S-1

As filed with the Securities and Exchange Commission on September 9, 2008

Registration No. 333-      

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

VERIFONE HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	3578	04-3692546
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

2099 Gateway Place, Suite 600

San Jose, CA 95110

(408) 232-7800

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Douglas G. Bergeron

VeriFone Holdings, Inc.

2099 Gateway Place, Suite 600

San Jose, CA 95110

(408) 232-7800

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Scott D. Miller, Esq.

Sullivan & Cromwell LLP

1870 Embarcadero Road

Palo Alto, California 94303

(650) 461-5600

Approximate date of commencement of proposed sale to the public:  From time to time after the effective date of this registration statement, as determined by market and other conditions.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) 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.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

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.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

CALCULATION OF REGISTRATION FEE

			Proposed Maximum		Proposed Maximum		Amount of
Title of Each Class of	Amount to be		Offering		Aggregate		Registration
Securities to be Registered	Registered		Price per Unit		Offering Price		Fee
1.375% Senior Convertible Notes Due 2012		$316,250,000		100%		$316,250,000(1)		$12,428.63
Common Stock, $0.01 par value per share		(2)		(2)		(2)		(2)

(1)

Equals the aggregate principal amount of the notes being registered. Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act.

(2)

Includes up to 7,184,234 shares of common stock that may be issued upon conversion of the 1.375% Senior Convertible Notes Due 2012 registered hereby. Pursuant to Rule 416(a) under the Securities Act, this registration statement shall be deemed to cover any additional number of shares of common stock as may be issued from time to time upon conversion of the notes to prevent dilution as a result of stock splits, stock dividends or similar transactions. No additional consideration will be received for the common stock, and therefore no registration fee is required pursuant to Rule 457(i).

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion. Dated September 9, 2008.

PROSPECTUS

1.375% Senior Convertible Notes Due 2012

and

Shares of Common Stock Issuable upon Conversion of the Notes

In June 2007, we issued and sold $316,250,000 aggregate principal amount of our 1.375% Senior Convertible Notes due 2012, which we refer to as the “Notes”. This prospectus will be used by selling securityholders to resell from time to time up to $316.25 million of the Notes or the common stock issuable upon conversion of such Notes. Additional selling securityholders may be named by prospectus supplement or post-effective amendment. The Notes accrue interest at a rate of 1.375% per annum together with any additional interest that may from time to time be payable on the Notes. Interest is payable semiannually in arrears in cash on June 15 and December 15 of each year, unless the Notes are earlier converted.

The Notes rank equally with all our existing and future senior debt and senior to all our future subordinated debt. The Notes rank junior to all our existing and future senior secured debt to the extent of the collateral securing such debt and are effectively subordinated to all existing and future indebtedness and other liabilities of our subsidiaries.

The Notes are convertible, at your option, into cash and, if applicable, shares of our common stock initially at a conversion rate of 22.7190 shares per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $44.02 per share), subject to adjustment as described in this prospectus at any time on or prior to the close of business on the second business day immediately preceding the maturity date only under the following circumstances:

•  on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter;

•  at any time on or after March 15, 2012;

•  if we distribute to all holders of our common stock rights or warrants (other than pursuant to a rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of our common stock at a price less than the average closing sale price for the ten trading days preceding the declaration date for such distribution;

•  if we distribute to all holders of our common stock, cash or other assets, debt securities or rights to purchase our securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of our common stock on the trading day preceding the declaration date for such distribution;

•  during a specified period if certain types of fundamental changes occur; or

•  during the five business-day period following any five consecutive trading-day period in which the average trading price for the Notes was less than 98% of the average of the closing sale price of our common stock for each day during such five trading-day period multiplied by the then current conversion rate.

Upon conversion, we will deliver cash and shares of our common stock, if applicable, based on a daily conversion value (as described herein). See “Description of the Notes — Conversion Rights — Settlement Upon Conversion.” Unless and until we amend our certificate of incorporation to increase our authorized capital, you will not participate in any appreciation of the price of our common stock above $80.37 per share. In the event of certain types of fundamental changes, we will increase the conversion rate by a number of additional shares or, in lieu thereof, we may elect to adjust the conversion obligation and conversion rate so that the Notes are convertible into shares of the acquiring or surviving company, in each case as described herein.

Our common stock is listed on the New York Stock Exchange and trades under the ticker symbol “PAY”.

You may require us to repurchase all or a portion of your Notes upon a fundamental change at a cash repurchase price equal to 100% of the principal amount plus accrued and unpaid interest (including additional interest, if any).

Investing in the Notes involves risks. See “Risk Factors” beginning on page 11.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is            , 2008.

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		11
Forward-Looking Statements		29
Use of Proceeds		29
Ratio of Earnings to Fixed Charges		29
Price Range of Common Stock		29
Dividend Policy		30
Description of the Notes		31
Description of Convertible Note Hedge and Warrant Transactions		54
Description of Capital Stock		55
Selling Securityholders		57
Certain United States Tax Consequences		59
Plan of Distribution		65
Validity of the Securities		66
Experts		66
Incorporation of Certain Documents by Reference		67
Where You Can Find More Information		68
EXHIBIT 4.5
EXHIBIT 5.1
EXHIBIT 12.1
EXHIBIT 23.1
EXHIBIT 25.1

We have not authorized any dealer, salesperson or other person to give any information or to make any representations to you other than the information contained in this prospectus. You must not rely on any information or representations not contained in this prospectus as if we had authorized it. The information contained in this prospectus is current only as of the date on the cover page of this prospectus and may change after that date. We do not imply that there has been no change in the information contained in this prospectus or in our affairs since that date by delivering this prospectus. The selling securityholders are not making an offer of these securities in any state where the offer is not permitted.

This prospectus incorporates important business and financial information about us that is not included in or delivered with this prospectus. This information is available without charge to you upon written or oral request. If you would like a copy of any of this information, please submit your request to Investor Relations, VeriFone Holdings, Inc., 2099 Gateway Place, Suite 600, San Jose, California 95110, or call (408) 232-7800 to make your request.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere or incorporated by reference in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the section entitled “Risk Factors,” and the information incorporated by reference in this prospectus.

VeriFone Holdings, Inc.

We are a global leader in secure electronic payment solutions. We provide expertise, solutions, and services that add value to the point of sale with merchant-operated, consumer-facing, and self-service payment systems for the financial, retail, hospitality, petroleum, transportation, government, and healthcare vertical markets. Since 1981, we have designed and marketed system solutions that facilitate the long-term shift toward electronic payment transactions and away from cash and checks.

Our system solutions consist of point of sale electronic payment devices that run our proprietary and third-party operating systems, security and encryption software, and certified payment software as well as third party, value-added applications. Our system solutions are able to process a wide range of payment types. They include signature and PIN-based debit cards, credit cards, contactless/radio frequency identification, or RFID, cards and tokens, Near Field Communication, or NFC, enabled mobile phones, smart cards, pre-paid gift and other stored-value cards, electronic bill payment, check authorization and conversion, signature capture, and electronic benefits transfer, or EBT. Our proprietary architecture was the first to enable multiple value-added applications, such as gift card and loyalty card programs, healthcare insurance eligibility, and time and attendance tracking, to reside on the same system without requiring recertification when new applications are added to the system. We are an industry leader in multi-application payment system deployments and we believe we have the largest selection of certified value-added applications.

We design our system solutions to meet the demanding requirements of our direct and indirect customers. Our electronic payment systems are available in several modular configurations, offering our customers flexibility to support a variety of connectivity options, including wireline and wireless internet protocol, or IP, technologies. We also offer our customers support for installed systems, consulting and project management services for system deployment, and customization of integrated software solutions.

Security has become a driving factor in our business as our customers endeavor to meet ever escalating governmental statutory requirements related to the prevention of identity theft as well as operating regulation safeguards from the credit and debit card associations, including Visa International, or Visa, MasterCard Worldwide, or MasterCard, American Express, Discover Financial Services, and JCB Co., Ltd., or JCB. In 2007, these card associations established the Payment Card Industry Council, or PCI Council, to oversee and unify industry standards in the areas of credit card data security, referred to as the PCI-PED standard which consists of PIN-entry device security, or PED, and the PCI Data Security Standard, or PCI-DSS, standard. We are a leader in providing systems that meet these standards and have upgraded or launched next generation system solutions that span our product portfolio ahead of deadlines.

Our customers are primarily financial institutions, payment processors, petroleum companies, large retailers, government organizations, and healthcare companies, as well as independent sales organizations, or ISOs. The functionality of our system solutions includes transaction security, connectivity, compliance with certification standards and the flexibility to execute a variety of payment and non-payment applications on a single system solution.

1

THE NOTES

Issuer	VeriFone Holdings, Inc.
Maturity	June 15, 2012, unless earlier converted or repurchased.
Interest Rate	1.375% per year together with any additional interest that may from time to time be payable on the Notes. Interest is payable in cash on June 15 and December 15 of each year. See “Description of the Notes —Interest” for a description of additional interest that has accrued on the Notes.
Ranking	The Notes are VeriFone Holdings, Inc.’s senior unsecured obligations and rank equal in right of payment with all of its existing and future senior unsecured indebtedness. The Notes are effectively subordinated to any secured indebtedness to the extent of the value of the related collateral and structurally subordinated to indebtedness and other liabilities of our subsidiaries including secured indebtedness of such subsidiaries.
	As of July 31, 2008, VeriFone Holdings, Inc. had no other senior indebtedness outstanding and our subsidiaries had approximately $233.5 million of indebtedness outstanding.
Limitations on Incurrence of Indebtedness	We will not permit VeriFone, Inc., our principal operating subsidiary, directly or indirectly, to incur or guarantee any unsecured indebtedness in excess of $20 million in the aggregate, unless prior to or concurrently with such incurrence or guarantee, VeriFone, Inc. guarantees the Notes on an equal and ratable basis.
Conversion Rights	You may convert your Notes into cash and, if applicable, shares of our common stock at any time on or prior to the close of business on the second business day immediately preceding the maturity date only under the following circumstances:
	• on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter;
	• at any time on or after March 15, 2012;
	• if we distribute to all holders of our common stock rights or warrants (other than pursuant to a rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of our common stock at a price less than the average closing sale price for the ten trading days preceding the declaration date for such distribution;
	• if we distribute to all holders of our common stock, cash or other assets, debt securities or rights to purchase our securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of our common stock on the trading day preceding the declaration date for such distribution;

2

• during a specified period if one of the following types of fundamental changes occurs, subject to certain exceptions:

  • the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, of more than 50% of our capital stock that is at the time entitled to vote by the holder thereof in the election of our board of directors (or comparable body); or

  • the consolidation or merger of us with or into any other person, or the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of our assets and those of our subsidiaries taken as a whole to any “person” (as this term is used in Section 13(d)(3) of the Exchange Act); or

• during the five business-day period following any five consecutive trading-day period in which the average trading price for the Notes was less than 98% of the average of the closing sale price of our common stock for each day during such five trading-day period multiplied by the then current conversion rate.

The Notes will be convertible into cash and, if applicable, shares of our common stock at an initial conversion rate of 22.7190 shares of common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of approximately $44.02 per share). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described under “Description of the Notes — Conversion Rights — Conversion Rate Adjustments.”

Upon conversion, we will deliver cash and shares of our common stock, if any, based on a daily conversion value (as described herein), calculated as described under “Description of the Notes — Conversion Rights — Settlement Upon Conversion.”

Upon any conversion, subject to certain exceptions, you will not receive any cash payment representing accrued and unpaid interest. See “Description of the Notes — Conversion Rights.”

Unless and until we obtain stockholder approval to amend our certificate of incorporation to increase our authorized capital, the maximum number of shares available for issuance upon conversion of each $1,000 principal amount of Notes will be the pro rata portion of an aggregate of 3,250,000 shares allocable to such Note, which equates to 10.2766 shares per $1,000 principal amount of Notes. Notwithstanding the foregoing, the limitations described above on the maximum number of shares available for issuance upon conversion of the Notes will apply only with respect to the issuance of our common stock upon conversion of the Notes, and not to payment of cash or the issuance of other securities into which the Notes may be convertible.

Because we did not increase our authorized capital to permit conversion of all of the Notes at the initial conversion rate by June 21, 2008, the Notes currently bear additional interest at a rate of 2.0% per annum, which will increase 0.25% per annum for each year thereafter.

3

	If stockholder approval to increase our authorized capital is received, such additional interest will cease to accrue and, upon conversion of each Note, we will deliver cash or a combination of cash and our common stock without respect to such limitation. We can give no assurance that stockholder approval will be obtained.
Adjustment to conversion rate upon a non-stock change of control	If and only to the extent holders elect to convert the Notes in connection with a transaction described under the first clause or fourth clause of the definition of fundamental change as described in “Description of the Notes — Fundamental Change Put” pursuant to which 10% or more of the consideration for our common stock (other than cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) in such fundamental change transaction consists of cash or securities (or other property) that are not shares of capital stock or American Depositary Receipts in respect of shares of capital stock traded or scheduled to be traded immediately following such transaction on a U.S. national securities exchange, which we refer to as a “non-stock change of control,” we will increase the conversion rate by a number of additional shares. The number of additional shares will be determined by reference to the table in “Description of the Notes — Conversion Rights — Adjustment to Conversion Rate Upon a Non-Stock Change of Control,” based on the effective date and the price (the “stock price”) paid per share of our common stock in such non-stock change of control. If holders of our common stock receive only cash in the type of transaction described above, the stock price will be the cash amount paid per share. Otherwise, the stock price will be the average of the last reported sale prices of our common stock on the five trading days prior to but not including the effective date of such non-stock change of control.
Conversion after a public acquirer change of control	In the case of a non-stock change of control constituting a public acquirer change of control (as defined in this prospectus), we may, in lieu of adding additional shares to the conversion rate as described in “Description of the Notes — Conversion Rights — Adjustment to Conversion Rate Upon a Non-Stock Change of Control,” elect to adjust the conversion obligation and the conversion rate such that from and after the effective date of such public acquirer change of control, holders of the Notes will be entitled to convert their Notes (subject to the satisfaction of certain conditions) into shares of public acquirer common stock, and the conversion rate in effect immediately before the public acquirer change of control will be adjusted by multiplying it by a fraction:
	• the numerator of which will be:
	• in the case of a public acquirer change of control pursuant to which our common stock is converted solely into cash, the value of such cash paid or payable per share of common stock, or
	• in the case of any other public acquirer change of control, the average of the closing sale prices of our common stock for the five consecutive trading days prior to but excluding the effective date of such public acquirer change of control, and

4

	• the denominator of which will be the average of the closing sale prices of the public acquirer common stock for the five consecutive trading days commencing on the trading day next succeeding the effective date of such public acquirer change of control.
Fundamental Change Repurchase Right of Holders	If we undergo a fundamental change (as defined in this prospectus) prior to maturity, you will have the right, at your option, to require us to repurchase for cash some or all of your Notes at a repurchase price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest (including additional interest, if any) to, but excluding, the repurchase date. See “Description of the Notes — Fundamental Change Put.”
Events of Default	If an event of default on the Notes occurs, the principal amount of the Notes, plus accrued and unpaid interest (including additional interest, if any) may be declared immediately due and payable, subject to certain conditions set forth in the indenture. These amounts automatically become due and payable in the case of certain types of bankruptcy or insolvency events of default involving us or certain of our subsidiaries.
Convertible Note Hedge and Warrant Transactions	In connection with the issuance of the Notes, we entered into convertible note hedge transactions with respect to our common stock with affiliates of the initial purchasers of the Notes (the “counterparties”). The transactions are expected generally to reduce the potential equity dilution upon conversion of the Notes. We also sold warrants to the counterparties. The warrants could have a dilutive effect on our earnings per share to the extent that the price of our common stock exceeds the strike price of the warrants. The warrants have a strike price of $62.356 per share.
	In connection with establishing their initial hedge of these transactions, the counterparties (and/or their affiliates) may have entered into, or may in the future enter into, various derivative transactions with respect to our common stock or purchase shares of our common stock.
	These activities could have the effect of increasing or preventing a decline in the price of our common stock.
	In addition, the counterparties (and/or their affiliates) may modify their hedge positions following the pricing of the Notes from time to time by entering into or unwinding various derivative transactions with respect to our common stock or by selling or purchasing our common stock in secondary market transactions (including on and after the 22nd scheduled trading day prior to the maturity of the Notes and during any conversion period related to the conversion of the Notes), which could adversely affect the value of our common stock and, as a result, the value of the Notes or could have the effect of increasing or preventing a decline in the value of our common stock. See “Description of the Convertible Note Hedge and Warrant Transactions.”

5

Absence of a Public Market for the Notes	We cannot assure you that any active or liquid market will develop for the Notes.
Stock Exchange Listings	Our common stock is listed on The New York Stock Exchange under the symbol “PAY.”
Use of Proceeds	We will not receive any proceeds from the sale of any Notes or any shares of our common stock offered by this prospectus. See “Selling Securityholders.”
U.S. Federal Income Tax Considerations	You should consult your tax advisor with respect to the U.S. federal income tax consequences of owning the Notes and the common stock into which the Notes may be converted in light of your own particular situation and with respect to any tax consequences arising under the laws of any state, local, foreign or other taxing jurisdiction. See “U.S. Federal Income Tax Considerations.”
Risk Factors	Please read “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in the Notes.

Except as otherwise indicated, all information in this prospectus assumes the effect of a three-for-two split of all common stock outstanding on April 30, 2003.

6

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial data should be read together with our consolidated financial statements and the related notes and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our annual report on Form 10-K for the fiscal year ended October 31, 2007 and our quarterly report on Form 10-Q for the three and nine months ended July 31, 2008, each of which has been incorporated by reference into this prospectus. The summary consolidated historical financial data set forth below are not necessarily indicative of the results of future operations.

	Years Ended October 31,															Nine Months Ended July 31,
	2003			2004			2005			2006			2007(4)			2007(4)			2008
	(Dollars in thousands, except per share data)
Consolidated Statement of Operations Data:
Net revenues	$	339,331		$	390,088		$	485,367		$	581,070		$	902,892		$	664,947		$	677,220
Cost of net revenues(1)		214,439			241,637			288,542			319,525			603,660			433,082			458,081
Gross profit		124,892			148,451			196,825			261,545			299,232			231,865			219,139
Operating expenses(1):
Research and development		28,193			33,703			41,830			47,353			65,430			48,272			57,179
Sales and marketing		40,024			44,002			52,231			58,607			96,295			69,549			70,945
General and administrative		25,039			25,503			29,609			42,573			80,704			62,306			93,183
Amortization of purchased intangible assets		10,200			10,200			4,967			4,703			21,571			16,456			18,855
In-process research and development		—			—			—			—			6,752			6,650			—
Total operating expenses		103,456			113,408			128,637			153,236			270,752			203,233			240,162
Operating income (loss)		21,436			35,043			68,188			108,309			28,480			28,632			(21,023	)
Interest expense		(12,456	)		(12,597	)		(15,384	)		(13,617	)		(36,598	)		(28,731	)		(21,877	)
Interest income		—			—			598			3,372			6,702			4,751			4,677
Other income (expense), net		3,557			(11,869	)		(6,673	)		(6,394	)		(7,882	)		(4,419	)		(6,240	)
Income (loss) before income taxes		12,537			10,577			46,729			91,670			(9,298	)		233			(44,463	)
Provision for income taxes		12,296			4,971			13,490			32,159			24,718			53,116			14,221
Net income (loss)		241			5,606			33,239			59,511			(34,016	)		(52,883	)		(58,684	)
Accrued dividends and accretion on preferred stock		6,916			4,959			—			—			—			—			—
Net income (loss) attributable to common stockholders	$	(6,675	)	$	647		$	33,239		$	59,511		$	(34,016	)	$	(52,883	)	$	(58,684	)
Net income (loss) per common share — diluted(1)	$	(0.14	)	$	0.01		$	0.54		$	0.86		$	(0.41	)	$	(0.65	)	$	(0.70	)

	As of July 31, 2008
	(Dollars in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	182,014
Total assets		1,555,603
Long-term debt and capital leases, including current portion		549,747
Total stockholders’ equity		537,226

7

	Years Ended October 31,										Nine Months Ended July 31,
	2003		2004		2005		2006		2007		2007		2008
	(Dollars in thousands, except per share data)
Other Data:
EBITDA, as adjusted(2)	$	49,854	$	57,247	$	86,423	$	130,445	$	157,252	$	135,888	$	43,660
Net cash provided by operating activities		9,772		33,217		40,159		16,747		89,270		84,813		7,648
Capital expenditures(3)		4,151		5,273		4,847		6,568		38,465		25,398		17,538

(1)	We adopted the fair value recognition and measurement provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment, effective May 1, 2005 using the modified-prospective transition method. For periods prior to May 1, 2005 we followed the intrinsic value recognition and measurement provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB 25. For further information see Note 2 to the consolidated financial statements in our Annual Report on Form 10-K.
(2)	We define earnings before interest, taxes, depreciation, and amortization, or EBITDA, as adjusted, as the sum of (a) net income (excluding extraordinary items of gain or loss and any gain or loss from discontinued operations), (b) interest expense, (c) income taxes, (d) depreciation, amortization, goodwill impairment, and other non-recurring charges, (e) non-cash charges, including non-cash stock-based compensation expense and purchase accounting items, and (f) acquisition related charges and restructuring costs. EBITDA, as adjusted, is a primary component of the financial covenants to which we are subject under our credit agreement. If we fail to maintain required levels of EBITDA, as adjusted, we could have a default under our credit agreement, potentially resulting in an acceleration of all of our outstanding indebtedness. Management uses EBITDA, as adjusted, only in addition to and in conjunction with results presented in accordance with GAAP. Management believes that the use of this non-GAAP financial measure, in conjunction with results presented in accordance with GAAP, helps it to evaluate our performance and to compare our current results with those for prior periods as well as with the results of other companies in our industry. Our competitors may, due to differences in capital structure and investment history, have interest, tax, depreciation, amortization, and other non-cash expenses that differ significantly from ours. Management also uses this non-GAAP financial measure in our budget and planning process. Management believes that the presentation of this non-GAAP financial measure may be useful to investors for many of the same reasons that management finds these measures useful.
	Our EBITDA, as adjusted, contains limitations and should be considered as a supplement to, and not as a substitute for, or superior to, disclosures made in accordance with GAAP. EBITDA, as adjusted, may be different from EBITDA or EBITDA, as adjusted, calculated by other companies and is not based on any comprehensive set of accounting rules or principles. In addition, EBITDA, as adjusted, does not reflect all amounts and costs, such as employee stock-based compensation costs, periodic costs of assets used to generate net revenues and costs to replace those assets, cash expenditures or future requirements for capital expenditures or contractual commitments, cash requirements for working capital needs, interest expense or the cash requirements necessary to service interest or principal payments on our debt, income taxes and the related cash requirements, restructuring and impairment charges and losses from discontinued operations, associated with our results of operations as determined in accordance with GAAP. Furthermore, we expect to continue to incur expenses similar to those amounts excluded from EBITDA, as adjusted. Management compensates for these limitations by also relying on the comparable GAAP financial measure.
	As noted above, management excludes the following items from EBITDA, as adjusted:

• Provision for income taxes.  While income taxes are directly related to the amount of pre-tax income, they are also impacted by tax laws and the company’s tax structure. As the tax laws and our tax structure are not under the control of our operational managers, management believes that the provision for income taxes should be excluded when evaluating our operational performance.

• Interest expense and interest income.  While working capital supports the business, management does not believe that related interest expense or interest income is directly attributable to the operating performance of our business.

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• Depreciation of property, plant and equipment.  Management excludes depreciation because while tangible assets support the business, management does not believe the related depreciation costs are directly attributable to the operating performance of our business. In addition, depreciation may not be indicative of current or future capital expenditures.

• Amortization of capitalized software.  Management excludes amortization of capitalized software because while capitalized software supports the business, management does not believe the related amortization costs are directly attributable to the operating performance of our business. In addition, amortization of capitalized software may not be indicative of current or future expenditures to develop software.

• Amortization of certain acquisition related items.  We incur amortization of purchased core and developed technology assets, amortization of purchased intangible assets, amortization of step-down in deferred revenue on acquisition and amortization of step-up in inventory on acquisition in connection with acquisitions. Management excludes these items because it does not believe these expenses are reflective of ongoing operating results in the period incurred. These amounts arise from prior acquisitions and management does not believe that they have a direct correlation to the operation of our business.

• In-process research and development.  We incur IPR&D expenses when technological feasibility for acquired technology has not been established at the date of acquisition and no future alternative use for such technology exists. These amounts arise from prior acquisitions and management does not believe they have a direct correlation to the operation of VeriFone’s business.

• Stock-based compensation.  These expenses consist primarily of expenses for employee stock options and restricted stock units under SFAS 123(R). Management excludes stock-based compensation expenses from non-GAAP financial measures primarily because they are non-cash expenses which management believes are not reflective of ongoing operating results.

• Acquisition related charges and restructuring costs.  This represents charges incurred for consulting services and other professional fees associated with acquisition related activities. These expenses also include charges related to restructuring activities, including costs associated with severance, benefits and excess facilities. As management does not believe that these charges directly relate to the operation of our business, management believes they should be excluded when evaluating our operating performance.

• Management fees to majority stockholder.  Management excludes management fees paid to our majority stockholder (which were paid prior to our initial public offering) because it does not believe that these charges directly relate to the operation of our business.

• Refund of foreign unclaimed pension benefits.  Management excludes the refund of foreign unclaimed pension benefits because it does not believe these amounts directly relate to the operation of our business.

• Loss on debt extinguishment and debt repricing fee.  This represents the non-cash portion of loss incurred on the extinguishment and repricing of our credit facility. While this credit facility supported our business, management does not believe the related loss on extinguishment and repricing is a cost directly attributable to the operating performance of our business.

• Capitalized software write-off.  This represents charges related to software development costs due to restructuring activities and changes in our market approach in certain areas. As management does not believe that these charges directly relate to the operation of our business, management believes they should be excluded when evaluating our operating performance.

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A reconciliation of net income, the most directly comparable U.S. GAAP measure, to EBITDA, as adjusted, for each period indicated is as follows (in thousands):

	Years Ended October 31,														Nine Months Ended July 31,
	2003			2004		2005			2006			2007(4)			2007(4)			2008
U.S. GAAP net income (loss)	$	241		$	5,606	$	33,239		$	59,511		$	(34,016	)	$	(52,883	)	$	(58,684	)
Provision for income taxes		12,296			4,971		13,490			32,159			24,718			53,116			14,221
Interest expense(a)		12,456			12,597		15,384			13,617			36,598			28,731			21,877
Interest income		—			—		(598	)		(3,372	)		(6,702	)		(4,751	)		(4,677	)
Depreciation and amortization of property, plant and equipment		1,333			2,451		3,691			3,505			7,766			5,814			9,894
Amortization of capitalized software		108			698		1,173			1,231			1,220			800			1,142
Amortization of purchased intangible assets(b)		24,348			19,945		11,902			10,328			59,468			44,930			43,155
Amortization of step-down in deferred revenue on acquisition		1,561			519		700			986			3,735			3,088			873
Amortization of step-up in inventory on acquisition		—			—		—			121			13,823			13,961			—
In-process research and development		—			—		—			—			6,752			6,650			—
Stock-based compensation		81			400		1,687			6,000			28,892			21,954			13,159
Acquisition related charges and restructuring costs		—			—		—			—			10,234			9,714			—
Management fees to majority stockholder		250			250		125			—			—			—			—
Refund of foreign unclaimed pension benefits		(2,820	)		—		—			—			—			—			—
Loss on debt extinguishment and debt repricing fee		—			9,810		5,630			6,359			4,764			4,764			—
Capitalized software write-off		—			—		—			—			—			—			2,700
EBITDA, as adjusted	$	49,854		$	57,247	$	86,423		$	130,445		$	157,252		$	135,888		$	43,660

(a)	For the year ended October 31, 2007, interest expense increased due to the increase in our average debt outstanding, including debt incurred to finance the acquisition of Lipman.
(b)	For the year ended October 31, 2007, these expenses increased significantly due to the acquisition of Lipman and PayWare.
(3)	Includes purchase of equipment and improvements, software development costs capitalized and purchase of other assets.
(4)	On November 1, 2006, we acquired Lipman Electronic Engineering Ltd. See Note 3 to the Consolidated Financial Statements contained in our annual report on Form 10-K for the fiscal year ended October 31, 2007.

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RISK FACTORS

An investment in the Notes and shares of our common stock involves investment risks. You should consider the following risks carefully before making an investment decision. There may also be risks of which we are currently unaware, or that we currently regard as immaterial based on the information available to us that later prove to be material. These risks may adversely affect our business, financial condition, and operating results. As a result, the value of the Notes and shares of our common stock could decline, and you could lose some or all of your investment.

Risks Related to Our Business

Our internal processes and controls and our disclosure controls have been inadequate; if the processes and controls we have implemented and continue to implement are inadequate, we may not be able to comply with our financial statement certification requirements under applicable SEC rules, or prevent future errors in our financial reporting.

As described under “Item 9A — Controls and Procedures” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2007, we have identified material weaknesses in our internal control over financial reporting and have determined that our disclosure controls and procedures were not effective. These weaknesses contributed to our need to restate previously reported interim financial information for each of the first three quarters of our fiscal year ended October 31, 2007, and to the delays in the filing of our Annual Report on Form 10-K for the fiscal year ended October 31, 2007. We also were unable to file our quarterly reports on Form 10-Q for our fiscal quarters ended January 31, 2008 and April 30, 2008 on a timely basis. We have implemented and intend to continue to implement a number of additional and enhanced processes and controls to improve our internal control over financial reporting. However, if we are unsuccessful in adequately implementing these processes and controls, we may be unable to comply with Exchange Act Rules 13a-15 and 15d-15, which specify the processes and controls that public companies are required to have in place, and we may be unable to provide the executive certificates required by Exchange Act Rules 13a-14 and 15d-15, in our quarterly and annual reports. Even if we implement such controls, there can be no assurance that these controls will be sufficient to detect or prevent future errors in financial reporting. We have devoted additional resources to our financial control and reporting requirements, including hiring additional qualified employees in these areas. We expect to hire additional employees and may also engage additional consultants in these areas. Competition for qualified financial control and accounting professionals in the geographic areas in which we operate is keen and there can be no assurance that we will be able to hire and retain these individuals.

We have been named as a party to several class action and derivative action lawsuits arising from the restatements, and we may be named in additional litigation, all of which are likely to require significant management time and attention and expenses and may result in an unfavorable outcome which could have a material adverse effect on our business, financial condition, and results of operations.

In connection with the restatements of our historical interim financial statements, a number of securities class action complaints were filed against us and certain of our officers, and a number of purported derivative actions have also been filed against certain of our current and former directors and officers. See “Item 3 — Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended October 31, 2007.

The amount of time and resources required to resolve these lawsuits is unpredictable, and defending ourselves is likely to divert management’s attention from the day-to-day operations of our business, which could adversely affect our business, financial condition, and results of operations. In addition, an unfavorable outcome in such litigation is likely to have a material adverse effect on our business, financial condition, and results of operations.

Our insurance may not be sufficient to cover our costs in these actions. In addition, we may be obligated to indemnify (and advance legal expenses to) officers, employees and directors in connection with these actions. We currently hold insurance policies for the benefit of our directors and officers, although our insurance coverage may not be sufficient in some or all of these matters. Furthermore, our insurance carriers may seek to deny coverage in some or all of these matters, in which case we may have to fund the indemnification amounts owed to such directors and officers ourselves.

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We are subject to the risk of additional litigation and regulatory proceedings or actions in connection with the restatements. We have responded to inquiries and provided information and documents related to the restatement to the U.S. Securities and Exchange Commission, or SEC, the U.S. Department of Justice, the New York Stock Exchange, and the Chicago Board Options Exchange. The SEC also has expressed an interest in interviewing several current and former VeriFone officers and employees, and we are continuing to cooperate with the SEC in responding to the SEC’s requests for information. Additional regulatory inquiries may also be commenced by other U.S. federal, state or foreign regulatory agencies. In addition, we may in the future be subject to additional litigation or other proceedings or actions arising in relation to the restatement of our historical interim financial statements. Litigation and any potential regulatory proceeding or action may be time consuming, expensive and distracting from the conduct of our business. The adverse resolution of any specific lawsuit or any potential regulatory proceeding or action could have a material adverse effect on our business, financial condition, and results of operations.

Our restatement and related litigation, as well as related amendments to our credit instruments could result in substantial additional costs and expenses and adversely affect our cash flows, and may adversely affect our business, financial condition, and results of operations. We have incurred substantial expenses for legal, accounting, tax and other professional services in connection with the Audit Committee investigation, our internal review of our historical financial statements, the preparation of the restated financial statements, inquiries from government agencies, the related litigation, and the amendments to our credit agreement as a result of our failure to timely file our Exchange Act reports with the SEC. We estimate that we have incurred approximately $28.4 million of expenses related to these activities through July 31, 2008, including $1.4 million of professional fees to modify our credit instruments. We expect to continue to incur significant expenses in connection with these matters. For more information on the risks related to the amendments to our credit agreement, see the risk factor entitled “Our secured credit facility contains restrictive and financial covenants and, if we are unable to comply with these covenants, we will be in default” under “Risks Related to Our Capital Structure.”

Many members of our senior management team and our Board of Directors have been and will be required to devote a significant amount of time on matters relating to the restatement, our outstanding periodic reports, remedial efforts and related litigation. In addition, certain of these individuals are named defendants in the litigation related to the restatement. Defending these actions may require significant time and attention from them. If our senior management is unable to devote sufficient time in the future developing and pursuing our strategic business initiatives and running ongoing business operations, there may be a material adverse effect on our business, financial condition and results of operations.

We have experienced rapid growth, and if we cannot adequately manage our growth, our results of operations will suffer.

We have experienced rapid growth in our operations, both internally and from acquisitions. Future rapid growth may place a significant strain on managerial, operational, and financial resources. We cannot be sure that we have made adequate allowances for the costs and risks associated with our expansion, or that our systems, procedures, and managerial controls will be adequate to support further expansion in our operations. Any delay in implementing, or transitioning to, new or enhanced systems, procedures, or controls may adversely affect our ability to manage our product inventory and record and report financial and management information on a timely and accurate basis. We expect that growth will require us to hire additional finance and control, engineering, technical support, sales, administrative, and operational personnel. Competition for qualified personnel can be intense in the areas where we operate and we have faced challenges in hiring qualified employees in these areas. The process of locating, training and successfully integrating qualified personnel into our operations can be lengthy and expensive. If we are unable to successfully manage expansion, our results of operations may be adversely affected.

A significant percentage of our business is executed towards the end of our fiscal quarters. This could negatively impact our business and results of operations.

Revenues recognized in our fiscal quarters tend to be back-end loaded. This means that sales orders are received, product shipped, and revenue recognized increasingly towards the end of each fiscal quarter. This back-

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end loading, particularly if it becomes more pronounced, could adversely affect our business and results of operations due to the following factors:

•  the manufacturing processes at our internal manufacturing facility could become concentrated in a shorter time period. This concentration of manufacturing could increase labor and other manufacturing costs and negatively impact gross margins. The risk of inventory write offs could also increase if we were to hold higher inventory levels to counteract this;

•  the higher concentration of orders may make it difficult to accurately forecast component requirements and, as a result, we could experience a shortage of the components needed for production, possibly delaying shipments and causing lost orders; and

•  if we are unable to fill orders at the end of a quarter, shipments may be delayed. This could cause us to fail to meet our revenue and operating profit expectations for a particular quarter and could increase the fluctuation of quarterly results if shipments are delayed from one fiscal quarter to the next or orders are cancelled by customers; and

•  increasing manufacturing and distribution costs.

We may be subject to impairment charges due to potential declines in the fair value of our assets.

As a result of our acquisitions, particularly that of Lipman, we have significant goodwill on our balance sheet. We test that goodwill for impairment on a periodic basis as required at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The events or changes that could require us to test our goodwill for impairment include a reduction in our stock price and market capitalization and changes in our estimated future cash flows, as well as changes in rates of growth in our industry or in any of our reporting units. If we determine that goodwill is impaired in any of our reporting units, we may be required to record a significant charge to earnings which would adversely affect our financial results and could also materially adversely affect our business.

The government tax benefits that our Israeli subsidiary currently receives require it to meet several conditions and may be terminated or reduced in the future, which may impact the timing of cash tax payments for previously accrued taxes.

Our principal subsidiary in Israel (formerly Lipman) has received tax benefits under Israeli law for capital investments that are designated as “Approved Enterprises.” Lipman received such tax benefits of approximately $0.1 million in 2007, zero in 2006, and $4.0 million in 2005. To maintain our eligibility for these tax benefits, we must continue to meet conditions, including making specified investments in property, plant, and equipment, and continuing to manufacture in Israel. If we do not comply with these conditions in the future, the benefits received could be cancelled or reduced and we could be required to pay increased taxes or refund the amounts of the tax benefits Lipman received in the past, together with interest and penalties. Also, an increase in our assembly of products outside of Israel may be construed as a failure to comply with these conditions. These tax benefits may not continue in the future at the current levels or at all. The termination or reduction of these tax benefits, or our inability to qualify for new programs, could adversely affect our results of operations. Our principal subsidiary in Israel has undistributed earnings of approximately $133.0 million, the vast majority of which are attributable to Lipman’s Approved Enterprise programs. As such these earnings were not subject to Israeli statutory corporate tax at the time they were generated. To the extent that these earnings are distributed to the United States in the future, our Israeli subsidiary would be required to pay corporate tax at the rate ordinarily applicable to such earnings (currently between 10% and 25%) along with a 15% withholding tax. As of October 31, 2007, the Company has accrued $40.5 million for taxes associated with future distributions of Israeli earnings.

We face risks related to our recent migration to a common enterprise resource planning information system to integrate all business and finance activities.

We recently migrated the majority of our business and finance activities to a new enterprise resource planning information system, which replaced our previous systems. Due to the size and complexity of our business, including the acquisition of Lipman, the conversion process will continue to be very challenging. Any disruptions and

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problems that occur during the system conversion could adversely impact our ability to finish the conversion in a timely and cost effective way or the quality and reliability of the information generated by the new system. Even if we do succeed, the implementation of the remaining phases, and the optimization of the already installed phases may be much more costly than we anticipated. If we are unable to successfully complete implementation of our new information system as planned, in addition to adversely impacting our financial position, results of operations and cash flows in the short and long term, it could also affect our ability to collect the information necessary to timely and accurately file our financial reports with the SEC.

We depend upon third parties to physically manufacture many of our systems and to supply the components necessary to manufacture our products.

Prior to the Lipman acquisition, VeriFone did not directly manufacture the physical systems we design which form part of our System Solutions. In addition, Lipman did not manufacture systems it sold in Brazil or a majority of the systems designed by its Dione subsidiary. We arrange for a limited number of third parties to manufacture these systems under contract and pursuant to our specifications. Components such as application specific integrated circuits, or ASICs, payment processors, wireless modules, modems, and printer mechanisms that are necessary to manufacture and assemble our systems are sourced either directly by us or on our behalf by our contract manufacturers from a variety of component suppliers selected by us. If our suppliers are unable to deliver the quantities that we require, we would be faced with a shortage of critical components. We also experience from time to time an increase in the lead time for delivery of some of our key components. We may not be able to find alternative sources in a timely manner if suppliers of our key components become unwilling or unable to provide us with adequate supplies of these key components when we need them or if they increase their prices. If we are unable to obtain sufficient key required components, or to develop alternative sources if and as required in the future, or to replace our component and factory tooling for our products in a timely manner if they are damaged or destroyed, we could experience delays or reductions in product shipments. This could harm our relationships with our customers and cause our revenues to decline. Even if we are able to secure alternative sources or replace our tooling in a timely manner, our costs could increase. For the fiscal year ended October 31, 2007, over half of our component spending was for components we sourced from a single supplier or a small number of suppliers.

We have significant operations in Israel and therefore our results of operations may be adversely affected by political or economic instability or military operations in or around Israel.

We have offices and a manufacturing facility in Israel and many of our suppliers are located in Israel. Therefore, political, economic, and military conditions in Israel directly affect our operations. The future of peace efforts between Israel and its Arab neighbors remains uncertain. Any armed conflicts or further political instability in the region is likely to negatively affect business conditions and adversely affect our results of operations. Furthermore, several countries continue to restrict or ban business with Israel and Israeli companies. These restrictive laws and policies may seriously limit our ability to make sales in those countries.

In addition, many employees in Israel are obligated to perform at least 30 days and up to 40 days, depending on rank and position, of military reserve duty annually and are subject to being called for active duty under emergency circumstances. If a military conflict or war arises, these individuals could be required to serve in the military for extended periods of time. Our operations in Israel could be disrupted by the absence for a significant period of one or more key employees or a significant number of other employees due to military service. Any disruption in our operations in Israel could materially adversely affect our business.

We depend on our manufacturing and warehouse facility in Israel. If operations at this facility are interrupted for any reason, there could be a material adverse effect on our results of operations.

We currently assemble and test a majority of our NURIT products and some of our Dione products at our manufacturing facility located in Israel. Component and limited finished product inventories are also stored at this facility. Disruption of the manufacturing process at this facility or damage to it, whether as a result of fire, natural disaster, act of war, terrorist attack, or otherwise, could materially affect our ability to deliver products on a timely basis and could materially adversely affect our results of operations. We also assemble some of our NURIT products in Brazil. To the extent products are manufactured by third parties in additional countries, we may become more

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dependent on third party manufacturers to produce and deliver products sold in these markets on a timely basis and at an acceptable cost.

We depend on a limited number of customers, including distributors and resellers, for sales of a large percentage of our System Solutions. If we do not effectively manage our relationships with them, our net revenues and operating results will suffer.

We sell a significant portion of our solutions through third parties such as independent distributors, independent sales organizations, or ISOs, value-added resellers, and payment processors. We depend on their active marketing and sales efforts. These third parties also provide after-sales support and related services to end user customers. When we introduce new applications and solutions, they also provide critical support for developing and porting the custom software applications to run on our various electronic payment systems and, internationally, in obtaining requisite certifications in the markets in which they are active. Accordingly, the pace at which we are able to introduce new solutions in markets in which these parties are active depends on the resources they dedicate to these tasks. Moreover, our arrangements with these third parties typically do not prevent them from selling products of other companies, including our competitors, and they may elect to market our competitors’ products and services in preference to our system solutions. If one or more of our major resellers terminates or otherwise adversely changes its relationship with us, we may be unsuccessful in replacing it. The loss of one of our major resellers could impair our ability to sell our solutions and result in lower revenues and income. It could also be time consuming and expensive to replicate, either directly or through other resellers, the certifications and the custom applications owned by these third parties.

A significant percentage of our net revenues is attributable to a limited number of customers, including distributors and ISOs. For the fiscal year ended October 31, 2007, our ten largest customers accounted for approximately 30.8% of our net revenues. No customer accounted for more than 10% of our net revenues in that period. If any of our large customers significantly reduces or delays purchases from us or if we are required to sell products to them at reduced prices or on other terms less favorable to us, our revenues and income could be materially adversely affected.

A majority of our net revenues is generated outside of the United States and we intend to continue to expand our operations internationally. Our results of operations could suffer if we are unable to manage our international expansion and operations effectively.

During the fiscal year ended October 31, 2007, 61% of our net revenues were generated outside of the United States. We expect our percentage of net revenues generated outside of the United States to continue to increase in the coming years. Part of our strategy is to expand our penetration in existing foreign markets and to enter new foreign markets. Our ability to penetrate some international markets may be limited due to different technical standards, protocols or product requirements. Expansion of our international business will require significant management attention and financial resources. Our international net revenues will depend on our continued success in the following areas:

•  securing commercial relationships to help establish our presence in international markets;

•  hiring and training personnel capable of marketing, installing and integrating our solutions, supporting customers, and managing operations in foreign countries;

•  localizing our solutions to target the specific needs and preferences of foreign customers, which may differ from our traditional customer base in the United States;

•  building our brand name and awareness of our services among foreign customers; and

•  implementing new systems, procedures, and controls to monitor our operations in new markets.

