10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.   20549

FORM 10-Q

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2001

OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM       TO      

Commission File Number 0-19032

ATMEL CORPORATION

(Registrant)

Delaware	77-0051991
(State or other jurisdiction of incorporation or organization)	(I.R.S Employer Identification Number)

2325 Orchard Parkway
San Jose, California 95131
(Address of principal executive offices)

(408) 441-0311
Registrant’s telephone number

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes [X]    No [   ]

On August 3, 2001, Registrant had outstanding 464,478,073 shares of Common Stock.

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
	Item 1. Financial Statements
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Operations
		Condensed Consolidated Statements of Cash Flows
		Condensed Consolidated Statements of Comprehensive Income
		Notes to Condensed Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosure about Market Risk
PART II OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 4: Submission of Matters to a Vote of Securities Holders
	Item 5: Other Information
	Item 6: Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 3.1
EXHIBIT 10.9
EXHIBIT 10.10

ATMEL CORPORATION
 
FORM 10-Q
 
QUARTER ENDED JUNE 30, 2001
 
INDEX

			Page
Part I:	Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets at June 30, 2001 and December 31, 2000	1
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2001 and June 30, 2000	2
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and June 30, 2000	3
		Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2001 and June 30, 2000	4
		Notes to Condensed Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Part II:	Other Information
	Item 1.	Legal Proceedings	28
	Item 2.	Changes in Securities and Use of Proceeds	28
	Item 4.	Submission of Matters to a Vote of Securities Holders	28
	Item 5.	Other Information	29
	Item 6.	Exhibits and Reports on Form 8-K	29
Signatures			30

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

Atmel Corporation
Condensed Consolidated Balance Sheets
(In thousands)

			June 30, 2001			December 31, 2000
			(unaudited)
Current assets
	Cash and cash equivalents		$	403,598		$	448,281
	Short term investments			299,921			514,263
	Accounts receivable			275,663			392,384
	Inventories			327,999			289,054
	Other current assets			144,620			148,212
		Total current assets		1,451,801			1,792,194
	Fixed assets, net			2,136,456			1,927,817
	Other assets			66,093			53,876
	Cash — restricted			51,000			51,000
		Total assets	$	3,705,350		$	3,824,887
Current liabilities
	Current portion of long-term debt		$	157,806		$	173,866
	Trade accounts payable			234,280			655,450
	Accrued liabilities and other			442,144			326,352
	Deferred income on shipments to distributors			31,941			33,703
		Total current liabilities		866,171			1,189,371
	Convertible notes			337,393			122,700
	Long-term debt less current portion			512,054			545,803
	Other long term liabilities			70,846			72,156
		Total liabilities		1,786,464			1,930,030
Stockholders’ equity
	Common stock			464			462
	Additional paid in capital			1,235,139			1,226,412
	Accumulated other comprehensive loss			(94,148	)		(53,465	)
	Retained earnings			777,431			721,448
		Total stockholders’ equity		1,918,886			1,894,857
		Total liabilities and stockholders’ equity	$	3,705,350		$	3,824,887

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Atmel Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2001			2000			2001			2000
Net revenues			$	366,996		$	478,758		$	892,940		$	907,944
Expenses
	Cost of revenues			249,942			270,707			564,692			523,429
	Research and development			69,274			62,616			138,469			124,529
	Selling, general and administrative			45,293			52,433			100,442			97,543
		Total operating expenses		364,509			385,756			803,603			745,501
Operating income				2,487			93,002			89,337			162,443
Interest and other (expenses) income, net				(2,536	)		2,818			(1,864	)		(1,230	)
(Loss) income before taxes				(49	)		95,820			87,473			161,213
Income tax benefit (provision)				18			(34,495	)		(31,490	)		(58,036	)
Net (loss) income			$	(31	)	$	61,325		$	55,983		$	103,177
Basic net income per share			$	0.00		$	0.14		$	0.12		$	0.24
Diluted net income per share			$	0.00		$	0.13		$	0.12		$	0.23
Shares used in basic net income per share calculations				464,121			449,166			463,761			439,584
Shares used in diluted net income per share calculations				464,121			482,890			474,875			473,902

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Atmel Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

			Six Months Ended June 30,
			2001			2000
Cash from operating activities
Net income			$	55,983		$	103,177
Items not requiring the use of cash:
	Depreciation and amortization			149,345			107,800
	Loss on sales of fixed assets			5,121			2,230
	Other			9,454			4,125
Changes in operating assets and liabilities
	Accounts receivable			106,641			(50,236	)
	Inventories			(45,750	)		(1,907	)
	Prepaid taxes and other assets			(21,325	)		(7,476	)
	Trade accounts payable and other accrued liabilities			(73,756	)		47,814
	Income taxes payable			(30,755	)		44,325
	Deferred income on shipments to distributors			(1,762	)		1,043
		Net cash provided by operating activities		153,196			250,895
Cash from investing activities
	Acquisition of fixed assets			(606,524	)		(399,079	)
	Sales of fixed assets			1,430			1,689
	Acquisitions			—			(12,869	)
	Purchase of investments			(93,661	)		(110,192	)
	Sale or maturity of investments			311,335			18,670
		Net cash used in investing activities		(387,420	)		(501,781	)
Cash from financing activities
	Issuance of notes payable			—			25,272
	Proceeds from issuance of convertible notes			200,027			—
	Proceeds from capital leases and notes			95,281			284,634
	Principal payments on capital leases and notes			(126,021	)		(84,034	)
	Issuance of common stock			8,729			619,356
		Net cash provided by financing activities		178,016			845,228
Effect of foreign currency translation adjustment				11,524			(4,111	)
Net (decrease) increase in cash				(44,683	)		590,231
Cash and cash equivalents at beginning of period				448,281			251,272
Cash and cash equivalents at end of period			$	403,598		$	841,503
Interest paid			$	14,503		$	18,058
Income taxes paid			$	46,927		$	16,082
Fixed asset purchases in accounts payable			$	179,060		$	45,735

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Atmel Corporation
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2001			2000			2001			2000
Net (loss) income		$	(31	)	$	61,325		$	55,983		$	103,177
Other comprehensive (loss) income, net of tax:
	Foreign currency translation adjustments		(20,617	)		2,726			(44,013	)		(13,353	)
	Unrealized gain (loss) on securities		354			(367	)		3,330			(803	)
	Other comprehensive (loss) income		(20,263	)		2,359			(40,683	)		(14,156	)
Comprehensive (loss) income		$	(20,294	)	$	63,684		$	15,300		$	89,021

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Atmel Corporation
Notes to Condensed Consolidated Financial Statements
June 30, 2001
(Unaudited)

1. Basis of Presentation and Accounting Policies

These unaudited interim financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly, in all material respects, the financial position of Atmel Corporation (Company or Atmel) and its subsidiaries as of June 30, 2001, and the results of operations, comprehensive income and cash flows for the three and six month periods ended June 30, 2001 and 2000. All material intercompany balances have been eliminated. Because all of the disclosures required by generally accepted accounting principles are not included, these interim statements should be read in conjunction with the audited financial statements and accompanying notes in our Annual Report to Shareholders filed on Form 10-K for the year ended December 31, 2000. The year-end condensed balance sheet data was derived from the audited financial statements and does not include all of the disclosures required by generally accepted accounting principles. The statements of operations for the periods presented are not necessarily indicative of results to be expected for any future period, nor for the entire year. Prior year amounts have been reclassified to conform with current presentation.

2. Inventories

Inventories are stated at the lower of cost (first-in, first-out for raw materials and purchased parts; and average cost for work in progress) or market, and comprise the following:

(In thousands)	June 30, 2001		December 31, 2000
Raw materials and purchased parts	$	25,883	$	26,671
Finished goods		88,095		78,938
Work in progress		214,021		183,445
Total	$	327,999	$	289,054

3. Short term investments

Short term investments at June 30, 2001 and December 31, 2000 comprise debt securities consisting primarily of US government and municipal agency securities, US and foreign corporate debt securities, commercial paper, auction rate preferred stock, certificates of deposit, and overnight deposits.

All marketable securities are deemed by management to be available for sale and are reported at fair value with net unrealized gains or losses reported within stockholders’ equity.

4. Net Income Per share

A reconciliation of the numerator and denominator of basic and diluted net income per share is provided in the following table. All shares have been restated to reflect the 2-for-1 stock split effected in August 2000.