In addition, we are subject to risks associated with operating in foreign countries, including:

•  multiple, changing, and often inconsistent enforcement of laws and regulations;

•  satisfying local regulatory or industry imposed security or other certification requirements;

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•  competition from existing market participants that may have a longer history in and greater familiarity with the foreign markets we enter;

•  tariffs and trade barriers;

•  laws and business practices that favor local competitors;

•  fluctuations in currency exchange rates;

•  extended payment terms and the ability to collect accounts receivable;

•  economic and political instability in foreign countries;

•  imposition of limitations on conversion of foreign currencies into U.S. dollars or remittance of dividends and other payments by foreign subsidiaries;

•  changes in a specific country’s or region’s political or economic conditions; and

•  greater difficulty in safeguarding intellectual property in areas such as China, Russia, and Latin America.

In addition, compliance with foreign and U.S. laws and regulations that are applicable to our international operations is complex and may increase our cost of doing business in international jurisdictions and our international operations could expose us to fines and penalties if we fail to comply with these regulations. These laws and regulations include import and export requirements, U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to governmental officials. Although we have implemented policies and procedures designed to ensure compliance with these laws, there can be no assurance that our employees, contractors, and agents will not take actions in violation of our policies, particularly as we expand our operations through organic growth and acquisitions. Any such violations could subject us to civil or criminal penalties, including substantial fines or prohibitions on our ability to offer our products and services to one or more countries, and could also materially damage our reputation, our brand, our international expansion efforts, our business, and our operating results. In addition, if we fail to address the challenges and risks associated with international expansion and acquisition strategy, we may encounter difficulties implementing our strategy, which could impede our growth or harm our operating results.

Our quarterly operating results may fluctuate significantly as a result of factors outside of our control, which could cause the market price of our common stock to decline.

We expect our revenues and operating results to vary from quarter to quarter. As a consequence, our operating results in any single quarter may not meet the expectations of securities analysts and investors, which could cause the price of our common stock to decline. Factors that may affect our operating results include:

•  the type, timing, and size of orders and shipments;

•  demand for and acceptance of our new product offerings;

•  delays in the implementation and delivery of our products and services, which may impact the timing of our recognition of revenues;

•  variations in product mix and cost during any period;

•  development of new relationships and maintenance and enhancement of existing relationships with customers and strategic partners;

•  component supplies, manufacturing, or distribution difficulties;

•  deferral of customer contracts in anticipation of product or service enhancements;

•  timing of commencement, implementation, or completion of major implementations projects;

•  timing of governmental, statutory and industry association requirements;

•  the relative mix of North America and International net revenues;

•  fluctuations in currency exchange rates;

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•  the fixed nature of many of our expenses; and

•  industry and economic conditions, including competitive pressures and inventory obsolescence.

In particular, differences in relative growth rates between our businesses in North America and internationally may have a significant effect on our operating results, particularly our reported gross profit percentage, in any individual quarter, with International sales carrying lower margins.

In addition, we have in the past and may continue to experience periodic variations in sales to our key vertical and international markets. These periodic variations occur throughout the year and may lead to fluctuations in our quarterly operating results depending on the impact of any given market during that quarter and could lead to volatility in our stock price.

Our North American and International operations are not equally profitable, which may promote volatility in our earnings and may adversely impact future growth in our earnings.

Our International sales of System Solutions tend to carry lower average selling prices and therefore have lower gross margins than our sales in North America. As a result, if we successfully expand our International sales, any improvement in our results of operations will likely not be as favorable as an expansion of similar magnitude in the United States and Canada. In addition, we are unable to predict for any future period our proportion of revenues that will result from International sales versus sales in North America. Variations in this proportion from period to period may lead to volatility in our results of operations which, in turn, may depress the trading price of our common stock.

Fluctuations in currency exchange rates may adversely affect our results of operations.

A substantial portion of our business consists of sales made to customers outside the United States. A portion of the net revenues we receive from such sales is denominated in currencies other than the U.S. dollar. Additionally, portions of our cost of net revenues and our other operating expenses are incurred by our International operations and denominated in local currencies. Fluctuations in the value of these net revenues, costs and expenses as measured in U.S. dollars have affected our results of operations historically, and adverse currency exchange rate fluctuations may have a material impact in the future. In addition, our balance sheet reflects non-U.S. dollar denominated assets and liabilities, primarily intercompany balances, which can be adversely affected by fluctuations in currency exchange rates. We have entered into foreign currency forward contracts and other arrangements intended to hedge our exposure to adverse fluctuations in exchange rates. Nevertheless, these hedging arrangements may not always be effective, particularly in the event of imprecise forecasts of non-U.S. denominated assets and liabilities. Accordingly, if there is an adverse movement in exchange rates, we might suffer significant losses. Additionally, hedging programs expose us to risks that could adversely affect our operating results, including the following:

•  we may be unable to hedge currency risk for some transactions because of a high level of uncertainty or the inability to reasonably estimate our foreign exchange exposures; and

•  we may be unable to acquire foreign exchange hedging instruments in some of the geographic areas where we do business, or, where these derivatives are available, we may not be able to acquire enough of them to fully offset our exposure.

Security is vital to our customers and end users and therefore breaches in the security of our solutions could adversely affect our reputation and results of operations.

Protection against fraud is of key importance to the purchasers and end users of our solutions. We incorporate security features, such as encryption software and secure hardware, into our solutions to protect against fraud in electronic payment transactions and to ensure the privacy and integrity of consumer data. Our solutions may be vulnerable to breaches in security due to defects in the security mechanisms, the operating system and applications, or the hardware platform. Security vulnerabilities could jeopardize the security of information transmitted or stored using our solutions. In general, liability associated with security breaches of a certified electronic payment system belongs to the institution that acquires the financial transaction. However, if the security of our solutions is compromised, our reputation and marketplace acceptance of our solutions will be adversely affected, which would cause our business to suffer, and we may become subject to damage claims.

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Our solutions may have defects that could result in sales delays, delays in our collection of receivables, and claims against us.

We offer complex solutions that are susceptible to undetected hardware and software errors or failures. Solutions may experience failures when first introduced, as new versions are released, or at any time during their lifecycle. Any product recalls as a result of errors or failures could result in the loss of or delay in market acceptance of our solutions and adversely affect our business and reputation. Any significant returns or warranty claims could result in significant additional costs to us and could adversely affect our results of operations. Our customers may also run third-party software applications on our electronic payment systems. Errors in third-party applications could adversely affect the performance of our solutions.

The existence of defects and delays in correcting them could result in negative consequences, including the following: harm to our brand; delays in shipping system solutions; loss of market acceptance for our system solutions; additional warranty expenses; diversion of resources from product development; and loss of credibility with distributors and customers. Correcting defects can be time consuming and in some circumstances extremely difficult. Software errors may take several months to correct, and hardware defects may take even longer to correct.

We may accumulate excess or obsolete inventory that could result in unanticipated price reductions and write-downs and adversely affect our financial condition.

In formulating our solutions, we have focused our efforts on providing to our customers solutions with higher levels of functionality, which requires us to develop and incorporate cutting edge and evolving technologies. This approach tends to increase the risk of obsolescence for products and components we hold in inventory and may compound the difficulties posed by other factors that affect our inventory levels, including the following:

•  the need to maintain significant inventory of components that are in limited supply;

•  buying components in bulk for the best pricing;

•  responding to the unpredictable demand for products;

•  cancellation of customer orders; and

•  responding to customer requests for quick delivery schedules.

The accumulation of excess or obsolete inventory may result in price reductions and inventory write-downs, which could adversely affect our business and financial condition. VeriFone incurred an obsolescence cost of $16.6 million for obsolete inventory, scrap, and purchase commitments for excess components at contract manufacturers during the fiscal year ended October 31, 2007, primarily due to the implementation of PCI security standards which significantly reduced the markets in which non-PCI compliant finished goods and related accessories could be sold. In the fiscal year ended October 31, 2006, VeriFone incurred an obsolescence charge of $3.5 million primarily as a result of discontinued and legacy financial and retail products and check readers, in addition to the writedown of certain memory components that are high risk in nature as they are no longer used in manufacturing and are only being held as future repair stock.

Our proprietary technology is difficult to protect and unauthorized use of our proprietary technology by third parties may impair our ability to compete effectively.

We may not be able to protect our proprietary technology, which could enable competitors to develop services that compete with our own. We rely on copyright, trademark, and trade secret laws, as well as confidentiality, licensing and other contractual arrangements to establish and protect the proprietary aspects of our solutions. We do not own any patents that protect important aspects of our current solutions. The laws of some countries in which we sell our solutions and services may not protect software and intellectual property rights to the same extent as the laws in the United States. If we are unable to prevent misappropriation of our technology, competitors may be able to use and adapt our technology. Our failure to protect our technology could diminish our competitive advantage and cause us to lose customers to competitors.

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Our business may suffer if we are sued for infringing the intellectual property rights of third parties, or if we are unable to obtain rights to third party intellectual property on which we depend.

Third parties have in the past asserted and may in the future assert claims that our system solutions infringe their proprietary rights. Such infringement claims, even if meritless, may cause us to incur significant costs in defending those claims. We may be required to discontinue using and selling any infringing technology and services, to expend resources to develop non-infringing technology or to purchase licenses or pay royalties for other technology. Similarly, we depend on our ability to license intellectual property from third parties. These or other third parties may become unwilling to license to us on acceptable terms intellectual property that is necessary to our business. In either case, we may be unable to acquire licenses for other technology on reasonable commercial terms or at all. As a result, we may find that we are unable to continue to offer the solutions and services upon which our business depends.

We have received, and have currently pending, third-party claims and may receive additional notices of such claims of infringement in the future. Infringement claims may cause us to incur significant costs in defending those claims. For example, during 2005, VeriFone incurred approximately $1.2 million and Lipman incurred approximately $1.5 million in expenses in connection with the defense and settlement of proceedings brought by Verve L.L.C. More recently, in September 2007, SPA Syspatronic AG commenced an infringement action against us and others and in March 2008, Cardsoft, Inc. and Cardsoft (Assignment for the Benefit of Credits), LLC commenced an infringement action against us and others. Infringement claims are expensive and time-consuming to defend, regardless of the merits or ultimate outcome. Similar claims may result in additional protracted and costly litigation. There can be no assurance that we will continue to prevail in any such actions or that any license required under any such patent or other intellectual property would be made available on commercially acceptable terms, if at all. See “Item 3 — Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended October 31, 2007.

We face litigation risks that could force us to incur substantial defense costs and could result in damages awards against us that would negatively impact our business.

As described in “Item 3 — Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended October 31, 2007, there are a number of pending litigation and tax assessment matters each of which may be time-consuming to resolve, expensive to defend, and disruptive to normal business operations. The outcome of litigation is inherently difficult to predict. An unfavorable resolution of any specific lawsuit could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to attract, integrate, manage, and retain qualified personnel.

Our success depends to a significant degree upon the continued contributions of our key senior management, engineering, sales and marketing, and manufacturing personnel, many of whom would be difficult to replace. In addition, our future success also depends on our ability to attract, integrate, manage, and retain highly skilled employees throughout our businesses. Competition for some of these personnel is intense, and in the past, we have had difficulty hiring employees in our desired time frame, particularly qualified finance and accounting professionals. We may be unsuccessful in attracting and retaining personnel. The loss of the services of any of our key personnel, the inability to attract or retain qualified personnel in the future, or delays in hiring required personnel, particularly engineers and sales personnel, could make it difficult for us to manage our business and meet key objectives, such as timely product introductions.

In January and July 2008, we implemented work force reduction plans reducing the number of employees and contractors. These reductions have also required that we reassign certain employee duties. Workforce reductions and job reassignments could negatively affect employee morale, and make it difficult to motivate and retain the remaining employees and contractors, which would affect our ability to deliver our products in a timely fashion and otherwise negatively affect our business.

In addition, the restatement of our historical interim financial statements has adversely impacted our ability to attract and retain qualified personnel and may also affect the morale and productivity of our workforce, including as a result of the uncertainties inherent in that process as well as our inability to provide equity-based compensation or permit the exercise of outstanding stock options until we have filed all of our required reports with the SEC.

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Moreover, the restatement process has adversely affected the market for our shares making our equity compensation program potentially less attractive for current or prospective employees.

Shipments of electronic payment systems may be delayed by factors outside of our control, which can harm our reputation and our relationships with our customers.

The shipment of payment systems requires us or our manufacturers, distributors, or other agents to obtain customs or other government certifications and approvals, and, on occasion, to submit to physical inspection of our systems in transit. Failure to satisfy these requirements, and the very process of trying to satisfy them, can lead to lengthy delays in the delivery of our solutions to our direct or indirect customers. Delays and unreliable delivery by us may harm our reputation in the industry and our relationships with our customers.

Force majeure events, such as terrorist attacks, other acts of violence or war, political instability, and health epidemics may adversely affect us.

Terrorist attacks, war and international political instability, along with health epidemics may disrupt our ability to generate revenues. Such events may negatively affect our ability to maintain sales revenues and to develop new business relationships. Because a substantial and growing part of our revenues is derived from sales and services to customers outside of the United States and we have our electronic payment systems manufactured outside the U.S., terrorist attacks, war and international political instability anywhere may decrease international demand for our products and inhibit customer development opportunities abroad, disrupt our supply chain and impair our ability to deliver our electronic payment systems, which could materially adversely affect our net revenues or results of operations. Any of these events may also disrupt global financial markets and precipitate a decline in the price of our common stock.

While we believe we comply with environmental laws and regulations, we are still exposed to potential risks associated with environmental laws and regulations.

We are subject to other legal and regulatory requirements, including a European Union directive that places restrictions on the use of hazardous substances (RoHS) in electronic equipment, a European Union directive on Waste Electrical and Electronic Equipment (WEEE), and the environmental regulations promulgated by China’s Ministry of Information Industry (China RoHS). RoHS sets a framework for producers’ obligations in relation to manufacturing (including the amounts of named hazardous substances contained in products sold) and WEEE sets a framework for treatment, labeling, recovery, and recycling of electronic products in the European Union which may require us to alter the manufacturing of the physical devices that include our solutions and/or require active steps to promote recycling of materials and components. Although the WEEE directive has been adopted by the European Commission, national legislation to implement the directive is still pending in the member states of the European Union. In addition, similar legislation could be enacted in other jurisdictions, including in the United States. If we do not comply with the RoHS and WEEE directives and China RoHS, we may suffer a loss of revenue, be unable to sell in certain markets or countries, be subject to penalties and enforced fees, and/or suffer a competitive disadvantage. Furthermore, the costs to comply with RoHS and WEEE and China RoHS, or with current and future environmental and worker health and safety laws may have a material adverse effect on our results of operation, expenses and financial condition.

We may pursue acquisitions and strategic investments, which will involve numerous risks. We may not be able to address these risks without substantial expense, delay or other operational or financial problems.

We may seek to acquire or make investments in related businesses, technologies, or products in the future. Acquisitions or investments involve various risks, such as:

•  the difficulty of integrating the technologies, operations, and personnel of the acquired business, technology or product;

•  the potential disruption of our ongoing business, including the diversion of management attention;

•  the possible inability to obtain the desired financial and strategic benefits from the acquisition or investment;

•  loss of customers;

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•  the risk that increasing complexity inherent in operating a larger business may impact the effectiveness of our internal controls and adversely affect our financial reporting processes;

•  assumption of unanticipated liabilities;

•  the loss of key employees of an acquired business; and

•  the possibility of our entering markets in which we have limited prior experience.

Future acquisitions and investments could also result in substantial cash expenditures, potentially dilutive issuance of our equity securities, our incurring of additional debt and contingent liabilities, and amortization expenses related to other intangible assets that could adversely affect our business, operating results, and financial condition. We depend on the retention and performance of existing management and employees of acquired businesses for the day-to-day management and future operating results of these businesses.

Risks Related to Our Industry

Our markets are highly competitive and subject to price erosion.

The markets for our system solutions and services are highly competitive, and we have been subject to price pressures. Competition from manufacturers, distributors, or providers of products similar to or competitive with our system solutions or services could result in price reductions, reduced margins, and a loss of market share or could render our solutions obsolete. For example, First Data Corporation, a leading provider of payments processing services, and formerly our largest customer, has developed and continues to develop a series of proprietary electronic payment systems for the U.S. market.

We expect to continue to experience significant and increasing levels of competition in the future. We compete with suppliers of cash registers that provide built-in electronic payment capabilities and producers of software that facilitates electronic payment over the internet, as well as other manufacturers or distributors of electronic payment systems. We must also compete with smaller companies that have been able to develop strong local or regional customer bases. In certain foreign countries, some competitors are more established, benefit from greater name recognition and have greater resources within those countries than we do.

If we do not continually enhance our existing solutions and develop and market new solutions and enhancements, our net revenues and income will be adversely affected.

The market for electronic payment systems is characterized by:

•  rapid technological change;

•  frequent product introductions and enhancements;

•  evolving industry and government performance and security standards; and

•  changes in customer and end-user requirements.

Because of these factors, we must continually enhance our existing solutions and develop and market new solutions.

We cannot be sure that we will successfully complete the development and introduction of new solutions or enhancements or that our new solutions will be accepted in the marketplace. We may also fail to develop and deploy new solutions and enhancements on a timely basis. In either case, we may lose market share to our competitors, and our net revenues and results of operations could suffer.

We must adhere to industry and government regulations and standards and therefore sales will suffer if we cannot comply with them.

Our system solutions must meet industry standards imposed by EMVCo LLC, Visa, MasterCard, and other credit card associations and standard setting organizations. New standards are continually being adopted or proposed as a result of worldwide anti-fraud initiatives, the increasing need for system compatibility and technology developments such as wireless and wireline IP communication. Our solutions also must comply with

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government regulations, including those imposed by telecommunications authorities and independent standards groups worldwide regarding emissions, radiation, and connections with telecommunications and radio networks. We cannot be sure that we will be able to design our solutions to comply with future standards or regulations on a timely basis, if at all. Compliance with these standards could increase the cost of developing or producing our solutions. New products designed to meet any new standards need to be introduced to the market and ordinarily need to be certified by the credit card associations and our customers before being purchased. The certification process is costly and time consuming and increases the amount of time it takes to sell our products. Our business and financial condition could be adversely affected if we cannot comply with new or existing industry standards, or obtain or retain necessary regulatory approval or certifications in a timely fashion, or if compliance results in increasing the cost of our products. Selling products that are non-compliant may result in fines against us or our customers, which we may be liable to pay.

Risks Related to Our Capital Structure

Our secured credit facility contains restrictive and financial covenants and, if we are unable to comply with these covenants, we will be in default. A default could result in the acceleration of our outstanding indebtedness, which would have an adverse effect on our business and stock price.

On October 31, 2006, we entered into a secured Credit Agreement consisting of a Term B Loan facility of $500 million and a revolving credit facility permitting borrowings of up to $40 million. The proceeds from the Term B loan were used to repay all outstanding amounts relating to an existing senior secured credit agreement, pay certain transaction costs, and partially fund the cash consideration in connection with the acquisition of Lipman on November 1, 2006. As of July 31, 2008, we had a Term B Loan balance of $232.5 million.

Our secured credit facility contains customary covenants that require our subsidiaries to maintain certain specified financial ratios and restrict their ability to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make capital expenditures above specified levels, engage in certain business combinations, or undertake various other corporate activities. Therefore, as a practical matter, these covenants restrict our ability to engage in or benefit from such activities. In addition, we have, in order to secure repayment of our secured credit facility, pledged substantially all of our assets and properties. This pledge may reduce our operating flexibility because it restricts our ability to dispose of these assets or engage in other transactions that may be beneficial to us.

In connection with our restatement process, we sought and obtained an initial amendment to our Credit Agreement delaying our obligation to provide required financial reports until April 30, 2008. In connection with the initial amendment we paid to the consenting lenders an amendment fee aggregating approximately $0.7 million and we also agreed to an increase in the interest rate payable on our term loan of 0.25% per year. On April 28, 2008, we sought and obtained a second amendment to our Credit Agreement to further delay our obligation to provide required financial reports until July 31, 2008. In connection with the second amendment, we paid to the consenting lenders an additional amendment fee aggregating approximately $0.7 million. We also agreed to an increase in the interest rate payable on our term loan and any revolving commitments of 0.75% per year, an increase of 0.125% per year to the commitment fee for unused revolving commitments and an increase of 0.75% per year to the letter of credit fees. On July 31, 2008, we sought and obtained a third amendment to our Credit Agreement to further delay our obligation to provide required financial reports until August 31, 2008. In connection with the third amendment, we paid to the consenting lenders an additional amendment fee aggregating approximately $0.3 million. If we are unable to comply with the covenants in our credit agreement, we will be in default, which could result in the acceleration of our outstanding indebtedness. If acceleration occurs, we may not be able to repay our debt and it is unlikely that we would be able to borrow sufficient additional funds to refinance our debt. Even if new financing is made available to us, it may not be available on acceptable terms. If we were to default in performance under the Credit Agreement we may pursue an amendment or waiver of the Credit Agreement with our existing lenders, but there can be no assurance that the lenders would grant another amendment and waiver and, in light of current credit market conditions, any such amendment or waiver may be on terms, including additional fees, as well as increased interest rates and other more stringent terms and conditions that are materially disadvantageous to us.

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Our indebtedness and debt service obligations will increase under our secured credit facility, which may adversely affect our cash flow, cash position, and stock price.

We intend to fulfill our debt service obligations under our secured credit facility from existing cash, investments and operations. In the future, if we are unable to generate cash or raise additional cash financings sufficient to meet these obligations and need to use more of our existing cash than planned or to liquidate investments in order to fund these obligations, we may have to delay or curtail the development and or the sales and marketing of new payment systems.

Our indebtedness could have significant additional negative consequences, including, without limitation:

•  requiring the dedication of a significant portion of our expected cash flow to service the indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures;

•  increasing our vulnerability to general adverse economic conditions;

•  limiting our ability to obtain additional financing; and

•  placing us at a possible competitive disadvantage to less leveraged competitors and competitors that have better access to capital resources.

Any modification of the accounting guidelines for convertible debt could result in higher interest expense related to our convertible debt, which could materially impact our results of operations and earnings per share.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP APB 14-1 requires the issuer of convertible debt instruments with cash settlement features to account separately for the liability and equity components of the instrument. The debt would be recognized at the present value of its cash flows discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance. The equity component would be recognized as the difference between the proceeds from the issuance of the note and the fair value of the liability. The FSP also requires accretion of the resultant debt discount over the expected life of the debt. The FSP is effective for fiscal years beginning after December 15, 2008, and interim periods within those years. Entities are required to apply the FSP retrospectively for all periods presented. We are currently evaluating FSP APB 14-1 and have not yet determined the impact its adoption will have on our consolidated financial statements. However, the impact of this new accounting treatment will be significant and will result in a significant increase to non-cash interest expense beginning in fiscal year 2010 for financial statements covering past and future periods.

Some provisions of our certificate of incorporation and bylaws may delay or prevent transactions that many stockholders may favor.

Some provisions of our certificate of incorporation and bylaws may have the effect of delaying, discouraging or preventing a merger or acquisition that our stockholders may consider favorable, including transactions in which stockholders might receive a premium for their shares. These provisions include:

•  authorization of the issuance of “blank check” preferred stock without the need for action by stockholders;

•  the removal of directors or amendment of our organizational documents only by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote;

•  provision that any vacancy on the board of directors, however occurring, including a vacancy resulting from an enlargement of the board, may only be filled by vote of the directors then in office;

•  inability of stockholders to call special meetings of stockholders, although stockholders are permitted to act by written consent; and

•  advance notice requirements for board nominations and proposing matters to be acted on by stockholders at stockholder meetings.

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Our share price has been volatile and we expect that the price of our common stock may continue to fluctuate substantially.

Our stock price has fluctuated substantially since our initial public offering and more recently since the announcement of our anticipated restatement in December 2007. In addition to fluctuations related to Company-specific factors, broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things:

•  actual or anticipated variations in quarterly operating results;

•  changes in financial estimates by us or by any securities analysts who might cover our stock, or our failure to meet the estimates made by securities analysts;

•  changes in the market valuations of other companies operating in our industry;

•  announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;

•  additions or departures of key personnel; and

•  sales of our common stock, including sales of our common stock by our directors and officers or by our principal stockholders.

As of August 31, 2008, we have approximately 84,325,800 shares of our common stock outstanding and 14,059,515 shares reserved for issuance under our equity compensation plans and the Notes. We have 100 million shares of common stock authorized under our certificate of incorporation. We are obligated under the terms of the Notes to seek an increase in the authorized number of shares of our common stock. We will seek such an increase in connection with our 2008 annual meeting of stockholders. If we are unsuccessful in increasing our authorized capital, we will be required to continue to pay additional interest on the Notes. We will also be unable to provide additional equity compensation to our existing and new employees, which could materially adversely affect our business.

Risks Related to the Notes and Our Common Stock

The Notes are effectively subordinated to any existing and future secured indebtedness and structurally subordinated to existing and future liabilities and other indebtedness of our subsidiaries.

The Notes are our general, unsecured obligations and rank equally in right of payment with all of our existing and future unsubordinated, unsecured indebtedness. As a result, the Notes are effectively subordinated to existing and future secured indebtedness we may have to the extent of the value of the assets securing such indebtedness and structurally subordinated to any existing and future liabilities and other indebtedness of our subsidiaries. These liabilities may include indebtedness under the secured credit facility of VeriFone, Inc. described above, trade payables, guarantees, lease obligations and letter of credit obligations. As set forth in “Description of the Notes — Limitations on Incurrence of Indebtedness,” the Notes contain a restriction on the ability of VeriFone, Inc. to incur or guarantee unsecured indebtedness in excess of $20 million without guaranteeing the Notes on an equal and ratable basis. Other than this limitation, the Notes do not restrict us or our subsidiaries from incurring indebtedness, including senior secured indebtedness in the future, nor do they limit the amount of indebtedness we can issue that is equal in right of payment.

The terms of the Notes do not contain restrictive covenants and provide only limited protection in the event of a change of control.

The indenture under which the Notes were issued does not contain restrictive covenants that would protect you from several kinds of transactions that may adversely affect you. In particular, the indenture does not contain covenants that limit our ability to pay dividends or make distributions on or redeem our capital stock or, except as set forth in “Description of the Notes — Limitations on Incurrence of Indebtedness,” limit our ability to incur additional indebtedness and, therefore, may not protect you in the event of a highly leveraged transaction or other similar transaction. The requirement that we offer to repurchase the Notes upon a change of control is limited to the transactions specified in the definition of a “fundamental change” under “Description of the Notes — Fundamental Change Put.” Similarly, the circumstances under which we are required to adjust the conversion rate upon the

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occurrence of a “non-stock change of control” are limited to circumstances where a Note is converted in connection with such a transaction as set forth under “Description of the Notes — Conversion Rights — Adjustment to Conversion Rate Upon a Non-Stock Change of Control.”

Accordingly, subject to restrictions contained in our other debt agreements, we could enter into certain transactions, such as acquisitions, refinancings or recapitalizations, that could affect our capital structure and the value of the Notes and common stock but would not constitute a fundamental change under the Notes.

We may be unable to repurchase the Notes when required by the holders, including following a fundamental change, or we may be unable to pay the cash portion of the conversion price pursuant to any conversion of the Notes.

Holders of the Notes have the right to require us to repurchase the Notes upon the occurrence of a fundamental change prior to maturity as described under “Description of the Notes — Fundamental Change Put.” Any of our future debt agreements may contain a similar provision. In addition, as described under “Description of the Notes — Conversion Rights,” upon conversion of the Notes, we will be required to pay to the holder of a Note a cash payment equal to the lesser of the principal amount of the Notes being converted or the conversion value of those Notes. We may not have sufficient funds to make the required repurchase or the cash payment upon conversion at such time or the ability to arrange necessary financing on acceptable terms. In addition, our ability to repurchase the Notes or satisfy our cash payment obligations upon conversion may be limited by law or the terms of other agreements relating to our debt outstanding at the time, including our senior credit facility, which will limit our ability to repurchase the Notes in certain circumstances. If we fail to repurchase the Notes as required by the indenture or if we fail to make required cash payments upon conversion of the Notes, it would constitute an event of default under the indenture governing the Notes, which, in turn, would constitute an event of default under our senior credit facility.

We are a holding company, and our ability to make payments on the Notes depends on our ability to receive dividends or other distributions from our subsidiaries.

Our operations are conducted through direct and indirect subsidiaries. As a holding company, we own no significant assets other than our equity in our subsidiaries, and our ability to meet our obligations, including with respect to the Notes, will depend on dividends and other distributions or payments from our subsidiaries. The ability of our subsidiaries to pay dividends or make distributions or other payments to us depends upon the availability of cash flow from operations, proceeds from the sale of assets and/or borrowings, and, in the case of non-wholly owned subsidiaries, our contractual arrangements with other equity holders. In the event of bankruptcy proceedings affecting one of these subsidiaries, to the extent we are recognized as a creditor of that entity, our claim could still be junior to any security interest in or other lien on any assets of that entity and to any of its debt and other obligations that are senior to the payment of the Notes. We cannot be certain of the future availability of such distributions and the lack of any such distributions may adversely affect our ability to pay interest and principal on, and amounts owing upon conversion of, the Notes or meet our other obligations.

Some significant restructuring transactions may not constitute a fundamental change, in which case we would not be obligated to offer to repurchase the Notes.

Upon the occurrence of a fundamental change, you have the right to require us to offer to repurchase the Notes. However, the fundamental change provisions will not afford protection to holders of the Notes in the event of certain transactions. For example, transactions such as leveraged recapitalizations, refinancings, restructurings or acquisitions initiated by us would not constitute a fundamental change requiring us to repurchase the Notes. In the event of any such transaction, the holders would not have the right to require us to repurchase the Notes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely affecting the holders of the Notes.

The convertible note hedge and warrant transactions may affect the value of the Notes and our common stock.

In connection with the offering of the Notes, we entered into convertible note hedge transactions with respect to our common stock with affiliates of the initial purchasers of the Notes (the “counterparties”). The transactions are

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expected generally to reduce the potential equity dilution upon conversion of the Notes. We also sold warrants to the counterparties. The warrants will have a dilutive effect on our earnings per share to the extent that the price of our common stock exceeds the strike price of the warrants. The warrants have a strike price of $62.356 per share. These transactions were accounted for as an adjustment to our stockholders’ equity.

In connection with establishing their initial hedge of these transactions, the counterparties (and/or their affiliates) may have entered into, or may in the future enter into, various derivative transactions with respect to our common stock or purchase shares of our common stock. These activities could have the effect of increasing or preventing a decline in the price of our common stock. In addition, the counterparties (and/or their affiliates) may modify their hedge positions from time to time by entering into or unwinding various derivative transactions with respect to our common stock or by purchasing or selling our common stock in secondary market transactions (including on and after the 22nd scheduled trading day prior to the maturity of the Notes and during any conversion period related to a conversion of the Notes), which could adversely affect the value of our common stock and, as a result, the value of the Notes or could have the effect of increasing or preventing a decline in the value of our common stock.

The potential effect, if any, of any of these transactions and activities on the market price of our common stock or the Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock and the value of the Notes and, as a result, the value of the consideration and the number of shares, if any, that you would receive upon the conversion of the Notes and, under certain circumstances, your ability to convert the Notes.

We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the Notes or the shares of our common stock. In addition, we do not make any representation that the counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Provisions of the Notes could discourage an acquisition of us by a third party.

Certain provisions of the Notes could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of the Notes will have the right, at their option, to require us to repurchase all of their Notes or any portion of the principal amount of such Notes in integral multiples of $1,000. We may also be required to issue additional shares upon conversion or provide for conversion into the acquirer’s capital stock in the event of certain fundamental changes.

The adjustment to the conversion rate upon the occurrence of certain types of fundamental changes may not adequately compensate you for the lost option time value of your Notes as a result of such fundamental change.

If certain types of fundamental changes occur, we may adjust the conversion rate of the Notes to increase the number of shares issuable upon conversion. The number of additional shares to be added to the conversion rate will be determined based on the date on which the fundamental change becomes effective and the price paid per share of our common stock in the fundamental change as described under “Description of the Notes — Conversion Rights — Adjustment to Conversion Rate Upon a Non-Stock Change of Control.” Although this adjustment is designed to compensate you in respect of the lost option value of your Notes as a result of certain types of fundamental changes, the adjustment is only an approximation of such lost value based upon assumptions made on the date on which the Notes were priced and may not adequately compensate you for such loss. In addition, if the price paid per share of our common stock in the fundamental change is less than $36.68 or more than $160.00 (subject to adjustment), there will be no such adjustment. In addition, unless and until we obtain stockholder approval to increase our authorized capital, your ability to receive additional shares will be limited. See “— You may not be able to participate in all of the stock price appreciation above the conversion price.”

The conditional conversion feature of the Notes could result in your receiving less than the value of the common stock into which a Note is convertible.

Prior to March 15, 2012, the Notes are convertible into cash and, if applicable, shares of our common stock only if specified conditions are met. If these conditions are not met, you will not be able to convert your Notes prior

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to March 15, 2012, and you may not be able to receive the value of the common stock into which the Notes would otherwise be convertible.

You may not be able to participate in all of the stock price appreciation above the conversion price.

Unless and until we obtain stockholder approval to increase our authorized capital, the maximum number of shares available for issuance upon conversion of each $1,000 principal amount of Notes will be the pro rata portion of an aggregate of 3,250,000 shares allocable to such Note, which equates to 10.2766 shares per $1,000 principal amount of Notes. The limit on the number of shares of our common stock that will be issued upon conversion under such circumstances will limit your participation in any appreciation of the price of our common stock above approximately $80.37 per share unless and until we are able to increase our authorized capital. We can make no assurance that stockholder approval will be obtained.

Upon conversion of the Notes, we will pay cash in lieu of issuing shares of our common stock with respect to an amount up to the principal amount of Notes converted and shares of our common stock with respect to the conversion value in excess thereof. Therefore, holders of the Notes may receive no shares of our common stock or fewer shares than the number into which their Notes are convertible.

Upon conversion, we will pay cash in lieu of issuing shares of our common stock with respect to an amount up to the principal amount of Notes converted and shares of our common stock with respect to the conversion value in excess thereof, based on a daily conversion value (as defined herein) calculated based on a proportionate basis for each day of the 20 trading day conversion period. See “Description of the Notes — Conversion Rights — Settlement Upon Conversion.” Accordingly, upon conversion of Notes, holders may not receive any shares of our common stock. Further, our liquidity may be reduced upon conversion of the Notes. In addition, in the event of our bankruptcy, insolvency or certain similar proceedings during the conversion period (as defined under “Description of the Notes — Conversion Rights — Settlement Upon Conversion”), there is a risk that a bankruptcy court may decide a holder’s claim to receive such cash and shares, if any, 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.

The conversion rate of the Notes may not be adjusted for all dilutive events that may adversely affect the trading price of the Notes or the common stock issuable upon conversion of the Notes.

The conversion rate of the Notes is subject to adjustment upon certain events, including the issuance of stock dividends on our common stock, the issuance of rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness or assets, cash dividends and issuer tender or exchange offers as described under “Description of the Notes — Conversion Rights — Conversion Rate Adjustments.” The conversion rate will not be adjusted for certain other events that may adversely affect the trading price of the Notes or the common stock issuable upon conversion of the Notes.

If we pay a cash dividend on our common stock or otherwise adjust the conversion rate of the Notes, you may be deemed to have received a taxable dividend without the receipt of any cash.

If we pay a cash dividend on our common stock or otherwise adjust the conversion rate of the Notes, you may be deemed to have received a taxable dividend subject to United States federal income tax without the receipt of any cash. If you are a non-U.S. holder (as defined in “U.S. Federal Income Tax Considerations”), such deemed dividend may be subject to United States federal withholding tax at a 30% rate or such lower rate as may be specified by an applicable treaty. See “U.S. Federal Income Tax Considerations.”

We cannot assure you that an active trading market will develop for the Notes. The failure of a market to develop for the Notes could adversely affect the liquidity and value of your Notes.

We do not intend to apply for listing of the Notes on any securities exchange or for quotation of the Notes on any automated dealer quotation system. The initial purchasers may make a market in the Notes. However, they are not obligated to do so and any market-making activities with respect to the Notes may be discontinued by them at any time without notice. In addition, any market-making activity is subject to limits imposed by law. The liquidity of the trading market, if any, and future trading prices of the Notes will depend on many factors, including, among other things, the market price of our common stock, our ability to register the resale of the Notes and the shares of

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common stock issuable upon conversion of the Notes, prevailing interest rates, our operating results, financial performance and prospects, the market for similar securities and the overall securities market, and may be adversely affected by unfavorable changes in these factors. Historically, the market for convertible debt has been subject to disruptions that have caused volatility in prices. It is possible that the market for the Notes will be subject to disruptions which may have a negative effect on the holders of the Notes, regardless of our operating results, financial performance or prospects.

The price of our common stock, and therefore of the Notes, may fluctuate significantly, and this may make it difficult for you to resell the Notes or common stock issuable upon conversion of the Notes when you want or at prices you find attractive.

Because the Notes may be convertible into our common stock, volatility or depressed prices for our common stock could have a similar effect on the trading price of the Notes.

There has only been a public market for our common stock since April 29, 2005. Broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things:

•  actual or anticipated variations in quarterly operating results;

•  changes in financial estimates by us or by any securities analysts who might cover our stock, or our failure to meet the estimates made by securities analysts;

•  changes in the market valuations of other companies operating in our industry;

•  announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;

•  additions or departures of key personnel; and

•  sales of our common stock, including sales of our common stock by our directors and officers or by any of our other principal stockholders.

Future sales of our common stock in the public market or the issuance of securities senior to our common stock could adversely affect the trading price of our common stock and the value of the Notes and our ability to raise funds in new stock offerings.

Future sales of substantial amounts of our common stock or equity-related securities in the public market, or the perception that such sales could occur, could adversely affect prevailing trading prices of our common stock and the value of the Notes and could impair our ability to raise capital through future offerings of equity or equity-related securities. No prediction can be made as to the effect, if any, that future sales of shares of common stock or the availability of shares of common stock for future sale, will have on the trading price of our common stock or the value of the Notes.

As a holder of Notes, you will not be entitled to any rights with respect to our common stock, but you will be subject to all changes made with respect to our common stock.

If you hold Notes, you are not entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on our common stock), but you are subject to all changes affecting the common stock. You will only be entitled to rights on the common stock if and when we deliver shares of common stock to you upon conversion of your Notes. For example, in the event that an amendment is proposed to our certificate of incorporation or bylaws that requires stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to delivery of the common stock, you will not be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.

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FORWARD-LOOKING STATEMENTS

This prospectus, any prospectus supplement and the documents incorporated by reference herein and therein may contain forward-looking statements within the meaning of the federal securities laws. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms or comparable terminology.

Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined in “Risk Factors.” These factors may cause our actual results to differ materially from any forward-looking statement.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include those listed under “Risk Factors” and elsewhere in this prospectus and in the documents incorporated by reference herein. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results or to changes in expectations.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the Notes or the shares of common stock offered by this prospectus. See “Selling Securityholders.”

RATIO OF EARNINGS TO FIXED CHARGES

The following table presents our ratio of earnings to fixed charges for the fiscal years ended October 31, 2003, 2004, 2005, 2006 and 2007 as well as the nine months ended July 31, 2008:

																Nine Months
	Fiscal Year Ended October 31,															Ended July 31,
	2003			2004			2005			2006			2007			2008
Ratio of Earnings to Fixed Charges		1.901	x		1.755	x		3.728	x		6.953	x		0.752	x		(0.800	)x

The ratio of earnings to fixed charges is computed by dividing (i) income (loss) before income taxes plus fixed charges by (ii) fixed charges. Fixed charges consist of the portion of operating lease rental expense that is representative of the interest factor (deemed to be seven percent of the operating lease rentals), interest expense on indebtedness and amortization of debt issuance costs. Earnings for the nine months ended July 30, 2008 were inadequate to cover fixed charges. The coverage deficiency was approximately $44.4 million.

PRICE RANGE OF COMMON STOCK

Our common stock has been quoted on the New York Stock Exchange under the symbol “PAY” since April 29, 2005. Prior to its listing on the New York Stock Exchange, there was no public market for our stock.

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The following table sets forth for the indicated periods, the high and low sale prices of our common stock as reported on the New York Stock Exchange.

	High		Low
Fiscal Year ended October 31, 2006
First Quarter	$	28.55	$	21.70
Second Quarter		33.56		22.85
Third Quarter		33.50		25.95
Fourth Quarter		29.55		21.21

	High		Low
Fiscal Year ended October 31, 2007
First Quarter	$	40.82	$	29.26
Second Quarter		42.72		34.84
Third Quarter		38.94		31.45
Fourth Quarter		50.00		33.03

	High		Low
Fiscal Year ending October 31, 2008
First Quarter	$	49.79		15.59
Second Quarter		21.12		10.10
Third Quarter		16.14		10.75
Fourth Quarter (through September 8, 2008)		21.17		13.85

On September 8, 2008, the closing sale price of our common stock on the New York Stock Exchange was $19.96. As of August 31, 2008, there were approximately 33 stockholders of record. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

DIVIDEND POLICY

We have not declared or paid cash dividends on our capital stock in our most recent two full fiscal years. We do not expect to pay any cash dividends for the foreseeable future. We currently intend to retain any future earnings to finance our operations and growth. Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent on earnings, financial condition, operating results, capital requirements, any contractual restrictions and other factors that our board of directors deems relevant. In addition, our secured credit facility contains limitations on the ability of our principal operating subsidiary, VeriFone, Inc., to declare and pay cash dividends. Because we conduct our business through our subsidiaries, as a practical matter these restrictions similarly limit our ability to pay dividends on our common stock.

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DESCRIPTION OF THE NOTES

We issued the Notes under an indenture dated June 22, 2007, which we refer to as the Indenture, between us and U.S. Bank National Association, as Trustee. The terms of the Notes include those expressly set forth in the Indenture and those provided in the Registration Rights Agreement dated June 22, 2007, which we refer to as the Registration Rights Agreement.

The following description is only a summary of the material provisions of the Notes, the Indenture and the Registration Rights Agreement, and does not purport to be complete. We urge you to read the Indenture and the Registration Rights Agreement in their entirety because they, and not this description, define your rights as a holder of the Notes. You may request copies of these documents from us.

When we refer to “VeriFone Holdings, Inc.,” “VeriFone,” “we,” “our” or “us” in this section, we refer only to VeriFone Holdings, Inc. and not to its subsidiaries.

General

Brief Description of the Notes

The Notes:

•  are initially limited to $316.25 million aggregate principal amount;

•  bear interest at a rate of 1.375% per year, together with any additional interest that may from time to time be payable on the Notes, payable semi-annually in arrears, on June 15 and December 15 of each year;

•  are general unsecured obligations, ranking equally with all of our other senior unsecured indebtedness and senior in right of payment to any subordinated indebtedness;

•  are convertible by you at any time on or prior to the second business day preceding the maturity date, only upon satisfaction of one of the conditions for conversion, as described under “— Conversion Rights,” into cash and, if applicable, shares of our common stock initially based on a conversion rate of 22.7190 shares of our common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $44.02 per share. Unless and until we amend our certificate of incorporation to increase our authorized capital, you will not participate in any appreciation of the price of our common stock above $80.37 per share. In the event of certain types of fundamental changes, we will increase the conversion rate or, in lieu thereof, we may elect to adjust the conversion obligation and conversion rate so that the Notes are convertible into shares of the acquiring or surviving company, in each case as described herein;

•  are not subject to redemption at our option prior to maturity;

•  are subject to repurchase by us at your option if a fundamental change occurs, at a cash repurchase price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest (including additional interest, if any) to, but not including, the repurchase date, as set forth under “— Fundamental Change Put”; and

•  are due on June 15, 2012, unless earlier converted or repurchased by us at your option.

Neither we nor any of our subsidiaries are subject to any financial covenants under the Indenture. In addition, neither we nor any of our subsidiaries are restricted under the Indenture from paying dividends, incurring debt (except as set forth below under “— Limitations on Incurrence of Indebtedness”) or issuing or repurchasing our securities. You are not afforded protection under the Indenture in the event of a highly leveraged transaction or a change in control of us, except to the extent described below under “— Conversion Rights” and “— Fundamental Change Put.”

No sinking fund is provided for the Notes and the Notes will not be subject to defeasance.

The Notes initially were issued in book-entry form only in denominations of $1,000 principal amount and whole multiples thereof. Beneficial interests in the Notes will be shown on, and transfers of beneficial interests in the Notes will be effected only through, records maintained by The Depository Trust Company, or DTC, or its

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nominee, and any such interests may not be exchanged for certificated Notes except in limited circumstances. For information regarding conversion, registration of transfer and exchange of global Notes held in DTC, see “— Form, Denomination and Registration — Global Notes, Book-Entry Form.”