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		Three Months Ended					Six Months Ended
		June 30					June 30
(In thousands, except per share data)		2001			2000		2001		2000
Basic net (loss) income [numerator]		$	(31	)	$	61,325	$	55,983	$	103,177
Interest saved on convertible bonds, net of taxes			—			1,118		—		3,596
Diluted net (loss) income [numerator]		$	(31	)	$	62,443	$	55,983	$	106,773
Shares used in basic net income per share calculations [denominator]:
	Weighted average shares of common stock outstanding (basic)		464,121			449,166		463,761		439,584
Dilutive effect of stock options			—			14,688		11,114		15,282
Dilutive effect of convertible bonds			—			19,036		—		19,036
Shares used in diluted net income per share calculations [denominator]:
	Weighted average shares of common stock outstanding (diluted)		464,121			482,890		474,875		473,902
Basic net income per share		$	0.00		$	0.14	$	0.12	$	0.24
Diluted net income per share		$	0.00		$	0.13	$	0.12	$	0.23

For the three months ended June 30, 2001, 33,595 shares of common stock relating to outstanding options and convertible bonds were excluded from the computation of diluted net loss per share because they were anti-dilutive. For the six months ended June 30, 2001, 22,949 shares of common stock relating to convertible bonds were excluded from the computation of diluted net income per share because they were anti-dilutive.

5. Segment Reporting

We have four reportable segments: Application Specific Integrated Circuits (ASIC), Logic, Nonvolatile Memories (NVM) and Atmel Wireless and Microcontroller Group (WMG) which was formerly known as “Temic.” Each segment requires different design, development and marketing resources to produce and sell semiconductor integrated circuits.

Information about segments (in thousands):

	ASIC		Logic		NVM		WMG		Total
Three Months ended June 30, 2001
Net revenues	$	98,019	$	44,018	$	158,093	$	66,866	$	366,996
Segment operating income		13,676		9,898		817		7,041		31,432
Three Months ended June 30, 2000
Net revenues	$	117,180	$	35,160	$	252,188	$	74,230	$	478,758
Segment operating income		22,217		9,676		75,616		11,847		119,356

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	ASIC		Logic		NVM		WMG		Total
Six Months ended June 30, 2001
Net revenues	$	240,518	$	96,178	$	410,640	$	145,604	$	892,940
Segment operating income		37,243		27,086		63,253		21,158		148,740
Six Months ended June 30, 2000
Net revenues	$	218,696	$	65,204	$	479,872	$	144,172	$	907,944
Segment operating income		43,354		14,295		125,234		20,511		203,394

Reconciliations of segment information to financial statements (in thousands):

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2001			2000			2001			2000
Total income for reportable segments		$	31,432		$	119,356		$	148,740		$	203,394
Unallocated amounts:
	Corporate R&D		(9,269	)		(19,000	)		(20,970	)		(32,000	)
	Start up expenses		(17,816	)		(5,167	)		(35,632	)		(5,167	)
	Corporate expenses		(1,860	)		(2,187	)		(2,801	)		(3,784	)
Consolidated operating income before interest and taxes		$	2,487		$	93,002		$	89,337		$	162,443

6. Zero Coupon Convertible Subordinated Notes

In May 2001, we completed an offering of $511,500 in aggregate principal amount at maturity of our Zero Coupon Convertible Debentures due 2021. The initial purchasers of the debentures were Morgan Stanley & Co. Incorporated, Credit Lyonnais Securities (USA) Inc. and Needham & Company, Inc. From the aggregate offering price of approximately $200,027, we received approximately $194,026 in net proceeds from the offering after deducting the aggregate initial purchasers’ discount, which was approximately $6,000. The offer and sale of the debentures was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Rule 144A promulgated thereunder. The debentures are convertible, at the option of the holder, into the Company’s common stock at the rate of 22.983 shares per $1 (one thousand dollars) principal amount at maturity of the debentures. The effective interest rate of the debentures is 4.75 percent per annum. The debentures will be redeemable for cash, at our option, at any time on or after May 23, 2006 in whole or in part at redemption prices equal to the issue price plus accrued original issue discount. At the option of the holders as of May 23, 2006, 2011 and 2016, we may be required to redeem the debt at prices equal to the issue price plus accrued original issue discount through date of repurchase. We may, at our option, elect to pay the repurchase price in cash, in shares of our common stock or in any combination of the two. We plan to use the net proceeds from this offering for general corporate purposes, as well as capital expenditures, such as equipment for 0.13 micron and copper manufacturing processes.

7. Recent Pronouncements

SFAS 133

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133). SFAS No. 133 requires that an entity recognizes all derivatives as

7

either assets or liabilities in the statement of financial position and measures those instruments at fair value. It further provides criteria for derivative instruments to be designated as fair value, cash flow and foreign currency hedges and establishes respective accounting standards for reporting changes in the fair value of the instruments. The statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000 pursuant to the issuance of SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities— Deferral of the Effective Date of FASB Statement No. 133,” which deferred the effective date of SFAS No. 133 by one year. In June 2000, the FASB issued SFAS Statement No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities.” SFAS No. 138 amends certain terms and conditions of SFAS 133. We have adopted SFAS No. 133 and 138 in the quarter ending March 31, 2001. The adoption of the statements did not have a significant effect on our results of operations.

SFAS 141 and SFAS 142

In July 2001, the Financial Accounting Standards Board (FASB) issued FASB Statements Nos. 141 and 142 (SFAS 141 and SFAS 142), “Business Combinations” and “Goodwill and Other Intangible Assets.” SFAS 141 replaces APB 16 and eliminates pooling-of-interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and accounting for negative goodwill. SFAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Under SFAS 142, goodwill will be tested annually and whenever events or circumstances occur indicating that goodwill might be impaired. SFAS 141 and SFAS 142 are effective for all business combinations completed after June 30, 2001. Upon adoption of SFAS 142, amortization of goodwill recorded for business combinations consummated prior to July 1, 2001 will cease, and intangible assets acquired prior to July 1, 2001 that do not meet the criteria for recognition under SFAS 141 will be reclassified to goodwill. Companies are required to adopt SFAS 142 for fiscal years beginning after December 15, 2001. We will adopt SFAS 142 on January 1, 2002, the beginning of fiscal 2002. In connection with the adoption of SFAS 142, the Company will be required to perform a transitional goodwill impairment assessment. The Company has not yet determined the impact these standards will have on its results of operations and financial position.

8

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

     You should read the following discussion and analysis in conjunction with the Condensed Consolidated Financial Statements and related Notes thereto contained elsewhere in this Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Report and in our other reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2000. In this report, all share numbers and per share amounts have been retroactively adjusted to reflect our 2-for-1 stock split in the form of a 100% stock dividend to stockholders of record as of August 11, 2000.

Forward Looking Statements

     Investors are cautioned that certain statements in this Form 10-Q are forward looking statements that involve risks and uncertainties. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward looking statements which include, but are not limited to, statements in “Cost of Revenues and Gross Margin” regarding the amount of our capital expenditures and in “Research and Development” regarding our need for continued investments in process technology and product development. These statements are based on current expectations and projections about the semiconductor industry and assumptions made by the management and are not guarantees of future performance. Therefore, actual events and results may differ materially from those expressed or forecasted in the forward looking statements due to factors such as the effect of changing economic conditions; material changes in currency exchange rates; political instability in countries where we manufacture and/or sell our products; disruptions in production or conditions in the overall semiconductor market (including the historic cyclicality of the industry); risks associated with product demand and market acceptance risks; the impact of competitive products and pricing; delays in new product development, manufacturing capacity utilization, product mix and technological risks and other risk factors identified in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K. The Company undertakes no obligation to update any forward looking statements in this Form 10-Q.

Results of Operations

     The following table sets forth for the periods indicated certain operating data as a percentage of net revenues:

9

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2001			2000			2001			2000
Net revenues			100	%		100	%		100	%		100	%
Expenses
	Cost of sales		68			57			63			57
	Research and Development		19			13			16			14
	Selling, general and administrative		12			11			11			11
Total expenses			99			81			90			82
Operating income			1			19			10			18
Interest and other income (expenses), net			-1			1			0			0
Income before taxes			0			20			10			18
Income tax provision			0			-7			-4			-7
Net income			0	%		13	%		6	%		11	%

Net Revenues

     Revenues for the first half 2001 decreased $15 million, or 2%, from the comparable period of 2000. Revenues in the second quarter 2001 totaled $367 million, a decrease of 23% from the same quarter in 2000. Beginning late in the fourth quarter 2000, the global semiconductor industry began to experience a downturn, and worldwide semiconductor sales declined by 31% in the first half 2001 from the same period in 2000. Our business has been impacted by this recent downturn, with the effect that our net revenues of $367 million in the second quarter 2001 declined by $158 million, or 30%, from $526 million in the first quarter 2001. This decrease in revenues is primarily due to a decline in customer end-demand for semiconductor products, particularly in the Flash market, European smart card business and our North American distribution business. At present we cannot predict with any degree of certainty when business conditions will improve.