If certificated Notes are issued, you may present them for conversion, registration of transfer and exchange, without service charge, at our office or agency in New York City, which will initially be the office or agency of the trustee in New York City.

Additional Notes

We may, without the consent of the holders of the Notes, increase the principal amount of the Notes by issuing additional Notes in the future on the same terms and conditions, except for any differences in the issue price and interest accrued prior to the issue date of the additional Notes and certain other differences made to comply with applicable securities laws, registration rights or similar agreements; provided that such differences do not cause the additional Notes to constitute an issue of debt instruments different from the Notes for U.S. federal income tax purposes; and provided further, that the additional Notes have the same CUSIP number as the Notes offered hereby. The Notes offered by this prospectus and any additional Notes would rank equally and ratably and would be treated as a single class for all purposes under the Indenture. No additional Notes may be issued if any event of default has occurred and is continuing with respect to the Notes.

Payment at Maturity

On the maturity date, each holder will be entitled to receive on such date $1,000 in cash for each $1,000 in principal amount of Notes, together with accrued and unpaid interest (including additional interest, if any) to, but not including, the maturity date. With respect to global Notes, principal and interest (including additional interest, if any) will be paid to DTC in immediately available funds. With respect to any certificated Notes, principal and interest (including additional interest, if any) will be payable at our office or agency in New York City, which initially is the office or agency of the trustee in New York City.

Interest

The Notes bear interest at a rate of 1.375% per year, together with any additional interest that may from time to time be payable upon the Notes. We will pay interest (including additional interest, if any) semi-annually, in arrears on June 15 and December 15 of each year to holders of record at 5:00 p.m., New York City time, on the preceding June 1 and December 1, respectively. However, there are two exceptions to the preceding sentence:

•  we will not pay accrued interest (excluding any additional interest) on any Notes when they are converted, except as described under “— Conversion Rights;” and

•  we will pay accrued and unpaid interest (including additional interest, if any) to a person other than the holder of record on the record date on the maturity date. On such date, we will pay accrued and unpaid interest only to the person to whom we pay the principal amount.

We will pay interest on:

•  global Notes to DTC in immediately available funds;

•  any certificated Notes having a principal amount of less than $5,000,000, by check mailed to the holders of those Notes; provided, however, at maturity, interest will be payable as described under “— Payment at Maturity;” and

•  any certificated Notes having a principal amount of $5,000,000 or more, by wire transfer in immediately available funds at the election of the holders of these Notes duly delivered to the trustee at least five business days prior to the relevant interest payment date; provided, however, at maturity, interest will be payable as described under “— Payment at Maturity.”

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Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. If an interest payment date is not a business day, payment will be made on the next succeeding business day, and no additional interest will accrue thereon.

Due to the delay in the registration of the Notes and the shares underlying the Notes, the interest rate on the Notes increased by 0.25% per annum on December 20, 2007 and by an additional 0.25% per annum on March 19, 2008 relating to the Company’s obligations under the Registration Rights Agreement relating to the Notes. On the date of this prospectus, such additional interest ceased to accrue. In addition, the interest rate on the Notes increased an additional 0.25% per annum on May 1, 2008 because of the delay in the filing and delivery of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007. Such additional interest ceased to accrue on August 19, 2008. Because the Company did not increase its authorized capital to permit conversion of the Notes at the initial conversion rate by June 21, 2008, additional interest of 2.0% per annum began to accrue on the Notes on June 21, 2008. If stockholder approval to increase the Company’s authorized capital is received, such additional interest will cease to accrue on the date following such approval.

Limitations on Incurrence of Indebtedness

We will not permit VeriFone, Inc., directly or indirectly, to incur or guarantee any unsecured indebtedness in excess of $20 million in the aggregate, unless prior to or concurrently with such incurrence or guarantee, VeriFone, Inc. guarantees the Notes on an equal and ratable basis.

Conversion Rights

Holders may convert their Notes prior to the close of business on the second business day immediately preceding the maturity date based on an initial conversion rate of 22.7190 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $44.02 per share), only if the conditions for conversion described below are satisfied. The conversion rate will be subject to adjustment as described below. As described under “— Settlement Upon Conversion,” upon conversion, we will satisfy our conversion obligation with respect to the principal amount of the Notes to be converted in cash, with any remaining amount to be satisfied in shares of our common stock. Unless we have previously purchased the Notes, you will have the right to convert any portion of the principal amount of any Notes that is an integral multiple of $1,000 at any time on or prior to the close of business on the second business day immediately preceding the maturity date only under the following circumstances:

(1) on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter;

(2) at any time on or after March 15, 2012;

(3) if we distribute to all holders of our common stock rights or warrants (other than pursuant to a rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of our common stock at a price less than the average closing sale price for the ten trading days preceding the declaration date for such distribution, as described below in more detail under “— Conversion Upon Specified Corporate Transactions;”

(4) if we distribute to all holders of our common stock, cash or other assets, debt securities or rights to purchase our securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of our common stock on the trading day preceding the declaration date for such distribution, as described below in more detail under “— Conversion Upon Specified Corporate Transactions;”

(5) during a specified period if certain events constituting a fundamental change occurs, as described in more detail below under “— Conversion Upon a Fundamental Change;” or

(6) during the five business-day period following any five consecutive trading-day period in which the average trading price for the Notes was less than 98% of the average of the closing sale price of our common

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stock for each day during such five trading-day period multiplied by the then current conversion rate, as described in more detail below under “— Conversion Upon Satisfaction of Trading Price Condition;” we refer to this condition as the “trading price condition.”

In the case of clauses (3) and (4) immediately above, we will notify you at least 20 calendar days prior to the ex-dividend date for such distribution. Once we have given such notice, you may surrender your Notes for conversion at any time until the earlier of 5:00 p.m., New York City time, on the business day preceding the ex-dividend date and any announcement by us that such distribution will not take place. In the case of a distribution identified in clauses (3) and (4) immediately above, you may not convert your Notes if you will otherwise participate in the distribution without conversion as a result of holding the Notes.

The “closing sale price” of any share of our common stock on any trading date means the closing sale price of such security (or if no closing sale price is reported, the average of the closing bid and closing ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported in composite transactions for the principal U.S. securities exchange on which our common stock is traded or, if our common stock is not listed on a U.S. national or regional securities exchange, as reported by Pink Sheets LLC. In the absence of such a quotation, the closing sale price will be determined by a nationally recognized securities dealer retained by us for that purpose. The closing sale price will be determined without reference to extended or after hours trading. The “conversion price” on any day will equal $1,000 divided by the conversion rate in effect on that day.

Unless and until we obtain stockholder approval to amend our certificate of incorporation to increase our authorized capital, the maximum number of shares available for issuance upon conversion of each $1,000 principal amount of Notes will be the pro rata portion of an aggregate of 3,250,000 shares allocable to such Note, which equates to 10.2766 shares per $1,000 principal amount of Notes. As a result, you will not participate in any appreciation of the price of our common stock above $80.37 per share. Notwithstanding the foregoing, the limitations described above on the maximum number of shares available for issuance upon conversion of the Notes will apply only with respect to the issuance of our common stock upon conversion of the Notes, and not to payment of cash or the issuance of other securities into which the Notes may be convertible. Because we did not increase our authorized capital to permit conversion of all of the Notes at the initial conversion rate by June 21, 2008, the Notes currently bear additional interest at a rate of 2.0% per annum, which will increase 0.25% per annum for each year thereafter. If stockholder approval to increase our authorized capital is received, such additional interest will cease to accrue and, upon conversion of each Note, we will deliver cash or a combination of cash and our common stock without respect to the limitation described above.

We can, however, give no assurance that stockholder approval will be obtained. Other than our obligation to pay additional interest, we will not have any liability for damages with respect to a failure to amend our certificate of incorporation to increase the number of shares of our common stock that we are authorized to issue.

Except as provided in the next paragraph, upon conversion, you will not receive any separate cash payment of accrued and unpaid interest (excluding any additional interest) on the Notes. Accrued and unpaid interest (excluding any additional interest) to the conversion date is deemed to be paid in full with the cash paid and shares of our common stock, if any, issued upon conversion rather than cancelled, extinguished or forfeited.

If you convert all or part of your Notes after the record date for an interest payment but prior to the corresponding interest payment date, you will receive on the corresponding interest payment date the interest (including additional interest, if any) accrued and unpaid on those Notes, notwithstanding your conversion of those Notes prior to the interest payment date, assuming you were the holder of record on the corresponding record date. However, except as provided in the next sentence, at the time you surrender your Notes for conversion, you must pay us an amount equal to the interest (excluding any additional interest) that has accrued and will be paid on the Notes being converted on the corresponding interest payment date. However, you are not required to make such payment:

•  if you convert your Notes following the regular record date immediately preceding the maturity date;

•  if you convert your Notes in connection with a fundamental change and we have specified a fundamental change repurchase date that is after a record date and on or prior to the corresponding interest payment date; or

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•  to the extent of any overdue interest (including overdue additional interest, if any), if overdue interest (or overdue additional interest) exists at the time of conversion with respect to your Notes.

Except as described under “— Conversion Rate Adjustments,” we will not make any payment or other adjustment for dividends on any common stock issued upon conversion of the Notes.

Conversion Upon Specified Corporate Transactions

You will have the right to convert your Notes if we:

•  distribute to all holders of our common stock rights or warrants (other than pursuant to a rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of our common stock at a price less than the average closing sale price for the ten trading days preceding the declaration date for such distribution; or

•  distribute to all holders of our common stock, cash or other assets, debt securities or rights to purchase our securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of our common stock on the trading day preceding the declaration date for such distribution.

We will notify you at least 20 calendar days prior to the ex-dividend date for such distribution. Once we have given such notice, you may surrender your Notes for conversion at any time until the earlier of 5:00 p.m., New York City time, on the business day preceding the ex-dividend date or any announcement by us that such distribution will not take place. You may not convert any of your Notes based on this conversion contingency if you will otherwise participate in the distribution without conversion as a result of holding the Notes.

You will also have the right to convert your Notes if we are a party to a consolidation, merger, binding share exchange or sale or conveyance of all or substantially all of our property and assets that does not constitute a fundamental change, in each case pursuant to which all or substantially all of our common stock would be converted into cash, securities and/or other property. In such event, you will have the right to convert your Notes at any time beginning 15 calendar days prior to the date announced by us as the anticipated effective date of the transaction and until and including the date which is 15 calendar days after the date that is the actual effective date of such transaction. If you do not convert your Notes during this period, you will generally be entitled to receive, upon subsequent conversion, if any, the kind and amount of cash, securities and other property that you would have received if you had converted your Notes immediately prior to the transaction. Notwithstanding the foregoing, Notes will not become convertible by reason of a transaction described in clause (a) or (b) of clause (4) of the definition of fundamental change (as defined under “— Fundamental Change Put”) or a transaction that is excluded from the definition of fundamental change by the paragraph set forth below clause (5) of the definition of fundamental change (see “— Fundamental Change Put”).

Conversion Upon a Fundamental Change

If a transaction constituting a fundamental change of the type described in clauses (1) or (4) of the definition of fundamental change occurs, you will have the right to convert your Notes at any time beginning on the business day following the effective date of the fundamental change until 5:00 p.m., New York City time, on the business day preceding the repurchase date relating to such fundamental change. We will notify you of the anticipated effective date of any fundamental change at least 10 calendar days prior to such date. If you convert your Notes in connection with a fundamental change, you will receive:

•  (1) cash equal to the lesser of (i) the principal amount of the Notes converted and (ii) the conversion value and (2) if the conversion value exceeds the principal amount of the Notes converted, an amount of cash, securities and other assets or property equal to such excess based on the consideration that you would have received if you had held a number of shares of our common stock based on the conversion rate immediately prior to the transaction, with the conversion value based on the consideration received in such transaction; and

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•  under certain circumstances, consideration with respect to an adjustment to the conversion rate, which will be in an amount determined as set forth under “— Adjustment to Conversion Rate Upon a Non-Stock Change of Control” and which will be payable following certain types of fundamental changes.

If you have submitted any or all of your Notes for repurchase, unless you have withdrawn such Notes in a timely fashion, your conversion rights on the Notes so subject to repurchase will expire at 5:00 p.m., New York City time, on the business day preceding the repurchase date, unless we default in the payment of the repurchase price. If you have submitted any Notes for repurchase, such Notes may be converted only if you submit a withdrawal notice, and if the Notes submitted are evidenced by a global Note, you comply with appropriate DTC procedures.

Conversion Upon Satisfaction of Trading Price Condition

You may surrender your Notes for conversion prior to maturity during the five business-day period following any five consecutive trading-day period in which the “trading price” per $1,000 principal amount of Notes, as determined following a request by a holder of Notes in accordance with the procedures described below, for each trading day of such five trading-day period was less than 98% of the product of the closing sale price of our common stock for each day during such five-day trading period and the then current conversion rate.

The “trading price” of the Notes on any date of determination means the average of the secondary market bid quotations per $1,000 principal amount of Notes obtained by the trustee for $5,000,000 principal amount of the Notes at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers we select, which may include one or more of the initial purchasers, provided that if at least two such bids cannot reasonably be obtained by the trustee, but one such bid can reasonably be obtained by the trustee, this one bid will be used. If the trustee cannot reasonably obtain at least one bid for $5,000,000 principal amount of the Notes from a nationally recognized securities dealer or, in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the Notes, then, for purposes of the trading price condition only, the trading price of the Notes will be deemed to be less than 98% of the applicable conversion rate of the Notes multiplied by the closing sale price of our common stock on such determination date.

The trustee will determine the trading price of the Notes upon our request. We will have no obligation to make that request unless a holder of Notes requests that we do so. If a holder provides such request, we will instruct the trustee to determine the trading price of the Notes for each trading day until it is determined that the trading price, for purposes of the trading price condition, is not less than 98% of the applicable conversion rate of the Notes multiplied by the closing sale price of our common stock on the applicable determination date.

Conversion Procedures

Procedures to be Followed by a Holder

If you hold a beneficial interest in a global Note, to convert all or part of your Notes you must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program and, if required, pay funds equal to interest (excluding any additional interest) payable on the next interest payment date to which you are not entitled and, if required, pay all taxes or duties, if any.

If you hold a certificated Note, to convert you must:

•  complete and manually sign the conversion notice on the back of the Notes or a facsimile of the conversion notice;

•  deliver the completed conversion notice and the Notes to be converted to the conversion agent;

•  if required, furnish appropriate endorsements and transfer documents;

•  if required, pay funds equal to interest (but excluding any additional interest) payable on the next interest payment date to which you are not entitled; and

•  if required, pay all transfer or similar taxes, if any.

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The conversion date will be the date on which you have satisfied all of the foregoing requirements. The Notes will be deemed to have been converted immediately prior to 5:00 p.m., New York City time, on the conversion date.

You will not be required to pay any taxes or duties relating to the issuance or delivery of our common stock, if any, if you exercise your conversion rights, but you will be required to pay any tax or duty that may be payable relating to any transfer involved in the issuance or delivery of the common stock, if any, in a name other than your own. Certificates representing common stock will be issued and delivered only after all applicable taxes and duties, if any, payable by you have been paid in full.

Settlement Upon Conversion

Upon conversion, we will deliver to holders in respect of each $1,000 principal amount of Notes being converted a “conversion settlement amount” equal to the sum of the daily settlement amounts (as defined below) for each of the twenty trading days during the conversion period, subject to a maximum number of shares available for issuance upon conversion of each $1,000 principal amount of Notes equal to the pro rata portion of an aggregate of 3,250,000 shares allocable to such Note, which equates to 10.2766 shares per $1,000 principal amount of Notes, unless and until we increase our authorized capital, as described below. Notwithstanding the foregoing, the limitations described above on the maximum number of shares available for issuance upon conversion of the Notes will apply only with respect to the issuance of our common stock upon conversion of the Notes, and not to payment of cash or the issuance of other securities into which the Notes may be convertible.

The “conversion period” means the 20 consecutive trading day period:

•  with respect to conversion notices received during the period beginning 25 scheduled trading days preceding the maturity date and ending on the second business day preceding the maturity date, beginning on the 22nd scheduled trading day immediately preceding the maturity date; and

•  in all other cases, beginning on the third trading day following our receipt of your conversion notice.

The “daily settlement amount,” for each $1,000 principal amount of Notes, for each of the twenty trading days during the conversion period, shall consist of:

•  cash equal to the lesser of $50 and the daily conversion value for such trading day; and

•  to the extent such daily conversion value exceeds $50, a number of shares of our common stock equal to, (1) the difference between such daily conversion value and $50, divided by (2) the volume weighted average price of our common stock for such day.

The “daily conversion value” for any trading day equals 1/20th of:

•  the conversion rate in effect on that day, multiplied by

•  the volume weighted average price of our common stock (or the consideration into which our common stock has been converted in connection with certain corporate transactions) on that day.

“Trading day” means a day during which (1) trading in our common stock generally occurs and (2) there is no market disruption event.

“Market disruption event” means (1) a failure by the principal U.S. national or regional securities exchange on which our common stock is then listed, or if our common stock is not listed, the principal other market on which our common stock is then traded, to open for trading during its regular trading session or (2) the occurrence or existence prior to 1:00 p.m., New York City time, on any trading day for our common stock of an aggregate one-half hour of suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by a stock exchange or otherwise) in our common stock or in any option contracts or futures contracts relating to our common stock.

The “volume weighted average price” per share of our common stock on any trading day means such price as displayed on Bloomberg (or any successor service) page PAY.N <EQUITY> AQR in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such trading day; or, if such price is not available, the volume

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weighted average price means the market value per share of our common stock on such day as determined by a nationally recognized independent investment banking firm retained for this purpose by us.

Settlement in cash and shares of our common stock, if any, will occur on the third trading day following the final trading day of the conversion period (as defined above).

We will not issue fractional shares of our common stock upon conversion of the Notes. Instead, we will pay cash in lieu of fractional shares based on the volume weighted average price of our common stock on the final trading day of the conversion period.

Unless and until we obtain stockholder approval to amend our certificate of incorporation to increase our authorized capital to permit conversion of all of the Notes at the initial conversion rate, the maximum number of shares available for issuance upon conversion of each $1,000 principal amount of Notes will be the pro rata portion of an aggregate of 3,250,000 shares allocable to such Note, which equates to 10.2766 shares per $1,000 principal amount of Notes. As a result, you will not participate in any appreciation of the price of our common stock above $80.37 per share. Notwithstanding the foregoing, the limitations described above on the maximum number of shares available for issuance upon conversion of the Notes will apply only with respect to the issuance of our common stock upon conversion of the Notes, and not to payment of cash or the issuance of other securities into which the Notes may be convertible.

Conversion Rate Adjustments

We will adjust the conversion rate for certain events, including:

(1) Issuances of our common stock as a dividend or distribution on our common stock, in which case the conversion rate will be adjusted based on the following formula:

	OS1
CR1 = CR0 ×
	OS0

where,

CR₀ = the conversion rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such dividend or other distribution;

CR₁ = the conversion rate in effect at 9:00 a.m., New York City time, on the ex-dividend date for such dividend or other distribution;

OS₀ = number of shares of our common stock outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such dividend or other distribution; and

OS₁ = the number of shares of our common stock that would be outstanding immediately after giving effect to such dividend or other distribution.

(2) Certain subdivisions, combinations or reclassifications of our common stock, in which case the conversion rate will be adjusted based on the following formula:

	OS1
CR1 = CR0 ×
	OS0

where,

CR₀ = the conversion rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the effective date of such subdivision, combination or reclassification;

CR₁ = the conversion rate in effect at 9:00 a.m., New York City time, on the date such subdivision, combination or reclassification becomes effective;

OS₀ = number of shares of our common stock outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the effective date of such subdivision, combination or reclassification; and

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OS₁ = number of shares of our common stock that would be outstanding immediately after giving effect to such subdivision, combination or reclassification.

(3) Issuances to all holders of our common stock of certain rights or warrants to purchase, for a period of up to 45 days, our common stock at less than the then-current market price of our common stock, in which case the conversion rate will be adjusted based on the following formula:

	OS0+X
CR1 = CR0 ×
	OS0+Y

where,

CR₀ = the conversion rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such issuance;

CR₁ = the conversion rate in effect at 9:00 a.m., New York City time, on the ex-dividend date for such issuance;

OS₀ = the number of shares of our common stock outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such issuance;

X = the total number of shares of our common stock issuable pursuant to such rights or warrants; and

Y = the number of shares of our common stock equal to the aggregate price payable to exercise such rights or warrants divided by the then current market price,

provided that the conversion rate will be readjusted to the extent that any of the rights or warrants are not exercised prior to their expiration.

(4) Distributions to all holders of our common stock of shares of our capital stock, evidences of our indebtedness or assets, including securities, but excluding:

•  the rights and warrants referred to in clause (3) above;

•  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 fifth succeeding paragraph below;

•  any dividends or distributions paid exclusively in cash; or

•  any dividends or distributions referred to in the clause (1) above

in which case (other than spin-offs of a subsidiary or business unit, which are described below) the conversion rate will be adjusted based on the following formula:

	SP0
CR1 = CR0 ×
	SP0−FMV

where,

CR₀ = the conversion rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such distribution;

CR₁ = the conversion rate in effect at 9:00 a.m., New York City time, on the ex-dividend date for such distribution;

SP₀ = the current market price of our common stock; and

FMV = the fair market value on a per share basis (as determined by our board of directors) on the ex-dividend date for the distribution of the shares of capital stock, evidences of indebtedness or assets distributed with respect to each outstanding share of our common stock.

With respect to an adjustment pursuant to this clause (4) where there has been a payment of a dividend or other distribution on our common stock or shares of capital stock of any class or series, or similar equity interest, of

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or relating to a subsidiary or other business unit, which we refer to as a “spin-off,” the conversion rate in effect immediately before 5:00 p.m., New York City time, on the tenth trading day immediately following, and including, the effective date of the spin-off will be increased based on the following formula:

	FMV0+SP0
CR1 = CR0 ×
	SP0

where,

CR₀ = the conversion rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the effective date of the spin-off;

CR₁ = the conversion rate in effect at 9:00 a.m., New York City time, on the effective date of the spin-off;

FMV₀ = the average of the closing sale prices of the shares of capital stock or equity interests distributed to holders of our common stock applicable to one share of our common stock over the ten consecutive trading day period commencing on and including the effective date of the spin-off; and

SP₀ = the average of the closing sale prices of our common stock over the ten consecutive trading day period commencing on and including the effective date of the spin-off.

The adjustment to the conversion rate under the preceding paragraph will occur on the tenth trading day from, and including, the effective date of the spin-off; provided that in respect of any conversion within the ten trading days immediately following, and including, the effective date of any spin-off, references with respect to the spin-off to ten trading days shall be deemed replaced with such lesser number of trading days as have elapsed between the effective date of such spin-off and the conversion date in determining the applicable conversion rate.

(5) Dividends or other distributions consisting exclusively of cash to all holders of our common stock (other than dividends or distributions made in connection with our liquidation, dissolution or winding-up or upon a merger or consolidation), in which case the conversion rate will be adjusted based on the following formula:

	SP0
CR1 = CR0 ×
	SP0 — C

where,

CR₀ = the conversion rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such distribution or dividend;

CR₁ = the conversion rate in effect at 9:00 a.m., New York City time, on the ex-dividend date for such distribution or dividend;

SP₀ = the current market price of our common stock; and

C = the amount in cash per share of such dividend or distribution.

(6) Purchases of our common stock pursuant to a tender offer or exchange offer made by us or any of our subsidiaries to the extent that the cash and value of any other consideration included in the payment per share of common stock exceeds the closing sale price per share of our common stock on the trading day next succeeding the last date (the “expiration date”) on which tenders or exchanges may be made pursuant to such tender or exchange offer, in which case the conversion rate will be increased based on the following formula:

	FMV+(SP1 × OS1)
CR1 = CR0 ×
	OS0 × SP1

where,

CR₀ = the conversion rate in effect at 5:00 p.m., New York City time, on the expiration date;

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CR₁ = the conversion rate in effect at 9:00 a.m., New York City time, on the business day following the expiration date;

FMV = the fair market value (as determined by our board of directors) on the expiration date of the aggregate consideration payable to stockholders whose shares are (a) validly tendered or exchanged and not withdrawn at the expiration time of such tender offer or exchange offer and (b) accepted for purchase;

OS₀ = the number of shares of our common stock outstanding immediately prior to the last time tenders or exchanges may be made pursuant to such tender or exchange offer (the “expiration time”);

OS₁ = the number of shares of our common stock outstanding immediately after the expiration time (including after giving effect to such tender offer or exchange offer); and

SP₁ = the closing sale price of a share of our common stock on the trading day next succeeding the expiration date.

For purposes of clause (3), (4) and (5) above, “current market price” means the average closing sale price of our common stock for the ten consecutive trading days immediately prior to the ex-dividend date for the distribution requiring such computation. For the purposes of clauses (1), (3), (4) and (5) above, “ex-dividend date” means the first date on which shares of our common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the relevant dividend, distribution or issuance.

To the extent that any future rights plan adopted by us is in effect, upon conversion of the Notes into common stock only or a combination of cash and common stock, you will receive, in addition to the common stock, the rights under the applicable rights agreement unless the rights have separated from our common stock at the time of conversion of the Notes, in which case, the conversion rate will be adjusted as if we distributed to all holders of our common stock shares of our capital stock, evidences of indebtedness or assets as described above in clause (4), subject to readjustment in the event of the expiration, termination or redemption of such rights.

We will not make any adjustment if holders of the Notes may participate in the transaction or in certain other cases. Except with respect to a spin-off, in cases where the fair market value of assets, debt securities or certain rights, warrants or options to purchase our securities, applicable to one share of common stock, distributed to stockholders:

•  equals or exceeds the average closing price of the common stock over the ten consecutive trading day period ending on the record date for such distribution, or

•  such average closing price exceeds the fair market value of such assets, debt securities or rights, warrants or options so distributed by less than $1.00,

rather than being entitled to an adjustment in the conversion price, the holder of Notes will be entitled to receive upon conversion, in addition to the cash and, if applicable, shares of common stock, the kind and amount of assets, debt securities or rights, warrants or options comprising the distribution that such holder would have received if such holder had converted such Notes immediately prior to the record date for determining the stockholders entitled to receive the distribution.

Except as stated above, we will not adjust the conversion rate 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 merge with or into any person or sell, lease, transfer, convey or otherwise dispose of all or substantially all of our assets and those of our subsidiaries taken as a whole to another person,

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, each outstanding Note will, without the consent of the holders of the Notes, become convertible only into the consideration the holders of the Notes would

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have received if they had converted their Notes solely into our common stock based on the applicable conversion rate immediately prior to such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition, except in the limited case of a public acquirer change of control where we elect to have the Notes convertible into public acquirer common stock as described below under “— Conversion After a Public Acquirer Change of Control” and except that the provisions above under “— Settlement Upon Conversion” shall continue to apply following any such transaction, with the daily conversion values based on the consideration received in such transaction. In the event holders of our common stock have the opportunity to elect the form of consideration to be received in such transaction, then from and after the effective date of such transaction, the Notes shall be convertible into the consideration that holders of a majority of our common stock who made such an election received in such transaction. We may not become a party to any such transaction unless its terms are consistent with the foregoing, except that the provisions under “— Settlement Upon Conversion” shall continue to apply.

If a taxable distribution to holders of our common stock or other transaction occurs that results in any adjustment of the conversion rate (including an adjustment at our option or an adjustment upon a non-stock change of control described below), you may, in certain circumstances, be deemed to have received a distribution subject to U.S. 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 “U.S. Federal Income Tax Considerations.”

We will not be required to make an adjustment in the conversion rate unless the adjustment would require a change of at least 1% in the conversion rate. However, we will carry forward any adjustment that is less than 1% of the conversion rate, take such carried-forward adjustments into account in any subsequent adjustment, and make such carried-forward adjustments, regardless of whether the aggregate adjustment is less than 1%, (a) annually on the anniversary of the first date of issue of the Notes and otherwise (b)(1) upon any conversion of Notes, (2) five business days prior to the maturity of the Notes (whether at stated maturity or otherwise) or (3) prior to any repurchase date, unless such adjustment has already been made.

We are permitted, to the extent permitted by law and the rules of the New York Stock Exchange or any other securities exchange on which our common stock is then listed, to increase the conversion rate of the Notes by any amount for a period of at least 20 days. In that case, we will give at least 15 days’ notice of such increase. We may also, but are not required to, increase the conversion rate to avoid or diminish income tax to holders of our common stock or rights to purchase shares of our common stock in connection with a dividend or distribution of shares or rights to acquire shares or similar event.

If we adjust the conversion rate pursuant to the above provisions, we will issue a press release containing the relevant information through Business Wire or a similar service and make this information available on our website or through another public medium as we may use at that time.

Adjustment to Conversion Rate Upon a Non-Stock Change of Control

If and only to the extent you elect to convert your Notes in connection with a transaction constituting a fundamental change of the type described under clause (1) or clause (4) under the definition of a fundamental change described below under “— Fundamental Change Put” pursuant to which 10% or more of the consideration for our common stock (other than cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) in such fundamental change transaction consists of cash or securities (or other property) that are not shares of capital stock or American Depositary Receipts in respect of shares of capital stock traded or scheduled to be traded immediately following such transaction on a U.S. national securities exchange, which we refer to as a “non-stock change of control,” we will increase the conversion rate as described below. The number of additional shares by which the conversion rate is increased (the “additional shares”) will be determined by reference to the table below, based on the date on which the non-stock change of control becomes effective (the “effective date”) and the price (the “stock price”) paid per share for our common stock in such non-stock change of control. If holders of our common stock receive only cash in such transaction, the stock price will be the cash amount paid per share. Otherwise, the stock price will be the average of the last reported sale prices of our common stock on the five trading days prior to but not including the effective date of such non-stock change of control. We will notify you of the anticipated effective date of any fundamental change at least 20 calendar days prior to such date.

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A conversion of the Notes by a holder will be deemed for these purposes to be “in connection with” a non-stock change of control if the conversion notice is received by the conversion agent following the effective date of the non-stock change of control but before the close of business on the business day immediately preceding the related repurchase date (as specified in the repurchase notice described under “— Fundamental Change Put”).

The number of additional shares will be adjusted in the same manner as and as of any date on which the conversion rate of the Notes is adjusted as described above under “— Conversion Rate Adjustments.” The stock prices set forth in the first row of the table below (i.e., the column headers) will be simultaneously adjusted to equal the stock prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the conversion rate immediately prior to the adjustment and the denominator of which is the conversion rate as so adjusted.

The following table sets forth the hypothetical stock prices and number of additional shares by which the conversion rate shall be increased with respect to Notes for which the holder thereof has elected to convert in connection with a transaction described under clause (1) or clause (4) under the definition of a fundamental change described below:

	Stock Price
Effective Date	$36.68		$44.02		$50.00		$60.00		$70.00		$80.00		$90.00		$100.00		$120.00		$140.00		$160.00
June 15, 2008		4.5438		2.7759		1.9102		1.0869		0.6590		0.4198		0.2771		0.1870		0.0863		0.0367		0.0111
June 15, 2009		4.5438		2.6242		1.7199		0.9050		0.5135		0.3108		0.1977		0.1298		0.0571		0.0222		0.0044
June 15, 2010		4.5438		2.3722		1.4271		0.6504		0.3271		0.1825		0.1112		0.0717		0.0308		0.0105		0.0002
June 15, 2011		4.5438		1.8953		0.9221		0.2813		0.1016		0.0496		0.0310		0.0215		0.0099		0.0020		—
June 15, 2012		4.5438		—		—		—		—		—		—		—		—		—		—

The exact stock price and effective dates may not be set forth on the table, in which case:

•  if the stock price is between two stock price amounts on the table or the effective date is between two dates on the table, the number of additional shares will be determined by straight-line interpolation between the number of additional shares set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year;

•  if the stock price is in excess of $160.00 per share (subject to adjustment), no additional shares will be added to the conversion rate;

•  if the stock price is less than $36.68 per share (subject to adjustment), no additional shares will be added to the conversion rate.

Notwithstanding the foregoing, in no event will the total number of shares of common stock issuable upon conversion exceed 27.2628 per $1,000 principal amount of the Notes, subject to adjustments in the same manner as the conversion rate. In addition, as described above, unless and until we obtain stockholder approval to increase our authorized capital, your ability to receive these additional shares may be limited.

Additional shares deliverable as described in this section “— Adjustment to Conversion Rate Upon a Non-Stock Change of Control,” or cash in lieu thereof, will be delivered on the settlement date applicable to the relevant conversion.

Conversion After a Public Acquirer Change of Control

Notwithstanding the foregoing, in the case of a non-stock change of control constituting a public acquirer change of control (as defined below), we may, in lieu of adding additional shares to the conversion rate as described in ‘‘— Adjustment to Conversion Rate Upon a Non-Stock Change of Control” above, elect to adjust our conversion obligation and the conversion rate such that from and after the effective date of such public acquirer change of control, holders of the Notes will be entitled to convert their Notes (subject to the satisfaction of certain conditions)

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into shares of public acquirer common stock (as defined below), and the conversion rate in effect immediately before the public acquirer change of control will be adjusted by multiplying it by a fraction:

•  the numerator of which will be (i) in the case of a public acquirer change of control pursuant to which our common stock is converted solely into cash, the value of such cash paid or payable per share of common stock or (ii) in the case of any other public acquirer change of control, the average of the closing sale prices of our common stock for the five consecutive trading days prior to but excluding the effective date of such public acquirer change of control, and

•  the denominator of which will be the average of the closing sale prices of the public acquirer common stock for the five consecutive trading days commencing on the trading day next succeeding the effective date of such public acquirer change of control.

A “public acquirer change of control” means a non-stock change of control in which the acquirer has a class of common stock traded on a U.S. national securities exchange or that will be so traded when issued or exchanged in connection with such non-stock change of control (the “public acquirer common stock”). If an acquirer does not itself have a class of common stock satisfying the foregoing requirement, it will be deemed to have “public acquirer common stock” if a corporation that directly or indirectly owns at least a majority of the acquirer has a class of common stock satisfying the foregoing requirement, provided that such corporation fully and unconditionally guarantees the Notes, in which case all references to public acquirer common stock will refer to such class of common stock. Majority owned for these purposes means having “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of all shares of the respective entity’s capital stock that are entitled to vote generally in the election of directors.

Upon a public acquirer change of control, if we so elect, holders may convert their Notes (subject to the satisfaction of the conditions to conversion described under “— Conversion Procedures — Procedures to be Followed by a Holder” above) for public acquirer common stock at the adjusted conversion rate described in the second preceding paragraph but will not be entitled to receive additional shares upon conversion as described under ‘‘— Adjustment to Conversion Rate Upon a Non-Stock Change of Control.” We are required to notify holders of our election in our notice to holders of such transaction. Following any such election, the provisions set forth herein, including those set forth under “— Settlement Upon Conversion,” shall continue to apply except that reference to our common stock shall be deemed to refer to the public acquirer common stock. In addition, upon a public acquirer change of control, in lieu of converting the Notes, the holder can, subject to certain conditions, require us to repurchase all or a portion of the Notes owned by the holder as described below under “— Fundamental Change Put.”

Fundamental Change Put

If a fundamental change (as defined below) occurs at any time prior to the maturity of the Notes, you will have the right to require us to repurchase, at the repurchase price described below, all or part of your Notes for which you have properly delivered and not withdrawn a written repurchase notice. The Notes submitted for repurchase must be $1,000 in principal amount or whole multiples thereof.

The repurchase price will be payable in cash and will equal 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest (including additional interest, if any) to, but excluding, the repurchase date. However, if the repurchase date is after a record date and on or prior to the corresponding interest payment date, the interest (including additional interest, if any) will be paid on the repurchase date to the holder of record on the record date.

We may be unable to repurchase your Notes upon a fundamental change. Our ability to repurchase the Notes with cash in the future may be limited by the terms of our then-existing borrowing agreements. In addition, the occurrence of a fundamental change could cause an event of default under the terms of our then-existing borrowing agreements. We cannot assure you that we would have the financial resources, or would be able to arrange financing, to pay the repurchase price.

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A “fundamental change” will be deemed to have occurred when any of the following has occurred:

(1) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of our capital stock that is at the time entitled to vote by the holder thereof in the election of our board of directors (or comparable body);

(2) the first day on which a majority of the members of our board of directors are not continuing directors;

(3) the adoption of a plan relating to our liquidation or dissolution;

(4) the consolidation or merger of us with or into any other person, or the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of our assets and those of our subsidiaries taken as a whole to any “person” (as this term is used in Section 13(d)(3) of the Exchange Act), other than:

(a) any transaction:

•  that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our capital stock; and

•  pursuant to which the holders of 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in elections of directors immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in elections of directors of the continuing or surviving person immediately after giving effect to such transaction; or

(b) any merger primarily for the purpose of changing our jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of capital stock of the surviving entity; or

(5) the termination of trading of our common stock, which will be deemed to have occurred if our common stock or other capital stock or American Depositary Receipts in respect of shares of capital stock into which the Notes are convertible is neither listed for trading on a United States national securities exchange nor approved for listing on any United States system of automated dissemination of quotations of securities prices.

However, a fundamental change will be deemed not to have occurred if more than 90% of the consideration in the transaction or transactions (other than cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) which otherwise would constitute a fundamental change under clause (1) or (4) above consists of shares of capital stock or American Depositary Receipts in respect of shares of capital stock traded or to be traded immediately following such transaction on a national securities exchange and, as a result of the transaction or transactions, the Notes become convertible into such capital stock or American Depositary Receipts and other applicable consideration.

“Continuing directors” means, as of any date of determination, any member of the board of directors of VeriFone who:

•  was a member of the board of directors on the date of the Indenture; or

•  was nominated for election or elected to the board of directors with the approval of a majority of the continuing directors who were members of the board at the time of the new director’s nomination or election.

The definition of “fundamental change” includes a phrase relating to the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of our assets and those of our subsidiaries taken as a whole. There is no precise, established definition of the phrase “substantially all” under New York law, which governs the Indenture and the Notes, or under the general corporate law of Delaware, VeriFone’s state of incorporation. Accordingly, the ability of a holder of Notes to require us to repurchase the Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of our assets and those of our subsidiaries taken as a whole to another person or group may be uncertain.

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On or before the fifth calendar day after the occurrence of a fundamental change, we will provide to all record holders of the Notes on the date of the fundamental change at their addresses shown in the register of the registrar and to beneficial owners to the extent required by applicable law, the trustee and the paying agent, a written notice of the occurrence of the fundamental change and the resulting repurchase right. Such notice shall state, among other things, the event causing the fundamental change and the procedures you must follow to require us to repurchase your Notes.

The repurchase date will be a date specified by us in the notice of a fundamental change that is not less than 20 nor more than 35 calendar days after the date of the notice of a fundamental change.

To exercise your repurchase right, you must deliver, prior to 5:00 p.m., New York City time, on the repurchase date, a written notice to the paying agent of your exercise of your repurchase right (together with the Notes to be repurchased, if certificated Notes have been issued). The repurchase notice must state:

•  if you hold a beneficial interest in a global Note, the information required by appropriate DTC procedures; if you hold certificated Notes, the Notes’ certificate numbers;

•  the portion of the principal amount of the Notes to be repurchased, which must be $1,000 or whole multiples thereof; and

•  that the Notes are to be repurchased by us pursuant to the applicable provisions of the Notes and the Indenture.

You may withdraw your repurchase notice at any time prior to 5:00 p.m., New York City time, on the repurchase date by delivering a written notice of withdrawal to the paying agent. If a repurchase notice is given and withdrawn during that period, we will not be obligated to repurchase the Notes listed in the repurchase notice. The withdrawal notice must state:

•  if you hold a beneficial interest in a global Note, the information required by appropriate DTC procedures; if you hold certificated Notes, the certificate numbers of the withdrawn Notes;

•  the principal amount of the withdrawn Notes; and

•  the principal amount, if any, which remains subject to the repurchase notice.

Payment of the repurchase price for Notes for which a repurchase notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of the Notes, together with necessary endorsements, to the paying agent, as the case may be. Payment of the repurchase price for the Notes will be made promptly following the later of the repurchase date and the time of book-entry transfer or delivery of the Notes, as the case may be.

If the paying agent holds on the business day immediately following the repurchase date cash sufficient to pay the repurchase price of the Notes that holders have elected to require us to repurchase, then, as of the repurchase date:

•  the Notes will cease to be outstanding and interest (including additional interest, if any) will cease to accrue, whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the paying agent, as the case may be; and

•  all other rights of the holders of Notes will terminate, other than the right to receive the repurchase price upon delivery or transfer of the Notes.

In connection with any repurchase, we will, to the extent applicable:

•  comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act that may be applicable at the time of the offer to repurchase the Notes;

•  file a Schedule TO or any other schedule required in connection with any offer by us to repurchase the Notes; and

•  comply with all other federal and state securities laws in connection with any offer by us to repurchase the Notes.

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This fundamental change repurchase right could discourage a potential acquirer of VeriFone. However, this fundamental change repurchase feature is not the result of management’s knowledge of any specific effort to obtain control of us by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of anti-takeover provisions.

Our obligation to repurchase the Notes upon a fundamental change would not necessarily afford you protection in the event of a highly leveraged or other transaction involving us that may adversely affect holders. We also could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a fundamental change but would increase the amount of our (or our subsidiaries’) outstanding debt. The incurrence of significant amounts of additional debt could adversely affect our ability to service our then existing debt, including the Notes.

Consolidation, Merger and Sale of Assets by VeriFone

The Indenture provides that we may not, in a single transaction or a series of related transactions, consolidate with or merge with or into any other person or sell, convey, transfer or lease our property and assets substantially as an entirety to another person, unless:

•  either (a) we are the continuing corporation or (b) the resulting, surviving or transferee person (if other than us) is a corporation or limited liability company organized and existing under the laws of the United States, any state thereof or the District of Columbia and such person assumes, by a supplemental Indenture in a form reasonably satisfactory to the trustee all of our obligations under the Indenture and the Notes, and by a supplemental agreement, all of our obligations under the registration rights agreement;

•  immediately after giving effect to such transaction, no default or event of default has occurred and is continuing;

•  if as a result of such transaction the Notes become convertible into common stock or other securities issued by a third party, such third party fully and unconditionally guarantees all obligations of us or such successor under the Notes, the Indenture and the registration rights agreement; and

•  we have delivered to the trustee certain certificates and opinions of counsel if so requested by the trustee.

In the event of any transaction described in and complying with the conditions listed in the immediately preceding paragraph in which VeriFone is not the continuing corporation, the successor person formed or remaining shall succeed, and be substituted for, and may exercise every right and power of, VeriFone, and VeriFone shall be discharged from its obligations under the Notes, the Indenture and the registration rights agreement.

This covenant includes a phrase relating to the sale, conveyance, transfer and lease of the property and assets of VeriFone “substantially as an entirety”. There is no precise, established definition of the phrase “substantially as an entirety” under New York law, which governs the Indenture and the Notes, or under the general corporate law of Delaware, VeriFone’s state of incorporation. Accordingly, the ability of a holder of the Notes to require us to repurchase the Notes as a result of a sale, conveyance, transfer or lease of less than all of the property and assets of VeriFone may be uncertain.

An assumption by any person of VeriFone’s obligations under the Notes and the Indenture might be deemed for U.S. federal income tax purposes to be an exchange of the Notes for new Notes by the holders thereof, resulting in recognition of gain or loss for such purposes and possibly other adverse tax consequences to the holders. Holders should consult their own tax advisors regarding the tax consequences of such an assumption.

Events of Default; Notice and Waiver

The following will be events of default under the Indenture:

•  we fail to pay any interest (including additional interest, if any) on the Notes when due and such failure continues for a period of 30 calendar days;

•  we fail to pay principal of the Notes when due at maturity, or we fail to pay the repurchase price payable, in respect of any Notes when due;

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•  we fail to deliver cash and, if applicable, shares of common stock upon the conversion of any Notes and such failure continues for five days following the scheduled settlement date for such conversion;

•  we fail to comply in any material respect with our notice obligations regarding the anticipated effective date or actual effective date of a fundamental change;

•  we fail to perform or observe any other term, covenant or agreement in the Notes or the Indenture for a period of 60 calendar days after written notice of such failure is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding;

•  a failure to pay when due (whether at stated maturity or otherwise) or a default that results in the acceleration of maturity, of any indebtedness for borrowed money of VeriFone or any of our “significant subsidiaries” (which term shall have the meaning specified in Rule 1-02(w) of Regulation S-X) in an aggregate amount in excess of $25,000,000 (or its foreign currency equivalent), unless such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after written notice of such failure is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding; or

•  certain events involving our bankruptcy, insolvency or reorganization or the bankruptcy, insolvency or reorganization of any of our “significant subsidiaries” (which term shall have the meaning specified in Rule 1-02(w) of Regulation S-X).

We are required to notify the trustee promptly upon becoming aware of the occurrence of any default under the Indenture known to us. The trustee is then required within 90 calendar days of becoming aware of the occurrence of any default to give to the registered holders of the Notes notice of all uncured defaults known to it. However, the trustee may withhold notice to the holders of the Notes of any default, except defaults in payment of principal, interest (including additional interest, if any) on the Notes, if the trustee, in good faith, determines that the withholding of such notice is in the interests of the holders. We are also required to deliver to the trustee, on or before a date not more than 120 calendar days after the end of each fiscal year, a written statement as to compliance with the Indenture, including whether or not any default has occurred.

If an event of default specified in the last bullet point listed above occurs and continues with respect to us or any of our significant subsidiaries, the principal amount of the Notes and accrued and unpaid interest (including additional interest, if any) on the outstanding Notes will automatically become due and payable. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the principal amount of the Notes and accrued and unpaid interest (including additional interest, if any) on the outstanding Notes to be due and payable. Thereupon, the trustee may, in its discretion, proceed to protect and enforce the rights of the holders of the Notes by appropriate judicial proceedings.

After a declaration of acceleration, but before a judgment or decree for payment of the money due has been obtained by the trustee, the holders of a majority in aggregate principal amount of the Notes outstanding, by written notice to us and the trustee, may rescind and annul such declaration if:

•  we have paid (or deposited with the trustee a sum sufficient to pay) (1) all overdue interest (including additional interest, if any) on all Notes; (2) the principal amount of any Notes that have become due otherwise than by such declaration of acceleration; (3) to the extent that payment of such interest is lawful, interest upon overdue interest (including additional interest, if any); and (4) all sums paid or advanced by the trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the trustee, its agents and counsel; and

•  all events of default, other than the non-payment of the principal amount and any accrued and unpaid interest (including additional interest, if any) that have become due solely by such declaration of acceleration, have been cured or waived.

The holders of a majority in aggregate principal amount of the outstanding Notes will have the right to direct the time, method and place of any proceedings for any remedy available to the trustee, subject to limitations specified in the Indenture.

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No holder of the Notes may pursue any remedy under the Indenture, except in the case of a default in the payment of principal or interest (including additional interest, if any) on the Notes, unless:

•  the holder has given the trustee written notice of an event of default;

•  the holders of at least 25% in aggregate principal amount of the outstanding Notes make a written request to the trustee to pursue the remedy, and offer reasonable security or indemnity against any costs, liability or expense of the trustee;

•  the trustee fails to comply with the request within 60 calendar days after receipt of the request and offer of security or indemnity; and

•  the trustee does not receive an inconsistent direction from the holders of a majority in aggregate principal amount of the outstanding Notes during such 60 calendar day period.

Notwithstanding the foregoing, the Indenture provides that, if we so elect, the sole remedy for an event of default relating to the failure to comply with the reporting obligations in the Indenture, which are described below under the caption “— Reports,” and for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act (which also relate to the provision of reports), will for the 365 days after the occurrence of such an event of default consist exclusively of the right to receive additional interest on the Notes at an annual rate equal to 0.25% of the principal amount of the Notes during the first 180 days after the occurrence of such an event of default and 0.50% of the principal amount of the Notes from the 181st day until the 365th day following the occurrence of such an event of default. If we so elect, the additional interest will accrue on all outstanding Notes from and including the date on which an event of default relating to a failure to comply with the reporting obligations in the Indenture first occurs to but not including the 365th day thereafter (or such earlier date on which the event of default relating to the reporting obligations shall have been cured or waived). On such 365th day (or earlier, if the event of default relating to the reporting obligations is cured or waived prior to such 365th day), such additional interest will cease to accrue and the Notes will be subject to acceleration as provided above if the event of default is continuing. The provisions of the Indenture described in this paragraph will not affect the rights of holders of Notes in the event of the occurrence of any other event of default and will have no effect on the rights of holders of Notes under the registration rights agreement. In the event we do not elect to pay the additional interest upon an event of default in accordance with this paragraph, the Notes will be subject to acceleration as provided above.

Waiver

The holders of a majority in aggregate principal amount of the Notes outstanding may, on behalf of the holders of all the Notes, waive any past default or event of default under the Indenture and its consequences, except:

•  our failure to pay principal of or interest (including additional interest, if any) on any Notes when due;

•  our failure to convert any Notes into cash and, if applicable, common stock as required by the Indenture;

•  our failure to pay the repurchase price on the repurchase date in connection with a holder exercising its repurchase rights; or

•  our failure to comply with any of the provisions of the Indenture that would require the consent of the holder of each outstanding Note affected.

Modification

Changes Requiring Approval of Each Affected Holder

The Indenture (including the terms and conditions of the Notes) may not be modified or amended without the written consent or the affirmative vote of the holder of each Note affected by such change to:

•  extend the maturity of any Notes;

•  reduce the rate or extend the time for payment of interest (including additional interest, if any) on any Notes;

•  reduce the principal amount of any Notes;

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•  reduce any amount payable upon repurchase of any Notes;

•  impair the right of a holder to receive payment with respect to any Notes, including interest and additional interest, if any, or to institute suit for payment of any Notes;

•  change the currency in which any Note is payable;

•  change our obligation to repurchase any Notes upon a fundamental change in a manner adverse to the holders;

•  affect the right of a holder to convert any Notes into cash and, if applicable, shares of our common stock or reduce the number of shares of our common stock or any other property, including cash, receivable upon conversion pursuant to the terms of the Indenture;

•  change our obligation to maintain an office or agency in New York City;

•  subject to specified exceptions, modify certain provisions of the Indenture relating to modification of the Indenture or waiver under the Indenture; or

•  reduce the percentage of the Notes required for consent to any modification of the Indenture that does not require the consent of each affected holder.

Changes Requiring Majority Approval

The Indenture (including the terms and conditions of the Notes) may be modified or amended, except as described above, with the written consent or affirmative vote of the holders of a majority in aggregate principal amount of the Notes then outstanding.

Changes Requiring No Approval

The Indenture (including the terms and conditions of the Notes) may be modified or amended by us and the trustee, without the consent of the holder of any Notes, to, among other things:

•  provide for conversion rights of holders of the Notes and our repurchase obligations in connection with a fundamental change in the event of any reclassification of our common stock, merger or consolidation, or sale, conveyance, transfer or lease of all or substantially all of our assets and those of our subsidiaries taken as a whole, all in accordance with the Indenture;

•  secure the Notes;

•  provide for the assumption of our obligations to the holders of the Notes in the event of a merger or consolidation, or sale, conveyance, transfer or lease of our property and assets substantially as an entirety;

•  surrender any right or power conferred upon us;

•  to add to our covenants for the benefit of the holders of the Notes;

•  cure any ambiguity or correct or supplement any inconsistent or otherwise defective provision contained in the Indenture; provided that such modification or amendment does not adversely affect the interests of the holders of the Notes in any material respect; provided, further, that any amendment made solely to conform the provisions of the Indenture to the description of the Notes contained in this prospectus will not be deemed to adversely affect the interests of the holders of the Notes;

•  make any provision with respect to matters or questions arising under the Indenture that we may deem necessary or desirable and that shall not be inconsistent with provisions of the Indenture; provided that such change or modification does not, in the good faith opinion of our board of directors, adversely affect the interests of the holders of the Notes in any material respect;

•  increase the conversion rate; provided, that the increase will not adversely affect the interests of the holders of the Notes;

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•  comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

•  add guarantees of obligations under the Notes;

•  make any changes or modifications necessary in connection with the registration of the Notes under the Securities Act as contemplated in the registration rights agreement; provided that such change or modification does not adversely affect the interests of the holders of the Notes in any material respect; and

•  provide for a successor trustee.

Other

The consent of the holders of Notes is not necessary under the Indenture to approve the particular form of any proposed modification or amendment. It is sufficient if such consent approves the substance of the proposed modification or amendment. After a modification or amendment under the Indenture becomes effective, we are required to mail to the holders a notice briefly describing such modification or amendment. However, the failure to give such notice to all the holders, or any defect in the notice, will not impair or affect the validity of the modification or amendment.

Notes Not Entitled to Consent

Any Notes held by us or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with us shall be disregarded (from both the numerator and the denominator) for purposes of determining whether the holders of the requisite aggregate principal amount of the outstanding Notes have consented to a modification, amendment or waiver of the terms of the Indenture.

Repurchase and Cancellation

We may, to the extent permitted by law, repurchase any Notes in the open market or by tender offer at any price or by private agreement. Any Notes repurchased by us may, at our option, be surrendered to the trustee for cancellation, but may not be reissued or resold by us. Any Notes surrendered for cancellation may not be reissued or resold and will be promptly cancelled.

Rule 144A Information

At any time that we are not required to file with the Commission reports pursuant to Section 13 or 15(d) of the Exchange Act, we will furnish to the holders or beneficial holders of the Notes or the common stock issued upon conversion and prospective purchasers, upon their request, the information, if any, required under Rule 144A(d)(4) under the Securities Act until such time as such securities are no longer “restricted securities” within the meaning of Rule 144 under the Securities Act, assuming these securities have not been owned by an affiliate of ours.

Reports

We shall deliver to the trustee, within 15 days after filing with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) that we are required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.

Information Concerning the Trustee and Common Stock Transfer Agent and Registrar

We have appointed U.S. Bank National Association, the trustee under the Indenture, as paying agent, conversion agent, Notes registrar and custodian for the Notes. The trustee or its affiliates may also provide other services to us in the ordinary course of their business. The Indenture contains certain limitations on the rights of the trustee, if it or any of its affiliates is then our creditor, to obtain payment of claims in certain cases or to realize on certain property received on any claim as security or otherwise. The trustee and its affiliates will be permitted to

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engage in other transactions with us. However, if the trustee or any affiliate continues to have any conflicting interest and a default occurs with respect to the Notes, the trustee must eliminate such conflict or resign.

Computershare, Ltd. is the transfer agent and registrar for our common stock.

Governing Law

The Notes and the Indenture are governed by, and construed in accordance with, the laws of the State of New York.

Calculations in Respect of the Notes

Except as otherwise provided herein, we will be responsible for making all calculations called for under the Notes. These calculations include, but are not limited to, determinations of the sale price of our common stock, accrued interest payable on the Notes and the conversion rate and conversion price. We or our agents will make all these calculations in good faith and, absent manifest error, such calculations will be final and binding on holders of the Notes. We will provide a schedule of these calculations to each of the trustee and the conversion agent, and each of the trustee and conversion agent is entitled to rely upon the accuracy of our calculations without independent verification. The trustee will forward these calculations to any holder of the Notes upon the request of that holder.

Form, Denomination and Registration

The Notes were issued:

•  in fully registered form;

•  without interest coupons; and

•  in denominations of $1,000 principal amount and integral multiples of $1,000.

Global Notes, Book-Entry Form

The Notes are evidenced by a global Note. We have deposited the global Note with DTC and registered the global Note in the name of Cede & Co. as DTC’s nominee. Except as set forth below, global Notes may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee.

Beneficial interests in a global Note may be held through organizations that are participants in DTC (called “participants”). Transfers between participants will be effected in the ordinary way in accordance with DTC rules and will be settled in clearing house funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. As a result, the ability to transfer beneficial interests in the global Notes to such persons may be limited.

Beneficial interests in a global Note held by DTC may be held only through participants, or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a participant, either directly or indirectly (called “indirect participants”). So long as Cede & Co., as the nominee of DTC, is the registered owner of a global Note, Cede & Co. for all purposes will be considered the sole holder of such global Note. Except as provided below, owners of beneficial interests in a global Note will:

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

•  not receive physical delivery of certificates in definitive registered form; and

•  not be considered holders of the global Notes.

We will pay principal of, premium, if any, and interest (including additional interest, if any) on, and the repurchase price of, a global Note to Cede & Co., as the registered owner of the global Note, by wire transfer of

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immediately available funds on the maturity date, each interest payment date or repurchase date, as the case may be. Neither we, the trustee nor any paying agent will be responsible or liable:

•  for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in a global Note; or

•  for maintaining, supervising or reviewing any records relating to the beneficial ownership interests.

DTC has advised us that it will take any action permitted to be taken by a holder of the Notes, including the presentation of the Notes for conversion, only at the direction of one or more participants to whose account with DTC interests in the global Notes are credited, and only in respect of the principal amount of the Notes represented by the global Notes as to which the participant or participants has or have given such direction.

DTC has advised us that it is:

•  a limited purpose trust company organized under the laws of the State of New York;

•  a member of the Federal Reserve System;

•  a “clearing corporation” within the meaning of the New York Uniform Commercial Code; and

•  a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.

DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants. Participants include securities brokers, dealers, banks, trust companies and clearing corporations and other organizations. Some of the participants or their representatives, together with other entities, own DTC. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly.

DTC has agreed to the foregoing procedures to facilitate transfers of interests in a global Note among participants. However, DTC is under no obligation to perform or continue to perform these procedures, and may discontinue these procedures at any time. We will issue the Notes in registered definitive certificated form if DTC notifies us that it is unwilling or unable to continue as depositary or DTC ceases to be a clearing agency registered under the Exchange Act and a successor depositary is not appointed by us within 90 days. In addition, beneficial interests in a global Note may be exchanged for registered definitive certificated notes upon request by or on behalf of DTC in accordance with customary procedures following the request of a beneficial owner seeking to enforce its rights under such Notes or the Indenture. The Indenture permits us to determine at any time and in our sole discretion that notes shall no longer be represented by global Notes. DTC has advised us that, under its current practices, it would notify its participants of our request, but will only withdraw beneficial interests from the global note at the request of each DTC participant. We would issue registered definitive certificates in exchange for any such beneficial interests withdrawn.

Neither we, the trustee, registrar, paying agent nor conversion agent will have any responsibility or liability for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

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DESCRIPTION OF CONVERTIBLE NOTE HEDGE AND WARRANT TRANSACTIONS

In connection with the offering of the Notes, we entered into convertible note hedge transactions with respect to our common stock with affiliates of the initial purchasers (the “counterparties”). The convertible note hedge transactions cover, subject to anti-dilution adjustments applicable to the Notes, 7,184,234 shares of our common stock. Concurrently with entering into the convertible note hedge transactions, we also entered into warrant transactions whereby we sold to the counterparties warrants relating to, subject to customary anti-dilution adjustments, up to 7,184,234 shares of our common stock.

The convertible note hedge transactions are expected generally to reduce the potential equity dilution upon conversion of the Notes in the event that the volume weighted average price of our common stock on each trading day of the relevant conversion period or other relevant valuation period is greater than the applicable strike price of the convertible note hedge transactions, which initially corresponds to the conversion price of the Notes and is subject, with certain exceptions, to the adjustments applicable to the conversion price of the Notes. If however, the volume weighted average price of our common stock on each trading day of the measurement period at maturity of the warrants exceeds the applicable strike price of the warrants, there would nevertheless be dilution to the extent that such volume weighted average price of our common stock exceeds the strike price of the warrants. The warrants have a strike price of $62.356 per share.

In addition, if we do not obtain stockholder approval for an increase in the number of our authorized shares by the date of the second annual meeting of our stockholders after June 18, 2007, the number of shares underlying the warrants will increase by 10%, and the warrants will be subject to early termination by the counterparties.

The convertible note hedge transactions and the warrant transactions are separate transactions entered into by us with the counterparties, are not part of the terms of the Notes and do not change the holders’ rights under the Notes. Noteholders do not have any rights with respect to the convertible note hedge or warrant transactions.

For a discussion of the potential impact of any market or other activity by the counterparties in connection with these convertible note hedge and warrant transactions, see “Risk Factors — Risks Related to the Notes and Our Common Stock — The convertible note hedge and warrant transactions may affect the value of the Notes and our common stock.”

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DESCRIPTION OF CAPITAL STOCK

The following descriptions are summaries of material terms of our certificate of incorporation and bylaws. They may not contain all of the information that is important to you. To understand them fully, you should read our certificate of incorporation and bylaws, copies of which are filed with the SEC. The following descriptions are qualified in their entirety by reference to the certificate of incorporation and bylaws and applicable law.

Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. As of August 31, 2008, there were 84,325,800 shares of common stock outstanding and no shares of preferred stock outstanding.

Common Stock

We are authorized to issue one class of common stock. Stockholders are entitled to one vote for each share of our common stock held of record on all matters on which stockholders are entitled or permitted to vote. Our common stock does not have cumulative voting rights in the election of directors. As a result, holders of a majority of the shares of our common stock voting for the election of directors can elect all the directors standing for election. Holders of our common stock will be entitled to receive dividends, if any, out of legally available funds when and if declared from time to time by our board of directors. See “Dividend Policy.” In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to the rights of any then outstanding preferred stock. Our common stock has no preemptive, subscription or conversion rights, and there are no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of preferred stock that we may designate and issue in the future. All outstanding shares of our common stock are fully paid and nonassessable and the shares of common stock offered hereby will be fully paid and nonassessable.

Preferred Stock

Our Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of our common stockholders. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of delaying or preventing our change in control, and may cause the market price of our common stock to decline or impair the voting and other rights of the holders of our common stock. We have no current plans to issue any shares of preferred stock.

Antitakeover Effects of Provisions of Our Certificate of Incorporation and Bylaws

Provisions of our certificate of incorporation and bylaws may have the effect of delaying, discouraging, or preventing a merger or acquisition that our stockholders may consider favorable, including transactions in which stockholders might receive a premium for their shares. These provisions include:

•  authorization of the issuance of “blank check” preferred stock without the need for action by stockholders;

•  the removal of directors or amendment of our organizational documents only by the affirmative vote of the holders of two-thirds, or for certain amendments, four-fifths, of the shares of our capital stock entitled to vote;

•  provision that any vacancy on the board of directors, however occurring, including a vacancy resulting from an enlargement of the board, may only be filled by vote of the directors then in office;

•  inability of stockholders to call special meetings of stockholders, although stockholders are permitted to act by written consent; and

•  advance notice requirements for board nominations and proposing matters to be acted on by stockholders at stockholder meetings.

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Limitation of Liability and Indemnification Matters

As permitted by the Delaware General Corporation Law, our certificate of incorporation contains provisions that limit or eliminate the personal liability of our directors for a breach of their fiduciary duty of care as a director. The duty of care generally requires that, when acting on behalf of a corporation, directors exercise an informed business judgment based on all material information reasonably available to them. Consequently, a director will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:

•  any breach of the director’s duty of loyalty to us or our stockholders;

•  any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

•  any act related to unlawful stock repurchases, redemptions or other distributions or payment of dividends; or

•  any transaction from which the director derived an improper personal benefit.

The duty of loyalty generally requires that, when acting on behalf of a corporation, officers and directors act in the best interests of the corporation and its stockholders. In circumstances where an officer or director owes fiduciary duties to more than one entity it can be difficult for such person to satisfy duties of loyalty to both entities. Mr. Roche is a principal of our significant stockholder, GTCR, and also serves on our board of directors. Our certificate of incorporation provides that transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as (1) the material facts relating to the director’s or officer’s relationship or interest as to the transaction are disclosed to our board of directors and a majority of our disinterested directors approves the transaction, (2) the material facts relating to the director’s or officer’s relationship or interest as to the transaction are disclosed to our stockholders and a majority of our disinterested stockholders approves the transaction, or (3) the transaction is otherwise fair to us. GTCR’s representatives will not be required to offer to us any transaction opportunity of which they become aware and could take any such opportunity for themselves or offer it to other companies in which they have an investment, unless such opportunity is expressly offered to them solely in their capacity as a director of the company.

These limitations of liability do not affect the availability of equitable remedies such as injunctive relief or rescission.

Additionally, as permitted by the Delaware General Corporation Law, our certificate of incorporation provides that:

•  we shall indemnify our directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law;

•  we shall advance expenses to our directors, officers and employees in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions; and

•  the rights provided in our certificate of incorporation are not exclusive.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Computershare, Ltd.

Listing

Our common stock is listed on the New York Stock Exchange under the symbol “PAY.”

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SELLING SECURITYHOLDERS

On June 22, 2007, we issued all of the Notes to Lehman Brothers Inc. and J.P. Morgan Securities Inc., the initial purchasers of the Notes. The initial purchasers then resold the Notes to persons reasonably believed by the initial purchasers to be qualified institutional buyers in reliance on Rule 144A of the Securities Act. Based on representations made to us by the selling securityholders, we believe that the selling securityholders purchased the Notes in the ordinary course of business and that at the time of the purchase of the Notes, such selling securityholders had no agreements or understandings, directly or indirectly with any person to distribute such securities. All of the Notes were issued as “restricted securities” under the Securities Act. Selling securityholders may from time to time offer and sell pursuant to this prospectus any or all of the Notes and shares of common stock issuable upon conversion of the Notes.

The following table sets forth information as of August 31, 2008 with respect to the selling securityholders and the principal amounts of Notes beneficially owned by each selling securityholder that may be offered pursuant to this prospectus. The information is based on information provided by or on behalf of the selling securityholders. The selling securityholders may offer all, some or none of the Notes or the common stock issuable upon conversion of the Notes. The selling securityholders identified below may have sold, transferred or otherwise disposed of all or a portion of their Notes since the date on which they provided the information regarding their Notes in transactions exempt from the registration requirements of the Securities Act. The number of shares of common stock owned prior to the offering includes shares of common stock issuable upon conversion of the Notes. The percentage of common stock outstanding beneficially owned by each selling securityholder is based on 84,325,800 shares of common stock outstanding on August 31, 2008. The number of shares of common stock issuable upon conversion of the Notes offered hereby is based on a conversion price of $44.02 per share and a cash payment in lieu of any fractional share and assumes that the entire amount of the Notes are settled with shares of common stock, rather than cash and, if applicable, shares of common stock as provided under the terms of the Notes. Assuming that all of the securities offered hereby are sold, none of the selling securityholders will hold greater than one percent of the total number of shares outstanding upon completion of these sales.

	Principal						Shares of
	Amount of Notes						Common
	Beneficially		Shares of				Stock Owned
	Owned and		Common Stock		Convertible		Upon
	Offered Hereby		Owned Prior to		Shares Offered		Completion of
Name	($)		the Offering		Hereby		the Offering
FIST Convertible Securities Fund(1)		21,000,000		477,055		477,055		—
FIST FRK Total Return Fund(1)		2,100,000		47,705		47,705		—
FDP Series — FRK TEMP Total Return Fund(1)		385,000		8,746		8,746		—
FTIF Franklin US Total Return Fund(1)		140,000		3,180		3,180		—
Any other holders of Notes or future transferees, assignees, successors, pledgees or donees of or from any such holder(2)		292,625,000		6,647,546		6,647,546		—

(1) Ed Jamieson and Roger Bayston share voting and dispositive power over these securities.

(2) Assumes that any other holders of Notes or any future transferee from any holder does not beneficially own any common stock other than the common stock issuable upon conversion of the Notes at the initial conversion rate. Information concerning other selling securityholders will be set forth in prospectus supplements or post-effective amendments from time to time, if and as required.

To the extent that any of the selling securityholders identified above are broker-dealers, they are deemed to be, under interpretations of the Staff of the Securities and Exchange Commission, “underwriters” within the meaning of the Securities Act. With respect to selling securityholders that are affiliates of broker-dealers, they have represented to us that such entities acquired their Notes in the ordinary course of business and at the time of the purchase of their Notes such selling securityholders had no agreements or understanding, directly or indirectly, with any person to distribute those Notes.

To the extent that we determine that such entities did not acquire their Notes in the ordinary course of business or did not have such an agreement or understanding, we will file a post-effective amendment to the registration

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statement of which this prospectus forms a part to designate such affiliate as an “underwriter” within the meaning of the Securities Act.

Information concerning other selling securityholders will be set forth in prospectus supplements or post-effective amendments from time to time, if and as required. Information concerning the securityholders may change from time to time and any changed information will be set forth in post-effective amendments or prospectus supplements if and when necessary. In addition, the conversion price, and therefore, the number of shares of common stock issuable upon conversion of the Notes, is subject to adjustment under certain circumstances. Accordingly, the number of shares of common stock into which the Notes are convertible may increase or decrease.

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CERTAIN UNITED STATES TAX CONSEQUENCES

The following is a discussion of the material U.S. federal income tax considerations of the purchase, ownership and disposition of the Notes and any common stock received upon conversion of the Notes. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, judicial decisions, published positions of the Internal Revenue Service (“IRS”) and other applicable authorities, all as in effect as of the date on the front cover of this prospectus and all of which are subject to change, possibly with retroactive effect.

This discussion is limited to the U.S. federal tax consequences to holders who are beneficial owners of the Notes or our common stock received upon conversion of the Notes, if any, and who hold the Notes or our common stock received upon conversion of the Notes, if any, as capital assets within the meaning of Section 1221 of the Code (generally, for investment). In addition, this discussion is limited to the tax consequences to holders that purchase the Notes on the secondary market and does not discuss the tax consequences to holders who purchased their Notes in the initial offering. This discussion is limited to the treatment of the Notes starting from the date hereof.

This discussion does not address all of the tax consequences that may be relevant to a particular holder or to holders subject to special treatment under the Code, such as financial institutions, broker dealers, insurance companies, former U.S. citizens or long-term residents, tax-exempt organizations, persons that are, or that hold their Notes or our common stock received upon conversion of the Notes, if any, through, partnerships or other pass-through entities, U.S. Holders (as defined below) whose functional currency is not the U.S. dollar, persons that hold Notes or our common stock received upon conversion of the Notes as part of a straddle, hedge, conversion, synthetic security or constructive sale transaction for U.S. federal income tax purposes, Non-U.S. Holders (as defined below) that own, or are deemed to own, more than 5% of our common stock or more than 5% of the fair market value of the Notes, or Non-U.S. Holders that, on the date of acquisition of the Notes, own Notes with a fair market value of more than 5% of the fair market value of our common stock.

If a partnership holds the Notes or our common stock received upon conversion of the Notes, if any, the tax treatment of a partner will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding the Notes or our common stock received upon conversion of the Notes, if any, you are urged to consult your tax advisors. For purposes of this discussion, a U.S. Holder means a beneficial owner of Notes or our common stock received upon conversion of the Notes, if any, and that for U.S. federal income tax purposes is:

•  a citizen or resident of the United States;

•  a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any of its states or the District of Columbia;

•  an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

•  any trust if (a) the administration of the trust is subject to the primary supervision of a court in the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

A Non-U.S. Holder means any beneficial owner of a Note or our common stock received upon conversion of the Notes, if any, that is not a U.S. Holder.

If you are considering buying the Notes, we urge you to consult your tax advisor about the particular U.S. federal, state, local and foreign tax consequences of the acquisition, ownership and disposition of the Notes and our common stock received upon conversion of the Notes, if any, and the application of the U.S. federal income tax laws to your particular situation.

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U.S. Holders

Taxation of the Notes

The tax treatment of the Notes is uncertain, due to certain contingencies which had been considered remote but, contrary to expectations, actually occurred and resulted in additional interest becoming payable on the Notes for a certain period of time. While these contingencies are either no longer relevant or are remote, it is unclear how their occurrence should affect the Notes. Except as otherwise noted below, the discussion below assumes that the special rules governing contingent payment debt obligations will not alter the tax treatment of the Notes. VeriFone, as the issuer of the Notes, intends to treat the Notes in the manner described below.

Interest.  A U.S. Holder of the Notes will be required to include stated interest in income as ordinary income in accordance with the holder’s method of accounting for U.S. federal income tax purposes.

Disposition of the Notes.  Upon the sale, exchange, redemption, retirement, repurchase or other taxable disposition of a Note (other than a conversion as discussed in “— Conversion of the Notes”), a U.S. Holder will recognize capital gain or loss equal to the difference (if any) between the amount realized (other than amounts attributable to accrued but unpaid stated interest or market discount (as discussed below), which will be taxable as ordinary income if not previously included in such holder’s income) and such U.S. Holder’s tax basis in the Note. The U.S. Holder’s tax basis for a Note will be the purchase price for the Note. Such gain or loss will be treated as long-term capital gain or loss if the Note was held for more than one year. Long-term capital gain recognized by certain non-corporate U.S. Holders (including individuals) in taxable years beginning before January 1, 2011 will be subject to a reduced tax rate. The deductibility of capital losses may be subject to limitations.

Market Discount.  A Note will be treated as if purchased at a market discount, and the Note will be a market discount note, if the difference between the Note’s stated redemption price at maturity and the price paid for the Note is equal to or greater than 1/4 of 1 percent of the Note’s stated redemption price at maturity multiplied by the number of complete years to the Note’s maturity. If the Note’s stated redemption price at maturity exceeds the price paid for the Note by less than 1/4 of 1 percent multiplied by the number of complete years to the Note’s maturity, the excess constitutes de minimis market discount, and the rules discussed below are not applicable.

Any gain recognized on the maturity or disposition of a market discount note must be treated as ordinary income to the extent of the accrued market discount on the Note. Alternatively, an election may be made to include market discount in income currently over the life of the Note. If a U.S. Holder makes this election, it will apply to all debt instruments with market discount that the U.S. Holder acquires on or after the first day of the first taxable year to which the election applies. This election may not be revoked without the consent of the Internal Revenue Service. If a U.S. Holder owns a market discount note and does not make this election, the U.S. Holder will generally be required to defer deductions for interest on borrowings allocable to the Note in an amount not exceeding the accrued market discount on the Note until the maturity or disposition of the Note.

Market discount on a market discount note will accrue on a straight-line basis unless an election is made to accrue market discount using a constant-yield method. If such election is made, it will apply only to the Note with respect to which it is made and such election may not be revoked.

Notes Purchased at a Premium.  If a U.S. Holder purchases a Note for an amount in excess of its principal amount, such U.S. Holder may elect to treat the excess as amortizable bond premium. If such election is made, the U.S. Holder will reduce the amount required to be included in income each year with respect to interest on the Note by the amount of amortizable bond premium allocable to that year, based on the Note’s yield to maturity. If a U.S. Holder makes an election to amortize bond premium, it will apply to all debt instruments, other than debt instruments the interest on which is excludible from gross income, that such U.S. Holder holds at the beginning of the first taxable year to which the election applies or that are thereafter acquired, and such election may not be revoked without the consent of the Internal Revenue Service.

Alternative Treatment.  The Notes may be subject to the special rules governing contingent payment debt instruments, and such rules may affect the tax treatment of the Notes. Under such rules, a U.S. Holder that is subject to the cash basis method of accounting may be required to accrue the stated interest on the Notes. In addition, it is possible that if such rules apply to the Notes, a U.S. Holder would be required to treat any gain that is recognized upon a sale of the

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Notes as ordinary income and may be required to accrue interest at a rate that exceeds the stated interest rate on the Notes. U.S. Holders should consult their tax advisors as to the tax consequences of such alternative treatment.

Conversion of the Notes.

Conversion Entirely into Cash.  In the event that a U.S. Holder receives solely cash in exchange for Notes upon conversion, the U.S. Holder will recognize gain or loss equal to the difference between the proceeds received by such holder (excluding amounts attributable to accrued but unpaid interest or market discount, which will be taxable as ordinary income if not previously included in such holder’s income) and the U.S. Holder’s tax basis in the Note. See “— Disposition of the Notes” above.

Conversion into Cash and Common Stock.  In the event that a U.S. Holder receives cash and common stock upon conversion, the U.S. federal income tax treatment will depend upon whether the conversion is characterized as a recapitalization or as in part a conversion and in part a redemption of the Notes. If the conversion of the Notes constitutes a recapitalization, a U.S. Holder will recognize capital gain (if any) equal to the excess of the sum of the fair market value of the common stock and cash received (other than amounts allocable to accrued interest or market discount or shares allocable to accrued interest, which will be taxed as ordinary income if not previously included in such holder’s income) over the holder’s tax basis in the Note, but in no event will the gain recognized exceed the amount of cash received (excluding cash allocable to interest or market discount and cash received in lieu of a fractional share). No loss will be recognized on such conversion. The U.S. Holder’s tax basis in the common stock received (other than common stock allocable to accrued interest but including any tax basis allocable to a fractional share) will equal the U.S. Holder’s tax basis in the Note, less the amount of cash received (excluding amounts allocable to accrued but unpaid interest or market discount and cash received in lieu of a fractional share), plus the amount of taxable gain recognized on the conversion (other than with respect to a fractional share). A U.S. Holder’s tax basis in the common stock allocable to accrued interest will equal the fair market value of such stock on the date of receipt. The U.S. Holder’s holding period for the common stock will include the holding period for the Notes (except for any common stock received allocable to accrued interest, which will have a holding period beginning on the day after receipt). Cash received in lieu of a fractional share upon conversion of a Note will generally be treated as a payment in exchange for such fractional share. Accordingly, the receipt of cash in lieu of a fractional share generally will result in capital gain or loss measured by the difference between the cash received for the fractional share and the U.S. Holder’s tax basis allocable to such fractional share.

Any capital gain recognized by U.S. Holders upon conversion will be long-term capital gain if at the time of conversion the Notes have been held for more than one year. Long-term capital gains recognized by noncorporate U.S. Holders, including individuals, will be subject to reduced tax rates.

If the conversion of the Notes is instead treated as in part a conversion into common stock and in part a payment in redemption of the Notes, a U.S. Holder would not recognize any taxable gain or loss with respect to the portion of the Notes considered to be converted into common stock (excluding shares allocable to accrued interest, which will be taxable as ordinary income if not previously included in such holder’s income, and cash received in lieu of a fractional share, which will result in capital gain or loss measured by the difference between the cash received for the fractional share and the U.S. Holder’s tax basis allocable to such fractional share, as described below). A U.S. Holder’s tax basis in the Notes would be allocated pro rata between the portion of the Notes considered to be converted into common stock and the portion of the Notes considered redeemed for cash, in accordance with their fair market values, and the U.S. Holder’s tax basis in the common stock received (other than common stock received with respect to accrued interest but including any tax basis allocable to a fractional share) will equal the tax basis of the portion of the Note allocated to the common stock. A U.S. Holder’s tax basis in the common stock allocable to accrued interest will equal the fair market value of such stock on the date of receipt. The U.S. Holder’s holding period for the common stock received will include the holding period for the Notes (except for any common stock received allocable to accrued interest, which will have a holding period beginning on the day after receipt). The cash received with respect to the portion of the Notes considered to be redeemed would likely be treated as received in redemption of such portion. In that event, a U.S. Holder would generally recognize gain or loss as described above in “— Conversion Entirely into Cash.”

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Any shares allocable to accrued market discount should be treated as “exchanged basis” property under the Code and, under applicable rules regarding market discount, upon a U.S. Holder’s disposition of such shares, any gain recognized to the extent of the accrued market discount should be treated as ordinary income.

U.S. Holders should consult their tax advisors regarding the tax treatment of the receipt of cash and common stock for Notes upon conversion.

Adjustments to Conversion Rate.  The conversion rate of the Notes is subject to adjustment under certain circumstances (see “Description of the Notes — Conversion Rights — Conversion Rate Adjustments”). Certain adjustments to (or failures to make such adjustments to) the conversion rate of the Notes that increase a holder’s proportionate interest in our assets or earnings and profits (including an adjustment to the conversion rate in connection with a change of control) may result in a taxable constructive distribution to a U.S. Holder, whether or not such holder ever converts the Notes. This would occur, for example, upon an adjustment to the conversion rate to compensate holders of Notes for distributions of cash or property to our stockholders (but generally not distributions of stock or rights to subscribe for our common stock). Any such constructive distribution will be treated as a dividend for U.S. federal income tax purposes, resulting in ordinary income, to the extent of our current or accumulated earnings and profits. As a result, U.S. Holders could have taxable income as a result of an event pursuant to which they receive no cash or property. It is unclear whether a constructive distribution to U.S. Holders of the Notes would be eligible for the reduced tax rate applicable to certain dividends paid to non-corporate holders or for the dividends-received deduction applicable to certain dividends paid to corporate holders. A U.S. Holder’s tax basis in a Note will be increased to the extent any such constructive distribution is treated as a dividend. Moreover, if there is an adjustment (or a failure to make an adjustment) to the conversion rate of the Notes that increases the proportionate interest of the holders of outstanding common stock in our assets or earnings and profits, then such increase in the proportionate interest of the U.S. Holders of the common stock will be treated as a constructive distribution to such holders of common stock, taxable as described below. U.S. Holders should consult their tax advisors as to the tax consequences of receiving constructive distributions.

Distributions on Common Stock.  Distributions paid on our common stock received upon conversion of a Note, if any, other than certain pro rata distributions of common stock, will be treated as a dividend to the extent paid out of our current or accumulated earnings and profits and such dividends will be taxed 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 basis in the common stock, and thereafter as capital gain. Dividends received by a corporate U.S. Holder may qualify for a dividends-received deduction and dividends received by non-corporate U.S. Holders, including individuals, in tax years beginning prior to January 1, 2011 may qualify for preferential rates of taxation; however, in each case, certain holding period and other limitations apply.

Disposition of Common Stock.  Gain or loss realized by a U.S. Holder on the sale or other disposition of our common stock received upon conversion of a Note, if any, 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’s holding period for the common stock is more than one year (including the U.S. Holder’s holding period for the converted Note, if applicable). Long-term capital gain recognized by non-corporate U.S. Holders, including individuals, will be subject to a reduced tax rate. 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. The deductibility of capital losses may be subject to limitations.

Non-U.S. Holders

Interest.  Subject to the discussion below concerning backup withholding, a Non-U.S. Holder will not be subject to U.S. federal income or withholding tax on payments of interest on a Note, provided that:

•  the Non-U.S. Holder is not an actual or constructive owner of 10% or more of the total voting power of all our voting stock; a controlled foreign corporation related, directly or indirectly, to us through stock ownership; or a bank whose receipt of interest on a Note is pursuant to a loan agreement entered into in the ordinary course of business;

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•  such interest payments are not effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States; and

•  we or our paying agent receives certain information from the Non-U.S. Holder, including certification that such holder is a Non-U.S. Holder on a properly executed IRS Form W-8BEN or other applicable IRS form.

A Non-U.S. Holder that is not exempt from tax under these rules will be subject to U.S. federal income tax withholding at a rate of 30% unless:

•  the income is effectively connected with the conduct of a U.S. trade or business (and is attributable to a U.S. permanent establishment under an applicable income tax treaty) or

•  an applicable income tax treaty provides for a lower rate of, or exemption from, withholding tax.

Interest on a Note that is effectively connected with the conduct by a Non-U.S. Holder of a trade or business in the United States and, if the Non-U.S. Holder is entitled to the benefits under an applicable income tax treaty, attributable to a permanent establishment or a fixed base in the United States, will be subject to U.S. federal income tax on a net basis at the rates applicable to U.S. persons (and, if received by corporate holders, may also be subject to a 30% branch profits tax unless reduced or prohibited by an applicable income tax treaty). If interest is subject to U.S. federal income tax on a net basis in accordance with the rules described in the preceding sentence, payments of such interest will not be subject to U.S. withholding tax so long as the Non-U.S. Holder provides us or the paying agent with a properly executed IRS Form W-8ECI. To claim the benefit of an applicable income tax treaty, the Non-U.S. Holder must timely provide the appropriate and properly executed IRS forms.

Conversion of Notes.  To the extent a Non-U.S. Holder realizes any gain as a result of the receipt of cash in the conversion (including the receipt of cash in lieu of a fractional share upon conversion), such gain would be subject to the rules described below under “— Disposition of Notes or Common Stock” with respect to the sale or exchange of a Note. To the extent that a Non-U.S. Holder receives upon conversion any cash or common shares attributable to accrued interest not previously included in income, such cash or shares would be subject to the rules described above for interest.

Adjustments to Conversion Rate.  The conversion rate of the Notes is subject to adjustment in certain circumstances. Any such adjustment (or failure to make such adjustment) could, in certain circumstances, give rise to a deemed distribution to Non-U.S. Holders. See “— U.S. Holders— Adjustments to Conversion Rate” above. In such case, the deemed distribution would be subject to the rules described below under “— Distributions on Common Stock” regarding taxation and withholding of U.S. federal income tax on dividends in respect of common stock. Any resulting withholding tax attributable to deemed dividends may be collected from interest payments made on the Notes or from the proceeds on sale or conversion of the Notes.

Distributions on Common Stock.  Dividends paid on our common stock to a Non-U.S. Holder will be subject to U.S. withholding tax at a 30% rate, subject to reduction under an applicable income tax 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 applicable successor form) certifying its entitlement to benefits under an applicable income tax treaty.

A Non-U.S. Holder who is subject to withholding tax should consult its own tax advisor as to whether it can obtain a refund for all or a portion of the withholding tax.

Dividends on our common stock (or constructive dividends, see “— Adjustments to Conversion Rate” above) that are effectively connected with the conduct by a Non-U.S. Holder of a trade or business in the United States and, if the Non-U.S. Holder is entitled to the benefits under an applicable tax treaty, attributable to a permanent establishment or a fixed base in the United States, will be subject to U.S. federal income tax on a net basis at the rates applicable to U.S. persons (and, if received by corporate holders, may also be subject to a 30% branch profits tax unless reduced or prohibited by an applicable income tax treaty). If dividends (or constructive dividends) are subject to U.S. federal income tax on a net basis in accordance with the rules described in the preceding sentence, payments of dividends will not be subject to U.S. federal withholding tax so long as the Non-U.S. Holder provides us or the paying agent with a properly executed IRS Form W-8ECI. To claim the benefit of an applicable income tax treaty, the Non-U.S. Holder must timely provide the appropriate and properly executed IRS forms.

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Disposition of Notes or Common Stock.  Subject to the rules described below under “— Information Reporting and Backup Withholding,” a Non-U.S. Holder will not be subject to U.S. federal income or withholding tax on gain from the sale or other taxable disposition of a Note or common stock unless:

•  such gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States and, if the Non-U.S. Holder is entitled to the benefits under an applicable income tax treaty, attributable to a permanent establishment or a fixed base in the United States;

•  such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and meets certain other requirements; 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 taxable disposition and the period during which the Non-U.S. Holder held the Notes or common stock. We believe that we are currently not a U.S. real property holding corporation for U.S. federal income tax purposes, but there is no assurance that we will not become one in the future. If we become a U.S. real property holding corporation, any gain realized on such sale or other taxable disposition by a Non-U.S. Holder will be subject to U.S. federal income tax if our common stock ceases to be regularly traded on an established securities market (as defined in the applicable Treasury regulations) prior to the beginning of the calendar year in which the disposition occurs.

Except to the extent provided by an applicable income tax treaty, a Non-U.S. Holder will be subject to U.S. federal income tax with respect to gain from the sale or other taxable disposition of a Note or common stock that is effectively connected with the conduct by the holder of a trade or business in the United States (and Non-U.S. Holders that are corporations may also be subject to a 30% branch profits tax unless reduced or prohibited by an applicable income tax treaty). If such gain is realized by a Non-U.S. Holder who is an individual present in the United States for 183 days or more in the taxable year of disposition and who meets certain other requirements, then such individual will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on the amount by which capital gains from U.S. sources (including gains from the sale or other taxable disposition of the Notes or common stock) exceed capital losses allocable to U.S. sources. To claim the benefit of an applicable income tax treaty, the Non-U.S. Holder must timely provide the appropriate and properly executed IRS forms.

Information Reporting and Backup Withholding

Generally, information returns will be filed with the IRS in connection with payments on the Notes and on the common stock, if any, and the proceeds from a sale or other disposition of the Notes or the common stock, if any. A U.S. Holder will 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. information reporting and 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 certification procedures required of Non-U.S. Holders to claim the exemption from withholding tax on interest, described above, will satisfy the certification requirements necessary to avoid the backup withholding tax. Copies of applicable IRS information returns may be made available, under the provisions of an applicable income tax treaty or agreement, to the tax authorities of the country in which the Non-U.S. Holder resides. 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.

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PLAN OF DISTRIBUTION

The selling securityholders and their successors, which term includes their transferees, pledgees or donees or their successors may sell the Notes and the underlying common stock directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling securityholders or the purchasers. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved.