Net Revenues — By Segment

     Our business has four segments: application specific integrated circuits (ASIC), Logic, nonvolatile memory (NVM), and Atmel Wireless and Microcontroller Group (WMG).

     Although our revenues for the first half 2001 decreased by 2% from the same period in 2000, revenues in every segment except NVM increased in the first half 2001 from the same period last year. Revenues in every segment except Logic decreased in the second quarter 2001 compared to the same quarter last year. The largest decrease was in the NVM segment.

     The Company’s net revenues by segment are summarized as follows (in thousands):

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	Three Months Ended							Six Months Ended
	June 30,							June 30,
					Increase							Increase
Segment	2001		2000		(Decrease)			2001		2000		(Decrease)
ASIC	$	98,019	$	117,180	$	(19,161	)	$	240,518	$	218,696	$	21,822
Logic		44,018		35,160		8,858			96,178		65,204		30,974
NVM		158,093		252,188		(94,095	)		410,640		479,872		(69,232	)
WMG		66,866		74,230		(7,364	)		145,604		144,172		1,432
Total	$	366,996	$	478,758	$	(111,762	)	$	892,940	$	907,944	$	(15,004	)

     ASIC segment revenues increased by $22 million in the first half 2001 compared to the same period in 2000. This increase resulted principally from the inclusion of Atmel Grenoble’s revenues under this segment in the entire first half 2001 and only two months of the first half 2000, since we acquired Atmel Grenoble in May 2000.

     ASIC revenues decreased by $19 million in the second quarter 2001 over the same period in 2000 due principally to lower unit shipments offset by higher average selling prices. ASIC revenues decreased by $44 million in the second quarter 2001 compared to the first quarter 2001 due to lower unit shipments.

     Logic segment revenues increased by $31 million in the first half 2001 compared to the first half 2000 as the result of higher unit shipments and higher average selling prices.

     Logic revenues increased $9 million in the second quarter 2001 compared to the same quarter 2000 because of higher unit shipments at higher average selling prices. However, revenues decreased by $8 million in the second quarter 2001 compared to the first quarter 2001 as the result of lower unit shipments and lower average selling prices.

     NVM segment revenues decreased $69 million in the first half 2001 compared to the same period in 2000. The decrease was due to significantly lower unit shipments offset by higher average selling prices.

     NVM revenues decreased $94 million in the second quarter 2001 compared to the same period in 2000, as a result of lower unit shipments and lower average selling prices. Revenues also decreased $94 million in the second quarter 2001 compared to the first quarter 2001 due to a combination of lower unit shipments and lower unit prices. Because NVM products are commodity oriented, they are subject to greater declines in average selling prices than other product areas within our company. The commodity memory portion of the semiconductor industry has suffered from excess capacity since late in the fourth quarter 2000, and previously during all of 1998 through the first quarter 1999, which led and may be leading to greater than normal price erosion during these and subsequent periods.

     WMG segment revenues in the first half 2001 did not change significantly from the same period a year earlier, however average selling prices increased while unit volumes decreased.

     WMG revenues decreased $7 million in the second quarter 2001 compared to the same period in 2000 primarily as a result of an unfavorable euro/dollar exchange rate. Revenues decreased by $12 million in the second quarter 2001 compared to the first quarter 2001 as the result of lower unit shipments and an unfavorable euro/dollar exchange rate.

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     We normally expect a steady, predictable rate of price decline throughout a product’s life cycle. However, the semiconductor industry historically has been cyclical and characterized by wide fluctuations in product supply and demand. As a result, the industry experiences significant downturns from time to time, as it did in 1998, and as it is currently experiencing. These downturns are marked by diminished product demand, production overcapacity and consequent accelerated erosion of average selling prices.

Net Revenues — By Geographic Area

     The Company’s net revenues by geographic areas are summarized as follows (in thousands):

	Three Months Ended							Six Months Ended
	June 30,							June 30,
					(Decrease)							(Decrease)
Region	2001		2000		Increase			2001		2000		Increase
North America	$	93,379	$	167,247	$	(73,868	)	$	239,680	$	308,049	$	(68,369	)
Europe		121,624		145,097		(23,473	)		301,866		275,995		25,871
Asia		136,112		153,699		(17,587	)		316,170		299,930		16,240
Other		15,881		12,715		3,166			35,224		23,970		11,254
Total	$	366,996	$	478,758	$	(111,762	)	$	892,940	$	907,944	$	(15,004	)

     Sales in the three largest regions declined in the second quarter 2001 compared to the same period in 2000. For the first half 2001, only North American sales declined when compared to the first half 2000.

     Revenues from North America in the first half 2001 declined $68 million or 22% from the same period in 2000. The decrease occurred principally in the second quarter 2001 with a decline of $74 million or 44% from the same period in 2000. Second quarter 2001 revenues declined $53 million or 36% from the first quarter 2001.

     Revenues from Europe increased $26 million or 9% in the first half 2001 compared to the same period in 2000. However, second quarter 2001 revenues from Europe were $23 million less than in the same period last year, a decline of 16%. Second quarter 2001 revenues declined $59 million or 33% from the first quarter 2001.

     Revenues from Asia increased $16 million or 5% in the first half 2001 compared to the same period in 2000. However, second quarter 2001 revenues declined $18 million or 12% from the same quarter in 2000. Second quarter 2001 revenues declined $44 million or 24% from the first quarter 2001.

     In the first half and second quarter 2001 approximately 22% of sales were denominated in foreign currencies, which compares to 25% and 22% in the same periods in 2000. Had exchange rates in the first half 2001 remained the same as in 2000 our reported revenues would have been approximately $10 million higher.

Cost of Revenues and Gross Margin

     Our cost of revenues as a percentage of net revenues increased to 68% in the second quarter 2001, compared to 57% in the second quarter 2000, and to 63% in the first half 2001, from 58%

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in the corresponding period of 2000. Gross margin was 32% for the second quarter 2001 and 37% for the first half 2001, compared to 43% and 42% in the same periods of 2000. The decline is caused both by lower unit sales volumes over which to spread fixed manufacturing costs and lower average selling prices.

     In 2001 we expect capital expenditures to be about $900 million, compared to $961 million in 2000. These expenditures will be focused on developing leading edge manufacturing capacity. We expect to make equipment purchases to add 0.18 micron capacity and also to incur development expenses for next generation process technologies.

     During the second quarter 2001 we implemented several cost reduction measures. However, if the current downturn in the semiconductor industry which began late in the fourth quarter 2000 continues or worsens, our wafer fabrication capacity would continue to be underutilized, and our inability to quickly reduce fixed costs such as depreciation and other fixed operating expenses necessary to operate our wafer manufacturing facilities would further harm our operating results. If our net revenues do not increase sufficiently in future periods to meet these costs, our business could be harmed.

Research and Development

     Research and development costs increased 11% in the first half 2001 from the first half 2000. As a percentage of net revenues, research and development cost increased to 19% in the second quarter 2001 from 13% in the second quarter 2000. We continue our investment in advancing our wafer manufacturing technology to produce integrated circuits with 0.18 micron and 0.13 micron line widths, enhancing our mature products, developing new products, developing new process technologies such as those which use silicon germanium to produce faster integrated circuits, and making improvements to manufacturing efficiencies. We believe that continued investments in process technology and product development are essential for us to remain competitive in the markets we serve, and we are committed to high levels of expenditures for research and development. At the same time, we are taking appropriate steps in an effort to keep fixed costs in this area in line with market conditions.

Selling, General and Administrative (SG&A)

     Selling, general and administrative expenses increased by $3 million in the first half 2001 compared to the same period in 2000 to support an infrastructure commensurate with a greater number of employees and additional manufacturing facilities. However, SG&A expenses declined 18% in the second quarter 2001 compared to the first quarter 2001, primarily as the result of lower selling expenses resulting from lower revenues.

Interest and Other Expenses

     We reported $(2) million of net interest and other expenses for the first half 2001 compared to $(1) million net interest and other expenses for the same period in 2000. For the second quarter 2001 interest and other expenses were $(2.5) million, compared to interest and other income of $2.8 million for the same quarter last year. This expense or income is affected by several variables such as interest rates, exchange rates, and relative balances of investments and borrowings which can have greater or lesser offsetting effects during any period, depending on their respective amounts.

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Income Tax Provision

     The Company’s effective tax rate was 36% for the three and six months ended June 30, 2001 and June 30, 2000. For the remainder of 2001 we expect the effective tax rate to continue at 36%.

Net Income

     We reported a net loss of $31 thousand for the second quarter 2001 compared to net income of $61 million in the same quarter 2000. The second quarter 2001 net loss is a decline of $56 million from the net income of the first quarter 2001. The loss for the second quarter 2001 is due primarily to the significant decline in our net revenues while significant fixed costs such as depreciation and other fixed operating expenses necessary to operate our wafer manufacturing facilities have remained stable. We were unable to reduce such costs as quickly as net revenues declined.

Liquidity and Capital Resources

     At June 30, 2001 we had $404 million of cash and cash equivalents, compared to $448 million at December 31, 2000. Total current assets exceeded total current liabilities by 1.7 times, compared to 1.5 times at December 31, 2000. Short term investments decreased from $514 million to $300 million over the same period as funds have been used to help reduce trade accounts payable to $234 million at June 30, 2001 from $655 million at December 31, 2000. Our working capital decreased by $17 million to $586 million in the first six months of 2001 due to a variety of factors including a $116 million decrease in accounts receivable plus a $116 million increase in accrued liabilities offset by a $39 million increase in inventory plus other net cash provided by operating activities.

     The Company’s accounts receivable decreased 30% to $276 million at June 30, 2001 from $392 million at December 31, 2000. The average days of accounts receivable outstanding was 69 days in the second quarter 2001 compared to 61 days in the first quarter 2001 and 62 days in the fourth quarter 2000. Average days outstanding could continue to increase during the most recent downturn in the semiconductor industry, which began late in the fourth quarter 2000. We monitor collection risks and provide an adequate allowance for doubtful accounts related to these risks. While there can be no guarantee of collecting these receivables, we believe that substantially all net receivables will be collected given customers’ current credit ratings.

     Inventories increased by $39 million to $328 million at June 30, 2001 from $289 million at December 31, 2000. Days sales in inventory increased to 120 from 83 days at December 31, 2000 as shipments slowed faster than we were able to reduce production rates and fixed manufacturing costs. We are taking measures to reduce manufacturing costs in line with reduced demand, but the fixed nature of many manufacturing costs limits our ability to respond as quickly as demand for our products changes.

Cash Flow

From Operating Activities: During the six months ended June 30, 2001, net cash provided by operations was $153 million, compared to $251 million in the same period of 2000, a decrease of $98 million, or 39%. The decrease in cash provided by operating activities is primarily due to reduced net income and because cash was used to increase inventory and reduce liabilities, offset

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by cash provided from collections of accounts receivable. Depreciation and amortization, a cost not requiring cash, increased $42 million compared to the same half of 2000.

From Investing Activities: Cash used in investing activities was $387 million during the first six months of 2001, compared to $502 million during the comparable period of 2000, a decrease of $115 million. This decrease in cash used in investing activities was primarily due to an increase of $293 million of cash flow generated by the sale or maturity of investments used in part to pay for the acquisition of fixed assets.

From Financing Activities: Net cash flows generated by financing activities totaled $178 million in the first half 2001 compared with $845 million in the same period last year. The principal reason for the relative decline was our receipt of $612 million in net proceeds from the stock offering in the first quarter 2000, an event not repeated in the first half 2001. In addition, we engaged in lease financing of $95 million in the first half 2001 compared to $285 million in the same period last year, a decrease of $190 million.

     In May 2001, we completed an offering of $512 million in aggregate principal amount at maturity of our Zero Coupon Convertible Debentures due 2021. The initial purchasers of the debentures were Morgan Stanley & Co. Incorporated, Credit Lyonnais Securities (USA) Inc. and Needham & Company, Inc. From the aggregate offering price of $200 million we received $194 million in net proceeds from the offering after deducting the aggregate initial purchasers’ discount, which was $6 million. The offer and sale of the debentures was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Rule 144A promulgated thereunder. The debentures are convertible, at the option of the holder, into the Company’s common stock at the rate of 22.983 shares per $1,000 (one thousand) principal amount at maturity of the debentures. The effective interest rate of the debentures is 4.75 percent per annum. The debentures will be redeemable for cash, at our option, at any time on or after May 23, 2006 in whole or in part at redemption prices equal to the issue price plus accrued original issue discount. At the option of the holders as of May 23, 2006, 2011 and 2016, we may be required to redeem the debt at prices equal to the issue price plus accrued original issue discount through date of repurchase. We may, at our option, elect to pay the repurchase price in cash, in shares of our common stock or in any combination of the two. We plan to use the net proceeds from this offering for general corporate purposes, as well as capital expenditures, such as equipment for 0.13 micron and copper manufacturing processes.

     We believe that our existing sources of liquidity, together with cash flow from operations, lease financing on equipment, and other short- and medium-term bank borrowings, will be sufficient to meet our liquidity and capital requirements through 2001. We may, however, seek additional equity or debt financing to fund the expansion of our wafer fabrication capacity or other projects, and the timing and amount of such capital requirements cannot be precisely determined at this time. If we seek such financing it may not be available in sufficient amounts or upon acceptable terms.

Other Factors That May Affect Operations

     Investors should carefully consider the risks described below, in addition to the other information contained in this report and in our other filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2000. The risks and uncertainties described below are not the only ones facing our Company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business

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operations. If any of these risks actually occur they could seriously harm our business, financial condition or results of operations. In that event, the market price for our common stock could decline and you may lose all or part of your investment.

Our revenues and operating results fluctuate significantly due to a variety of factors, which may result in volatility or a decline in our stock price.

     Our future operating results will be subject to quarterly variations based upon a wide variety of factors, many of which are not within our control. These factors include:

• the cyclical nature of both the semiconductor industry and the markets addressed by our products

• fluctuations in manufacturing yields

• the timing of introduction of new products

• the timing of customer orders

• price erosion

• changes in mix of products sold

• the extent of utilization of manufacturing capacity

• product obsolescence

• availability of supplies and raw materials

• price competition and other competitive factors, and

• fluctuations in currency exchange rates.

     Any unfavorable changes in any of these factors could harm our operating results.

     In particular, we believe that our future sales growth will depend substantially on the success of our new products. Our new products are generally incorporated into our customers’ products or systems at the design stage. However, design wins may precede volume sales by a year or more. We may not be successful in achieving design wins or any design win may not result in future revenues, which depend in large part on the success of the customer’s end product or system. We expect the average selling price of each of our products to decline as individual products mature and competitors enter the market. To offset average selling price decreases, we rely primarily on reducing costs in the manufacturing of those products, increasing unit sales to absorb fixed costs and introducing new, higher priced products which incorporate advanced features or integrated technologies to address new or emerging markets. To the extent that such cost reductions and new product introductions do not occur in a timely manner, our operating results could be harmed. From time to time, our quarterly revenues and operating results can become more dependent upon orders booked and shipped within a given quarter and, accordingly, our quarterly results can become less predictable and subject to greater variability.

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     In addition, our continued success will depend in large part on the continued growth of various electronics industries that use semiconductors, including manufacturers of computers, telecommunications equipment, automotive electronics, industrial controls, consumer electronics, data networking equipment and military equipment, and economic growth generally. Our success will also depend upon a better supply and demand balance within the semiconductor industry.

     In 1998 and early 1999, the semiconductor industry experienced a significant downturn, characterized by, among other things, diminished product demand, production overcapacity and decline of average selling prices of products. While sales of our ASIC and logic-related products increased during this period, continued price reduction of our commodity nonvolatile memory products (caused by continued weakened business conditions and excess manufacturing capacity in the semiconductor industry) more than offset the impact of higher sales of ASIC and logic-related products in 1998. These nonvolatile memory products included our commodity EPROMs and Flash memories. These business conditions in the worldwide semiconductor industry also contributed to our decision to implement a restructuring plan, which we announced in the second quarter of fiscal 1998. The restructuring plan, which resulted in a nonrecurring charge of approximately $66 million, included a ten percent work force reduction and an impairment charge to write down the value of certain manufacturing equipment and machinery with older process technology.