The common stock may be sold in one or more transactions at:

•  fixed prices;

•  prevailing market prices at the time of sale;

•  prices related to the prevailing market prices;

•  varying prices determined at the time of sale; or

•  negotiated prices.

These sales may be effected in transactions:

•  on any national securities exchange on which our common stock may be listed at the time of sale, including the New York Stock Exchange;

•  in the over-the-counter market;

•  otherwise than on such exchanges or services or in the over-the-counter market;

•  through the writing of options, whether the options are listed on an options exchange or otherwise; or

•  through the settlement of short sales.

These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as agent on both sides of the trade.

In connection with the sale of the Notes and the underlying common stock or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers or other financial institutions. These broker-dealers or financial institutions may in turn engage in short sales of the common stock in the course of hedging the positions they assume with selling securityholders. The selling securityholders may also sell the Notes and the underlying common stock short and deliver these securities to close out such short positions, or loan or pledge the Notes or the underlying common stock to broker-dealers that in turn may sell these securities.

The aggregate proceeds to the selling securityholders from the sale of the Notes or the underlying common stock offered by them hereby will be the purchase price of the Notes or common stock less discounts and commissions, if any. Each of the selling securityholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.

Our outstanding common stock is listed for trading on the New York Stock Exchange under the symbol “PAY.” We do not intend to list the Notes for trading on any national securities exchange or on the New York Stock Exchange and can give no assurance about the development of any trading market for the Notes.

In order to comply with the securities laws of some states, if applicable, the Notes and the underlying common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers.

Profits on the sale of the Notes and the underlying common stock by selling securityholders and any discounts, commissions or concessions received by any broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. Selling securityholders who are deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of

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the Securities Act. To the extent the selling securityholders may be deemed to be “underwriters,” they may be subject to statutory liabilities, including, but not limited to, Sections 11, 12 and 17 of the Securities Act.

The selling securityholders and any other person participating in a distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder. Regulation M of the Exchange Act may limit the timing of purchases and sales of any of the securities by the selling securityholders and any other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the particular securities being distributed for a period of up to five business days before the distribution. The selling securityholders have acknowledged that they understand their obligations to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M, and have agreed that they will not engage in any transaction in violation of such provisions.

To our knowledge, there are currently no plans, arrangements or understandings between any selling securityholder and any underwriter, broker-dealer or agent regarding the sale of the common stock by the selling securityholders.

A selling securityholder may decide not to sell any Notes or the underlying common stock described in this prospectus. We cannot assure holders that any selling securityholder will use this prospectus to sell any or all of the Notes or the underlying common stock. Any securities covered by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. In addition, a selling securityholder may transfer, devise or gift the Notes and the underlying common stock by other means not described in this prospectus.

With respect to a particular offering of the Notes and the underlying common stock, to the extent required, an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is a part will be prepared and will set forth the following information:

•  the specific Notes or common stock to be offered and sold;

•  the names of the selling securityholders;

•  the respective purchase prices and public offering prices and other material terms of the offering;

•  the names of any participating agents, broker-dealers or underwriters; and

•  any applicable commissions, discounts, concessions and other items constituting, compensation from the selling securityholders.

We entered into the Registration Rights Agreement for the benefit of holders of the Notes to register their Notes and the underlying common stock under applicable federal and state securities laws under certain circumstances and at certain times. The Registration Rights Agreement provides that the selling securityholders and VeriFone Holdings, Inc. will indemnify each other and their respective directors, officers and controlling persons against specific liabilities in connection with the offer and sale of the Notes and the underlying common stock, including liabilities under the Securities Act, or will be entitled to contribution in connection with those liabilities. We will pay all of our expenses incident to our performance of or compliance with the Registration Rights Agreement. Each selling securityholder will be responsible for, among other things, payment of commissions, concessions, fees and discounts of underwriters, broker-dealers and agents.

VALIDITY OF THE SECURITIES

The validity of the Notes offered hereby and any shares of common stock issuable upon conversion thereof will be passed upon for us by Sullivan & Cromwell LLP, Palo Alto, California.

EXPERTS

The consolidated financial statements of VeriFone Holdings, Inc. appearing in VeriFone Holdings, Inc.’s Annual Report (Form 10-K) for the year ended October 31, 2007, and the effectiveness of VeriFone Holdings, Inc.’s

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internal control over financial reporting as of October 31, 2007, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in its reports thereon, which conclude, among other things, that VeriFone Holdings, Inc. did not maintain effective internal control over financial reporting as of October 31, 2007, based on Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, because of the effects of the material weaknesses described therein, included therein, and incorporated herein by reference. Such financial statements have been incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

Some of the information that you may want to consider in deciding whether to invest in the Notes and any shares of our common stock issuable upon conversion of the Notes is not included in this prospectus, but rather is incorporated by reference to certain reports that we have filed with the SEC. This permits us to disclose important information to you by referring to those documents rather than repeating them in full in the prospectus. The information incorporated by reference in this prospectus contains important business and financial information. We incorporate by reference the following documents filed by us with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):

•  our annual report on Form 10-K for the fiscal year ended October 31, 2007;

•  our quarterly reports on Form 10-Q for the fiscal quarters ended January 31, 2008, April 30, 2008 and July 31, 2008;

•  the amendments to our quarterly reports on Form 10-Q for the fiscal quarters ended January 31, 2007, April 30, 2007 and July 31, 2007;

•  our preliminary proxy statement on Schedule 14A, filed with the SEC on August 25, 2008;

•  our current reports on Form 8-K, filed with the SEC on December 3, 2007, January 29, 2008, April 2, 2008, April 3, 2008, April 29, 2008, July 28, 2008, July 31, 2008, August 19, 2008, August 25, 2008 and September 3, 2008; and

•  the description of our common stock contained in our registration statement on Form 8-A, filed with the SEC on March 28, 2005, including any amendments or reports filed for the purpose of updating such description.

Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus do not purport to be complete and where reference is made to the particular provisions of such contract or other document, such provisions are qualified in all respects by reference to all of the provisions of such contract or other document.

We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the reports or documents that have been incorporated by reference in this prospectus, other than exhibits to such documents unless such exhibits have been specifically incorporated by reference thereto. You may request a copy of these reports or documents, at no cost, by writing or telephoning us at the following address:

Investor Relations
VeriFone Holdings, Inc.
2099 Gateway Place, Suite 600
San Jose, CA 95110
(408) 232-7800
email: ir@verifone.com

The information in this prospectus may not contain all of the information that may be important to you. You should read the entire prospectus, as well as the documents incorporated by reference in the prospectus, before making an investment decision.

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WHERE YOU CAN FIND MORE INFORMATION

We are subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended, and as a result file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s public reference room and the website of the SEC referred to above, as well as on our website, http://www.verifone.com. This reference to our website is an inactive textual reference only, and is not a hyperlink. The contents of our website are not part of this prospectus, and you should not consider the contents of our website in making an investment decision with respect to the Notes.

You may read and copy the reports and other information we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. You may also obtain copies of this information by mail from the public reference section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information regarding the operation of the public reference room by calling 1 (800) SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like us, who file electronically with the SEC. The address of that website is http://www.sec.gov. This reference to the SEC’s website is an inactive textual reference only, and is not a hyperlink.

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PART II

Information Not Required in Prospectus

ITEM 13.   OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is a statement of expenses to be incurred by VeriFone Holdings, Inc. in connection with the distribution of the securities registered under this registration statement:

	Amount
Securities and Exchange Commission Fee	$	12,429
Legal fees and expenses	$	75,000
Accountant’s fees and expenses	$	50,000
Printing expenses	$	10,000
Miscellaneous	$	12,571
Total	$	160,000

ITEM 14.   LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 102(b)(7) of the Delaware General Corporation Law, or DGCL, as amended, allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our certificate of incorporation provides for this limitation of liability.

Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such a person in connection with any threatened, pending or completed actions, suits or proceedings in which such a person is made a party by reason of being or having been a director, officer, employee or agent of the corporation, subject to certain limitations. The statute provides that it is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Article Eight of the Registrant’s certificate of incorporation provides for indemnification by the Registrant of its directors, officers and employees to the fullest extent permitted by the DGCL. The Registrant has also entered into separate indemnification agreements with each of its directors and officers, which may be broader than the specific indemnification provisions contained in Delaware law.

The Registrant expects to maintain standard policies of insurance that provide coverage (1) to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and (2) to it with respect to indemnification payments that we may make to such directors and officers.

ITEM 15.   RECENT SALES OF UNREGISTERED SECURITIES

1. On June 22, 2007, the Registrant sold $316.25 million aggregate principal amount of 1.375% Senior Convertible Notes due 2012 (the “Notes”) to Lehman Brothers Inc. and J.P. Morgan Securities Inc., as initial purchasers (the “initial purchasers”). The Company offered and sold the Notes to the initial purchasers in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The initial purchasers received aggregate discounts of approximately $7.12 million in connection with the offering of the Notes.

2. On June 22, 2007, the Company sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 7,184,884 shares of the Company’s common stock in the aggregate, at an initial strike price of

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$62.356 per share, which may reset, if higher, to a 70% premium over the market price of the Company’s common stock determined in approximately six months from the original issue date of the warrants. The warrants were sold to Lehman Brothers OTC Derivatives Inc. and JPMorgan Chase Bank, National Association, London Branch. The sale of the warrants was made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act. The Company received aggregate proceeds of approximately $31.19 million from the sale of the warrants.

ITEM 16.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit
No.			Description
	3	.1(4)	Form of Amended and Restated Certificate of Incorporation of the Registrant
	3	.2(5)	Form of Amended and Restated Bylaws of the Registrant
	3	.3(14)	Amendment No. 1 to the Bylaws of VeriFone Holdings, Inc.
	4	.1(3)	Specimen Common Stock Certificate
	4	.2(2)	Stockholders Agreement, dated as of July 1, 2002, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., GTCR Co-Invest, L.P., GTCR Capital Partners, L.P., TCW/Crescent Mezzanine Partners III, L.P., TCW/Crescent Mezzanine Trust III, TCW/Crescent Mezzanine Partners III Netherlands, L.P. and TCW Leveraged Income Trust IV, L.P., VF Holding Corp. and the executives who are parties thereto
	4	.2.1(4)	Form of Amendment to Stockholders Agreement
	4	.3(1)	Registration Rights Agreement, dated as of July 1, 2002, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., GTCR Co-Invest, L.P., GTCR Capital Partners, L.P., TCW/Crescent Mezzanine Partners III, L.P., TCW/Crescent Mezzanine Trust III, TCW/Crescent Mezzanine Partners III Netherlands, L.P., and TCW Leveraged Income Trust IV, L.P., VF Holding Corp., Jesse Adams, William Atkinson, Douglas G. Bergeron, Nigel Bidmead, Denis Calvert, Donald Campion, Robert Cook, Gary Grant, Robert Lopez, James Sheehan, David Turnbull and Elmore Waller
	4	.4(1)	Amendment to Registration Rights Agreement, dated as of November 30, 2004, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., Douglas Bergeron, DGB Investments, Inc., The Douglas G. Bergeron Family Annuity Trust, The Sandra E. Bergeron Family Annuity Trust and The Bergeron Family Trust
	4	.5*	Indenture related to the 1.375% Senior Convertible Notes due 2012, dated as of June 22, 2007, between VeriFone Holdings, Inc. and U.S. Bank National Association, as trustee
	4	.6(11)	Registration Rights Agreement, dated as of June 22, 2007, between VeriFone Holdings, Inc. and Lehman Brothers Inc. and J.P. Morgan Securities Inc.
	5	.1*	Opinion of Sullivan & Cromwell LLP
	10	.1(2)	Purchase Agreement, dated as of July 1, 2002, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., GTCR Co-Invest, L.P., TCW/Crescent Mezzanine Partners III, L.P., TCW/Crescent Mezzanine Trust III, TCW/Crescent Mezzanine Partners III Netherlands, L.P. and TCW Leveraged Income Trust IV, L.P.
	10	.1.1(4)	Form of Amendment No. 1 to Purchase Agreement
	10	.2(1)+	Senior Management Agreement, dated as of July 1, 2002, among VeriFone Holdings, Inc., VeriFone, Inc. and Douglas G. Bergeron
	10	.2.1(2)+	Amendment to Senior Management Agreement, dated as of June 29, 2004, by and among VeriFone Holdings, Inc., VeriFone, Inc. and Douglas G. Bergeron
	10	.3(1)+	Amendment to Senior Management Agreement, dated as of December 27, 2004, by and among VeriFone Holdings, Inc., VeriFone, Inc. and Douglas Bergeron
	10	.4(1)+	2002 Securities Purchase Plan
	10	.5(1)+	New Founders’ Stock Option Plan
	10	.6(1)+	Change in Control Severance Agreement, effective July 1, 2004, between VeriFone Holdings, Inc. and Barry Zwarenstein

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Exhibit
No.			Description
	10	.7(3)+	Outside Directors’ Stock Option Plan
	10	.8(1)	Patent License Agreement, effective as of November 1, 2004, by and between NCR Corporation and VeriFone, Inc.
	10	.9(6)+	2005 Employee Equity Incentive Plan
	10	.10(5)+	Form of Indemnification Agreement
	10	.11(7)+	VeriFone Holdings, Inc. 2006 Equity Incentive Plan
	10	.12(7)+	VeriFone Holdings, Inc. Bonus Plan
	10	.13(8)	Credit Agreement, dated October 31, 2006, among VeriFone Intermediate Holdings, Inc., VeriFone, Inc., various financial institutions and other persons from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as the administrative agent for the lenders, Lehman Commercial Paper Inc., as the syndication agent for the lenders, Bank Leumi USA and Wells Fargo Bank, N.A., as the co-documentation agents for the lenders, and J.P. Morgan Securities Inc. and Lehman Brothers Inc., as joint lead arrangers and joint book running managers
	10	.14(9)+	Lipman Electronic Engineering Ltd. 2003 Stock Option Plan
	10	.15(9)+	Lipman Electronic Engineering Ltd. 2004 Stock Option Plan
	10	.16(9)+	Lipman Electronic Engineering Ltd. 2004 Share Option Plan
	10	.17(9)+	Amendment to Lipman Electronic Engineering Ltd. 2004 Share Option Plan
	10	.18(9)+	Lipman Electronic Engineering Ltd. 2006 Share Incentive Plan
	10	.19(10)+	Amended and Restated Employment Agreement, dated January 4, 2007, among VeriFone Holdings, Inc., VeriFone, Inc., and Douglas G. Bergeron
	10	.20(11)	Confirmation of Convertible Note Hedge Transaction, dated June 18, 2007, by and between VeriFone Holdings, Inc. and Lehman Brothers OTC Derivatives Inc.
	10	.21(11)	Confirmation of Convertible Note Hedge Transaction, dated June 18, 2007, by and between VeriFone Holdings, Inc. and JPMorgan Chase Bank, National Association, London Branch
	10	.22(11)	Confirmation of Warrant Transaction, dated June 18, 2007, by and between VeriFone Holdings, Inc. and Lehman Brothers OTC Derivatives Inc.
	10	.23(11)	Confirmation of Warrant Transaction, dated June 18, 2007, by and between VeriFone Holdings, Inc. and JPMorgan Chase Bank, National Association, London Branch
	10	.24(11)	Amendment to Confirmation of Warrant Transaction, dated June 21, 2007, by and between VeriFone Holdings, Inc. and Lehman Brothers OTC Derivatives Inc.
	10	.25(11)	Amendment to Confirmation of Warrant Transaction, dated June 21, 2007, by and between VeriFone Holdings, Inc. and JPMorgan Chase Bank, National Association, London Branch
	10	.26(12)+	Confidential Separation Agreement, dated August 2, 2007, between VeriFone Holdings, Inc. and William G. Atkinson
	10	.27(13)	First Amendment and Waiver to Credit Agreement, dated as of January 25, 2008.
	10	.28(15)+	Separation Agreement, dated as of April 1, 2008, among VeriFone Holdings, Inc., VeriFone, Inc. and Barry Zwarenstein.
	10	.29(16)	Second Amendment to Credit Agreement, dated as of April 28, 2008.
	10	.30(17)	Third Amendment to Credit Agreement, dated as of July 31, 2008.
	10	.31(18)+	Executive Services Agreement, dated May 15, 2008, between VeriFone and Tatum LLC.
	10	.32(19)+	Offer Letter between VeriFone Holdings, Inc. and Robert Dykes.
	10	.33(19)+	Severance Agreement, dated September 2, 2008, between VeriFone Holdings, Inc. and Robert Dykes.
	12	.1*	Statement of Computation of Ratios
	21	.1(20)	List of Subsidiaries of the Registrant
	23	.1*	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
	23	.2*	Consent of Sullivan & Cromwell LLP (contained in Exhibit 5.1)

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Exhibit
No.			Description
	24	.1*	Power of Attorney (included in the signature pages hereto)
	25	.1*	Statement of Eligibility of Trustee on Form T-1 for the Notes

*	Filed herewith.
+	Indicates a management contract or compensatory plan or arrangement.
(1)	Filed as an exhibit to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed February 23, 2005.
(2)	Filed as an exhibit to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed March 28, 2005.
(3)	Filed as an exhibit to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 18, 2005.
(4)	Filed as an exhibit to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 21, 2005.
(5)	Filed as an exhibit to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 29, 2005.
(6)	Filed as an exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-124545), filed May 2, 2005.
(7)	Incorporated by reference in the Registrant’s Current Report on Form 8-K, filed March 23, 2006.
(8)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed November 1, 2006.
(9)	Incorporated by reference in the Registrant’s Registration Statement on Form S-8 (File No. 333-138533), filed November 9, 2006.
(10)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed January 5, 2007.
(11)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed June 22, 2007.
(12)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed August 3, 2007.
(13)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed January 28, 2008.
(14)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on March 31, 2008.
(15)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on April 1, 2008.
(16)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on April 29, 2008.
(17)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on July 31, 2008.
(18)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on August 19, 2008.
(19)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on September 3, 2008.
(20)	Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007, filed on August 19, 2008.

ITEM 17.   UNDERTAKINGS

The undersigned Registrant hereby undertakes:

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered

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would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(A) Each prospectus filed by a Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

II-5

To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question 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.

II-6

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 San Jose, State of California, on the 9th day of September, 2008.

VeriFone Holdings, Inc.

By:  /s/  Douglas Bergeron

Name:     Douglas Bergeron

Title:  Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Douglas G. Bergeron, Robert Dykes and Laura Merkl and each of them acting individually, as his true and lawful attorneys-in-fact and agents, each with full power of substitution, for the undersigned in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the number of securities for which registration is sought), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, with full power of each to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated:

Signature	Title	Date
/s/  Douglas G. Bergeron Douglas G. Bergeron	Chief Executive Officer (principal executive officer)	September 9, 2008
/s/  Clinton Knowles Clinton Knowles	Interim Chief Financial Officer (principal financial and accounting officer)	September 9, 2008
/s/  Charles R. Rinehart Charles R. Rinehart	Chairman of the Board of Directors	September 9, 2008
/s/  Robert W. Alspaugh Robert W. Alspaugh	Director	September 9, 2008
/s/  James C. Castle James C. Castle	Director	September 9, 2008
/s/  Leslie G. Denend Leslie G. Denend	Director	September 9, 2008

II-7

Signature	Title	Date
/s/  Alex W. Hart Alex W. Hart	Director	September 9, 2008
/s/  Robert B. Henske Robert B. Henske	Director	September 9, 2008
/s/  Eitan Raff Eitan Raff	Director	September 9, 2008
/s/  Collin E. Roche Collin E. Roche	Director	September 9, 2008
/s/  Jeffrey E. Stiefler Jeffrey E. Stiefler	Director	September 9, 2008

II-8

INDEX TO EXHIBITS

Exhibit
No.			Description
	3	.1(4)	Form of Amended and Restated Certificate of Incorporation of the Registrant
	3	.2(5)	Form of Amended and Restated Bylaws of the Registrant
	3	.3(14)	Amendment No. 1 to the Bylaws of VeriFone Holdings, Inc.
	4	.1(3)	Specimen Common Stock Certificate
	4	.2(2)	Stockholders Agreement, dated as of July 1, 2002, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., GTCR Co-Invest, L.P., GTCR Capital Partners, L.P., TCW/Crescent Mezzanine Partners III, L.P., TCW/Crescent Mezzanine Trust III, TCW/Crescent Mezzanine Partners III Netherlands, L.P. and TCW Leveraged Income Trust IV, L.P., VF Holding Corp. and the executives who are parties thereto
	4	.2.1(4)	Form of Amendment to Stockholders Agreement
	4	.3(1)	Registration Rights Agreement, dated as of July 1, 2002, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., GTCR Co-Invest, L.P., GTCR Capital Partners, L.P., TCW/Crescent Mezzanine Partners III, L.P., TCW/Crescent Mezzanine Trust III, TCW/Crescent Mezzanine Partners III Netherlands, L.P., and TCW Leveraged Income Trust IV, L.P., VF Holding Corp., Jesse Adams, William Atkinson, Douglas G. Bergeron, Nigel Bidmead, Denis Calvert, Donald Campion, Robert Cook, Gary Grant, Robert Lopez, James Sheehan, David Turnbull and Elmore Waller
	4	.4(1)	Amendment to Registration Rights Agreement, dated as of November 30, 2004, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., Douglas Bergeron, DGB Investments, Inc., The Douglas G. Bergeron Family Annuity Trust, The Sandra E. Bergeron Family Annuity Trust and The Bergeron Family Trust
	4	.5*	Indenture related to the 1.375% Senior Convertible Notes due 2012, dated as of June 22, 2007, between VeriFone Holdings, Inc. and U.S. Bank National Association, as trustee
	4	.6(11)	Registration Rights Agreement, dated as of June 22, 2007, between VeriFone Holdings, Inc. and Lehman Brothers Inc. and J.P. Morgan Securities Inc.
	5	.1*	Opinion of Sullivan & Cromwell LLP
	10	.1(2)	Purchase Agreement, dated as of July 1, 2002, by and among VeriFone Holdings, Inc., GTCR Fund VII, L.P., GTCR Co-Invest, L.P., TCW/Crescent Mezzanine Partners III, L.P., TCW/Crescent Mezzanine Trust III, TCW/Crescent Mezzanine Partners III Netherlands, L.P. and TCW Leveraged Income Trust IV, L.P.
	10	.1.1(4)	Form of Amendment No. 1 to Purchase Agreement
	10	.2(1)+	Senior Management Agreement, dated as of July 1, 2002, among VeriFone Holdings, Inc., VeriFone, Inc. and Douglas G. Bergeron
	10	.2.1(2)+	Amendment to Senior Management Agreement, dated as of June 29, 2004, by and among VeriFone Holdings, Inc., VeriFone, Inc. and Douglas G. Bergeron
	10	.3(1)+	Amendment to Senior Management Agreement, dated as of December 27, 2004, by and among VeriFone Holdings, Inc., VeriFone, Inc. and Douglas Bergeron
	10	.4(1)+	2002 Securities Purchase Plan
	10	.5(1)+	New Founders’ Stock Option Plan
	10	.6(1)+	Change in Control Severance Agreement, effective July 1, 2004, between VeriFone Holdings, Inc. and Barry Zwarenstein
	10	.7(3)+	Outside Directors’ Stock Option Plan
	10	.8(1)	Patent License Agreement, effective as of November 1, 2004, by and between NCR Corporation and VeriFone, Inc.
	10	.9(6)+	2005 Employee Equity Incentive Plan
	10	.10(5)+	Form of Indemnification Agreement
	10	.11(7)+	VeriFone Holdings, Inc. 2006 Equity Incentive Plan
	10	.12(7)+	VeriFone Holdings, Inc. Bonus Plan

Exhibit
No.			Description
	10	.13(8)	Credit Agreement, dated October 31, 2006, among VeriFone Intermediate Holdings, Inc., VeriFone, Inc., various financial institutions and other persons from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as the administrative agent for the lenders, Lehman Commercial Paper Inc., as the syndication agent for the lenders, Bank Leumi USA and Wells Fargo Bank, N.A., as the co-documentation agents for the lenders, and J.P. Morgan Securities Inc. and Lehman Brothers Inc., as joint lead arrangers and joint book running managers
	10	.14(9)+	Lipman Electronic Engineering Ltd. 2003 Stock Option Plan
	10	.15(9)+	Lipman Electronic Engineering Ltd. 2004 Stock Option Plan
	10	.16(9)+	Lipman Electronic Engineering Ltd. 2004 Share Option Plan
	10	.17(9)+	Amendment to Lipman Electronic Engineering Ltd. 2004 Share Option Plan
	10	.18(9)+	Lipman Electronic Engineering Ltd. 2006 Share Incentive Plan
	10	.19(10)+	Amended and Restated Employment Agreement, dated January 4, 2007, among VeriFone Holdings, Inc., VeriFone, Inc., and Douglas G. Bergeron
	10	.20(11)	Confirmation of Convertible Note Hedge Transaction, dated June 18, 2007, by and between VeriFone Holdings, Inc. and Lehman Brothers OTC Derivatives Inc.
	10	.21(11)	Confirmation of Convertible Note Hedge Transaction, dated June 18, 2007, by and between VeriFoneHoldings, Inc. and JPMorgan Chase Bank, National Association, London Branch.
	10	.22(11)	Confirmation of Warrant Transaction, dated June 18, 2007, by and between VeriFone Holdings, Inc. and Lehman Brothers OTC Derivatives Inc.
	10	.23(11)	Confirmation of Warrant Transaction, dated June 18, 2007, by and between VeriFone Holdings, Inc. and JPMorgan Chase Bank, National Association, London Branch.
	10	.24(11)	Amendment to Confirmation of Warrant Transaction, dated June 21, 2007, by and between VeriFone Holdings, Inc. and Lehman Brothers OTC Derivatives Inc.
	10	.25(11)	Amendment to Confirmation of Warrant Transaction, dated June 21, 2007, by and between VeriFone Holdings, Inc. and JPMorgan Chase Bank, National Association, London Branch
	10	.26(12)+	Confidential Separation Agreement, dated August 2, 2007, between VeriFone Holdings, Inc. and William G. Atkinson
	10	.27(13)	First Amendment and Waiver to Credit Agreement, dated as of January 25, 2008.
	10	.28(15)+	Separation Agreement, dated as of April 1, 2008, among VeriFone Holdings, Inc., VeriFone, Inc. and Barry Zwarenstein.
	10	.29(16)	Second Amendment to Credit Agreement, dated as of April 28, 2008.
	10	.30(17)	Third Amendment to Credit Agreement, dated as of July 31, 2008.
	10	.31(18)+	Executive Services Agreement, dated May 15, 2008, between VeriFone and Tatum LLC.
	10	.32(19)+	Offer Letter between VeriFone Holdings, Inc. and Robert Dykes.
	10	.33(19)+	Severance Agreement, dated September 2, 2008, between VeriFone Holdings, Inc. and Robert Dykes.
	12	.1*	Statement of Computation of Ratios
	21	.1(20)	List of Subsidiaries of the Registrant
	23	.1*	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
	23	.2*	Consent of Sullivan & Cromwell LLP (contained in Exhibit 5.1 )
	24	.1*	Power of Attorney (included in the signature pages hereto)
	25	.1*	Statement of Eligibility of Trustee on Form T-1 for the Notes

*	Filed herewith.
+	Indicates a management contract or compensatory plan or arrangement.
(1)	Filed as an exhibit to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed February 23, 2005.
(2)	Filed as an exhibit to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed March 28, 2005.

(3)	Filed as an exhibit to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 18, 2005.
(4)	Filed as an exhibit to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 21, 2005.
(5)	Filed as an exhibit to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 29, 2005.
(6)	Filed as an exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-124545), filed May 2, 2005.
(7)	Incorporated by reference in the Registrant’s Current Report on Form 8-K, filed March 23, 2006.
(8)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed November 1, 2006.
(9)	Incorporated by reference in the Registrant’s Registration Statement on Form S-8 (File No. 333-138533), filed November 9, 2006.
(10)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed January 5, 2007.
(11)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed June 22, 2007.
(12)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed August 3, 2007.
(13)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed January 28, 2008.
(14)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on March 31, 2008.
(15)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on April 1, 2008.
(16)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on April 29, 2008.
(17)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on July 31, 2008.
(18)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on August 19, 2008.
(19)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed on September 3, 2008.
(20)	Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007, filed on August 19, 2008.

EX-4.5

Exhibit 4.5

VERIFONE HOLDINGS, INC.

1.375% Senior Convertible Notes due 2012

INDENTURE

Dated as of June 22, 2007

U.S. BANK NATIONAL ASSOCIATION, Trustee

Certain Sections of this Indenture relating to Sections 310 through 318,
inclusive, of the Trust Indenture Act of 1939:

Trust Indenture
Act Section			Indenture Section
§	310	(a)(1)	7.10
		(a)(2)	7.10
		(a)(3)	Not Applicable
		(a)(4)	Not Applicable
		(a)(5)	7.10
		(b)	7.08
			7.10
		(c)	Not Applicable
§	311	(a)	7.11
		(b)	7.11
		(c)	Not Applicable
§	312	(a)	2.07
		(b)	11.03
		(c)	11.03
§	313	(a)	7.06
		(b)	7.06
		(c)	7.06
			11.02
		(d)	7.06
§	314	(a)	4.08
			4.05
		(b)	Not Applicable
		(c)(1)	11.04
		(c)(2)	11.04
		(c)(3)	Not Applicable
		(d)	Not Applicable
		(e)	11.05
§	315	(a)	7.01
		(b)	7.05
			7.01
		(c)	7.01
		(d)	7.01
		(e)	6.11
§	316	(a)(1)(A)	6.05
		(a)(1)(B)	6.04
		(a)(2)	Not Applicable
		(b)	6.07
		(c)	9.04
§	317	(a)(1)	6.08
		(a)(2)	6.09
		(b)	2.06
§	318	(a)	11.01

Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.

TABLE OF CONTENTS

		Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE			1
SECTION 1.01	Definitions		1
SECTION 1.02	Incorporation by Reference of Trust Indenture Act		11
SECTION 1.03	Rules of Construction		11
ARTICLE 2 THE NOTES			11
SECTION 2.01	Designation, Amount and Issuance of Notes		11
SECTION 2.02	Form of the Notes		11
SECTION 2.03	Date and Denomination of Notes; Payment at Maturity; Payment of Interest		12
SECTION 2.04	Execution and Authentication		14
SECTION 2.05	Registrar, Paying Agent and Conversion Agent		14
SECTION 2.06	Paying Agent to Hold Money in Trust		15
SECTION 2.07	Noteholder Lists		15
SECTION 2.08	Exchange and Registration of Transfer of Notes; Restrictions on Transfer		15
SECTION 2.09	Replacement Notes		21
SECTION 2.10	Outstanding Notes		21
SECTION 2.11	Temporary Notes		22
SECTION 2.12	Cancellation		22
SECTION 2.13	CUSIP and ISIN Numbers		22
SECTION 2.14	Additional Notes		22
SECTION 2.15	Share Cap Additional Interest		23
SECTION 2.16	Defaulted Interest		24
ARTICLE 3 REPURCHASE OF NOTES			25
SECTION 3.01	Repurchase at Option of Holders Upon a Fundamental Change		25
SECTION 3.02	Company Repurchase Notice		26
SECTION 3.03	Effect of Repurchase Notice; Withdrawal		27
SECTION 3.04	Deposit of Repurchase Price		28
SECTION 3.05	Notes Repurchased in Part		28
ARTICLE 4 COVENANTS			28
SECTION 4.01	Payment of Notes		28
SECTION 4.02	Maintenance of Office or Agency		29
SECTION 4.03	144A Information		29
SECTION 4.04	Existence		29
SECTION 4.05	Compliance Certificate		29
SECTION 4.06	Further Instruments and Acts		30
SECTION 4.07	Additional Interest Notice		30

		Page
SECTION 4.08	Reporting Obligation		30
SECTION 4.09	Covenant to Obtain Stockholder Approval		31
SECTION 4.10	Incurrence of Indebtedness		31
ARTICLE 5 SUCCESSOR COMPANY			31
SECTION 5.01	When Company May Merge or Transfer Assets		31
SECTION 5.02	Successor to be Substituted		32
SECTION 5.03	Opinion of Counsel to be Given Trustee		32
ARTICLE 6 DEFAULTS AND REMEDIES			32
SECTION 6.01	Events of Default		32
SECTION 6.02	Acceleration		34
SECTION 6.03	Other Remedies		35
SECTION 6.04	Waiver of Past Defaults		35
SECTION 6.05	Control by Majority		35
SECTION 6.06	Limitation on Suits		36
SECTION 6.07	Rights of Noteholders to Receive Payment		36
SECTION 6.08	Collection Suit by Trustee		36
SECTION 6.09	Trustee May File Proofs of Claim		36
SECTION 6.10	Priorities		37
SECTION 6.11	Undertaking for Costs		37
SECTION 6.12	Waiver of Stay, Extension or Usury Laws		37
SECTION 6.13	Sole Remedy for Failure to Report		37
ARTICLE 7 TRUSTEE			38
SECTION 7.01	Duties of Trustee		38
SECTION 7.02	Rights of Trustee		40
SECTION 7.03	Individual Rights of Trustee		41
SECTION 7.04	Trustee’s Disclaimer		41
SECTION 7.05	Notice of Defaults		41
SECTION 7.06	Reports by Trustee to Noteholders		42
SECTION 7.07	Compensation and Indemnity		42
SECTION 7.08	Replacement of Trustee		43
SECTION 7.09	Successor Trustee by Merger		43
SECTION 7.10	Eligibility; Disqualification		44
SECTION 7.11	Preferential Collection of Claims Against Company		44
ARTICLE 8 DISCHARGE OF INDENTURE			44
SECTION 8.01	Discharge of Liability on Notes		44
SECTION 8.02	Application of Trust Money		44
SECTION 8.03	Repayment to Company		45
SECTION 8.04	Reinstatement		45
ARTICLE 9 AMENDMENTS			45
SECTION 9.01	Without Consent of Noteholders		45

		Page
SECTION 9.02	With Consent of Noteholders		46
SECTION 9.03	Compliance with Trust Indenture Act		48
SECTION 9.04	Revocation and Effect of Consents and Waivers		48
SECTION 9.05	Notation on or Exchange of Notes		49
SECTION 9.06	Trustee to Sign Amendments		49
ARTICLE 10 CONVERSION OF NOTES			49
SECTION 10.01	Right to Convert		49
SECTION 10.02	Exercise of Conversion Right; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends		51
SECTION 10.03	Cash Payments in Lieu of Fractional Shares		53
SECTION 10.04	Conversion Rate		53
SECTION 10.05	Adjustment of Conversion Rate		54
SECTION 10.06	Effect of Reclassification, Consolidation, Merger or Sale		64
SECTION 10.07	Taxes on Shares Issued		65
SECTION 10.08	Reservation of Shares, Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock		65
SECTION 10.09	Responsibility of Trustee		66
SECTION 10.10	Notice to Holders Prior to Certain Actions		67
SECTION 10.11	Settlement Upon Conversion		67
SECTION 10.12	Conversion After a Public Acquirer Change of Control		68
SECTION 10.13	Stockholder Rights Plans		69
ARTICLE 11 MISCELLANEOUS			69
SECTION 11.01	Trust Indenture Act Controls		69
SECTION 11.02	Notices		69
SECTION 11.03	Communication by Noteholders with Other Noteholders		70
SECTION 11.04	Certificate and Opinion as to Conditions Precedent		71
SECTION 11.05	Statements Required in Certificate or Opinion		71
SECTION 11.06	When Notes Disregarded		71
SECTION 11.07	Rules by Trustee, Paying Agent, Conversion Agent and Registrar		72
SECTION 11.08	Business Day		72
SECTION 11.09	Governing Law; Waiver of Jury Trial		72
SECTION 11.10	No Interpretation of or by Other Agreements		72
SECTION 11.11	Successors		72
SECTION 11.12	Multiple Originals		72
SECTION 11.13	Table of Contents; Headings		72
SECTION 11.14	Indenture and Notes Solely Corporate Obligations		72
SECTION 11.15	Severability		73
SECTION 11.16	Benefits of Indenture		73
SECTION 11.17	Calculations		73
SECTION 11.18	Qualification of Indenture		73
Exhibit A — Form of Note
Exhibit B — Form of Restrictive Legend for Common Stock Issued Upon Conversion

     INDENTURE dated as of June 22, 2007, between VERIFONE HOLDINGS, INC., a Delaware corporation (the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a New York banking corporation, as trustee (the “Trustee”).

     WHEREAS, the Company has duly authorized the creation of an issue of its 1.375% Senior Convertible Notes due 2012 (the “Notes”), having the terms, tenor, amount and other provisions hereinafter set forth, and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture; and

     WHEREAS, all things necessary to make the Notes, when the Notes are duly 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 and binding agreement of the Company, in accordance with its terms, have been done and performed, and the execution of this Indenture and the issue hereunder of the Notes have in all respects been duly authorized,

     NOW, THEREFORE, THIS INDENTURE WITNESSETH, for and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE

     SECTION 1.01 Definitions.

     “Additional Interest” has the meaning specified for “Additional Amounts” in any Registration Rights Agreement, including in Section 3(a) of the Initial Registration Rights Agreement.

     “Additional Notes” has the meaning specified in Section 2.14.

     “Additional Notes Board Resolutions” means resolutions duly adopted by the Board of Directors of the Company and delivered to the Trustee in an Officers’ Certificate providing for the issuance of Additional Notes.

     “Additional Shares” has the meaning specified in Section 10.04(b).

     “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 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 2.08(b)(vi).

1

     “American Depositary Receipt” means a negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. securities exchange.

     “Bankruptcy Law” has the meaning specified in Section 6.01.

     “Board of Directors” means the Board of Directors of the Company or, other than in the case of the definition of “Continuing Directors,” any committee thereof duly authorized to act on behalf of such Board.

     “Business Day” has the meaning specified in Section 11.08.

     “Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, excluding any debt securities convertible into such equity.

     “Closing Date” means June 22, 2007, the date as of which this Indenture was originally executed and delivered.

     “Closing Sale Price” of any share of Common Stock or any other security on any Trading Day means:

          (i) the closing sale price per share of such security (or, if no closing sale price is reported, the average of the closing bid and closing ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported in composite transactions for the principal U.S. securities exchange on which such security is traded; or

          (ii) if such security is not listed on a U.S. national or regional securities exchange, the last quoted bid price of such security on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization; or

          (iii) if such security is not listed on a U.S. national or regional securities exchange and is not quoted by Pink Sheets LLC or a similar organization, as determined by a nationally recognized securities dealer retained by the Company for that purpose.

The Closing Sale Price shall be determined without reference to extended or after hours trading. The Closing Sale Price of the Common Stock may be adjusted pursuant to Section 10.05(j).

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Common Stock” means Common Stock of the Company, par value $0.01 per share, as designated by the Company at the Closing Date or shares of any class or classes resulting from any reclassification or reclassifications thereof, provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion shall be substantially in the proportion which the total number of shares of such class resulting from

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all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

     “Company” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

     “Company Order” has the meaning specified in Section 2.04.

     “Company Repurchase Notice” has the meaning specified in Section 3.02.

     “Company Website” means, as of any date of determination, the principal website maintained by the Company on the Internet, which is located at http://www.verifone.com as of the date hereof.

     “Continuing Directors” means, as of any date of determination, any member of the Board of Directors who (i) was a member of the Board of Directors on the Closing Date; or (ii) was nominated for election or elected to the Board of Directors with the approval of a majority of the Continuing Directors who were members of the Board of Directors at the time of such new director’s nomination or election.

     “Conversion Agent” has the meaning specified in Section 2.05.

     “Conversion Date” has the meaning specified in Section 10.02.

     “Conversion Notice” has the meaning specified in Section 10.02.

     “Conversion Period” means, with respect to any Note delivered for conversion, the 20 consecutive Trading Day period:

(a) with respect to Conversion Notices in respect of such Note received during the period beginning 25 Scheduled Trading Days preceding the Maturity Date and ending on the second Business Day preceding the Maturity Date, beginning on the 22nd Scheduled Trading Day immediately preceding the Maturity Date; and

(b) in all other cases, beginning on the third Trading Day following the receipt by the Company of the Conversion Notice in respect of such Note.

     “Conversion Price” on any date of determination means $1,000 divided by the Conversion Rate as of such date.

     “Conversion Rate” means initially 22.7190 shares of Common Stock, subject to adjustment as set forth herein.

     “Conversion Settlement Amount” has the meaning specified in Section 10.11.

     “Corporate Trust Office” or other similar term, means the designated office of the Trustee at which at any particular time its corporate trust business as it relates to this Indenture shall be administered, which office is, at the Closing Date, located at 100 Wall Street, Suite

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1600, EX-NY-WALL, New York, New York 10005, or at any other time at such other address as the Trustee may designate from time to time by notice to the Company.

     “Current Market Price” has the meaning specified in Section 10.05(h)(i).

     “Custodian” has the meaning specified in Section 6.01.

     “Daily Conversion Value” has the meaning specified in Section 10.11.

     “Daily Settlement Amount” has the meaning specified in Section 10.11.

     “Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

     “Defaulted Interest” has the meaning specified in 0.

     “Depositary” means the clearing agency registered under the Exchange Act that is designated to act as the Depositary for the Global Notes. DTC shall be the initial Depositary, 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.

     “Depositary Entity” has the meaning specified in Section 9.04.

     “Distributed Assets” has the meaning specified in Section 10.05(d).

     “Distribution Notice” has the meaning specified in Section 10.01(b).

     “DTC” means The Depository Trust Company.

     “Effective Date” has the meaning specified in Section 10.04(b).

     “Event of Default” has the meaning specified in Section 6.01.

     “Ex-Dividend Date” has the meaning specified in Section 10.05(h)(ii).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Expiration Date” has the meaning specified in Section 10.05(f).

     “Expiration Time” has the meaning specified in Section 10.05(f).

     “Fair Market Value” means the amount which a willing buyer would pay a willing seller in an arm’s-length transaction as determined by the Board of Directors.

     “Fiscal Quarter” means, with respect to the Company, the fiscal quarter publicly disclosed by the Company. The Company shall confirm the ending dates of its fiscal quarters for the current fiscal year to the Trustee upon the Trustee’s request.

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     “Fundamental Change” means the occurrence of any of the following after the Closing Date:

     (a) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Company’s Capital Stock that is at the time entitled to vote by the holder thereof in the election of the Board of Directors (or comparable body);

     (b) the first day on which a majority of the members of the Board of Directors are not Continuing Directors;

     (c) the adoption of a plan relating to the liquidation or dissolution of the Company;

     (d) the consolidation or merger of the Company with or into any other Person, or the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the Company’s assets and those of the Company’s Subsidiaries taken as a whole to any “person” (as such term is used in Section 13(d)(3) of the Exchange Act), other than:

          (i) any transaction (x) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of the Company’s Capital Stock, and (y) pursuant to which the holders of 50% or more of the total voting power of all shares of the Company’s Capital Stock entitled to vote generally in elections of directors of the Company immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of the Company’s Capital Stock entitled to vote generally in elections of directors of the continuing or surviving Person immediately after giving effect to such transaction; or

          (ii) any merger primarily for the purpose of changing the Company’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of capital stock of the surviving entity.

     (e) the termination of trading of the Common Stock, which will be deemed to have occurred if the Common Stock or other Capital Stock or American Depositary Receipts in respect of shares of Capital Stock into which the Notes are convertible is neither listed for trading on a United States national securities exchange nor approved for listing on any United States system of automated dissemination of quotations of securities prices.

     Notwithstanding the foregoing, a Fundamental Change will be deemed not to have occurred if more than 90% of the consideration in the transaction or transactions (other than cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) which otherwise would constitute a Fundamental Change under clauses (a) or (d) above consists of shares of Capital Stock or American Depositary Receipts in respect of shares of Capital Stock traded or to be traded immediately following such transaction on a national securities exchange,

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and, as a result of the transaction or transactions, the Notes become convertible into such Capital Stock or American Depositary Receipts and other applicable consideration.

     “Fundamental Change Repurchase Date” has the meaning specified in Section 3.01(a).

     “Global Notes” has the meaning specified in Section 2.02.

     “Indenture” means this Indenture as amended or supplemented from time to time.

     “Initial Purchasers” means Lehman Brothers Inc. and J.P. Morgan Securities Inc.

     “Initial Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Closing Date, between the Company and the Initial Purchasers, as amended from time to time in accordance with its terms.

     “interest” means, when used with reference to the Notes, any interest payable under the terms of the Notes, including Defaulted Interest, if any, Additional Interest, if any, Reporting Additional Interest, if any and Share Cap Additional Interest, if any.

     “Interest Payment Date” has the meaning specified in Section 2.03.

     “Issue Date” means the date of initial issuance of Notes pursuant to this Indenture.

     “Market Disruption Event” means (a) a failure by the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a U.S. national or regional securities exchange, the principal other market on which the Common Stock is then traded to open for trading during its regular trading session, or (b) the occurrence or existence prior to 1:00 p.m., New York City time, on any Trading Day for the Common Stock of an aggregate one-half hour of suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by a stock exchange or otherwise) in the Common Stock or in any option contracts or futures contracts relating to the Common Stock.

     “Maturity Date” means June 15, 2012.

     “Non-Stock Change of Control” means a transaction constituting a Fundamental Change of the type described under clause (a) or clause (d) in the definition of Fundamental Change pursuant to which 10% or more of the consideration for Common Stock (other than cash payments for fractional shares, if applicable, and cash payments made in respect of dissenters’ appraisal rights, if applicable) in such transaction consists of cash or securities (or other property) that are not shares of Capital Stock or American Depositary Receipts in respect of shares of Capital Stock traded or scheduled to be traded immediately following such transaction on a U.S. national securities exchange.

     “Noteholder” or “Holder” means the Person in whose name a Note is registered on the Registrar’s books.

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     “Notes” means any Notes issued, authenticated and delivered under this Indenture, including any Global Notes and any Additional Notes.

     “Notice of Default” has the meaning specified in Section 6.01.

     “Officer” means the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, any Senior Vice President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company.

     “Officers’ Certificate” means a certificate signed by two Officers. One of the officers executing an Officers’ Certificate in accordance with Section 4.05 shall be the chief executive, chief financial or chief accounting officer of the Company.

     “Opinion of Counsel” means a written opinion from legal counsel. The counsel may, but need not be, an employee of the Company.

     “Paying Agent” has the meaning specified in Section 2.05.

     “Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

     “PORTAL Market” means The PORTAL Market operated by the Nasdaq Stock Market or any successor thereto.

     “Preferred Stock”, as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.

     “protected purchaser” has the meaning specified in Section 2.09.

     “Public Acquirer Change of Control” means a Non-Stock Change of Control in which the acquirer has a class of common stock traded on a U.S. national securities exchange or that shall be so traded when issued or exchanged in connection with such Non-Stock Change of Control (the “Public Acquirer Common Stock”). If an acquirer does not itself have a class of common stock satisfying the foregoing requirement, it shall be deemed to have Public Acquirer Common Stock if a corporation that directly or indirectly owns at least a majority of the acquirer has a class of common stock satisfying the foregoing requirement, provided that such corporation fully and unconditionally guarantees the Notes, in which case all references to Public Acquirer Common Stock shall refer to such class of common stock. Majority owned for these purposes means having “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of all shares of the respective entity’s capital stock that are entitled to vote generally in the election of directors.

     “Public Acquirer Common Stock” has the meaning specified in the definition of Public Acquirer Change of Control.

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     “Purchase Agreement” means the Purchase Agreement, dated June 18, 2007, among the Company and the Initial Purchasers relating to the offering and sale of the Notes.

     “Record Date” means, 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 holders of Common Stock 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).

     “Reference Property” has the meaning specified in Section 10.06.

     “Register” has the meaning specified in Section 2.05.

     “Registrar” has the meaning specified in Section 2.05.

     “Registration Rights Agreement” means the Initial Registration Rights Agreement and, with respect to any Additional Notes, one or more registration rights agreements between the Company and the other parties thereto relating to rights given by the Company to the purchasers of Additional Notes to register such Additional Notes and the Common Stock into which such Additional Notes are convertible under the Securities Act.

     “Regular Record Date” means (i) with respect to an Interest Payment Date that falls on June 15, the June 1 immediately preceding such Interest Payment Date and (ii) with respect to an Interest Payment Date that falls on December 15, the December 1 immediately preceding such Interest Payment Date.

     “Reporting Additional Interest” has the meaning specified in Section 6.13 hereof.

     “Repurchase Notice” has the meaning specified in Section 3.01(c).

     “Restricted Securities” has the meaning specified in Section 2.08(c).

     “Rule 144A” means Rule 144A as promulgated under the Securities Act as it may be amended from time to time hereafter.

     “Scheduled Trading Day” means any day on which the primary U.S. national securities exchange or market on which Common Stock is listed or admitted for trading is scheduled to be open for trading.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Share Cap” means 10.2766 shares of Common Stock per $1,000 principal amount of Notes.

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     “Share Cap Additional Interest” has the meaning specified in Section 2.15.

     “Significant Subsidiary” means any Subsidiary of the Company that would be a “Significant Subsidiary” of the Company within the meaning specified in Rule 1-02(w) under Regulation S-X promulgated by the SEC.

     “Special Interest Payment Date” has the meaning specified in Section 2.16(a).

     “Special Record Date” has the meaning specified in Section 2.16(a).

     “Spin-Off” has the meaning specified in Section 10.05(d).

     “Spin-Off Distributed Assets” has the meaning specified in Section 10.05(d)(B).

     “Spin-Off Valuation Period” has the meaning specified in Section 10.05(d).

     “Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).

     “Stockholder Approval” means the authorization and approval by stockholders holding the requisite number of shares of Capital Stock of the Company in accordance with the Company’s certificate of incorporation and by-laws, applicable law and the rules of the New York Stock Exchange or other securities exchange on which the Common Stock is then listed for trading, and at a meeting duly called and held in accordance with such organizational documents, applicable law and rules, of a proposal by the Company to increase the number of shares of Common Stock authorized by the Company’s certificate of incorporation such that the Company is authorized to issue a number of additional shares of Common Stock equal to at least (i) the Conversion Rate multiplied by (ii) the aggregate principal amount of the Notes outstanding divided by $1,000.

     “Stock Price” means:

          (i) in the case of a Non-Stock Change of Control in which holders of the Common Stock receive only cash as consideration for their share of Common Stock, the amount of cash paid per share of the Common Stock in such Non-Stock Change of Control; or

          (ii) in the case of all other Non-Stock Changes of Control, the average of the last reported sale prices of Common Stock on the five consecutive Trading Days prior to but not including the Effective Date of such Non-Stock Change of Control.

     “Subsidiary” of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or

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other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.

     “TIA” or “Trust Indenture Act” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as amended, as in effect on the date of this Indenture.

     “Trading Day” means a day during which (i) trading in the Common Stock generally occurs, and (ii) there is no Market Disruption Event.

     “Trading Price” means, with respect to a Note on any date of determination, the average of the secondary market bid quotations per $1,000 principal amount of Notes obtained by the Trustee for $5,000,000 principal amount of Notes at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers selected by the Company, which may include one or more of the Initial Purchasers; provided that if at least two such bids cannot reasonably be obtained by the Trustee, but one such bid can be reasonably obtained by the Trustee, then this one bid shall be used; and provided further that, if the Trustee cannot reasonably obtain at least one bid for $5,000,000 principal amount of Notes from a nationally recognized securities dealer or in the Company’s reasonable judgment, the bid quotations are not indicative of the secondary market value of the Notes then, for the purpose of determining the convertibility of the Notes pursuant to Section 10.01(a)(6) only, the Trading Price per $1,000 principal amount of Notes shall be deemed to be less than 98% of the product of (a) the Conversion Rate on such determination date and (b) the Closing Sale Price of a share of Common Stock on such determination date.

     “Trigger Event” has the meaning specified in Section 10.05(d).

     “Trust Officer” means any officer within the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture.

     “Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

     “Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

     “Volume Weighted Average Price” per share of Common Stock on any Trading Day means such price as displayed on Bloomberg (or any successor service) Page PAY.N <equity> AQR in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Trading Day or, if such price is unavailable, the market value per share of Common Stock on such Trading Day as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company.

     “Wholly Owned Subsidiary” means a Subsidiary of the Company, all the Capital Stock of which (other than directors’ qualifying shares) is owned by the Company or another Wholly Owned Subsidiary.

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     SECTION 1.02 Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:

     “Commission” means the SEC.

     “indenture securities” means the Notes.

     “indenture security holder” means a Noteholder.

     “indenture to be qualified” means this Indenture.

     “indenture trustee” or “institutional trustee” means the Trustee.

     “obligor” on the indenture securities means the Company and any other obligor on the indenture securities.

     All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

     SECTION 1.03 Rules of Construction. Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) “or” is not exclusive;

     (3) “including” means including without limitation; and

     (4) words in the singular include the plural and words in the plural include the singular.

ARTICLE 2
THE NOTES

     SECTION 2.01 Designation, Amount and Issuance of Notes. The Notes shall be designated as “1.375% Senior Convertible Notes due 2012.” The Notes initially will be issued in an aggregate principal amount not to exceed (i) $316,250,000 plus (ii) such additional aggregate principal amount of Notes as may be issued from time to time as Additional Notes in accordance with Section 2.14. Notes may be executed by the Company and delivered to the Trustee for authentication as provided in Section 2.04.

     SECTION 2.02 Form of the Notes. The Notes and the Trustee’s certificate of authentication to be borne by such Notes shall be substantially in the form set forth in Exhibit A hereto. The terms and provisions contained in the form of Notes 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.

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     Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends, endorsements or changes 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 by the custodian for the Global Notes, the Depositary or by the National Association of Securities Dealers, Inc. in order for the Notes to be tradable on the PORTAL Market or as may be required for the Notes to be tradable on any other market developed for trading of securities pursuant to Rule 144A or as may be required to comply with any applicable 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 Notes may be listed, or to conform to usage, or to indicate any special limitations or restrictions to which any particular Notes are subject.

     Except as contemplated by Section 2.08(b), all of the Notes will be represented by one or more Notes in global form registered in the name of the Depositary or the nominee of the Depositary (“Global Notes”). The transfer and exchange of beneficial interests in any such Global Notes shall be effected through the Depositary in accordance with this Indenture and the applicable procedures of the Depositary; and beneficial interests in the Global Notes shall be subject to all rules and procedures of the Depositary. Except as provided in Section 2.08(b), beneficial owners of a Global Note shall 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 such Global Note.

     Any Global Notes shall represent such of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect repurchases, conversions, transfers or exchanges permitted hereby. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the custodian for the Global Note, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Notes in accordance with this Indenture. Payment of principal of and interest on any Global Notes shall be made to the Depositary in immediately available funds.

     SECTION 2.03 Date and Denomination of Notes; Payment at Maturity; Payment of Interest. The Notes shall be issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. Each Note shall be dated the date of its authentication and shall bear interest from the date specified in the form of Notes attached as Exhibit A hereto.

     Interest on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period that is less than a whole month shall be computed on the basis of the actual number of days elapsed during such less than whole-month period divided by 360.

     If any payment date is not a Business Day, payment will be made on the next succeeding Business Day and no interest will accrue thereon.

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     On the Maturity Date, each Holder shall be entitled to receive on such date $1,000 principal amount per Notes and accrued and unpaid interest to, but not including, the Maturity Date. With respect to Global Notes, such principal and interest will be paid to the Depositary in immediately available funds. With respect to any certificated Notes, such principal and interest will be payable at the Company’s office or agency maintained for that purpose, which initially will be the office or agency of the Trustee located at 100 Wall Street, Suite 1600, EX-NY-WALL, New York, New York 10005, Attention: Richard Prokosch.

     Interest on the Notes will accrue at the rate of 1.375% per annum, from June 22, 2007 until the principal thereof is paid or made available for payment. Interest shall be payable on June 15 and December 15 of each year (each, an “Interest Payment Date”), commencing December 15, 2007, to the Person in whose name any Note is registered on the Register at 5:00 p.m., New York City time, on any Regular Record Date with respect to the applicable Interest Payment Date, except that the interest payable upon the Maturity Date will be payable to the Person to whom the principal amount is paid. Notwithstanding the foregoing, any Notes or portion thereof surrendered for conversion after 5:00 p.m., New York City time, on the Regular Record Date for an Interest Payment Date but prior to the applicable Interest Payment Date shall be accompanied by payment, in immediately available funds or other funds acceptable to the Company, of an amount equal to the interest (excluding any Additional Interest, Reporting Additional Interest or Share Cap Additional Interest) otherwise payable on such Interest Payment Date on the principal amount being converted; provided that no such payment need be made:

          (i) with respect to conversions after 5:00 p.m., New York City time, on the Regular Record Date immediately preceding the Maturity Date;

          (ii) with respect to a conversion in connection with a Fundamental Change and the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date; and

          (iii) with respect to any Defaulted Interest or interest that is otherwise overdue, if any such interest exists at the time of conversion with respect to such Notes.

The Company shall pay interest:

          (i) on any Global Notes by wire transfer of immediately available funds to the account of the Depositary or its nominee;

          (ii) on any Notes in certificated form having a principal amount of less than $5,000,000, by check mailed to the address of the Person entitled thereto as it appears in the Register, provided, however, that at maturity interest will be payable at the office of the Company maintained by the Company for such purposes, which shall initially be an office or agency of the Trustee; and

          (iii) on any Notes in certificated form having a principal amount of $5,000,000 or more, by wire transfer in immediately available funds at the election of the Holder of such Notes duly delivered to the Trustee at least five Business Days prior to the relevant Interest Payment Date, provided, however, that at maturity interest will be payable at the

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office of the Company maintained by the Company for such purposes, which shall initially be an office or agency of the Trustee.

     SECTION 2.04 Execution and Authentication. One Officer shall sign the Notes for the Company by manual or facsimile signature.

     If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

     A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

     The Trustee shall authenticate and make available for delivery Notes for original issue, upon receipt of a written order or orders of the Company signed by an Officer (a “Company Order”): (i) pursuant to the Purchase Agreement, in the aggregate principal amount of up to $316,250,000 and (ii) from time to time, in such aggregate principal amount as shall be established for any Additional Notes established pursuant to the respective Officers’ Certificate in respect thereof delivered pursuant to Section 2.14. The Company Order shall specify the number, principal amount and registered Holder of the Notes to be authenticated and shall state the date on which such Notes are to be authenticated.

     The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Notes. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

     SECTION 2.05 Registrar, Paying Agent and Conversion Agent. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”), an office or agency where Notes may be presented for payment (the “Paying Agent”) and an office or agency where Notes may be presented for conversion (the “Conversion Agent”). The Corporate Trust Office shall be considered as one such office or agency of the Company for each of the aforesaid purposes. The Registrar shall keep a register of the Notes (the “Register”) and of their transfer and exchange. The Company may have one or more co-registrars, one or more additional paying agents and one or more additional conversion agents. The term “Paying Agent” includes any additional paying agent, the term “Registrar” includes any co-registrars and the term “Conversion Agent” includes any additional conversion agent. The Company initially appoints the Trustee as (i) Registrar, Paying Agent and Conversion Agent in connection with the Notes and (ii) the custodian with respect to the Global Notes.

     The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or Conversion Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to

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such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent or Registrar.

     The Company may remove any Registrar, Paying Agent or Conversion Agent upon written notice to such Registrar, Paying Agent, Conversion Agent and to the Trustee; provided, however, that no such removal shall become effective until (1) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar, Paying Agent or Conversion Agent, as the case may be, and delivered to the Trustee or (2) notification to the Trustee that the Trustee shall serve as Registrar, Paying Agent or Conversion Agent until the appointment of a successor in accordance with clause (1) above. The Registrar, Paying Agent or Conversion Agent may resign at any time upon written notice; provided, however, that the Trustee may resign as Paying Agent, Conversion Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.08.

     SECTION 2.06 Paying Agent to Hold Money in Trust. Prior to each due date of the principal and interest on any Note, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Notes and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.

     SECTION 2.07 Noteholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders and shall otherwise comply with Section 312(a) of the TIA. If the Trustee is not the Registrar, or to the extent otherwise required under the TIA, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders and shall otherwise comply with Section 312(a) of the TIA.

     SECTION 2.08 Exchange and Registration of Transfer of Notes; Restrictions on Transfer. (a) The Company shall cause to be kept at the Corporate Trust Office the Register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. The Register shall be in written form or in any form capable of being converted into written form within a reasonably prompt period of time.

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     Upon surrender for registration of transfer of any Notes to the Registrar or any co-registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.08, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture.

     Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.02. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive bearing registration numbers not contemporaneously outstanding.

     All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange.

     All Notes presented or surrendered for registration of transfer or for exchange, repurchase or conversion shall (if so required by the Company or the Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, and the Notes shall be duly executed by the Holder thereof or its attorney duly authorized in writing.

     No service charge shall be made to any Holder for any registration of, transfer or exchange of Notes, but the Company or the Trustee may require payment by the Holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes.

     Neither the Company nor the Trustee nor any Registrar shall be required to exchange, issue or register a transfer of (a) any Notes or portions thereof surrendered for conversion pursuant to Article 10 or (b) any Notes or portions thereof tendered for repurchase (and not withdrawn) pursuant to Article 3.

     (b) The following provisions shall apply only to Global Notes:

          (i) Each Global Note 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 for the Global Notes therefor, and each such Global Note shall constitute a single Note for all purposes of this Indenture.

          (ii) Notwithstanding any other provision in this Indenture, no Global Note may be exchanged in whole or in part for Notes registered, and no transfer of a Global Note in whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless

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     (A) the Depositary (x) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act, and a successor depositary has not been appointed by the Company within 90 calendar days, or

     (B) the Company, in its sole discretion, notifies the Trustee in writing that it no longer wishes to have all the Notes represented by Global Notes.

Any Global Notes exchanged pursuant to this Section 2.08(b)(ii) shall be so exchanged in whole and not in part.

          (iii) In addition, certificated Notes will be issued in exchange for beneficial interests in a Global Note upon request by or on behalf of the Depositary in accordance with customary procedures following the request of a beneficial owner seeking to enforce its rights under the Notes or this Indenture, including its rights following the occurrence of an Event of Default.

          (iv) Notes issued in exchange for a Global Note or any portion thereof pursuant to clause (ii) or (iii) above shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Notes 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 Notes to be exchanged shall be surrendered by the Depositary to the Trustee, as Registrar, provided that pending completion of the exchange of a Global Note, the Trustee acting as custodian for the Global Notes for the Depositary or its nominee with respect to such Global Notes, shall reduce the principal amount thereof, 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. Upon any such surrender or adjustment, the Trustee shall authenticate and make available for delivery the Notes issuable on such exchange to or upon the written order of the Depositary or an authorized representative thereof.

          (v) In the event of the occurrence of any of the events specified in clause (ii) above or upon any request described in clause (iii) above, the Company will promptly make available to the Trustee a sufficient supply of certificated Notes in definitive, fully registered form, without interest coupons.

          (vi) 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 Notes registered in the name of the Depositary or any nominee thereof, 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 Notes for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the 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

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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 Notes.

          (vii) At such time as all interests in a Global Note have been repurchased, converted, cancelled or exchanged for Notes in certificated form, such Global Note shall, upon receipt thereof, be cancelled by the Trustee in accordance with standing procedures and instructions existing between the Depositary and the custodian for the Global Note. At any time prior to such cancellation, if any interest in a Global Note is repurchased, converted, cancelled or exchanged for Notes in certificated form, the principal amount of such Global Note shall, in accordance with the standing procedures and instructions existing between the Depositary and the custodian for the Global Note, be appropriately reduced by the Trustee and the Depositary in their records.

     (c) Every Note (and all securities issued in exchange therefor or in substitution thereof) that bears or is required under this Section 2.08(c) to bear the legend set forth in this Section 2.08(c) (together with any Common Stock issued upon conversion of the Notes and required to bear the legend set forth in Exhibit B, collectively, the “Restricted Securities”) shall be subject to the restrictions on transfer set forth in this Section 2.08(c) (including those set forth in the legend below and the legend set forth in Exhibit B) unless such restrictions on transfer shall be waived by written consent of the Company following receipt of legal advice supporting the permissibility of the waiver of such transfer restrictions, and the holder of each such Restricted Security, by such holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this Section 2.08(c), the term “transfer” means any sale, pledge, loan, transfer or other disposition whatsoever of any Restricted Security or any interest therein.

     Prior to the date two years following the later of the Closing Date and the date of the last subsequent issuance of the Notes, if any, any certificate evidencing a Restricted Security shall bear a legend in substantially the following form (or as set forth in Exhibit B, in the case of Common Stock issued upon conversion of the Notes), unless such Restricted Security has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or sold pursuant to Rule 144 under the Securities Act or any similar provision then in force, or unless otherwise agreed by the Company in writing as set forth above, with written notice thereof to the Trustee:

THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT OF 1933”), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933;

(2) AGREES THAT IT WILL NOT PRIOR TO THE DATE TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE OF THE 1.375% SENIOR

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CONVERTIBLE NOTES DUE 2012 OF VERIFONE HOLDINGS, INC. (THE “COMPANY”) RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK THAT MAY BE ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OF 1933, (C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER, OR (D) PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, INCLUDING UNDER RULE 144, IF AVAILABLE, SUBJECT TO OUR AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH TRANSFER, TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO US AND THE TRUSTEE; AND

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(C) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

     In connection with any transfer of the Notes prior to the date two years following the later of the Closing Date and the date of the last subsequent issuance of the Notes, if any (other than a transfer pursuant to clause (2)(C) above), the Holder must complete and deliver the transfer certificate contained in this Indenture to the Trustee (or any successor Trustee, as applicable). If the proposed transfer is pursuant to clause (2)(D) above, the Holder must, prior to such transfer, furnish to the Trustee (or any successor Trustee, as applicable), such certifications, legal opinions or other information as the Company may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The legend set forth above will be removed upon the earlier of the transfer of the Notes evidenced thereby pursuant to clause (2)(C) above or the expiration of two years from the last date of original issuance of the Notes (including any Additional Notes issued pursuant to Section 2.14).

     Any Notes that are Restricted Securities and as to which such restrictions on transfer shall have expired in accordance with their terms or as to conditions for removal of the foregoing legend set forth therein have been satisfied may, upon surrender of such Notes for exchange to the Registrar in accordance with the provisions of this Section 2.08, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.08(c). If such Restricted Security surrendered for exchange is represented by a Global Note bearing the legend set forth in this Section 2.08(c), the principal amount of the legended Global Notes shall be reduced by the appropriate principal amount and the principal amount of a Global Note without the legend set forth in this Section 2.08(c) shall be increased by an equal principal amount. If a Global Note without the legend set forth in this

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Section 2.08(c) is not then outstanding, the Company shall execute and the Trustee shall authenticate and deliver an unlegended Global Note to the Depositary.

     In the event Rule 144(k) as promulgated under the Securities Act is amended to change the two-year period under Rule 144(k), then, the references in the restrictive legend set forth above to “two years,” and in the corresponding transfer restrictions described above included in this Indenture and the Notes and with respect to shares of the Common Stock issuable upon conversion of the Notes will be deemed to refer to such changed period, from and after receipt by the Trustee of an Officers’ Certificate and Opinion of Counsel evidencing such changes. However, such changes will not be made if they are otherwise prohibited by, or would otherwise cause a violation of, the federal securities laws applicable at the time. As soon as practicable after the Company knows of the effectiveness of any such amendment to change the two-year period under Rule 144(k), unless such changes would otherwise be prohibited by, or would otherwise cause a violation of, the federal securities laws applicable at the time, the Company will provide to the Trustee an Officers’ Certificate and Opinion of Counsel evidencing such changes as to the effectiveness of such amendment and the effectiveness of such change to the restrictive legends and transfer restrictions.

     (d) Any Restricted Securities, prior to the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), purchased or owned by the Company or any Affiliate thereof may not be resold by the Company or such Affiliate unless registered under the Securities Act or resold pursuant to an exemption from the registration requirements of the Securities Act in a transaction which results in such Notes or Common Stock, as the case may be, no longer being “restricted securities” (as defined under Rule 144).

     (e) The Trustee shall have no responsibility or obligation to any Agent Members or any other Person with respect to the accuracy of the books or records, or the acts or omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any Agent Member or other Person (other than the Depositary) of any notice or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders of Notes and all payments to be made to Holders of Notes under the Notes shall be given or made only to or upon the order of the registered Holders of Notes (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Notes shall be exercised only through the Depositary subject to the customary procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its Agent Members.

     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 Notes (including any transfers between or among Agent Members) 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.

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     SECTION 2.09 Replacement Notes. If a mutilated Note is surrendered to the Registrar or if the Noteholder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Noteholder (i) satisfies the Company and the Trustee within a reasonable time after it has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (ii) makes such request to the Company and the Trustee prior to the Note being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “protected purchaser”) and (iii) satisfies any other reasonable requirements of the Trustee and the Company. If required by the Trustee or the Company, such Noteholder shall furnish an indemnity bond sufficient in the judgment of the Trustee to protect the Company, the Trustee, the Paying Agent and the Registrar from any loss, liability and expense that any of them may suffer if a Note is replaced and subsequently presented or claimed for payment. The Company and the Trustee may charge the Noteholder for their expenses in replacing a Note. In case any Note which has matured or is about to mature or has been properly tendered for repurchase on a Fundamental Change Repurchase Date (and not withdrawn), as the case may be, or is to be converted into Common Stock, shall become mutilated or be destroyed, lost or wrongfully taken, the Company may, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or in connection with such substitution, and, in every case of destruction, loss or wrongful taking, the applicant shall also furnish to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent evidence to their satisfaction of the destruction, loss or wrongful taking of such Notes and of the ownership thereof.

     Every replacement Note is an additional obligation of the Company.

     The provisions of this Section 2.09 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Notes.

     SECTION 2.10 Outstanding Notes. Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.

     If a Note is replaced pursuant to Section 2.09, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a protected purchaser.

     If the Paying Agent holds in trust, in accordance with this Indenture, on the Business Day immediately following a Fundamental Change Repurchase Date or on the Maturity Date money sufficient to pay all principal and interest payable on that date with respect to the Notes (or

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portions thereof) to be repurchased or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Noteholders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

     SECTION 2.11 Temporary Notes. Pending the preparation of Notes in certificated form, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon the written request of the Company, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Notes in certificated form, but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Notes in certificated form. Without unreasonable delay, the Company will execute and deliver to the Trustee or such authenticating agent Notes in certificated form and thereupon any or all temporary Notes may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.02 and the Trustee or such authenticating agent shall authenticate and make available for delivery in exchange for such temporary Notes an equal aggregate principal amount of Notes in certificated form. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Notes in certificated form authenticated and delivered hereunder.

     SECTION 2.12 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancellation and dispose of such canceled Notes in accordance with its customary procedures or deliver canceled Notes to the Company upon its request therefor. The Company may not issue new Notes to replace Notes it has paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Notes in place of canceled Notes other than pursuant to the terms of this Indenture.

     SECTION 2.13 CUSIP and ISIN Numbers. The Company in issuing the Notes may use “CUSIP” and “ISIN” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP” and “ISIN” numbers in all notices issued to Noteholders as a convenience to such Noteholders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee in writing of any changes to the CUSIP and ISIN numbers.

     SECTION 2.14 Additional Notes. The Company may, from time to time, subject to compliance with any other applicable provisions of this Indenture, without the consent of the Noteholders, create and issue pursuant to this Indenture additional Notes (“Additional Notes”)

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having terms and conditions set forth in Exhibit A identical to those of the other outstanding Notes, except that Additional Notes may:

     (1) have a different Issue Date from the Issue Date for other outstanding Notes;

     (2) have a different issue price than other outstanding Notes; and

     (3) have terms specified in the Additional Notes Board Resolutions for such Additional Notes making appropriate adjustments to this Article 2 and Exhibit A (and related definitions) applicable to such Additional Notes in order to conform to and ensure compliance with the Securities Act (or other applicable securities laws) and any registration rights or similar agreement applicable to such Additional Notes, which are not adverse in any material respect to the Holder of any outstanding Notes (other than such Additional Notes);

provided, that no adjustment pursuant to this Section 2.14 shall cause such Additional Notes to constitute, as determined pursuant to an Opinion of Counsel, a different class of securities than the Notes issued pursuant to the Purchase Agreement for U.S. federal income tax purposes; and provided further, that the Additional Notes have the same CUSIP number as other outstanding Notes. No Additional Notes may be issued if on the Issue Date therefor any Event of Default has occurred and is continuing.

     In order to issue Additional Notes, the Notes originally issued pursuant to the Purchase Agreement and any Additional Notes must be treated as a single class for all purposes under this Indenture, including waivers, amendments, offers to purchase and, in the opinion of Counsel, United States federal tax purposes.

     With respect to any issuance of Additional Notes, the Company shall deliver to the Trustee a resolution of the Board of Directors and an Officers’ Certificate in respect of such Additional Notes, which shall together provide the following information:

          (1) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

          (2) the Issue Date, issue price, pre-issuance accrued interest, amount of interest payable on the first Interest Payment Date, first Interest Payment Date, CUSIP number and corresponding ISIN of such Additional Notes; and

          (3) such matters as shall be applicable to such Additional Notes as described in clause (3) of the preceding paragraph.

     SECTION 2.15 Share Cap Additional Interest. In the event that the Stockholder Approval is not obtained on or before the 365th day after the Closing Date, the Company shall pay additional interest (“Share Cap Additional Interest”) on the Notes in an amount equal to (i) 2.0% per annum, from and including June 21, 2008 to June 21, 2009, (ii) 2.25% per annum from and including June 22, 2009 to June 21, 2010, (iii) 2.5% per annum from and including June 22, 2010 to June 21, 2011, (iv) 2.75% per annum from and including June 22, 2011 to June 15, 2012,

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which Share Cap Additional Interest shall in each case continue to accrue until the date on which the Company receives the Stockholder Approval.

     SECTION 2.16 Defaulted Interest. Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of thirty (30) calendar days, shall forthwith cease to be payable to the Holder on the Regular Record Date, and such defaulted interest and interest (to the extent lawful) on such defaulted interest at the annual rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Company at its election, in each case, as provided in clause (a) or (b) below:

     (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date (not less than thirty (30) calendar days after such notice) of the proposed payment (the “Special Interest Payment Date”), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a record date (the “Special Record Date”) for the payment of such Defaulted Interest which shall be not more than fifteen (15) calendar days and not less than ten (10) calendar days prior to the Special Interest Payment Date and not less than ten (10) calendar days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall promptly cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given to each Noteholder, not less than ten (10) calendar days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

     (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

     (c) Subject to the foregoing provisions of this Section 2.16 each Note delivered under this Indenture upon registration of, transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

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ARTICLE 3
REPURCHASE OF NOTES

     SECTION 3.01 Repurchase at Option of Holders Upon a Fundamental Change. (a) If there shall occur a Fundamental Change at any time prior to maturity of the Notes, then each Holder of Notes shall have the right, at such Holder’s option, to require the Company to repurchase all of such Holder’s Notes, or any portion thereof that is a multiple of $1,000 principal amount, on a date (the “Fundamental Change Repurchase Date”) specified by the Company, that is not less than 20 calendar days nor more than 35 calendar days after the date of the Company Repurchase Notice related to such Fundamental Change at a cash repurchase price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but excluding, the Fundamental Change Repurchase Date, subject to the satisfaction by the Holder of the requirements set forth in Section 3.01(c); provided that if such Fundamental Change Repurchase Date falls after a Regular Record Date and on or prior to the corresponding Interest Payment Date, then the interest payable on such Fundamental Change Repurchase Date shall be paid on such Fundamental Change Repurchase Date to the Holders of record of the Notes on the applicable Regular Record Date instead of the Holders surrendering the Notes for repurchase on such date.

     (b) On or before the fifth calendar day after the occurrence of a Fundamental Change, the Company shall provide to all Holders of record of the Notes on the date of the Fundamental Change at their addresses shown in the Register (and to beneficial owners of the Notes to the extent required by applicable law) a Company Repurchase Notice as set forth in Section 3.02 with respect to such Fundamental Change. The Company shall also deliver a copy of the Company Repurchase Notice to the Trustee and the Paying Agent at such time as it is mailed to Holders of Notes.

     No failure of the Company to give the foregoing notices and no defect therein shall limit the repurchase rights of Holders of Notes or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 3.01.

     (c) For Notes to be repurchased at the option of the Holder, the Holder must deliver to the Paying Agent, prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date, (i) a written notice of repurchase (a “Repurchase Notice”) in the form set forth on the reverse of the Notes duly completed (if the Notes are certificated) or stating the following (if the Notes are represented by a Global Note): (A) the certificate number of the Notes which the Holder will deliver to be repurchased or compliance with the appropriate Depositary procedures, (B) the portion of the principal amount of the Notes which the Holder will deliver to be repurchased, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000 and (C) that such Notes are to be repurchased by the Company pursuant to the terms and conditions specified in the Notes and in this Indenture, together with (ii) such Notes duly endorsed for transfer (if the Notes are certificated) or book-entry transfer of such Notes (if such Notes are represented by a Global Note). The delivery of such Notes to the Paying Agent (together with all necessary endorsements) at the office of the Paying Agent shall be a condition to the receipt by the Holder of the repurchase price therefor; provided, however, that such repurchase price shall be so paid pursuant to this Section 3.01 only if the Notes so delivered to

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the Paying Agent shall conform in all respects to the description thereof in the Repurchase Notice. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Notes for repurchase shall be determined by the Company, whose determination shall be final and binding absent manifest error.

     (d) The Company shall repurchase from the Holder thereof, pursuant to this Section 3.01, a portion of a Note, if the principal amount of such portion is $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to the repurchase of all of a Note also apply to the repurchase of such portion of such Note.

     (e) The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof.

     Any repurchase by the Company contemplated pursuant to the provisions of this Section 3.01 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Fundamental Change Repurchase Date and the time of the book-entry transfer or delivery of the Notes.

     SECTION 3.02 Company Repurchase Notice. In connection with any repurchase of Notes pursuant to Section 3.01, the notice contemplated by such provision (the “Company Repurchase Notice”) shall:

     (1) state the repurchase price and the Fundamental Change Repurchase Date to which the Company Repurchase Notice relates;

     (2) state the circumstances constituting the Fundamental Change and the date of the Fundamental Change;

     (3) state that the repurchase price will be paid in cash;

     (4) state that Holders must exercise their right to elect repurchase prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date;

     (5) include a form of Repurchase Notice;

     (6) state the name and address of the Paying Agent;

     (7) state that Notes must be surrendered to the Paying Agent to collect the repurchase price;

     (8) state that a Holder may withdraw its Repurchase Notice in whole or in part at any time prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date by delivering a valid written notice of withdrawal in accordance with Section 3.03;

     (9) state whether the Notes are then convertible, and if so, the then applicable Conversion Rate, and any adjustments to the applicable Conversion Rate resulting from the Fundamental Change transaction and expected changes in the cash, shares or other property

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deliverable upon conversion of the Notes as a result of the occurrence of the Fundamental Change;

     (10) state that Notes as to which a Repurchase Notice has been given may be converted only if the Repurchase Notice is withdrawn in accordance with the terms of this Indenture;

     (11) state the amount of interest accrued and unpaid per $1,000 principal amount of Notes to, but excluding, the Fundamental Change Repurchase Date; and

     (12) state the CUSIP number of the Notes.

     A Company Repurchase Notice may be given by the Company or, at the Company’s request in writing, the Trustee shall give such Company Repurchase Notice in the Company’s name and at the Company’s expense; provided, that the text of the Company Repurchase Notice shall be prepared by the Company.

     The Company will, to the extent applicable, comply with the provisions of Rule 13e-4 and Rule 14e-1 (or any successor provision) and any other tender offer rules under the Exchange Act that may be applicable at the time of the repurchase of the Notes, file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act and comply with all other federal and state securities laws in connection with the repurchase of the Notes.

     SECTION 3.03 Effect of Repurchase Notice; Withdrawal. Upon receipt by the Paying Agent of the Repurchase Notice specified in Section 3.01, the Holder of the Notes in respect of which such Repurchase Notice was given shall (unless such Repurchase Notice is validly withdrawn in accordance with the following paragraph) thereafter be entitled to receive solely the repurchase price with respect to such Notes. Such repurchase price shall be paid to such Holder, subject to receipt of funds and/or the Notes by the Paying Agent, promptly following the later of (x) the Fundamental Change Repurchase Date with respect to such Notes (provided the Holder has satisfied the conditions in Section 3.01) and (y) the time of book-entry transfer or delivery of such Notes to the Paying Agent by the Holder thereof in the manner required by Section 3.01. The Notes in respect of which a Repurchase Notice has been given by the Holder thereof may not be converted pursuant to Article 10 hereof on or after the date of the delivery of such Repurchase Notice unless such Repurchase Notice has first been validly withdrawn.

     A Repurchase Notice may be withdrawn in whole or in part by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Repurchase Notice at any time prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date specifying:

     (a) the certificate number, if any, of the Note in respect of which such notice of withdrawal is being submitted, or the appropriate Depositary information, in accordance with appropriate Depositary procedures, if the Note in respect of which such notice of withdrawal is being submitted is represented by a Global Note,

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     (b) the principal amount of the Notes with respect to which such notice of withdrawal is being submitted, and

     (c) the principal amount, if any, of such Notes which remains subject to the original Repurchase Notice and which has been or will be delivered for repurchase by the Company.

     If a Repurchase Notice is properly withdrawn, the Company shall not be obligated to repurchase the Notes listed in such Repurchase Notice.

     SECTION 3.04 Deposit of Repurchase Price. Prior to 11:00 a.m., New York City Time, on the Business Day immediately following the Fundamental Change Repurchase Date, the Company shall deposit with the Paying Agent or, if the Company or a Wholly Owned Subsidiary of the Company is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 6.04, an amount of cash (in immediately available funds if deposited on the Fundamental Change Repurchase Date), sufficient to pay the aggregate repurchase price of all the Notes or portions thereof that are to be repurchased as of the Fundamental Change Repurchase Date.

     If on the Business Day immediately following the Fundamental Change Repurchase Date the Paying Agent holds cash sufficient to pay the repurchase price of the Notes that Holders have elected to require the Company to repurchase in accordance with Section 3.01, then, as of the Fundamental Change Repurchase Date, such Notes will cease to be outstanding, interest will cease to accrue and all other rights of the Holders of such Notes will terminate, other than the right to receive the repurchase price upon delivery or book-entry transfer of the Notes. This will be the case whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Paying Agent.

     SECTION 3.05 Notes Repurchased in Part. Upon presentation of any Notes repurchased only in part, the Company shall execute and the Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Company, a new Note or Notes, of any authorized denomination, in aggregate principal amount equal to the unrepurchased portion of the Notes presented.

ARTICLE 4
COVENANTS

     SECTION 4.01 Payment of Notes. The Company shall promptly pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Noteholders on that date pursuant to the terms of this Indenture.

     The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

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     SECTION 4.02 Maintenance of Office or Agency. The Company will maintain an office or agency in the Borough of Manhattan, The City of New York, where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or for conversion or repurchase and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. As of the date of this Indenture, such office is located at the office of the Trustee located at 100 Wall Street, Suite 1600, EX-NY-WALL, New York, New York 10005 and, at any other time, at such other address as the Trustee may designate from time to time by notice to the Company. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency not designated or appointed by the Trustee. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.

     The Company may also from time to time designate co-registrars and one or more offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

     So long as the Trustee is the Registrar, the Trustee agrees to mail, or cause to be mailed, the notices set forth in Section 7.08. If co-registrars have been appointed in accordance with this Section, the Trustee shall mail such notices only to the Company and the Holders of Notes it can identify from its records.

     SECTION 4.03 144A Information. The Company covenants and agrees that it shall, during any period in which it is not required to file with the SEC reports pursuant to Section 13 or 15(d) under the Exchange Act, make available to any Holder or beneficial owner of Notes or holder or beneficial owner of any Common Stock (collectively, for purposes of this Section 4.03, “holder”) issued upon conversion thereof which continue to be Restricted Securities and any prospective purchaser of Notes or such Common Stock designated by such holder, the information, if any, required pursuant to Rule 144A(d)(4) under the Securities Act upon the request of any holder of the Notes or such Common Stock, until such time as such securities are no longer “restricted securities” within the meaning of Rule 144 under the Securities Act, assuming such securities have not been owned by Affiliate of the Company.

     SECTION 4.04 Existence. Except in compliance with Article V, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and rights (charter and statutory); provided that the Company shall not be required to preserve any such right if the Company shall determine 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 of Notes.

     SECTION 4.05 Compliance Certificate. The Company shall deliver to the Trustee within 120 calendar days after the end of each Fiscal Year of the Company a certificate of the principal executive officer, principal financial officer or principal accounting officer of the

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Company, stating whether or not, to the knowledge of such officer, any Default or Event of Default occurred during such period and if so, describing each Default or Event of Default, its status and the action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the Trust Indenture Act. Except with respect to receipt of Note payments when due and any Default or Event of Default information contained in the Officer’s Certificate delivered to it pursuant to this Section 4.05, the Trustee shall have no duty to review, ascertain or confirm the Company’s compliance with, or the breach of any representation, warranty or covenant made in this Indenture.

     SECTION 4.06 Further Instruments and Acts. The Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

     SECTION 4.07 Additional Interest Notice. In the event that the Company is required to pay any Additional Interest, any Reporting Additional Interest or any Share Cap Additional Interest, as applicable, to Holders of Notes, the Company will provide written notice to the Trustee of its obligation to pay Additional Interest, Reporting Additional Interest or Share Cap Additional Interest, as the case may be, no later than two calendar days prior to the relevant Interest Payment Date for Additional Interest, Reporting Additional Interest or Share Cap Additional Interest, as the case may be, and such notice shall set forth the amount of Additional Interest, Reporting Additional Interest or Share Cap Additional Interest, as the case may be, to be paid by the Company on such Interest Payment Date. The Trustee shall not at any time be under any duty or responsibility to any Holder of Notes to determine the Additional Interest, Reporting Additional Interest or Share Cap Additional Interest, as the case may be, or with respect to the nature, extent or calculation of the amount of Additional Interest, Reporting Additional Interest or Share Cap Additional Interest, as the case may be, when made, or with respect to the method employed in such calculation of the Additional Interest, Reporting Additional Interest or Share Cap Additional Interest, as the case may be.

     SECTION 4.08 Reporting Obligation. (a) The Company shall deliver to the Trustee, within 15 calendar days after the Company has filed with the SEC, copies of its annual reports and of information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company shall also comply with the other applicable provisions of Section 314(a)(1) of the TIA.

     (b) Delivery of reports, information and other documents under this Section 4.08 to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute 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). The Trustee is under no duty to examine such reports, information or documents to ensure compliance with the provisions of this Indenture or to ascertain the correctness or otherwise of the information or the statements contained therein. The Trustee is entitled to assume such compliance and correctness unless a responsible officer of the Trustee is informed otherwise.

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     SECTION 4.09 Covenant to Obtain Stockholder Approval. (a) The Company hereby agrees to use its reasonable best efforts to seek Stockholder Approval on or prior to the date that is 365 calendar days after the Closing Date. In the event that the Company receives Stockholder Approval, the Company shall promptly provide written notice to the Trustee thereof. Notwithstanding any other provision of this Indenture, the sole remedy for the failure by the Company to receive Stockholder Approval shall be the payment of Share Cap Additional Interest as provided in Section 2.15.

     (b) Notwithstanding the foregoing, nothing contained herein shall preclude the Company from satisfying its obligations in respect of the conversion of the Notes by delivery of purchased shares of Common Stock which are then held in the treasury of the Company.

     SECTION 4.10 Incurrence of Indebtedness. The Company shall not permit VeriFone, Inc., directly or indirectly, to incur or guarantee any unsecured indebtedness in excess of $20,000,000 in the aggregate, unless prior to or concurrently with such incurrence or guarantee, VeriFone, Inc. guarantees the Notes on an equal and ratable basis.