     Beginning late in the fourth quarter 2000, the semiconductor industry began to experience a downturn, and worldwide semiconductor sales declined by approximately 31% in the first half 2001 from the same period in 2000. Our business has been impacted by this recent downturn, with the effect that our net revenues of $367 million in the second quarter 2001 declined by $159 million, or 30%, from $526 million in the first quarter 2001. Many of the business conditions we experienced in the 1998 downturn are again present in our business, and at present we cannot predict with any degree of certainty when business conditions will improve. If the current downturn is worse than we currently expect it would harm our results of operations and may result in our recognition of charges related to the downsizing of our manufacturing operations and write-downs of our gross inventories.

The cyclical nature of the semiconductor industry creates fluctuations in our operating results.

     The semiconductor industry has historically been cyclical, characterized by wide fluctuations in product supply and demand. From time to time, the industry has also experienced significant downturns, often in connection with, or in anticipation of, maturing product cycles and declines in general economic conditions. The industry is currently experiencing this type of downturn and experienced a similar downturn as recently as 1998. These downturns have been characterized by diminished product demand, production overcapacity and accelerated decline of average selling prices, and in some cases have lasted for more than a year. Our business would be further harmed by this industry-wide fluctuation if the recent downturn continues, or in the future. The commodity memory portion of the semiconductor industry, from which we derived 46% of our revenues in the first half 2001, compared to 52% of our revenues in 2000, 46% of our revenues in 1999, and approximately half of our revenues in 1998, suffered from excess capacity in 1998 and the second quarter 2001, which led to substantial price reductions during those periods. While conditions improved after the 1998 downturn in 1999 and 2000, at present we cannot predict with any degree of certainty when the current downturn will subside.

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During the current downturn and in the past, our operating results have also been harmed by industry-wide fluctuations in the demand for semiconductors, which resulted in under-utilization of our manufacturing capacity and declining gross margins. If the current downturn is more severe or prolonged it may result in our having to recognize asset impairment, excess inventory or other charges. Our business may be harmed in the future not only by cyclical conditions in the semiconductor industry as a whole but also by slower growth in any of the markets served by our customer products.

If we are unable to effectively utilize our wafer manufacturing capacity and fail to achieve acceptable manufacturing yields, our business would be harmed.

     The fabrication of our integrated circuits is a highly complex and precise process, requiring production in a tightly controlled, clean environment. Minute impurities, difficulties in the fabrication process, defects in the masks used to print circuits on a wafer or other factors can cause a substantial percentage of wafers to be rejected or numerous die on each wafer to be nonfunctional. We may experience problems in achieving acceptable yields in the manufacture of wafers, particularly in connection with the expansion of our manufacturing capacity and related transitions. The interruption of wafer fabrication or the failure to achieve acceptable manufacturing yields at any of our wafer fabrication facilities would harm our business.

     In 1997 and 1998, we made substantial capital expenditures to increase our wafer fabrication capacity at our facilities in Colorado Springs, Colorado and Rousset, France, and acquired two wafer fabrication facilities in connection with our acquisition of WMG. In 1998, our gross margin declined significantly as a result of the increase in fixed costs and operating expenses related to this expansion of capacity and lower product margins in many of our nonvolatile memory products due to severe price decline. In 1999, the declining gross margin trend reversed, primarily due to a higher unit sales volume over which to spread fixed costs and operating expenses, the inclusion of WMG’s positive gross margin for all of 1999 compared to only ten months in 1998, and stabilization of average selling prices.

     If the most recent downturn in the semiconductor industry experienced since the fourth quarter 2000 continues into the second half 2001 or worsens, our wafer fabrication capacity would continue to be under-utilized, and our inability to quickly reduce fixed costs such as depreciation and other fixed operating expenses necessary to operate our wafer manufacturing facilities would harm our operating results. If net revenues do not continue to increase sufficiently in future periods to meet these costs, our business could be harmed. We have previously experienced production delays and yield difficulties in connection with earlier expansions of our wafer fabrication capacity. Production delays, difficulties in achieving acceptable yields at any of our fabrication facilities or overcapacity could materially and adversely affect our operating results.

Our markets are highly competitive, and if we do not compete effectively, we may suffer price reductions, reduced revenues, reduced gross margins, and loss of market share.

     We compete in markets that are intensely competitive and characterized by rapid technological change, product obsolescence and price decline. Throughout our product line, we compete with a number of large semiconductor manufacturers, such as AMD, Fujitsu, Hitachi, Intel, LSI Logic, Microchip, Sharp and STMicroelectronics. Some of these competitors have substantially greater financial, technical, marketing and management resources than we do. As we have introduced our new products, we are increasingly competing directly with these companies, and we may not be able to compete effectively. We also compete with emerging

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companies that are attempting to sell products in specialized markets that our products address. We compete principally on the basis of the technical innovation and performance of our products, including their speed, density, power usage, reliability and specialty packaging alternatives, as well as on price and product availability. Although our average selling prices increased relative to those of the prior years in 2000 and late 1999, during 1998, early 1999, and beginning in the second quarter 2001 we experienced significant price competition in our nonvolatile memory business and especially for EPROM and Flash products. We expect continuing competitive pressures in our markets from existing competitors and new entrants, and declining demand which, among other things, could maintain the recent trend of declining average selling prices for our products.

     In addition to the factors described above, our ability to compete successfully depends on a number of factors, including the following:

• our success in designing and manufacturing new products that implement new technologies and processes

• our ability to offer integrated solutions using our advanced nonvolatile memory process with other technologies

• the rate at which customers incorporate our products into their systems

• product introductions by our competitors

• the number and nature of our competitors in a given market, and

• general market and economic conditions.

     Many of these factors are outside of our control, and we may not be able to compete successfully in the future.

If we do not successfully increase our manufacturing capacity to meet demand, we may face capacity constraints that could harm our business.

     We currently manufacture our products at our wafer fabrication facilities located in Colorado Springs, Colorado; Heilbronn, Germany; Nantes, France; and Rousset, France. We have two additional facilities in Irving, Texas, and in North Tyneside, UK, at which we are not yet producing wafers. We believe that we will be able to substantially meet our production needs from these facilities through the end of the fourth quarter 2003, although this date may vary depending on, among other things, our rate of growth. We would be required to hire, train and manage additional production personnel in order to increase production capacity. We will also be required to successfully implement new manufacturing technologies in order to reduce the geometries of our semiconductors to 0.18 micron and 0.13 micron line widths and produce more integrated circuits per wafer in order to remain competitive. If a rebound occurs in the worldwide semiconductor industry and we cannot expand our capacity on a timely basis, we could experience significant capacity constraints that would prevent us from meeting customer demand. In addition, the depreciation and other expenses that we incur in connection with the expansion of our manufacturing capacity may continue to reduce our gross margins in future periods.

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     The cost of expanding our manufacturing capacity at our existing facilities would be funded through a combination of available cash resources, cash from operations and additional lease, debt or equity financing. We may not be able to obtain the additional financing necessary to fund the expansion of our manufacturing facilities.

     Expanding our wafer fabrication capacity involves significant risks, including:

• shortages of materials and skilled labor

• unavailability of semiconductor manufacturing and testing equipment

• unforeseen environmental or engineering problems

• work stoppages

• approvals and requirements of governmental and regulatory agencies

• unanticipated cost increases, and

• unanticipated drops in demand.

     Any one of these risks could delay the building, equipping and production start-up of a new facility or the expansion of an existing facility, and could involve significant additional costs or reduce our anticipated revenues. In addition, the timing of commencement of operation of our Irving, Texas and North Tyneside, UK facilities will depend upon the availability, timely delivery, successful installation and testing of complex process equipment.

     As a result of these and other factors, any expanded or new facility may not be completed and in volume production on time or within budget. Furthermore, we may be unable to achieve adequate manufacturing yields in any expanded or new facility in a timely manner, and our revenues may not increase in proportion to the anticipated increase in manufacturing capacity associated with any expanded or new facility.

We must keep pace with technological change to remain competitive.

     The average selling prices of our products historically have decreased over the products’ lives and are expected to continue to do so. As a result, our future success depends on our ability to develop and introduce new products which compete effectively on the basis of price and performance and which address customer requirements. We are continually in the process of designing and commercializing new and improved products to maintain our competitive position. The success of new product introductions is dependent upon several factors, including timely completion and introduction of new product designs, achievement of acceptable fabrication yields and market acceptance. Our development of new products and our customers’ decision to design them into their systems can take as long as three years, depending upon the complexity of the device and the application. Accordingly, new product development requires a long-term forecast of market trends and customer needs, and the successful introduction of our products may be adversely affected by competing products or technologies serving markets addressed by our products. Our qualification process involves multiple cycles of testing and improving a product’s functionality to ensure that our products operate in accordance with design

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specifications. If we experience delays in the introduction of new products, our future operating results could be harmed.