ARTICLE 5
SUCCESSOR COMPANY

     SECTION 5.01 When Company May Merge or Transfer Assets. The Company shall not, in a single transaction or a series of related transactions, consolidate with or merge with or into any other Person, or sell, convey, transfer or lease the Company’s property and assets substantially as an entirety to another Person unless:

     (a) either (i) the Company is the continuing corporation, or (ii) the resulting, surviving or transferee Person (if other than the Company) is a corporation or limited liability company organized and existing under the laws of the United States, any state thereof or the District of Columbia and such Person assumes, by a supplemental indenture, all of the Company’s obligations under the Notes and this Indenture, and, to the extent then operative, by a supplemental agreement, all of the Company’s obligations under each Registration Rights Agreement, in each case in a form reasonably satisfactory to the Trustee;

     (b) immediately after giving effect to the transaction described above, no Default or Event of Default, has occurred and is continuing;

     (c) if as a result of such transaction the Notes become convertible into common stock or other securities issued by any Person other than the Company or the resulting, surviving or transferee Person, such other Person fully and unconditionally guarantees all obligations of the Company or the resulting, surviving or transferee Person (if other than the Company), as applicable, under the Notes and this Indenture and, to the extent then operative, each Registration Rights Agreement; and

     (d) the Company has delivered to the Trustee the Officers’ Certificate and Opinion of Counsel pursuant to Section 5.03.

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     SECTION 5.02 Successor to be Substituted. In case of any such consolidation, merger, sale, conveyance, transfer or lease in which the Company is not the continuing corporation and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and reasonably satisfactory in form and substance to the Trustee, of the due and punctual payment of the principal of and interest on all of the Notes, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or satisfied by the Company, and, to the extent then operative, by supplemental agreement, executed and delivered to the Trustee and reasonably satisfactory in form and substance to the Trustee, of all of the obligations of the Company under each Registration Rights Agreement, such successor Person shall succeed to, and be substituted for, the Company, and may exercise every right and power of the Company with the same effect as if it had been named herein as the party of this first part, and the Company shall be discharged from its obligations under the Notes, this Indenture and each Registration Rights Agreement. Such successor Person thereupon may cause to be signed, and may issue either in its own name or in the name of VeriFone Holdings, Inc. any or all of the Notes, issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Notes that such successor Person thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance, transfer or lease, upon compliance with this Article 5 the Person named as the “Company” in the first paragraph of this Indenture or any successor that shall thereafter have become such in the manner prescribed in this Article 5 may be dissolved, wound up and liquidated at any time thereafter and such Person shall be discharged from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture.

     SECTION 5.03 Opinion of Counsel to be Given Trustee. Prior to execution of any supplemental indenture pursuant to this Article 5, the Trustee shall be provided with an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption complies with the provisions of this Article 5.

ARTICLE 6
DEFAULTS AND REMEDIES

     SECTION 6.01 Events of Default. An “Event of Default” occurs if:

     (a) the Company defaults in any payment of interest on any Note when the same becomes due and payable and such default continues for a period of 30 calendar days;

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     (b) the Company defaults in the payment of the principal of any Note when the same becomes due and payable at its Stated Maturity, upon declaration or otherwise or upon required repurchase;

     (c) the Company fails to deliver cash and, if applicable, Common Stock, as required pursuant to Article 10 upon the conversion of any Notes and such failure continues for five days following the scheduled settlement date for such conversion;

     (d) the Company fails to comply in any material respect with its notice obligations regarding the anticipated effective date or actual effective date of a Fundamental Change as required by Section 3.01 or 10.01 hereof;

     (e) the Company fails to perform or observe any other term, covenant or agreement in the Notes or this Indenture (other than those referred to in (a), (b), (c), or (d) above) and such failure continues for 60 calendar days after the notice specified below;

     (f) a failure to pay when due, whether at Stated Maturity or otherwise, or a default that results in the acceleration of maturity, of any indebtedness for borrowed money of the Company or any Significant Subsidiary in an aggregate amount in excess of $25,000,000 (or its foreign currency equivalent), unless such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after the notice specified below; or

     (g) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

          (1) commences a voluntary case;

          (2) consents to the entry of an order for relief against it in an involuntary case;

          (3) consents to the appointment of a Custodian of it or for any substantial part of its property; or

          (4) makes a general assignment for the benefit of its creditors;

          (5) or takes any comparable action under any foreign laws relating to insolvency; or

     (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

          (1) is for relief against the Company or any Significant Subsidiary in an involuntary case;

          (2) appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property;

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          (3) orders the winding up or liquidation of the Company or any Significant Subsidiary; or

          (4) any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 calendar days.

     The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is 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.

     The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

     A Default under clause (e) or (f) above is not an Event of Default until the Trustee notifies the Company, or the Noteholders of at least 25% in aggregate principal amount of the outstanding Notes notify the Company and the Trustee, of the Default and the Company does not cure such Default within the time specified in such clause (e) or (f) after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default”.

     The Company shall deliver to the Trustee, promptly upon becoming aware of the occurrence thereof, written notice in the form of an Officers’ Certificate of any Default, its status and what action the Company is taking or proposes to take with respect thereto.

     SECTION 6.02 Acceleration. Subject to Section 6.13, if an Event of Default (other than an Event of Default specified in Section 6.01(h)) occurs and is continuing, the Trustee by notice to the Company, or the Noteholders of at least 25% in aggregate principal amount of the outstanding Notes by notice to the Company, may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(h) occurs, the principal of and interest on all the Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Noteholders.

     At any time after such a declaration of acceleration with respect to the Notes has been made or occurred and before a judgment or decree for payment of money due has been obtained by the Trustee, the Noteholders of a majority in aggregate principal amount of the Notes by written notice to the Company and the Trustee may rescind and annul such declaration and its consequences (including votes for or consents to such a rescission obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) if:

          (i) the Company has paid (or deposited with the Trustee a sum sufficient to pay) (A) all Defaulted Interest or interest that is otherwise overdue on all Notes, (B) the principal amount of any Notes that have become due otherwise than by such acceleration, (C) to the extent that payment of such interest is lawful, interest upon overdue interest,

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and (D) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and

          (ii) all Events of Default have been cured or waived except nonpayment of principal or accrued and unpaid interest that has become due solely because of acceleration.

No such rescission shall affect any subsequent Default or impair any right consequent thereto.

     SECTION 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

     SECTION 6.04 Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the Notes then outstanding, on behalf of the Noteholders, by notice to the Trustee may waive any past Default or Event of Default and its consequences (including votes for or consents to such a waiver obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) except:

          (i) a Default in the payment of the principal of or interest on a Note;

          (ii) a Default arising from the failure of the Company to convert any Notes to cash and, if applicable, Common Stock pursuant to the terms of this Indenture;

          (iii) a Default arising from the failure to repurchase any Note when required pursuant to the terms of this Indenture; or

          (iv) a Default in respect of a provision that under Section 9.02 would require the consent of each Noteholder affected.

When a Default is waived, it is deemed cured.

    SECTION 6.05 Control by Majority. The Noteholders of a majority in aggregate principal amount of the outstanding Notes may direct the time, method and place of conducting any proceedings for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Noteholders or would involve the Trustee in personal liability or expense that is not adequately indemnified in the judgment of the Trustee; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent

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with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

     SECTION 6.06 Limitation on Suits. Except to enforce the right to receive payment of principal or interest when due, no Noteholder may pursue any remedy with respect to this Indenture or the Notes unless:

     (a) the Noteholder gives to the Trustee written notice stating that an Event of Default is continuing;

     (b) the Noteholders of at least 25% in aggregate principal amount of the outstanding Notes make a written request to the Trustee to pursue the remedy;

     (c) such Noteholder or Noteholders offer to the Trustee security or indemnity reasonably satisfactory to it against any costs, liability or expense of the Trustee;

     (d) the Trustee fails to comply with the request within 60 calendar days after receipt of the request and the offer of security or indemnity; and

     (e) the Noteholders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction inconsistent with the request during such 60-calendar day period.

A Noteholder may not use this Indenture to prejudice the rights of another Noteholder or to obtain a preference or priority over another Noteholder.

     SECTION 6.07 Rights of Noteholders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Noteholder to receive payment of principal of and interest on the Notes held by such Noteholder, on or after the respective due dates expressed in the Notes, or to convert such Note in accordance with Article 10, or to bring suit for the enforcement of any such payment or right to convert on or after such respective dates, shall not be impaired or affected without the consent of such Noteholder.

     SECTION 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.

     SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Noteholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Noteholders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Noteholder to make payments to the Trustee and, in the event that the Trustee

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shall consent to the making of such payments directly to the Noteholders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

     SECTION 6.10 Priorities. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

     FIRST: to the Trustee for amounts due under Section 7.07;

     SECOND: to Noteholders for amounts due and unpaid on the Notes for principal and interest, ratably without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and

     THIRD: to the Company.

     The Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section. At least 15 calendar days before such record date, the Trustee shall mail to each Noteholder and the Company a notice that states the record date, the payment date and amount to be paid.

     SECTION 6.11 Undertaking for Costs. 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 or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, or a suit by Noteholders of more than 10% in aggregate principal amount of the Notes or to any suit instituted by any Holder of Notes for the enforcement of the payment of the principal of or interest on any Notes on or after the due date expressed in such Notes or to any suit for the enforcement of the right to convert any Notes in accordance with the provisions of Article 10.

     SECTION 6.12 Waiver of Stay, Extension or Usury Laws. The Company shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury 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 hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

     SECTION 6.13 Sole Remedy for Failure to Report. Notwithstanding any other provision of this Indenture, the Company may elect by written notice to the Trustee that the sole remedy for an Event of Default relating to the failure of the Company to comply with its agreements under Section 4.08(a) of this Indenture or the requirements of Section 314(a)(1) of the TIA will for the 365 calendar days after the occurrence of such an Event of Default consist exclusively of the right to receive additional interest (“Reporting Additional Interest”) on the principal amount of the Notes at a rate equal to 0.25% per annum for the first 180 calendar days

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after the occurrence of such an Event of Default and 0.50% per annum from the 181st calendar day until the 365th day after the occurrence of such an Event of Default. Such Reporting Additional Interest shall be payable in the same manner and on the same Interest Payment Dates and subject to the same terms as other interest payable under this Indenture. Reporting Additional Interest shall accrue on all outstanding Notes from and including the date on which such Event of Default relating to a failure to comply with Section 4.08(a) first occurs to but not including the 365th calendar day thereafter (or such earlier date on which the Event of Default relating to a failure to comply with Section 4.08(a) shall have been cured or waived). On such 365th calendar day (or such earlier date on which the Event of Default relating to a failure to comply with Section 4.08(a) shall have been cured or waived), such Reporting Additional Interest shall cease to accrue and on such 365th calendar day the Notes shall be subject to acceleration and other remedies as provided in this Article 6 if the Event of Default is continuing. For the avoidance of doubt, the provisions of this Section 6.13 shall not affect the rights of Holders of Notes in the event of the occurrence of any other Event of Default and shall have no effect on the rights of Holders of Notes under each Registration Rights Agreement. In the event the Company does not elect to pay Reporting Additional Interest upon an Event of Default relating to failure to comply with Section 4.08(a), the Notes shall be subject to acceleration as provided in Section 6.02. For the further avoidance of doubt, the Reporting Additional Interest shall not begin accruing until the Company fails to comply with Section 4.08(a) for a period of 60 calendar days after written notice of such failure is given to the Company by the Trustee or to the Company and the Trustee by the Holder of at least 25% in aggregate principal amount of outstanding Notes.

ARTICLE 7
TRUSTEE

     SECTION 7.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

     (b) Except during the continuance of an Event of Default:

          (1) the Trustee need only perform 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. However, in the case of certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

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     (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

     (d) In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

     (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

     (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

     (g) In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

     (h) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial loss, expense or 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 to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

     (i) The Trustee will not be liable for any error of judgment made in good faith by a responsible officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.

     (j) 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 and to the provisions of the TIA.

     (k) No later than 1:00 p.m., New York City time, on the Trading Day after the Conversion Agent receives a Conversion Notice that has been validly tendered in accordance with Section 10.02, the Trustee shall deliver a notice stating (a) the number of options under the applicable convertible bond hedge transaction that will be exercised equal to (i) the aggregate principal amount of Notes that are being tendered for conversion pursuant to such Conversion Notice divided by (ii) $2,000, (b) the scheduled commencement date of the Conversion Period relating to such Conversion Notice, and (c) the anticipated date that the Conversion Settlement

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Amount relating to such Conversion Notice will be delivered in accordance with Section 10.11 to converting Holders by facsimile or by hand to:

Lehman Brothers Inc., acting as Agent
Lehman Brothers OTC Derivatives Inc., acting as Principal
745 Seventh Avenue
New York, NY 10019
Andrew Yare — Transaction Management Group
Facsimile No.: (646) 885-9546

and;

JPMorgan Chase Bank, National Association
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Eric Stefanik
Title: Operations Analyst
EDG Corporate Marketing
Facsimile No.: (212) 622-8534

The Trustee shall not have any liability to the Company or any other Person as a result of its failure to deliver such notice.

     SECTION 7.02 Rights of Trustee. (a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

     (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.

     (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

     (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

     (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

     (f) 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, consent, order, approval, bond, debenture, note 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

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fit at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation.

     (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Noteholders pursuant to the provisions of this Indenture, unless such Noteholders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby.

     (h) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its rights to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

     (i) The Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

     (j) The permissive rights of the Trustee enumerated herein shall not be construed as duties.

     (k) The Trustee shall not be required to give any note, bond or surety in respect of the execution of the trusts and powers under this Indenture.

     SECTION 7.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Conversion Agent, Paying Agent, Registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

     SECTION 7.04 Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

     SECTION 7.05 Notice of Defaults. (a) The Trustee shall not be deemed to have notice of any Default, other than a payment default, unless a Trust Officer shall have been advised in writing that a Default has occurred. No duty imposed upon the Trustee in this Indenture shall be applicable with respect to any Default of which the Trustee is not deemed to have notice.

     (b) If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Noteholder notice of the Default within 90 calendar days after it is known to a

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Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in payment of principal or interest on any Note, the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Noteholders.

     SECTION 7.06 Reports by Trustee to Noteholders. As promptly as practicable after each October 15, beginning with October 15, 2007, and in any event prior to December 31 in each subsequent year, the Trustee shall, to the extent that any of the events described in TIA § 313(a) occurred within the previous twelve months, but not otherwise, mail to each Noteholder a brief report dated as of October 15 that complies with Section 313(a) of the TIA. The Trustee shall also comply with Section 313(b) of the TIA.

     A copy of each report at the time of its mailing to Noteholders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed. The Company agrees to notify promptly the Trustee, in writing, whenever the Notes become listed on any stock exchange and of any delisting thereof.

     SECTION 7.07 Compensation and Indemnity. The Company shall pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Company shall indemnify the Trustee, and hold it harmless, against any and all loss, claim, damage, liability or expense (including reasonable attorneys’ fees and expenses) incurred by or in connection with the offer and sale of the Notes or the administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided, however, that any failure so to notify the Company shall not relieve the Company of its indemnity obligations hereunder. The Company shall defend the claim and the indemnified party shall provide reasonable cooperation at the Company’s expense in the defense. Such indemnified parties may have separate counsel and the Company shall pay the fees and expenses of such counsel; provided, however, that the Company shall not be required to pay such fees and expenses if it assumes such indemnified parties’ defense and, in such indemnified parties’ reasonable judgment, there is no conflict of interest between the Company and such parties in connection with such defense. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party determined to have been caused by such party’s own willful misconduct and negligence.

     To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes.

     The Company’s payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under

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any bankruptcy law or the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(g) or (h) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

     SECTION 7.08 Replacement of Trustee. The Trustee may resign at any time by so notifying the Company. The Holders of a majority in aggregate principal amount of the Notes may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if:

     (a) the Trustee fails to comply with Section 7.10;

     (b) the Trustee is adjudged bankrupt or insolvent;

     (c) a receiver or other public officer takes charge of the Trustee or its property; or

     (d) the Trustee otherwise becomes incapable of acting.

     If the Trustee resigns, is removed by the Company or by the Holders of a majority in aggregate principal amount of the Notes and such Noteholders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Noteholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

     If a successor Trustee does not take office within 60 calendar days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in aggregate principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

     If the Trustee fails to comply with Section 7.10, any Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     Notwithstanding the replacement of the Trustee pursuant to this Section, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

     SECTION 7.09 Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

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     In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.

     SECTION 7.10 Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA § 310(a). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b); provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

     SECTION 7.11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

ARTICLE 8
DISCHARGE OF INDENTURE

     SECTION 8.01 Discharge of Liability on Notes. (a) When (i) the Company delivers to the Registrar all outstanding Notes (other than Notes replaced pursuant to Section 2.09) for cancellation or (ii) all outstanding Notes have become due and payable, whether at maturity or upon a repurchase pursuant to Article 3 hereof, and the Company irrevocably deposits with the Trustee money sufficient to pay at maturity or upon repurchase all outstanding Notes, including interest thereon to maturity or such repurchase date (other than Notes replaced pursuant to Section 2.09), and cash and any shares of Common Stock or other property due in respect of converted Notes, and if in each such case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(b), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Company.

     (b) Notwithstanding clause (a) above, the Company’s obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 2.10, 7.07, 7.08 and in this Article 8 shall survive until the Notes have been paid in full. Thereafter, the Company’s rights and obligations in Sections 7.07, 8.03 and 8.04 shall survive.

     SECTION 8.02 Application of Trust Money. The Trustee shall hold in trust money and any shares of Common Stock or other property due in respect of converted Notes deposited with it pursuant to this Article 8. It shall apply the deposited money through the

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Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes or, in the case of cash and any shares of Common Stock or other property due in respect of converted Notes, in accordance with this Indenture in relation to the conversion of Notes pursuant to the terms hereof.

     SECTION 8.03 Repayment to Company. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time.

     Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest and cash and any shares of Common Stock or other property due in respect of converted Notes that remains unclaimed for two years, and, thereafter, Noteholders entitled to the money and/or securities must look to the Company for payment as general creditors.

     SECTION 8.04 Reinstatement. If the Trustee or Paying Agent is unable to apply any money or to deliver any shares of Common Stock or other property due in respect of converted Notes in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money and any shares of Common Stock or other property due in respect of converted Notes in accordance with this Article 8; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Noteholders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9
AMENDMENTS

     SECTION 9.01 Without Consent of Noteholders. The Company and the Trustee may amend this Indenture or the Notes without notice to or consent of any Noteholder:

     (a) to provide for the conversion rights of Holders of the Notes and the Company’s repurchase obligations in connection with a Fundamental Change in the event of any change or reclassification of the Common Stock, merger, consolidation, or sale, conveyance, transfer or lease of all or substantially all of the Company’s property and assets and the property and assets of the Company’s subsidiaries taken as a whole;

     (b) to secure the Notes;

     (c) to comply with Article 5;

     (d) to surrender any right or power herein conferred upon the Company;

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     (e) to add to the covenants of the Company for the benefit of the Noteholders (including adding one or more additional put rights in favor of the Noteholders);

     (f) to cure any ambiguity or correct or supplement any inconsistent or otherwise defective provision contained in this Indenture; provided that such modification or amendment does not adversely affect the interests of the Holders of the Notes in any material respect; provided, further, that any amendment made solely to conform the provisions of this Indenture to the Description of the Notes contained in the Company’s Offering Memorandum dated June 18, 2007 will not be deemed to adversely affect the interests of the Holders of the Notes;

     (g) make any provision with respect to matters or questions arising under the Indenture that the Company may deem necessary or desirable and that shall not be inconsistent with provisions of this Indenture; provided that such change or modification does not, in the good faith opinion of the Board of Directors, adversely affect the interests of the holders of the Notes in any material respect;

     (h) to increase the Conversion Rate; provided that the increase will not adversely affect the interests of the Holders of the Notes;

     (i) to comply with any requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;

     (j) to add guarantees of obligations under the Notes;

     (k) to make any changes or modifications necessary in connection with the registrations of the Notes under the Securities Act as contemplated in each Registration Rights Agreement; provided that such change or modification does not adversely affect the interests of the Holders of the Notes in any material respect;

     (l) to provide for a successor Trustee; or

     (m) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code.

     After an amendment under this Section becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment. The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

     SECTION 9.02 With Consent of Noteholders. The Company and the Trustee may amend this Indenture or the Notes with the written consent or affirmative vote of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or a tender offer or exchange offer for the Notes), without prior notice to any other Noteholder. However, without the written consent of each Holder of an outstanding Note affected (including, without limitation,

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consents obtained in connection with or purchase of, or tender offer or exchange offer for, the Notes), an amendment may not:

     (a) extend the Maturity Date of any Note;

     (b) reduce the rate or extend the time for payment of interest on any Note;

     (c) reduce the principal amount of any Note;

     (d) reduce the amount payable upon repurchase of any Notes;

     (e) impair the right of a Holder to receive payment with respect to the Notes, including payment of interest, or institute suit for payment of any Note;

     (f) make any Note payable in a currency other than that stated in the Note;

     (g) change the Company’s obligation to repurchase any Notes upon a Fundamental Change in a manner adverse to the Holders;

     (h) affect the right of a Holder to convert any Note into cash and, if applicable, shares of Common Stock, or reduce the number of shares of Common Stock or any other property, including cash, receivable upon conversion pursuant to the terms of this Indenture;

     (i) change the Company’s obligation to maintain an office or agency in New York City under Section 4.02 hereof;

     (j) modify Sections 9.01 and 9.02 or modify Section 6.04, except to increase the percentage in aggregate principal amount of the outstanding Notes required for waiver or to provide for consent of each affected Holder of Notes; or

     (k) reduce the percentage in aggregate principal amount of the outstanding Notes required for consent to any modification of the Indenture that does not require the consent of each affected Holder.

     For the avoidance of doubt, the only written consent or affirmative vote required to approve any of the foregoing changes is the written consent or affirmative vote of the Holder of each Note affected by such change; the written consent or affirmative vote of the Holders of a majority in aggregate principal amount of the outstanding Notes is not additionally required.

     It is not necessary for the consent of the Holders of Notes under this Indenture to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance thereof.

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     After an amendment under this Section becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment. The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

     SECTION 9.03 Compliance with Trust Indenture Act. Every amendment to this Indenture or the Notes shall comply with the TIA as then in effect.

     SECTION 9.04 Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a Noteholder of a Note shall bind the Noteholder and every subsequent Noteholder of that Note or portion of the Note that evidences the same debt as the consenting Noteholder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Noteholder or subsequent Noteholder may revoke the consent or waiver as to such Noteholder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. An amendment or waiver becomes effective once both (i) the requisite number of consents have been received by the Company or the Trustee and (ii) such amendment or waiver has been executed by the Company and the Trustee.

     The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Noteholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Noteholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Noteholders after such record date. No such consent shall be valid or effective for more than 120 calendar days after such record date.

     For purposes of this Indenture, the consent of the Holder of a Global Note shall be deemed to include any consent delivered by any member of, or participant in, any Depositary or DTC, any nominees thereof and their respective successors and assigns, or such other depositary institution hereinafter appointed by the Company (“Depositary Entity”) by electronic means in accordance with the Automated Tender Offer Procedures system or other customary procedures of, and pursuant to authorization by, such Depositary Entity.

     Without limiting the generality of this Section 9.04, unless otherwise provided in or pursuant to this Indenture, a Holder, including a Depositary or its nominee that is a Holder of a Global Note, may give, make or take, by an agent or agents duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted in or pursuant to this Indenture to be given, made or taken by Holders, and a Depositary or its nominee that is a Holder of a Global Note may duly appoint in writing as its agent or agents members of, or participants in, such Depositary holding interests in such Global Note in the records of such Depositary, with regard to all or any part of the principal amount of such Note.

     Nothing in this paragraph shall be construed to prevent the Company or the Trustee from fixing a new record date for any action for which a record date has previously been set pursuant

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to this paragraph (whereupon the record date previously set shall automatically and with no further action by any Person be canceled and of no effect).

     SECTION 9.05 Notation on or Exchange of Notes. If an amendment changes the terms of a Note, the Trustee may require the Noteholder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Noteholder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

     SECTION 9.06 Trustee to Sign Amendments. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be provided with, and (subject to Section 7.01) shall be fully protected in relying upon, in addition to the documents required by Section 11.04, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03).

ARTICLE 10
CONVERSION OF NOTES

     SECTION 10.01 Right to Convert. (a) Subject to and upon compliance with the provisions of this Indenture, on or prior to 5:00 p.m., New York City time, on the second Business Day immediately preceding the Maturity Date, the Holder of any Notes not previously repurchased shall have the right, at such Holder’s option, to convert the principal amount of the Notes held by such Holder, or any portion of such principal amount which is an integral multiple of $1,000, into cash and, if applicable, fully paid and non-assessable shares of Common Stock as described in Section 10.11, at the Conversion Rate in effect at such time, by surrender of the Notes so to be converted in whole or in part, together with any required funds, under the circumstances described in this Section 10.01 and in the manner provided in Section 10.02. The Notes shall be convertible, on or prior to 5:00 p.m., New York City time, on the second Business Day immediately preceding the Maturity Date, only during the following periods:

     (1) on any date during any Fiscal Quarter beginning after October 31, 2007 (and only during such Fiscal Quarter), if the Closing Sale Price of a share of Common Stock was more than 130% of the then current Conversion Price for at least 20 Trading Days in the 30 consecutive Trading-Day period ending on the last Trading Day of the immediately preceding Fiscal Quarter;

     (2) on any date that is on or after March 15, 2012;

     (3) if the Company distributes to all holders of Common Stock rights or warrants (other than pursuant to a shareholder rights plan) entitling them to purchase, for a period of 45 calendar days or less, Common Stock at a price less than the average

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Closing Sale Price per share of the Common Stock for the 10 Trading Days preceding the declaration date for such distribution;

     (4) if the Company distributes to all holders of Common Stock, cash or other assets, debt securities or rights to purchase the Company’s securities (other than pursuant to a shareholder rights plan, which distribution has a per share value as determined by the Board of Directors exceeding 10% of the Closing Sale Price per share of the Common Stock on the Trading Day preceding the declaration for such distribution;

     (5) if a transaction constituting a Fundamental Change of the type described in clauses (a) or (d) of the definition of Fundamental Change occurs, at any time beginning on the Business Day following the effective date of the Fundamental Change until 5:00 p.m., New York City time, on the Business Day preceding the Fundamental Change Repurchase Date relating to such Fundamental Change;

     (6) during the five Business Day period immediately following any five consecutive Trading-Day period in which the average Trading Price per $1,000 principal amount of the Notes was less than 98% of the product of (x) the average Closing Sale Price of a share of Common Stock for each day during such five Trading Day period multiplied by (y) the applicable Conversion Rate, as determined following a request by a Holder of Notes as set forth in Section 10.01(c) below; and

     (7) at any time beginning 15 calendar days prior to the date announced by the Company as the anticipated effective date of, and ending on and including the date that is 15 calendar days after the actual effective date of, any transaction in which the Company is party to a consolidation, merger, binding share exchange or sale or conveyance of all or substantially all of the Company’s property and assets that does not constitute a Fundamental Change, in each case pursuant to which all or substantially all of the Common Stock would be converted into cash, securities and/or other property; provided, however, that notwithstanding the foregoing, the Notes shall not be convertible under this clause (7) by reason of a transaction described in subclause (i) or subclause (ii) of clause (d) of the definition of Fundamental Change or a transaction that is excluded from the definition of Fundamental Change by the paragraph set forth below clause (e) of the definition of Fundamental Change.

     (b) In the case of a distribution contemplated by clause (3) or (4) of Section 10.01(a), the Company shall notify Holders of Notes at least 20 calendar days prior to the Ex-Dividend Date for such distribution (the “Distribution Notice”). On the date such Distribution Notice is given, the Company shall issue a press release containing the relevant information and make this information available on the Company Website. Once the Company has given the Distribution Notice, Holders may surrender their Notes for conversion at any time until the earlier of (i) 5:00 p.m., New York City time, on the Business Day preceding the Ex-Dividend Date or (ii) the Company’s announcement that such distribution will not take place. In the event of a distribution contemplated by clause (3) or (4) of Section 10.01(a), Holders may not convert the Notes if the Holders may otherwise participate in such distribution without converting their Notes.

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     (c) The Trustee shall have no obligation to determine the Trading Price of the Notes and whether the Notes are convertible pursuant to clause (6) of Section 10.01(a) unless the Company has requested such determination; and the Company shall have no obligation to make such request unless a Holder of the Notes makes a request for a determination. At such time, the Company shall instruct the Trustee to determine the Trading Price of the Notes for each successive Trading Day until it is determined that the Trading Price for the Notes for a Trading Day is not less than 98% of the product of the Closing Sale Price of the Common Stock and the applicable Conversion Rate, and to notify the Company accordingly. The Trustee’s sole duty in respect of such determination shall consist of requesting and receiving, and, if applicable, averaging the quotations provided by the independent nationally recognized securities dealers referred to in the definition of “Trading Price.”

     The Trustee shall be entitled at its sole discretion to consult with the Company and to request the assistance of the Company in connection with the Trustee’s duties and obligations pursuant to this Section 10.01(c) (including without limitation the calculation or determination of the Conversion Rate, the Closing Sale Price and the Trading Price), and the Company agrees, if requested by the Trustee, to cooperate with, and provide assistance to, the Trustee in carrying out its duties under this Section 10.01(c).

     (d) Whenever the Notes shall become convertible pursuant to Section 10.01(a)(1) or (6), the Company shall promptly notify the Trustee and the Conversion Agent, and the Company or, at the Company’s request, the Trustee in the name and at the expense of the Company, shall promptly notify the Holders, of the event triggering such convertibility in the manner provided in Section 11.02. Whenever the Notes shall become convertible pursuant to Section 10.01(a)(5), the Company shall at least 10 calendar days prior to the anticipated effective date of the relevant transaction or fundamental change, as applicable, notify the Trustee and the Conversion Agent, and the Company, or, at the Company’s request, the Trustee in the name and at the expense of the Company, shall promptly notify the Holders, of the event triggering such convertibility in the manner provided in Section 11.02. In each case, simultaneously with providing such notice, the Company shall also publicly announce such information and make this information available on the Company Website or through another public medium the Company uses at that time. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.

     (e) Notwithstanding any other provision of this Indenture, prior to the receipt by the Company of the Stockholder Approval, the maximum number of shares of Common Stock that the Company shall be obligated to deliver upon conversion of each $1,000 principal amount of Notes pursuant to this Article 10 shall be limited to the Share Cap, provided, however, the Share Cap will apply only with respect to the issuance of the Common Stock upon conversion of the Notes, and not to payment of cash or the issuance of other securities into which the Notes may be convertible.

     SECTION 10.02 Exercise of Conversion Right; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends. In order to exercise the conversion right with respect to any Notes in certificated form, a Holder must (A) complete and manually sign an irrevocable notice of conversion in the form entitled “Form of Conversion Notice”

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attached to the reverse of such certificated Note (or a facsimile thereof) (a “Conversion Notice”), (B) deliver such Conversion Notice and certificated Note to the Conversion Agent at the office of the Conversion Agent, (C) to the extent any shares of Common Stock issuable upon conversion are to be issued in a name other than the Holder’s, furnish endorsements and transfer documents as may be required by the Conversion Agent, (D) if required pursuant to Section 10.07, pay all transfer or similar taxes or duties and (E) if required pursuant to Section 2.03, pay funds equal to interest payable on the next Interest Payment Date.

     In order to exercise the conversion right with respect to any interest in a Global Note, the Holder must (A) complete, or cause to be completed, the appropriate instruction form for conversion pursuant to the Depositary’s book-entry conversion procedures; (B) deliver, or cause to be delivered, by book-entry delivery an interest in such Global Note; (C) furnish appropriate endorsements and transfer documents if required by the Company or the Trustee or Conversion Agent; and (D) pay the funds, if any, required by Section 2.03 and any transfer or similar taxes or duties if required pursuant to Section 10.07.

     Notes in respect of which a Holder has delivered a Repurchase Notice exercising such Holder’s right to require the Company to repurchase such Notes pursuant to Section 3.01 may be converted only if such Repurchase Notice is withdrawn in accordance with Section 3.03 prior to 5:00 p.m., New York City time, on the Business Day immediately preceding the Fundamental Change Repurchase Date, unless the Company defaults in the payment of the repurchase price.

     Each conversion shall be deemed to have been effected as to any such Notes (or portion thereof) immediately prior to 5:00 p.m., New York City time, on the date on which the requirements set forth above in this Section 10.02 have been satisfied as to such Notes (or portion thereof) (the “Conversion Date”).

     The cash and, if applicable, shares of Common Stock into which the Notes are converted (and cash in lieu of fractional shares) will be delivered to such Holder after satisfaction of the requirements for conversion set forth above, in accordance with Section 10.11.

     In case any Notes of a denomination greater than $1,000 shall be surrendered for partial conversion, and subject to Section 2.03, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of the Notes so surrendered, without charge to the Holder, a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Notes.

     Upon the conversion of an interest in a Global Note, the Trustee (or other Conversion Agent appointed by the Company) and the Depositary shall reduce the principal amount of such Global Note in their records. The Company shall notify the Trustee in writing of any conversions of Notes effected through any Conversion Agent other than the Trustee.

     Except as provided in Section 2.03, upon conversion, a Holder will not receive any separate cash payment of accrued and unpaid interest on the Notes. Except as provided in Section 2.03, accrued and unpaid interest, if any, to the Conversion Date is deemed to be paid in full rather than cancelled, extinguished or forfeited.

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     A Holder of Notes is not entitled to any rights of a holder of Common Stock until such Holder has converted its Notes to Common Stock, and only to the extent such Notes are deemed to have been converted to Common Stock under this Article 10. Subject to Section 10.05(j), the Holder of Notes that has converted its Notes (or if such person designated another person to whom such Common Stock shall be issued and delivered, such person) shall be treated as a holder of record of such Common Stock as of 5:00 p.m., New York City time, on the final Trading Day of the applicable Conversion Period.

     If the cash paid by the Company to a Holder upon conversion of the Notes pursuant to this Article 10 is not sufficient to allow the Company to comply with the United States federal withholding tax obligations imposed by the Code with respect to accrued and unpaid interest on the Notes payable to the beneficial owner of such Notes, the Company may, to the extent required by applicable law, recoup or set-off such liability against any amounts owed to such Holder, including, but not limited to, the shares of Common Stock to be issued upon conversion to such beneficial owner or any actual cash dividends or distributions subsequently made with respect to such shares of Common Stock to such beneficial owner.

     SECTION 10.03 Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip certificates representing fractional shares shall be issued upon conversion of Notes. If more than one Note shall be surrendered for conversion at one time by the same Holder, the number of full shares that shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of stock would be issuable upon the conversion of any Note or Notes, the Company shall instead deliver cash with respect to the fractional share calculated by multiplying the Volume Weighted Average Price on the final Trading Day of the applicable Conversion Period by the fractional amount and rounding the product to the nearest cent.

     SECTION 10.04 Conversion Rate.

     (a) Each $1,000 principal amount of the Notes shall be convertible into cash and the number of shares of Common Stock, if any, based upon the Conversion Rate, which is subject to adjustment as provided in this Section 10.04 and Section 10.05.

     (b) Subject to Section 10.12, if and only to the extent a Holder elects to convert Notes in connection with a Non-Stock Change of Control, the Company shall increase the Conversion Rate applicable to such converted Notes by a number of additional shares of Common Stock (the “Additional Shares”) as set forth below. A conversion of the Notes by a Holder will be deemed for these purposes to be “in connection with” a Non-Stock Change of Control if the Conversion Notice is received by the Conversion Agent during the period from the Business Day following the Effective Date of the Non-Stock Change of Control to 5:00 p.m., New York City time, on the Business Day immediately preceding the related Fundamental Change Repurchase Date.

     The number of Additional Shares shall be determined by reference to the table below, based on the date on which the Non-Stock Change of Control occurs or becomes effective (the “Effective Date”) and the Stock Price paid per share for the Common Stock in the Non-Stock Change of Control. The numbers of Additional Shares set forth in the table below shall be

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adjusted as of any date on which the Conversion Rate is adjusted in the same manner in which the Conversion Rate is adjusted. The Stock Prices set forth in the first row of the table below (i.e., the column headers) shall be adjusted, as of any date on which the Conversion Rate is adjusted, to equal the Stock Price applicable immediately prior to such adjustment multiplied by a fraction, of which

     (1) the numerator shall be the Conversion Rate immediately prior to the adjustment and

     (2) the denominator shall be the Conversion Rate as so adjusted.

     The following table sets forth the Stock Price and number of Additional Shares by which the Conversion Rate shall be increased:

Stock price

Effective Date	$	36.68	$	44.02	$	50.00	$	60.00	$	70.00	$	80.00	$	90.00	$	100.00	$	120.00	$	140.00	$	160.00
June 22, 2007		4.5438		2.8578		2.0293		1.2128		0.7669		0.5055		0.3429		0.2366		0.1139		0.0515		0.0185
June 15, 2008		4.5438		2.7759		1.9102		1.0869		0.6590		0.4198		0.2771		0.1870		0.0863		0.0367		0.0111
June 15, 2009		4.5438		2.6242		1.7199		0.9050		0.5135		0.3108		0.1977		0.1298		0.0571		0.0222		0.0044
June 15, 2010		4.5438		2.3722		1.4271		0.6504		0.3271		0.1825		0.1112		0.0717		0.0308		0.0105		0.0002
June 15, 2011		4.5438		1.8953		0.9221		0.2813		0.1016		0.0496		0.0310		0.0215		0.0099		0.0020		—
June 15, 2012		4.5438		—		—		—		—		—		—		—		—		—		—

     provided, however, that:

     (i) If the actual Stock Price and actual Effective Date are not set forth on the table above and the actual Stock Price is between two Stock Prices on the table or the actual Effective Date is between two days on the table, the number of Additional Shares shall be determined by straight-line interpolation between the number of Additional Shares of Common Stock set forth for the higher and lower Stock Price and the two Effective Dates, as applicable, based on a 365-day year;

     (ii) If the actual Stock Price is in excess of $160.00 per share (subject to adjustment in the same manner as and as of any date on which the Stock Prices are adjusted in the table above), the Conversion Rate will not be increased; or

     (iii) If the actual Stock Price is less than $36.68 per share (subject to adjustment in the same manner as and as of any date on which the Stock Prices are adjusted in the table above), the Conversion Rate will not be increased.

     Notwithstanding the foregoing, in no event will the Conversion Rate exceed 27.2628 per $1,000 principal amount of the Notes, subject to adjustments in the same manner as and as of any date on which the numbers of Additional Shares set forth in the above table are adjusted.

     SECTION 10.05 Adjustment of Conversion Rate. The Conversion Rate shall be adjusted from time to time by the Company as follows:

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     (a) In case the Company shall, at any time or from time to time while any of the Notes are outstanding, pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to all Holders of its outstanding shares of Common Stock (other than a dividend or distribution upon a transaction to which Section 10.06 applies), then the Conversion Rate shall be adjusted based on the following formula:

     where

CR0	=	the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution;
CR1	=	the Conversion Rate in effect at 9:00 a.m., New York City time, on the Ex-Dividend Date for such dividend or distribution;
OS0	=	the number of shares of Common Stock outstanding at 5:00 p.m., New York City time, on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and
OS1	=	the number of shares of Common Stock that would be outstanding immediately after giving effect to such dividend or distribution.

     Any adjustment made pursuant to this Section 10.05(a) shall become effective at 9:00 a.m., New York City time, on the Ex-Dividend Date for such dividend or distribution. If any dividend or distribution that is the subject of this Section 10.05(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay or make such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

     (b) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock or combined into a smaller number of shares of Common Stock or reclassified (in each case, other than upon a transaction to which Section 10.06 applies), the Conversion Rate shall be adjusted based on the following formula:

     where

CR₀ = the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the effective date of such subdivision, combination or reclassification;

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CR1	=	the Conversion Rate in effect at 9:00 a.m., New York City time, on the effective date of such subdivision, combination or reclassification;
OS0	=	the number of shares of Common Stock outstanding at 5:00 p.m., New York City time, on the Trading Day immediately preceding the effective date of such subdivision, combination or reclassification; and
OS1	=	the number of shares of Common Stock that would be outstanding immediately after, giving effect to such subdivision, combination or reclassification.

     Any adjustment made pursuant to this Section 10.05(b) shall become effective at 9:00 a.m., New York City time, on the effective date of such subdivision, combination or reclassification.

     (c) In case the Company shall issue rights or warrants to all holders of its outstanding shares of Common Stock (other than upon a transaction to which Section 10.06 applies) entitling them to purchase, for a period of up to 45 calendar days, shares of Common Stock at a price per share less than the Current Market Price, the Conversion Rate shall be adjusted based on the following formula:

     where

CR0	=	the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the Ex-Dividend Date for such issuance;
CR1	=	the Conversion Rate in effect at 9:00 a.m., New York City time, on the Ex-Dividend Date for such issuance;
OS0	=	the number of shares of the Common Stock that are outstanding at 5:00 p.m., New York City time, on the Trading Day immediately preceding the Ex-Dividend Date for such issuance;
X	=	the total number of shares of the Common Stock issuable pursuant to such rights or warrants; and
Y	=	the number of shares of the Common Stock equal to the quotient of (x) aggregate price payable to exercise such rights or warrants, divided by (y) the Current Market Price of the Common Stock.

     Any adjustment made pursuant to this Section 10.05(c) shall become effective at 9:00 a.m., New York City time, on the Ex-Dividend Date for such issuance. The Company shall not issue any such rights or warrants in respect of shares of the Common Stock held in treasury by

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the Company. If any rights or warrants described in this Section 10.05(c) are not so issued, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to issue such rights or warrants, to the Conversion Rate that would then be in effect if such issuance had not been declared. To the extent that such rights or warrants are not exercised prior to their expiration or shares of the Common Stock are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.

     In determining the aggregate price payable for such shares of the Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants and the value of such consideration (if other than cash, to be determined by the Board of Directors).

     (d) (A) In case the Company shall, by dividend or otherwise, distribute to all holders of its outstanding shares of Common Stock shares of any class of Capital Stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (including securities, but excluding (i) any dividends or distributions referred to in Section 10.05(a), (ii) any rights or warrants referred to in Section 10.05(c), (iii) any dividends or distributions referred to in Section 10.05(e), (iv) any dividends or distributions in connection with a transaction to which Section 10.06 applies, or (v) any Spin-Offs to which the provisions set forth below in this Section 10.05(d) applies) (any such distribution hereinafter in this Section 10.05(d) being referred to as the “Distributed Assets”), then, in each such case, the Conversion Rate shall be adjusted based on the following formula:

     where

CR0	=	the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the Ex-Dividend Date for such distribution;
CR1	=	the Conversion Rate in effect at 9:00 a.m., New York City time, on the Ex-Dividend Date for such distribution;
SP0	=	the Current Market Price of the Common Stock; and
FMV	=	the Fair Market Value on the Ex-Dividend Date for such distribution of the Distributed Assets so distributed applicable to one share of Common Stock.

     (B) Where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to

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a Subsidiary or other business unit of the Company (such transaction being referred to as a “Spin-Off” and such shares of Capital Stock or similar equity interest being referred to as the “Spin-Off Distributed Assets”), then the Conversion Rate shall instead be adjusted based on the following formula:

     where

CR0	=	the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the effective date of the Spin-Off;
CR1	=	the Conversion Rate in effect at 9:00 a.m., New York City time, on the effective date of the Spin-Off;
FMV0	=	the average of the Closing Sale Prices of the Spin-Off Distributed Assets applicable to one share of Common Stock over the ten consecutive Trading Day period commencing on and including the effective date of the Spin-Off (the “Spin-Off Valuation Period”); and
SP0	=	the average of the Closing Sale Prices of the Common Stock over the Spin-Off Valuation Period.

     Any adjustment made pursuant to this Section 10.05(d)(B) shall become effective at 5:00 p.m., New York City time, on the tenth Trading Day from, and including, the effective date of the Spin-Off; provided that in respect of any conversion within the ten Trading Days immediately following, and including, the effective date of any Spin-Off, references with respect to the Spin-Off Valuation Period to ten Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed between the effective date of such Spin-Off and the conversion date in determining the applicable Conversion Rate.

     If an adjustment to the Conversion Rate is required under this Section 10.05(d)(B) during any Conversion Period in respect of Notes that have been tendered for conversion, delivery of the related Conversion Settlement Amount shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 10.05(d)(B). If any dividend or distribution of the type described in this Section 10.05(d) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

     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

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Common Stock, shall be deemed not to have been distributed for purposes of this Section 10.05 (and no adjustment to the Conversion Rate under this Section 10.05 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 10.05(d). If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new rights or warrants with such rights (and a termination or expiration of the existing rights or warrants without exercise by any of the holders 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 was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 10.05 was made, (1) in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by any Holders thereof, the Conversion Rate 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 or holders of Common Stock with respect to such rights or warrants (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 that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued.

     No adjustment of the Conversion Rate shall be made pursuant to this Section 10.05(d) in respect of rights or warrants distributed or deemed distributed on any Trigger Event to the extent that such rights or warrants are actually distributed or reserved by the Company for distribution to Holders of Notes upon conversion by such Holders of Notes to Common Stock.

     (e) In case the Company shall pay a dividend or otherwise distribute to all holders of its Common Stock a dividend or other distribution of exclusively cash excluding (x) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary and (y) any dividend or distribution in connection with a transaction to which Section 10.06 applies, then the Conversion Rate shall be adjusted based on the following formula:

     where

CR₀ = the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution;

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CR1	=	the Conversion Rate in effect at 9:00 a.m., New York City time, on the Ex-Dividend Date for such dividend or distribution;
SP0	=	the Current Market Price of the Common Stock; and
C	=	the amount in cash per share the Company distributes to holders of its Common Stock.

Any adjustment made pursuant to this Section 10.05(e) shall become effective at 9:00 a.m., New York City time, on the Ex-Dividend Date for such dividend or distribution. If any dividend or distribution of the type described in this Section 10.05(e) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

     (f) In case a tender offer or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders of cash and any other consideration per share of Common Stock having a Fair Market Value as of the last date (the “Expiration Date”) tenders or exchanges may be made pursuant to such tender offer or exchange offer (as it may be amended) that exceeds the Closing Sale Price of a share of Common Stock on the Trading Day next succeeding the Expiration Date, the Conversion Rate shall be adjusted based on the following formula:

     where

CR0	=	the Conversion Rate in effect at 5:00 p.m., New York City time, on the Expiration Date;
CR1	=	the Conversion Rate in effect at 9:00 a.m., New York City time, on the Business Day following the Expiration Date;
FMV	=	the Fair Market Value, on the Expiration Date, of the aggregate consideration payable for shares of Common Stock (a) validly tendered or exchanged and not withdrawn, and (b) accepted for purchase as of the Expiration Date;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the last time tenders or exchanges may be made pursuant to such tender offer or exchange offer (the “Expiration Time”);
OS1	=	the number of shares of Common Stock outstanding immediately after the Expiration Time (including after giving effect to such tender offer or exchange offer; and

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SP₁ = the Closing Sale Prices per share of Common Stock on the Trading Day next succeeding the Expiration Date.

Any adjustment made pursuant to this Section 10.05(f) shall become effective at 9:00 a.m., New York City time, on the Business Day immediately following the Expiration Date. If the Company, or one of its Subsidiaries, is obligated to purchase shares of Common Stock pursuant to any such tender or exchange offer, but the Company or such Subsidiary is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made. Except as set forth in the preceding sentence, if the application of this Section 10.05(f) to any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment shall be made for such tender offer or exchange offer under this Section 10.05(f). If an adjustment to the Conversion Rate is required pursuant to this Section 10.05(f) during any Conversion Period in respect of Notes that have been tendered for conversion, delivery of the related Conversion Settlement Amount shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 10.05(f).

     (g) Except with respect to a Spin-Off, in cases where the Fair Market Value of assets, debt securities or certain rights, warrants or options to purchase the Company’s securities, applicable to one share of Common Stock, distributed to stockholders:

     (i) equals or exceeds the average of the Closing Sales Prices per share of Common Stock for the ten consecutive Trading Days ending on the record date of such distribution, or

     (ii) the Current Market Price of Common Stock exceeds the Fair Market Value of such assets, debt securities or rights, warrants or options so distributed by less than $1.00,

rather than being entitled to an adjustment in the Conversion Rate, the Holder of a Note will be entitled to receive upon conversion, in addition to the cash, and, if applicable, shares of Common Stock, the kind and amount of assets, debt securities or rights, warrants or options comprising the distribution, if any, that such Holder would have received if such Holder had converted such Notes immediately prior to the Record Date for determining the stockholders entitled to receive the distribution.

     (h) For purposes of this Section 10.05, the following terms shall have the meaning indicated:

     (i) “Current Market Price,” with respect to any issuance or distribution, means the average of the Closing Sale Prices per share of Common Stock for the ten consecutive Trading Days immediately prior to the Ex-Dividend Date for such issuance or distribution requiring such computation.

Notwithstanding the foregoing, whenever successive adjustments to the Conversion Rate are called for pursuant to this Section 10.05, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this

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Section 10.05 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors.

     (ii) “Ex-Dividend Date” means the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the relevant dividend, distribution or issuance.

     (i) The Company may (but is not required to) make such increases in the Conversion Rate, in addition to those required by Section 10.05(a)-(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 shares of Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or similar event.

     In addition to the foregoing, to the extent permitted by applicable law and subject to the applicable rules of the New York Stock Exchange or any other securities exchange on which the Common Stock is then listed, the Company from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least 20 calendar days, the increase is irrevocable during the period. Whenever the Conversion Rate is increased pursuant to the preceding sentence, the Company shall mail to Holders of record of the Notes a notice of the increase, which notice will be given at least 15 calendar days prior to the effectiveness of any such increase, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

     (j) If during a period applicable for calculating the Closing Sale Price of Common Stock or any other security, an event occurs that requires an adjustment to the Conversion Rate, the Closing Sale Price of such security shall be calculated for such period in a manner determined by the Company to appropriately reflect the impact of such event on the price of such security during such period. Whenever any provision of this Indenture requires a calculation of an average of Closing Sale Prices of Common Stock or any other security over multiple days, appropriate adjustments shall be made to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date of the event occurs, at any time during the period during which the average is to be calculated.

     If (A) shares of Common Stock or other securities are deliverable as part of the Daily Settlement Amount for a given Trading Day and (B) an adjustment to Conversion Rate pursuant to this Section 10.05 occurs after such Trading Day and prior to the date upon which the Noteholder becomes a record holder in respect of the deliverable shares of Common Stock or other securities, then the number of shares deliverable in respect of such Trading Day shall be adjusted in the same manner that the Conversion Rate has been adjusted. In lieu of an adjustment of the number of shares of Common Stock or other security deliverable to a Noteholder as a portion of Conversion Settlement Amount, the Company may instead deem such Noteholder to be a holder of record of such Common Stock or other security for purposes of that distribution so that such Holder would receive the distribution at the time such Holder receives the Conversion Settlement Amount.

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     (k) No adjustment in the Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in such rate; provided that any adjustments that by reason of this Section 10.05(k) are not required to be made shall be carried forward and the Company shall take such carry forward adjustments into account in any subsequent adjustment, and regardless of whether the aggregate adjustment is less than 1% shall make all such adjustments, (x) annually on the anniversary of the Closing Date and otherwise (y) (1) upon conversion of the Notes, (2) five Business Days prior to the maturity of the Notes (whether at stated maturity or otherwise) or (3) prior to any Fundamental Change Repurchase Date, unless such adjustment has already been made. All calculations under this Article 10 shall be made by the Company and shall be made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of a share, as the case may be. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest or for any issuance of Common Stock or convertible or exchangeable securities or rights to purchase Common Stock or convertible or exchangeable securities. Interest will not accrue on any cash into which the Notes are convertible.

     (l) Whenever the Conversion Rate is adjusted as herein provided, the Company will issue a press release containing the relevant information through Business Wire or a similar service and make this information available on the Company Website or through another public medium the Company may use at that time. In addition, the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers’ Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a responsible officer of the Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume that the last Conversion Rate of which it has actual knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to the Holder of each Notes at its last address appearing on the Register, within 20 calendar days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

     (m) For purposes of this Section 10.05, 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.

     (n) Notwithstanding any of the foregoing clauses in this Section 10.05, the applicable Conversion Rate will not be adjusted pursuant to this Section 10.05 if the Holders of the Notes will participate in the transaction that would otherwise give rise to adjustment pursuant to this Section 10.05 without conversion of such Holder’s Notes.

     (o) If the Conversion Rate is adjusted pursuant to this Indenture, to the extent such adjustment results in a constructive distribution to beneficial owners of Notes under Section 305 of the Code, the Company may, to the extent required by law, recoup or set-off such liability

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against any payments (whether in cash or Common Stock) made with respect to the Notes (or any Common Stock received upon conversion thereof) to such beneficial owners.

     SECTION 10.06 Effect of Reclassification, Consolidation, Merger or Sale. If any of the following events occur, namely:

(a)	any reclassification or change of the outstanding Common Stock (other than a changes resulting from a subdivision or combination), or
(b)	any consolidation or merger of the Company with or into another Person, or any sale, lease, transfer, conveyance or other disposition of all or substantially all of the Company’s assets and the assets of its Subsidiaries, taken as a whole, to any other Person or Persons,

as a result of which holders of Common Stock receive stock, other securities or other property or assets (including cash or any combination thereof) with respect to or in exchange for such Common Stock, in each case, subject to Section 10.12, the Company or the successor or purchasing corporation, 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 each such Note shall, without the consent of any Holders of Notes, become convertible only into the kind and amount of the consideration that the Holders of the Notes would have received if they had converted their Notes solely into Common Stock based on the applicable Conversion Rate immediately prior to the reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition (the “Reference Property”). In all cases, the conditions relating to conversion of Notes specified herein (including in Section 10.01, to the extent applicable, and Section 10.02) (modified as appropriate in the good faith judgment of the Board of Directors to apply properly to the Reference Property in lieu of Common Stock) and the provisions of Section 10.12 relating to the settlement of the conversion obligation upon conversion of Notes shall continue to apply following such transaction. If such transaction causes shares of Common Stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the Reference Property shall be deemed to be the weighted average of the kind and amount of consideration received by the holders of shares of Common Stock that affirmatively made such an election. In the event holders of the Common Stock have the opportunity to elect the form of consideration to be received in such transaction, then from and after the effective date of such transaction, the Notes shall be convertible into the consideration that holders of a majority of the Common Stock who made such an election received in such transaction. The Company may not become a party to any such transaction unless its terms are consistent with the foregoing. Such supplemental indenture shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 10, as determined in good faith by the Company or successor or purchasing corporation.

     If, in the case of any such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition, the stock or other securities and assets received thereupon by a holder of Common Stock includes shares of stock or other securities and assets of

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a corporation other than the successor or purchasing corporation, as the case may be, in such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including to the extent practicable the provisions providing for the conversion rights set forth in this Article 10.

     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 register of the Notes maintained by the Registrar, within 20 calendar 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 10.06 shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales, leases, transfers, conveyances or other dispositions.

     If this Section 10.06 applies to any event or occurrence, Section 10.05 shall not apply. Notwithstanding this Section 10.06, if a Public Acquirer Change of Control occurs and the Company elects to adjust its conversion obligation and the Conversion Rate pursuant to Section 10.12, the provisions of Section 10.12 instead of this Section 10.06 shall apply to the transaction.

     SECTION 10.07 Taxes on Shares Issued. The issue of stock certificates on conversions of Notes shall be made without charge to the converting Holder of Notes for any documentary, stamp or similar issue or transfer tax in respect of the issue thereof. The Company shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the Holder of any Notes converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

     SECTION 10.08 Reservation of Shares, Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock. Prior to the time at which Stockholder Approval has been obtained, the Company shall reserve, out of its authorized but unissued Common Stock or Common Stock held in treasury, 3,250,000 shares of Common Stock for issuance upon conversion of the Notes. After Stockholder Approval has been obtained, the Company shall, and from time to time as may be necessary, reserve, out of its authorized but unissued Common Stock or Common Stock held in treasury, a sufficient number of shares of Common Stock to provide for the conversion of the Notes from time to time as such Notes are presented for conversion. All shares of Common Stock reserved by the Company for issuance upon conversion of the Notes shall be free from preemptive rights.

     Before taking any action which would cause an adjustment increasing the Conversion Rate to an amount that would cause the Conversion Price to be reduced below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Notes, the Company will take all corporate action which may, in the opinion of its counsel, be necessary in order that the

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Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Rate.

     The Company covenants that all shares of Common Stock issued upon conversion of Notes will be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.

     The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Notes hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued upon conversion, the Company will in good faith and as expeditiously as possible, to the extent then permitted by the rules and interpretations of the Commission (or any successor thereto), endeavor to secure such registration or approval, as the case may be.

     The Company further covenants that, if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system, the Company will, if permitted by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all Common Stock issuable upon conversion of the Notes; provided that if the rules of such exchange or automated quotation system permit the Company to defer the listing of such Common Stock until the first conversion of the Notes into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Notes in accordance with the requirements of such exchange or automated quotation system at such time.

     SECTION 10.09 Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Notes to determine the Conversion Rate or whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any capital stock, other securities or other assets or property, which may at any time be issued or delivered upon the conversion of any Notes; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Notes for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 10. 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 10.06 relating either to the kind or amount of shares of capital stock or other securities or other assets or property (including cash) receivable by Holders of Notes upon the conversion of their Notes after any event referred to in such Section 10.06 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 9.01, 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

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shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.

     SECTION 10.10 Notice to Holders Prior to Certain Actions. Except where notice is required pursuant to Section 10.01, in case:

(a)	the Company shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the Conversion Rate pursuant to Section 10.05; or
(b)	the Company shall authorize the granting to all holders of its Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants that would require an adjustment in the Conversion Rate pursuant to Section 10.05; or
(c)	of any reclassification or change of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock), or of any consolidation or merger to which the Company is a party and for which approval of the stockholders of the Company is required, or of the sale, lease, transfer, conveyance or other disposition of all or substantially all of the assets of the Company; or
(d)	of the voluntary or involuntary dissolution, liquidation or winding up of the Company;

and, in the case of the events specified in clauses (a), (b) or (c), if the Notes are convertible at the time of or in connection with such event, the Company shall cause to be filed with the Trustee and to be mailed to each Holder of Notes at its address appearing on the Register, as promptly as possible but in any event at least ten calendar days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or 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 or rights are to be determined, or (y) the date on which such reclassification, change, consolidation, merger, sale, transfer, conveyance or other disposition, dissolution, liquidation or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition, dissolution, liquidation or winding up.

     SECTION 10.11 Settlement Upon Conversion. Upon any conversion of Notes, the Company will deliver to converting Holders in respect of each $1,000 principal amount of Notes being converted, a “Conversion Settlement Amount” equal to the sum of the Daily Settlement Amounts for each of the 20 Trading Days during the applicable Conversion Period, subject to the Share Cap pursuant to Section 10.01(e).

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     The “Daily Settlement Amount” for each $1,000 principal amount of Notes, for each of the 20 Trading Days during the Conversion Period, shall consist of:

     (i) cash equal to the lesser of $50 and the Daily Conversion Value for such Trading Day; and

     (ii) to the extent the Daily Conversion Value exceeds $50, a number of shares of Common Stock equal to, (A) the difference between such Daily Conversion Value and $50, divided by (B) the Volume Weighted Average Price of the Common Stock for such day.

     “Daily Conversion Value” means, for any Trading Day, one-twentieth (1/20) of the product of (1) the applicable Conversion Rate on that Trading Day and (2) the Volume Weighted Average Price of the Common Stock (or, if the Conversion Settlement Amount is then based (x) on the Reference Property in accordance with Section 10.06, a unit of the Reference Property or (y) on shares of Public Acquirer Common Stock in accordance with Section 10.12, a share of the Public Acquirer Common Stock) on that Trading Day. For the purposes of determining the Daily Conversion Value, the following provisions shall apply: (i) if the Reference Property includes securities for which the price can be determined in a manner contemplated by the definition of “Volume Weighted Average Price,” then the value of such securities shall be determined in accordance with the principles set forth in such definition; (ii) if the Reference Property includes other property (other than securities as to which clause (i) applies or cash), then the value of such property shall be the Fair Market Value of such property; and (iii) if the Reference Property includes cash, then the value of such cash shall be the amount thereof.

     The Conversion Settlement Amount will be delivered in cash and shares of Common Stock, if any, to converting Holders on the third Trading Day following the final Trading Day of the applicable Conversion Period.

     SECTION 10.12 Conversion After a Public Acquirer Change of Control.

     (a) In the event of a Public Acquirer Change of Control, the Company may, in lieu of adjusting the Conversion Rate pursuant to Section 10.04(b) or 10.06, elect to adjust its conversion obligation and the Conversion Rate such that from and after the Effective Date of such Public Acquirer Change of Control, Holders of the Notes shall be entitled, subject to the conditions relating to conversion of Notes specified herein (including Sections 10.01 and 10.02) to receive a Conversion Settlement Amount upon conversion of Notes into shares of Public Acquirer Common Stock and the Conversion Rate in effect immediately before the Public Acquirer Change of Control shall be adjusted by multiplying it by a fraction:

     (1) the numerator of which shall be (A) in the case of a Public Acquirer Change of Control pursuant to which the Common Stock is converted solely into cash, the value of such cash paid or payable per share of Common Stock or (B) in the case of any other Public Acquirer Change of Control, the average of the Closing Sale Prices of the Common Stock for the five consecutive Trading Days prior to but excluding the Effective Date of such Public Acquirer Change of Control; and

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     (2) the denominator of which shall be the average of the Closing Sale Prices of the Public Acquirer Common Stock for the five consecutive Trading Days commencing on the Trading Day next succeeding the Effective Date of such Public Acquirer Change of Control.

     (b) The Company shall notify Holders of its election by providing notice as set forth in Section 10.01(d).

     (c) If the Company elects to make the adjustment to the Conversion Rate described in Section 10.12(a) in the event of a Public Acquirer Change of Control, (i) Holders of Notes will not be entitled to receive any Additional Shares pursuant to Section 10.04(b) as a result of such Public Acquirer Change of Control; (ii) Section 10.06 will not apply to such transaction; and (iii) the Company and the acquirer or other issuer of Public Acquirer Common Stock 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 Notes shall, without the consent of any Holders of Notes, be convertible into a Conversion Settlement Amount based on shares of Public Acquirer Common Stock at the adjusted Conversion Rate as specified above (subject to the conditions relating to conversion of Notes specified herein (including Section 10.01 and 10.02)). Such supplemental indenture shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 10, as determined in good faith by the Company, the acquirer or other issuer of Public Acquirer Common Stock.

     SECTION 10.13 Stockholder Rights Plans.

     Each share of Common Stock issued upon conversion of Notes or Additional Notes pursuant to this Article 10 shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any stockholder rights plan adopted by the Company, as the same may be amended from time to time. If at the time of conversion, however, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights agreement so that the Noteholders would not be entitled to receive any rights in respect of Common Stock issuable upon conversion of the Notes or Additional Notes, the Conversion Rate will be adjusted at the time of separation as if the Company has distributed to all holders of Common Stock, shares of Capital Stock of the Company, evidence of indebtedness or assets as provided in Section 10.05(d), subject to readjustment in the event of the expiration, termination or redemption of such rights.

ARTICLE 11
MISCELLANEOUS

     SECTION 11.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

     SECTION 11.02 Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows:

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     if to the Company:

VeriFone Holdings, Inc.
2099 Gateway Place, Suite 600
San Jose, CA 95110
Attention: Barry Zwarenstein

     if to the Trustee:

U.S. Bank National Association
60 Livingston Avenue
EP-MN-WS3C
St. Paul, MN 55107-2292
Facsimile No.: (651) 495-8097
Attention: Richard Prokosch

     The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

     Any notice or communication mailed to a Noteholder shall be mailed to the Noteholder at the Noteholder’s address as it appears on the Register of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

     Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

     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.

     Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary for such Note (or its designee), pursuant to the customary procedures of such Depositary, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.

     SECTION 11.03 Communication by Noteholders with Other Noteholders. Noteholders may communicate pursuant to TIA § 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

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     SECTION 11.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

     (a) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

     (b) if requested by the Trustee, an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

     SECTION 11.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

     (a) a statement that the individual making such certificate or opinion has read such covenant or condition;

     (b) 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;

     (c) a statement that, in the opinion of 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

     (d) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

     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 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 a certificate of opinion of, or representations by, counsel. Any such certificate or Opinion of Counsel may be based, and may state that it is so based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers of the Company.

     Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions, notices or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

     SECTION 11.06 When Notes Disregarded. In determining whether the Noteholders of the required aggregate principal amount of Notes have concurred in any

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direction, waiver or consent, Notes owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

     SECTION 11.07 Rules by Trustee, Paying Agent, Conversion Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Noteholders. The Registrar, the Paying Agent and the Conversion Agent may make reasonable rules for their functions.

     SECTION 11.08 Business Day. A “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City are authorized or obligated by law or executive order to close.

     SECTION 11.09 Governing Law; Waiver of Jury Trial. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.

     SECTION 11.10 No Interpretation of or by Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

     SECTION 11.11 Successors. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.

     SECTION 11.12 Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.

     SECTION 11.13 Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

     SECTION 11.14 Indenture and Notes Solely Corporate Obligations. No recourse for the payment of the principal of or interest on any Notes or for any claim based upon any Notes or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or in any Notes or

72

because of the creation of any indebtedness represented thereby shall be had against any incorporator, stockholder, member, manager, employee, partner, agent, officer, director or subsidiary, as such, past, present or future, of the Company or any of the Company’s subsidiaries or of any successor thereto, either directly or through the Company or any of the Company’s subsidiaries or any successor thereto, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes.

     SECTION 11.15 Severability. In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

     SECTION 11.16 Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture or the Notes.

     SECTION 11.17 Calculations. Except as otherwise provided herein, the Company shall be responsible for making all calculations called for under this Indenture and the Notes. The Company or its agents shall make all such calculations in good faith and, absent manifest error, its calculations will be final and binding on the Holders. The Company shall provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and the Conversion Agent shall be entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification. The Trustee or the Conversion Agent, as applicable, shall deliver a copy of such schedule to any Holder upon the request of such Holder.

     SECTION 11.18 Qualification of Indenture. The Company shall qualify this Indenture under the Trust Indenture Act in accordance with the terms and conditions of the Registration Rights Agreement(s) and shall pay all reasonable costs and expenses incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the registration of the resale of the Notes and the printing of this Indenture and the Notes.

[Signature Page Follows]

73

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

VERIFONE HOLDINGS, INC., as Issuer
By:	/s/ Barry Zwarenstein
	Name:	Barry Zwarenstein
	Title:	Executive Vice President and Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:	/s/ Richard Prokosch
	Name:	Richard Prokosch
	Title:	Vice President

74

EXHIBIT A

[FACE OF NOTE]

[Global Notes Legend]

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, 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 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.

     TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

[Restricted Notes Legend]

     THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF:

(1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933;

(2) AGREES THAT IT WILL NOT PRIOR TO THE DATE TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE OF THE 1.375% SENIOR CONVERTIBLE NOTES DUE 2012 OF VERIFONE HOLDINGS, INC. (THE “COMPANY”) RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK THAT MAY BE

A-F-1

ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OF 1933, (C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER, OR (D) PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, INCLUDING UNDER RULE 144, IF AVAILABLE, SUBJECT TO OUR AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH TRANSFER, TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO US AND THE TRUSTEE; AND

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(C) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

     PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (2)(D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF TWO YEARS FROM THE LAST DATE OF ORIGINAL ISSUANCE OF THE NOTES (INCLUDING ANY ADDITIONAL NOTES ISSUED PURSUANT TO SECTION 2.14 OF THE INDENTURE).

A-F-2

No.                     $                    

1.375% Senior Convertible Note due 2012

CUSIP No.: __________

     VeriFone Holdings, Inc., a Delaware corporation, promises to pay to [                    ], principal sum of                     , Dollars [, as revised by the Schedule of Increases or Decreases in Global Note attached hereto,]^* on June 15, 2012. Interest Payment Dates: June 15 and December 15.

     Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into cash and, if applicable, Common Stock, on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

     This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture.

^* Include for Global Notes.

A-R-3

     IN WITNESS WHEREOF, VeriFone Holdings, Inc. has caused this instrument to be duly executed.

VERIFONE HOLDINGS, INC.
By:
	Name:
	Title:

Dated: June 22, 2007

A-R-4

TRUSTEE’S CERTIFICATE OF AUTHENTICATION U.S. BANK NATIONAL ASSOCIATION      as Trustee, certifies that this is one of      the Notes referred to in the Indenture.
By:
	Authorized Signatory

A-R-5

[REVERSE SIDE OF NOTE]

1.375% Senior Convertible Note due 2012

1. Interest

     (a) VERIFONE HOLDINGS, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Note at the rate of 1.375 percent per annum. The Company will pay interest semiannually on June 15 and December 15 of each year commencing on December 15, 2007. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 22, 2007. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for any period that is less than a whole month shall be computed on the basis of the actual number of days elapsed during such less than whole-month period divided by 360.

     If a payment date is not a Business Day, payment will be made on the next succeeding Business Day, and no additional interest will accrue in respect of such payment by virtue of the payment being made on such later date.

     (b) Additional Interest, Reporting Additional Interest and Share Cap Additional Interest. The Holder of this Note shall be entitled to receive Additional Interest, Reporting Additional Interest and Share Cap Additional Interest as and to the extent provided in the Indenture and that certain Registration Rights Agreement, dated as of June 22, 2007, between the Company and the Initial Purchasers.

2. Method of Payment

     The Company will pay interest on the Notes (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the Regular Record Date even if Notes are canceled after the Regular Record Date and on or before the Interest Payment Date, except as otherwise provided in the Indenture. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. The Company shall pay interest (i) on any Global Notes by wire transfer of immediately available funds to the account of the Depositary or its nominee, (ii) on any Notes in certificated form having a principal amount of less than $5,000,000, by check mailed to the address of the Person entitled thereto as it appears in the Register, provided, however, that at maturity interest will be payable at the office of the Company maintained by the Company for such purposes, which shall initially be an office or agency of the Trustee (as defined below) and (iii) on any Notes in certificated form having a principal amount of $5,000,000 or more, by wire transfer in immediately available funds at the election of the Holder of such Notes duly delivered to the Trustee at least five Business Days prior to the relevant Interest Payment Date, provided, however, that at maturity interest will be payable at the office of the Company maintained by the Company for such purposes, which shall initially be an office or agency of the Trustee.

3. Paying Agent and Registrar

     Initially, U.S. Bank National Association (the “Trustee”) will act as Paying Agent, Registrar and Conversion Agent. The Company may appoint and change any Paying Agent, Registrar or co-registrar or Conversion Agent without notice. The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent or Registrar or co-registrar.

4. Indenture

     The Company issued the Notes under an Indenture dated as of June 22, 2007 (the “Indenture”), between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the TIA for a statement of those terms.

     The Notes are senior unsecured obligations of the Company. This Note is one of the Notes referred to in the Indenture initially issued in an aggregate principal amount of (i) $316,250,000 plus (ii) such additional aggregate principal amount of Notes as may be issued from time to time as Additional Notes in accordance with Section 2.14 of the Indenture.

5. Redemption

     The Notes will not be redeemable at the option of the Company prior to the Maturity Date.

6. Repurchase at the Option of Noteholders Upon a Fundamental Change

     If a Fundamental Change occurs at any time prior to maturity of the Notes, this Note will be subject to a repurchase, at the option of the Holder, on a Fundamental Change Repurchase Date, specified by the Company, that is not less than 20 calendar days nor more than 35 calendar days after notice thereof, at a repurchase price equal to 100% of the principal amount hereof, together with accrued and unpaid interest on this Note to, but excluding, the Fundamental Change Repurchase Date; provided that if such Fundamental Change Repurchase Date falls after a Regular Record Date and on or prior the corresponding Interest Payment Date, the accrued and unpaid interest shall be payable to the Holder of record of this Note on the applicable Regular Record Date. For Notes to be so repurchased at the option of the Holder, the Holder must deliver to the Paying Agent in accordance with the terms of the Indenture, the Repurchase Notice containing the information specified by the Indenture, together with such Notes, duly endorsed for transfer, or (if the Notes are Global Notes) book-entry transfer of the Notes, prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date.

     Holders have the right to withdraw any Repurchase Notice by delivering to the Paying Agent a written notice of withdrawal at any time prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date, all as provided in the Indenture.

7. Conversion

     Subject to and upon compliance with the provisions of the Indenture, the Holder hereof has the right, at its option, to convert each $1,000 principal amount of this Note into cash and, if applicable, Common Stock based on a Conversion Rate of 22.7190 shares of Common Stock per $1,000 principal amount of Notes (equivalent to a Conversion Price of approximately $44.02 per share), as the same may be adjusted pursuant to the terms of the Indenture. As specified in the Indenture, upon conversion, the Company will pay cash and shares of Common Stock, if any, based on a Daily Conversion Value (as defined in the Indenture) calculated on a proportionate basis for each day of the 20 Trading-Day Conversion Period (as defined in the Indenture).

     If and only to the extent Holders elect to convert the Notes in connection with a Non-Stock Change of Control (as defined in the Indenture), the Company may be required to increase the Conversion Rate applicable to such converting Notes; provided that in the case of a Non-Stock Change of Control constituting a Public Acquirer Change of Control (as defined in the Indenture), the Company may, in lieu of increasing the Conversion Rate, elect to adjust the conversion obligation and the Conversion Rate such that from and after the effective date of such Public Acquirer Change of Control, Holders of the Notes will be entitled to convert their Notes (subject to the satisfaction of certain conditions) based on a number of shares of Public Acquirer Common Stock (as defined in the Indenture) determined as set forth in the Indenture.

     If this Note (or portion hereof) is surrendered for conversion after 5:00 p.m., New York City time, on the Regular Record Date for an Interest Payment Date but prior to the applicable Interest Payment Date, it shall be accompanied by payment, in immediately available funds or other funds acceptable to the Company, of an amount equal to the interest otherwise payable on such Interest Payment Date on the principal amount being converted; provided that no such payment need be made (i) with respect to conversions after 5:00 p.m., New York City time, on the Regular Record Date immediately preceding the Maturity Date; (ii) with respect to a conversion in connection with a Fundamental Change and the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date; and (iii) with respect to any overdue interest, if overdue interest exists at the time of conversion with respect to such Notes.

     No fractional shares will be issued upon any conversion of Notes, but an adjustment and payment in cash will be made, as provided in the Indenture, in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Note or Notes for conversion.

     A Note in respect of which a Holder is exercising its right to require repurchase may be converted only if such Holder validly withdraws its election to exercise such right to require repurchase in accordance with the terms of the Indenture.

8. Denominations, Transfer, Exchange

     The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Noteholder may transfer or exchange Notes in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a

Noteholder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture.

9. Persons Deemed Owners

     The registered Holder of this Note may be treated as the owner of it for all purposes.

10. Unclaimed Money

     Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest and any shares of Common Stock or other property due in respect of converted Notes that remains unclaimed for two years, and, thereafter, Noteholders entitled to the money and/or securities must look to the Company for payment as general creditors.

11. Amendment, Waiver

     Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Notes may be amended without prior notice to any Noteholder but with the written consent or affirmative vote of the Holders of at least a majority in aggregate principal amount of the outstanding Notes and (ii) any Default or Event of Default may be waived with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Notes. In certain circumstances set forth in the Indenture, the Company and the Trustee may amend the Indenture or the Notes without the consent of any Holder of Notes.

12. Defaults and Remedies

     If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization) and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable, except as provided in the Indenture (including special provisions for an Event of Default relating to the failure of the Company to comply with its agreements in respect of periodic reporting under Section 4.08(a) of the Indenture as set forth in Section 6.13 of the Indenture). If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization occurs, the principal of and interest on all the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any Noteholders. Under certain circumstances, the Holders of a majority in aggregate principal amount of the outstanding Notes may rescind and annul such declaration with respect to the Notes and its consequences. No reference herein to the Indenture and no provision of this Note or of the Indenture shall impair, as among the Company and the Holder of the Notes, the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, at the rate and in the coin or currency herein and in the Indenture prescribed or to convert the Note as provided in the Indenture.

13. Trustee Dealings with the Company

     Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

14. Indenture and Notes Solely Corporate Obligations

     No recourse for the payment of the principal of or interest on any Notes or for any claim based upon any Notes or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or in any supplemental indenture or in any Notes or because of the creation of any indebtedness represented thereby shall be had against any incorporator, stockholder, member, manager, employee, agent, officer, director or subsidiary, as such, past, present or future, of the Company or any of the Company’s subsidiaries or of any successor thereto, either directly or through the Company or any of the Company’s subsidiaries or any successor thereto, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of the Indenture and the issue of the Notes.

15. Authentication

     This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note.

16. Abbreviations

     Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

17. GOVERNING LAW

     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

18. CUSIP and ISIN Numbers

     Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP and ISIN numbers to be printed on the Notes and has directed the Trustee to use CUSIP and ISIN numbers in all notices issued to Noteholders as a convenience to such Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any such notice and reliance may be placed only on the other identification numbers placed thereon.

     The Company will furnish to any Holder of Notes upon written request and without charge to the Holder a copy of the Indenture.

CONVERSION NOTICE

TO: VERIFONE HOLDINGS, INC. and U.S. BANK NATIONAL ASSOCIATION, as Trustee

     The undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion thereof (which is $1,000 or a multiple thereof) below designated, into, cash and shares of Common Stock of VeriFone Holdings, Inc., if any, in accordance with the terms of the Indenture referred to in this Note, and directs that the check in payment for cash and the shares, if any, issuable and deliverable upon such conversion, deliverable upon conversion or for fractional shares and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture. If shares or any portion of this Note not converted are to be issued in the name of a person other than the undersigned, the undersigned will provide the appropriate information below and pay all taxes or duties payable with respect thereto. Any amount required to be paid by the undersigned on account of interest accompanies this Note.

Dated: __________

Signature(s) 

Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 

Signature Guarantee 

     Fill in the registration of shares of Common Stock, if any, if to be issued, and Notes if to be delivered, and the person to whom cash, if any, and payment for fractional shares is to be made, if to be made, other than to and in the name of the registered Holder:

Please print name and address

(Name)

(Street Address)

(City, State and Zip Code)

Principal amount to be converted
(if less than all):

$

Social Security or Other Taxpayer
Identification Number:

NOTICE: The signature on this Conversion Notice must correspond with the name as written upon the face of the Notes in every particular without alteration or enlargement or any change whatever.

REPURCHASE NOTICE

TO: VERIFONE HOLDINGS, INC. and U.S. BANK NATIONAL ASSOCIATION, as Trustee

     The undersigned registered owner of this Note hereby irrevocably acknowledges receipt of a notice from VeriFone Holdings, Inc. (the “Company”) regarding the right of Holders to elect to require the Company to repurchase the Notes and requests and instructs the Company to repay the entire principal amount of this Note, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture at the price of 100% of such entire principal amount or portion thereof, together with, except as provided in the Indenture, accrued and unpaid interest to, but excluding, the Fundamental Change Repurchase Date to the registered Holder hereof. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture. The Notes shall be repurchased by the Company as of the Fundamental Change Repurchase Date pursuant to the terms and conditions specified in the Indenture.

Dated: __________

Signature(s) 

NOTICE: The above signatures of the Holder(s) hereof must correspond with the name as written upon the face of the Notes in every particular without alteration or enlargement or any change whatever.

Notes Certificate Number (if applicable):                     

Principal amount to be repurchased
(if less than all, must be $1,000 or whole multiples thereof):                     

Social Security or Other Taxpayer Identification Number:                     

ASSIGNMENT

     For value received                     hereby sell(s) assign(s) and transfer(s) unto                      (Please insert social security or other Taxpayer Identification Number of assignee) the within Notes, and hereby irrevocably constitutes and appoints                      attorney to transfer said Notes on the books of the Company, with full power of substitution in the premises.

     In connection with any transfer of the Notes prior to the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision) (other than any transfer pursuant to a registration statement that has become effective under the Securities Act), the undersigned confirms that such Notes are being transferred:

o   To VeriFone Holdings, Inc. or a subsidiary thereof; or

o   To a “qualified institutional buyer” in compliance with Rule 144A under the Securities Act of 1933, as amended; or

o   Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended; or

o   Pursuant to a Registration Statement which has become effective under the Securities Act of 1933, as amended, and which continues to be effective at the time of transfer.

     Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof.

Dated: __________

Signature(s) 

Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 

Signature Guarantee 

NOTICE: The signature on this Assignment must correspond with the name as written upon the face of the Notes in every particular without alteration or enlargement or any change whatever.

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL NOTE

     The following increases or decreases in this Global Note have been made:

			Principal Amount of	Signature of authorized
	Amount of decrease in Principal	Amount of increase in Principal	Note following such	signatory of Trustee
	Amount of this Global	Amount of this Global	decrease or	or Securities
Date	Note	Note	increase	Custodian

EXHIBIT B

FORM OF RESTRICTIVE LEGEND FOR
COMMON STOCK ISSUED UPON CONVERSION

THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT OF 1933”), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933;

(2) AGREES THAT IT WILL NOT PRIOR TO THE DATE TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE OF THE 1.375% SENIOR CONVERTIBLE NOTES DUE 2012 OF VERIFONE HOLDINGS, INC. (THE “COMPANY”) RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OF 1933, (C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER, OR (D) PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, INCLUDING UNDER RULE 144, IF AVAILABLE, SUBJECT TO OUR AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH TRANSFER, TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO US AND THE TRUSTEE; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(C) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

EX-5.1

Exhibit 5.1

September 9, 2008

VeriFone Holdings, Inc.,

     2099 Gateway Place, Suite 600,

               San Jose, California 95110.

Ladies and Gentlemen:

     In connection with the registration under the Securities Act of 1933 (the “Securities Act”) of $316,250,000 principal amount of 1.375% Senior Convertible Notes due 2012 (the “Notes”) of VeriFone Holdings, Inc., a Delaware corporation (the “Company”), and 7,184,234 shares of Common Stock, par value $ 0.01 per share, of the Company initially issuable upon conversion of the Notes (the “Shares”), we, as your counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion, the Notes constitute valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and the Shares, when duly issued upon conversion of the Notes in accordance with the terms of the Indenture, dated as of June 22, 2007, between the Company and U.S. Bank, National Association, as Trustee, will be validly issued, fully paid and nonassessable. In rendering the foregoing opinion, we are expressing no opinion as to Federal or state laws relating to fraudulent transfers.

     The foregoing opinion is limited to the Federal laws of the United States, the laws of the State of New York and the laws of the State of Delaware, and we are expressing no opinion as to the effect of the laws of any other jurisdiction.

     With your approval, we have relied as to certain factual matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed that the Indenture relating to the Notes has been duly authorized, executed and delivered by the Trustee thereunder, that the Trustee’s certificates of authentication of the Notes have been manually signed by one of the Trustee’s authorized officers, that the certificates for the Shares will conform to the

VeriFone Holdings, Inc.,

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specimen thereof examined by us and will be duly countersigned by a transfer agent and duly registered by a registrar of the Common Stock, and that the signatures on all documents examined by us are genuine, assumptions which we have not independently verified.

     We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading “Validity of the Securities” in the Prospectus. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.

Very truly yours,

/s/ Sullivan & Cromwell LLP

EX-12.1

Exhibit 12.1

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Exhibit

VeriFone Holdings, Inc. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(in thousands)

												Nine months
												ended
	2003		2004		2005		2006		2007			July 30, 2008
Earnings as defined:
Pretax income before adjustment for minority interests in consolidated subsidiaries or income or loss from equity investees		12,537		10,577		46,608		91,536		(9,436	)		(44,485	)
Plus: amortization of capitalized interest		—		—		—		—		—			39
Plus: fixed charges, as below		13,922		14,012		17,082		15,377		39,415			24,696
Less: capitalized interest		—		—		—		—		355			—
Total earnings, as defined		26,459		24,589		63,690		106,913		29,624			(19,750	)
Fixed charges, as defined:
Interest on long-term and short-term debt		12,456		12,597		15,384		13,617		36,598			21,877
Amortization of debt issuance costs		1,010		945		1,150		1,105		1,756			1,965
Interest factor on rental expense (1)		456		470		548		655		1,061			854
Subtotal		13,922		14,012		17,082		15,377		39,415			24,696
Ratio of Earnings to Fixed Charges (2)		1.901		1.755		3.728		6.953		0.752			(0.800	)

(1)	Represents the estimate of the interest within rental expense. This amount includes approximately 7 percent of the rental expense, which the Registrant believes is a reasonable approximation of the interest component of rental expense.
(2)	Earnings for the nine months ended July 30, 2008, were inadequate to cover fixed charges. The coverage deficiency was approximately $44.4 million.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the caption “Experts” in the Registration Statement (Form S-1) and related Prospectus of VeriFone Holdings, Inc. for the registration of $316,250,000 of its 1.375% senior convertible notes due 2012 and 7,184,234 shares of its common stock and to the incorporation by reference therein of our reports dated August 19, 2008, with respect to the consolidated financial statements of VeriFone Holdings, Inc., and the effectiveness of internal control over financial reporting of VeriFone Holdings, Inc., included in its Annual Report (Form 10-K) for the year ended October 31, 2007, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Palo Alto, California
September 5, 2008

EX-25.1

Exhibit 25.1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

Check if an Application to Determine Eligibility of
a Trustee Pursuant to Section 305(b)(2) o

U.S. BANK NATIONAL ASSOCIATION

(Exact name of Trustee as specified in its charter)

31-0841368
I.R.S. Employer Identification No.

800 Nicollet Mall Minneapolis, Minnesota	55402
(Address of principal executive offices)	(Zip Code)

Richard Prokosch
U.S. Bank National Association
60 Livingston Avenue
St. Paul, MN 55107
(651) 495-3918
(Name, address and telephone number of agent for service)

VeriFone Holdings, Inc.

(Exact name of obligor as specified in its charter)

Delaware	04-3692546
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2099 Gateway Place, Suite 600 San Jose, California	95110
(Address of Principal Executive Offices)	(Zip Code)

1.375% Senior Convertible Notes Due 2012
(Title of the Indenture Securities)

FORM T-1

Item 1. GENERAL INFORMATION. Furnish the following information as to the Trustee.

a) Name and address of each examining or supervising authority to which it is subject.

Comptroller of the Currency
Washington, D.C.

b) Whether it is authorized to exercise corporate trust powers.

Yes

Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation.

None

Items 3-15 Items 3-15 are not applicable because to the best of the Trustee’s knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee.

Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification.

1.	A copy of the Articles of Association of the Trustee.*
2.	A copy of the certificate of authority of the Trustee to commence business.*
3.	A copy of the certificate of authority of the Trustee to exercise corporate trust powers.*
4.	A copy of the existing bylaws of the Trustee.**
5.	A copy of each Indenture referred to in Item 4. Not applicable.
6.	The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6.
7.	Report of Condition of the Trustee as of June 30, 2008 published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7.

*	Incorporated by reference to Exhibit 25.1 to Amendment No. 2 to registration statement on S-4, Registration Number 333-128217 filed on November 15, 2005.
**	Incorporated by reference to Exhibit 25.1 to registration statement on S-4, Registration Number 333-145601 filed on August 21, 2007.

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SIGNATURE

     Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of St. Paul, State of Minnesota on the 9th of September, 2008.

By:	/s/ Richard Prokosch
	Richard Prokosch
	Vice President

By:	/s/ Raymond Haverstock
	Raymond Haverstock
	Vice President

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Exhibit 6

CONSENT

     In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Dated: September 9, 2008

By:	/s/ Richard Prokosch
	Richard Prokosch
	Vice President

By:	/s/ Raymond Haverstock
	Raymond Haverstock
	Vice President

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Exhibit 7
U.S. Bank National Association
Statement of Financial Condition
As of 6/30/2008

(In thousands)

	6/30/2008
Assets
Cash and Balances Due From Depository Institutions	$	8,040,113
Securities		38,273,740
Federal Funds		4,300,502
Loans & Lease Financing Receivables		162,625,350
Fixed Assets		2,638,883
Intangible Assets		12,303,139
Other Assets		14,126,201
Total Assets	$	242,307,928
Liabilities
Deposits	$	143,265,079
Fed Funds		13,193,537
Treasury Demand Notes		0
Trading Liabilities		490,836
Other Borrowed Money		47,378,092
Acceptances		0
Subordinated Notes and Debentures		7,647,466
Other Liabilities		7,266,430
Total Liabilities	$	219,241,440
Equity
Minority Interest in Subsidiaries	$	1,524,656
Common and Preferred Stock		18,200
Surplus		12,057,620
Undivided Profits		9,466,012
Total Equity Capital	$	23,066,488
Total Liabilities and Equity Capital	$	242,307,928

To the best of the undersigned’s determination, as of the date hereof, the above financial information is true and correct.

U.S. Bank National Association
By:	/s/ Richard Prokosch
	Vice President

Date: September 9, 2008

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