     In addition, new product introductions frequently depend on our development and implementation of new process technologies, and our future growth will depend in part upon the successful development and market acceptance of these process technologies. Our integrated solution products will require more technically sophisticated sales and marketing personnel to market these products successfully to customers. We are developing new products with smaller feature sizes, the fabrication of which will be substantially more complex than fabrication of our current products. If we are unable to design, develop, manufacture, market and sell new products successfully, our operating results will be harmed. Our new product development, process development, or marketing and sales efforts may not be successful, our new products may not achieve market acceptance, and price expectations for our new products may not be achieved, any of which could harm our business.

Our operating results are highly dependent on our international sales and operations, which exposes us to various political and economic risks.

     Sales to customers outside North America accounted for approximately 74%, 64% and 65% of net revenues in the first half 2001, and in all of 2000 and 1999. We expect that revenues derived from international sales will continue to represent a significant portion of net revenues. In recent years we have significantly expanded our international operations, most recently through our acquisitions of a wafer fabrication facility in North Tyneside, UK in September 2000, and Atmel Grenoble in May 2000. International sales and operations are subject to a variety of risks, including:

• greater difficulty in protecting intellectual property

• greater difficulty in staffing and managing foreign operations

• greater risk of uncollectible accounts

• longer collection cycles

• potential unexpected changes in regulatory practices, including export license requirements, trade barriers, tariffs and tax laws

• sales seasonality, and

• general economic and political conditions in these foreign markets.

     Further, we purchase a significant portion of our raw materials and equipment from foreign suppliers, and we incur labor and other operating costs in foreign currencies, particularly at our French and German manufacturing facilities. As a result, our costs will fluctuate along with the currencies and general economic conditions in the countries in which we do business, which could harm our operating results.

     Approximately 78%, 75% and 78% of our sales in the first half 2001, and in all of 2000 and 1999 were denominated in U.S. dollars. During these periods our products became less price competitive in countries with currencies declining in value against the dollar. In 1998, business

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conditions in Asia were severely affected by banking and currency issues that adversely affected our operating results. While these conditions stabilized in 1999 and 2000, the continuance or worsening of adverse business and financial conditions in Asia, where 35% of our revenues were generated in the first half 2001, and 34% in the full years of 2000 and 1999, would likely harm our operating results.

When we take foreign orders denominated in local currencies, we risk receiving fewer dollars when these currencies weaken against the dollar, and may not be able to adequately hedge against this risk.

     When we take a foreign order denominated in a local currency we will receive fewer dollars than we initially anticipated if that local currency weakens against the dollar before we collect our funds. In addition to reducing revenues, this risk will negatively affect our operating results. In Europe, where our significant operations have costs denominated in European currencies, these negative impacts on revenues can be partially offset by positive impacts on costs. However, in Japan, while our yen denominated sales are also subject to exchange rate risk, we do not have significant operations with which to counterbalance our exposure. Sales denominated in yen were 6% of our revenues in the first half 2001, compared to 7% in the first half 2000. Sales denominated in foreign currencies were 22% in the first half 2001, compared to 31% in the comparable period of 2000. We also face the risk that our accounts receivables denominated in foreign currencies will be devalued if such foreign currencies weaken quickly and significantly against the dollar.

If we fail to maintain satisfactory relationships with Motorola and other key customers, our business may be harmed.

     In the first half 2001 7% of our net revenues were derived from sales to Motorola. This compares to 12%, 12% and 14% in the full years 2000, 1999 and 1998. Sales to Motorola decreased by $25 million in the first half 2001 compared to the same period of 2000. This amount represents about 3% of revenues in the first half 2000. Our ability to maintain close, satisfactory relationships with Motorola and other large customers is important to our business. A reduction, delay, or cancellation of orders from Motorola or our other large customers would harm our business. The loss of one or more of our key customers, or reduced orders by any of our key customers, could harm our business and results of operations. Moreover, our customers may vary order levels significantly from period to period, and customers may not continue to place orders with us in the future at the same levels as in prior periods.

We are not protected by long-term contracts with our customers.

     We do not typically enter into long-term contracts with our customers, and we cannot be certain as to future order levels from our customers. When we do enter into a long-term contract, the contract is generally terminable at the convenience of the customer. In the event of an early termination by one of our major customers, it is unlikely that we will be able to rapidly replace that revenue source, which would harm our financial results.

Our failure to successfully integrate businesses or products we have acquired could disrupt or harm our ongoing business.

     We have from time to time acquired complementary businesses, products and technologies. Achieving the anticipated benefits of an acquisition depends, in part, upon whether the

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integration of the acquired business, products or technology is accomplished in an efficient and effective manner. Moreover, successful acquisitions in the semiconductor industry may be more difficult to accomplish than in other industries because such acquisitions require, among other things, integration of product offerings, manufacturing operations and coordination of sales and marketing and research and development efforts. The difficulties of such integration may be increased by the need to coordinate geographically separated organizations, the complexity of the technologies being integrated, and the necessity of integrating personnel with disparate business backgrounds and combining two different corporate cultures. The integration of operations following an acquisition requires the dedication of management resources that may distract attention from the day-to-day business, and may disrupt key research and development, marketing or sales efforts. The inability of management to successfully integrate any future acquisition could harm our business. Furthermore, products acquired in connection with acquisitions may not gain acceptance in our markets, and we may not achieve the anticipated or desired benefits of such transactions.

We may face third party intellectual property infringement claims that could be costly to defend and result in loss of significant rights.

     The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights or positions, which have on occasion resulted in significant and often protracted and expensive litigation. We have from time to time received, and may in the future receive, communications from third parties asserting patent or other intellectual property rights covering our products or processes. In the past, we have received specific allegations from major companies alleging that certain of our products infringe patents owned by such companies. In order to avoid the significant costs associated with our defense in litigation involving such claims, we may license the use of the technologies that are the subject of these claims from such companies and be required to make corresponding royalty payments, which may harm our operating results.

     We have in the past been involved in intellectual property infringement lawsuits, which harmed our operating results. Although we intend to vigorously defend against any such lawsuits, we may not prevail given the complex technical issues and inherent uncertainties in patent and intellectual property litigation. Moreover, the cost of defending against such litigation, in terms of management time and attention, legal fees and product delays, could be substantial, whatever the outcome. If any patent or other intellectual property claims against us are successful, we may be prohibited from using the technologies subject to these claims, and if we are unable to obtain a license on acceptable terms, license a substitute technology, or design new technology to avoid infringement, our business and operating results may be significantly harmed.

     We have several cross-license agreements with other companies. In the future, it may be necessary or advantageous for us to obtain additional patent licenses from existing or other parties, but these license agreements may not be available to us on acceptable terms, if at all.

Our long-term debt could harm our ability to obtain additional financing, and our ability to meet our debt obligations will be dependent upon our future performance.

     As of June 30, 2001, our convertible notes and long term debt less current portion was $849 million compared to $669 million at December 31, 2000, and $654 million at December 31, 1999. An increase in our debt-to-equity ratio could materially and adversely affect our ability to

23

obtain additional financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. Our ability to meet our debt obligations will depend upon our future performance, which will be subject to the financial, business and other factors affecting our operations, many of which are beyond our control.

     Since a substantial portion of our operations are conducted through our subsidiaries, the cash flow and the consequent ability to service debt are partially dependent upon the earnings of our subsidiaries and the distribution of those earnings, or upon loans or other payments of funds by those subsidiaries, to us. These subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to our long-term debt or to make any funds available therefor, whether by dividends, distributions, loans or other payments. In addition, the payment of dividends or distributions and the making of loans and advances to us by any of our subsidiaries could in the future be subject to statutory or contractual restrictions and other various business considerations and contingent upon the earnings of those subsidiaries. Any right held by us to receive any assets of any of our subsidiaries upon its liquidation or reorganization will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors, except to the extent that we are recognized as a creditor of such subsidiary, in which case our claims would still be subordinate to any security interest in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by us.

We may need to raise additional capital that may not be available.

     Semiconductor companies that maintain their own fabrication facilities have substantial capital requirements. We made capital expenditures of approximately $600 million in the first half 2001, compared to $961 million in all of 2000 and $172 million in 1999. We intend to continue to make capital investments to support business growth and achieve manufacturing cost reductions and improved yields. Currently, we expect our 2001 capital expenditures to be relatively level with 2000 at approximately $900 million. We may seek additional equity or debt financing to fund further expansion of our wafer fabrication capacity or to fund other projects. The timing and amount of such capital requirements cannot be precisely determined at this time and will depend on a number of factors, including demand for products, product mix, changes in semiconductor industry conditions and competitive factors. Additional debt or equity financing may not be available when needed or, if available, may not be available on satisfactory terms.

We depend on independent assembly contractors which may not have adequate capacity to fulfill our needs and which may not meet our quality and delivery objectives.

     We manufacture wafers for our products at our fabrication facilities, and the wafers are then sorted and tested at our facilities. After wafer testing, we ship the wafers to one of our independent assembly contractors located in China, Malaysia, the Philippines, South Korea, Taiwan and Thailand where the wafers are separated into die, packaged and, in some cases, tested. Our reliance on independent contractors to assemble, package and test our products involves significant risks, including reduced control over quality and delivery schedules, the potential lack of adequate capacity and discontinuance or phase-out of the contractors’ assembly processes. These independent contractors may not continue to assemble, package and test our products for a variety of reasons. Moreover, because our assembly contractors are located in foreign countries, we are subject to certain risks generally associated with contracting with foreign suppliers, including currency exchange fluctuations, political and economic instability, trade restrictions and changes in tariff and freight rates. Accordingly, we may experience

24

problems in timelines and the adequacy or quality of product deliveries, any of which could have a material adverse effect on our results of operations.

We are subject to environmental regulations, which could impose unanticipated requirements on our business in the future. Any failure to comply with current or future environmental regulations may subject us to liability or suspension of our manufacturing operations.

     We are subject to a variety of federal, state and local governmental regulations related to the discharge or disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing processes. Increasing public attention has been focused on the environmental impact of semiconductor operations. Although we have not experienced any material adverse effect on our operations from environmental regulations, any changes in such regulations or in their enforcement may impose the need for additional capital equipment or other requirements. If for any reason we fail to control the use of, or to restrict adequately the discharge of, hazardous substances under present or future regulations, we could be subject to substantial liability or our manufacturing operations could be suspended.

We depend on certain key personnel, and the loss of any key personnel may seriously harm our business.

     Our future success depends in large part on the continued service of our key technical and management personnel and on our ability to continue to attract and retain qualified employees, particularly those highly skilled design, process and test engineers involved in the manufacture of existing products and the development of new products and processes. The competition for such personnel is intense, and the loss of key employees, none of whom is subject to an employment agreement for a specified term or a post-employment non-competition agreement, could harm our business.

Failure to manage our growth may seriously harm our business.

     Our business has grown in recent years through both internal expansion and acquisitions, and continued growth may cause a significant strain on our infrastructure and internal systems. To manage our growth effectively, we must continue to improve and expand our management information systems. We commenced an implementation of a new SAP enterprise resource planning and management system for our worldwide operations in 2000, which is not yet fully implemented. Our success depends to a significant extent on the management skills of our executive officers. If we are unable to manage growth effectively, our results of operations will be harmed.

Business interruptions could harm our business.

     Our operations are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure and other events beyond our control. We do not have a detailed disaster recovery plan. Our facilities in the State of California are currently subject to electrical blackouts as a consequence of a shortage of available electrical power. In the event these blackouts continue or increase in severity, they could disrupt the operations of our affected facilities. In addition, business interruption insurance may not be enough to compensate us for losses that may occur and any losses or damages incurred by us as a result of business interruptions could significantly harm our business.

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Provisions in our amended and restated certificate of incorporation and preferred shares rights agreement may have anti-takeover effects.

     Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, voting rights, preferences and privileges and restrictions of those shares without the approval of our stockholders. The rights of the holders of common stock will be subject to, and may be harmed by, the rights of the holders of any shares of preferred stock that may be issued in the future. The issuance of preferred stock may delay, defer or prevent a change in control, by making it more difficult for a third party to acquire a majority of our stock. In addition, the issuance of preferred stock could have a dilutive effect on our stockholders. We have no present plans to issue shares of preferred stock.

     We also have a preferred shares rights agreement with BankBoston, N.A., as rights agent, dated as of September 4, 1996 and amended and restated on October 18, 1999, which gives our stockholders certain rights that would likely delay, defer or prevent a change of control of Atmel in a transaction not approved by our board of directors.

Our stock price has fluctuated in the past and may continue to fluctuate in the future.

     The market price of our common stock has experienced significant fluctuations and may continue to fluctuate significantly. The market price of our common stock may be significantly affected by factors such as the announcement of new products or product enhancements by us or our competitors, technological innovations by us or our competitors, quarterly variations in our results of operations, changes in earnings estimates by market analysts and general market conditions or market conditions specific to particular industries. Statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or relating to us specifically could result in an immediate and adverse effect on the market price of our stock. In addition, in recent years the stock market has experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on the market prices for many high technology companies, often unrelated to the operating performance of the specific companies.

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Item 3.  Quantitative and Qualitative Disclosure about Market Risk

Market Risk Sensitive Instruments

     We do not use derivative financial instruments in our operations.

Interest Rate Risk

     We maintain investment portfolio holdings of various issuers, types and maturities whose values are dependent upon short term interest rates. We generally classify these securities as available for sale, and consequently record them on the balance sheet at fair value with unrealized gains and losses being recorded as a separate part of stockholders’ equity. We do not currently hedge these interest rate exposures.

     Given our current profile of interest rate exposures and the maturities of our investment holdings, we believe that an unfavorable change in interest rates would not have a significant negative impact on our investment portfolio or statement of operations through December 31, 2000.

     Atmel has short term debt, long term debt and capital leases totaling $1 billion at June 30, 2001. Approximately $711 million of these borrowings have fixed interest rates. Approximately $296 million of floating rate debt is based on the Euro and EuroYen interest rates. We do not hedge either of these interest rates and could be negatively affected should either of these rates increase significantly. A hypothetical 100 basis point increase in both of these interest rates would have a $1.5 million adverse impact on income before taxes on Atmel’s Consolidated Statements of Operations for the remainder of 2001. While there can be no assurance that both of these rates will remain at current levels, we believe these rates will not increase significantly (defined as an increase of more than 100 basis points) and cause any harm to our operations and financial position.

Foreign Currency Risk

     When we take a foreign order denominated in a local currency we will receive fewer dollars than we initially anticipated if that local currency weakens against the dollar before we collect our funds. In addition to reducing revenue, this would negatively affect our operating results. In Europe, where our significant operations have costs denominated in European currencies, these negative impacts on revenue can be partially offset by positive impacts on costs. However, in Japan, while our yen denominated sales are also subject to exchange rate risk, we do not have significant operations with which to counterbalance our exposure. Sales denominated in yen were 6% of our revenue in the first half 2001, compared to 7% in the first half 2000. Sales denominated in foreign currencies were 22% in the first half 2001, compared to 31% in the first half 2000. We also face the risk that our accounts receivables denominated in foreign currencies will be devalued if such foreign currencies weaken quickly and significantly against the dollar.

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PART II OTHER INFORMATION

Item 1. Legal Proceedings

     We are not a party to any legal proceedings that management believes could have a material adverse effect on our operating results.

Item 2. Changes in Securities and Use of Proceeds

     In May 2001, we completed an offering of $511,500,000 in aggregate principal amount at maturity of our Zero Coupon Convertible Debentures due 2021. The initial purchasers of the debentures were Morgan Stanley & Co. Incorporated, Credit Lyonnais Securities (USA) Inc. and Needham & Company, Inc. From the aggregate offering price of approximately $200 million we received approximately $194 million in net proceeds from the offering after deducting the aggregate initial purchasers’ discount, which was approximately $6 million. The offer and sale of the debentures was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Rule 144A promulgated thereunder. The debentures are convertible, at the option of the holder, into the Company’s common stock at the rate of 22.983 shares per $1,000 principal amount at maturity of the debentures. The effective interest rate of the debentures is 4.75 percent per annum. The debentures will be redeemable for cash, at our option, at any time on or after May 23, 2006 in whole or in part at redemption prices equal to the issue price plus accrued original issue discount. At the option of the holders as of May 23, 2006, 2011 and 2016, we may be required to redeem the debt at prices equal to the issue price plus accrued original issue discount through date of repurchase. We may, at our option, elect to pay the repurchase price in cash, in shares of our common stock or in any combination of the two. We plan to use the net proceeds from this offering for general corporate purposes, as well as capital expenditures, such as equipment for 0.13 micron and copper manufacturing processes.

Item 4: Submission of Matters to a Vote of Securities Holders

     At our Annual Meeting of Stockholders held on May 2, 2001, the tabulation of proxies representing 410,158,408 shares of Common Stock or 88% of the total outstanding shares resulted in the following votes (in thousands):

          Proposal I (Election of Directors)

	Total Vote		Total Vote
	for Each		Withheld
	Director		Each Director
George Perlegos		357,296		52,854
Gust Perlegos		357,196		52,954
Tsung-Ching Wu		357,398		52,752
Norm Hall		380,699		29,452
T. Peter Thomas		392,439		17,711
Pierre Fougere		392,347		17,803

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Proposal II (To increase the number of authorized shares of Common Stock of Atmel Corporation to 1,600,000,000.)

FOR	AGAINST		ABSTAIN
354,856		54,270		1,024

Proposal III (To ratify the appointment of PricewaterhouseCoopers LLP as the independent accountants of Atmel Corporation for 2001.)

FOR	AGAINST		ABSTAIN
389,747		19,704		699

Item 5: Other Information

Stockholder Proposals Due for Our 2002 Annual Meeting

     Stockholder proposals intended to be presented at our 2002 annual meeting of stockholders must be received by our Vice President and General Counsel not later than November 21, 2001 in order to be included in our proxy statement and form of proxy relating to the 2002 annual meeting. (Our Address: 2325 Orchard Parkway; San Jose, CA 95131)

Item 6: Exhibits and Reports on Form 8-K

(A)  The following exhibits have been filed with this report:

Exhibit 3.1 — Certificate of Incorporation of Registrant, as amended and restated to date
 
Exhibit 10.9 — Indenture, dated as of May 23, 2001, by and between the company and State Street Bank and Trust Company of California, N.A., as trustee thereunder (including the form of debenture)
 
Exhibit 10.10 — Registration Rights Agreement, dated as of May 23, 2001

(B)  Reports on Form 8-K:

     A report on Form 8-K was filed on May 17, 2001 (reporting the intention to raise approximately $200 million through an offering of zero coupon convertible subordinated notes). A second Form 8-K was filed on May 18, 2001 (announcing the pricing of the zero coupon convertible subordinated debentures due 2021 through a private offering to qualified institutional investors). Another Form 8-K was filed on July 26, 2001 (announcing our results for the three months ended June 30, 2001, among other things).

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ATMEL CORPORATION
	(Registrant)
August 10, 2001	/s/ GEORGE PERLEGOS
	George Perlegos President, Chief Executive Officer (Principal Executive Officer)
	/s/ DONALD COLVIN
August 10, 2001	Donald Colvin Chief Financial Officer and Vice President, Finance (Principal Financial and Accounting Officer)

30

EXHIBIT INDEX

Exhibit Description

Exhibit 3.1	Certificate of Incorporation of Registrant, as amended and restated to date
Exhibit 10.9	Indenture, dated as of May 23, 2001, by and between the company and State Street Bank and Trust Company of California, N.A., as trustee thereunder (including the form of debenture)
Exhibit 10.10	Registration Rights Agreement, dated as of May 23, 2001

30 EX-3.1 3 f74490ex3-1.txt EXHIBIT 3.1 1 EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF ATMEL CORPORATION Atmel Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies that: A. The name of this Corporation is Atmel Corporation. B. The date of filing of this Corporation's original Certificate of Incorporation with the Secretary of State of the State of Delaware was March 4, 1999. C. Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, this Amended and Restated Certificate of Incorporation restates, integrates and amends the provisions of the Corporation's Certificate of Incorporation as follows: ARTICLE I The name of the corporation is Atmel Corporation (the "Corporation"). ARTICLE II The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III The nature of the business or purposes to be conducted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. 2 ARTICLE IV The Corporation is authorized to issue two classes of stock to be designated, respectively, Common Stock and Preferred Stock. The total number of shares of all classes of stock which the Corporation has authority to issue is one billion six hundred five million (1,605,000,000), consisting of one billion six hundred million (1,600,000,000) shares of Common Stock, par value $0.001 per share (the "Common Stock"), and five million (5,000,000) shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock"). The Corporation shall from time to time in accordance with the laws of the State of Delaware increase the authorized amount of its Common Stock if at any time the number of Common Stock remaining unissued and available for issuance shall not be sufficient to permit conversion of the Preferred Stock. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of each such series of Preferred Stock, including without limitation authority to fix by resolution or resolutions, the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any wholly unissued series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of the foregoing. The Board of Directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issue of shares of such series then outstanding, subject to the powers, preferences and rights, and the qualifications, limitations and restrictions thereof stated in the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series. ARTICLE V The Corporation is to have perpetual existence. ARTICLE VI The election of directors need not be by written ballot unless a stockholder demands election by written ballot at a meeting of stockholders and before voting begins or unless the Bylaws of the Corporation shall so provide. ARTICLE VII -2- 3 The number of directors which constitute the whole Board of Directors of the Corporation shall be designated in the Bylaws of the Corporation. Vacancies occurring on the Board of Directors may be filled by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, at a meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy shall hold office until the next succeeding annual meeting of stockholders of the Corporation or until his or her successor shall have been duly elected and qualified. ARTICLE VIII No action shall be taken by the stockholders of the Corporation except at an annual or special meeting of the stockholders called in accordance with the Bylaws and no action shall be taken by the stockholders by written consent. ARTICLE IX Advance notice of stockholder nomination for the election of directors and of any other business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. ARTICLE X In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to adopt, alter, amend or repeal the Bylaws of the Corporation. ARTICLE XI To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. The Corporation may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director, officer, employee or agent of the Corporation or any predecessor of the Corporation or serves or served at any other enterprise as a director, officer, employee or agent at the request of the Corporation or any predecessor to the Corporation. Neither any amendment nor repeal of this Article, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. -3- 4 ARTICLE XII At the election of directors of the Corporation, each holder of stock of any class or series shall be entitled to one vote for each share held. No stockholder will be permitted to cumulate votes at any election of directors. ARTICLE XIII Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the laws of the State of Delaware) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. ARTICLE XIV The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and all rights conferred herein are granted subject to this reservation. ARTICLE XV The Corporation expressly elects not to be governed by Section 203 of the General Corporation Law of the State of Delaware. The undersigned declares under penalty of perjury that the matters set forth in the foregoing certificate are true of his own knowledge. IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation this ___ day of August 1999. By: ----------------------------------------- Mike Ross, Vice President and General Counsel and Assistant Secretary -4- EX-10.9 4 f74490ex10-9.txt EXHIBIT 10.9 1 EXHIBIT 10.9 EXECUTION COPY ================================================================================ Zero Coupon Convertible Subordinated Debentures due 2021 Atmel Corporation Issuer ---------------- INDENTURE Dated as of May 23, 2001 ---------------- State Street Bank and Trust Company of California, N.A. Trustee 2 CROSS REFERENCE TABLE*

INDENTURE TIA SECTION SECTION - ------------------------------------------------------------------------- --------- 310 (a)(1)............................................................... 7.10 (a)(2)............................................................... 7.10 (a)(3)............................................................... N.A.** (a)(4)............................................................... N.A. (b).................................................................. 7.10 (c).................................................................. N.A. 311 (a).................................................................. 7.11 (b).................................................................. 7.11 (c).................................................................. N.A. 312 (a).................................................................. N.A. (b).................................................................. 12.3 (c).................................................................. 12.3 (d).................................................................. N.A. 313 (a).................................................................. 7.6 (b).................................................................. 7.6 (b)(1)............................................................... N.A. (b)(2)............................................................... N.A. (c).................................................................. N.A. (d).................................................................. N.A. 314 (a).................................................................. N.A. (b).................................................................. N.A. (c)(1)............................................................... N.A. (c)(2)............................................................... N.A. (c)(3)............................................................... N.A. (d).................................................................. N.A. (e).................................................................. N.A. (f).................................................................. N.A. 315 (a).................................................................. 7.1 (b).................................................................. 7.5 (c).................................................................. 7.1 (d)(1)............................................................... 7.1 (d)(2)............................................................... 7.1 (d)(3)............................................................... 7.1 (e).................................................................. N.A. 316 (a)(last sentence)................................................... N.A. (a)(1)(A)............................................................ N.A. (a)(1)(B)............................................................ N.A. (a)(2)............................................................... N.A. (b).................................................................. N.A. 317 (a)(1)............................................................... N.A. (a)(2)............................................................... N.A. (b).................................................................. N.A. 318 (a).................................................................. N.A. - ---------------------------------------------------------------------------------------

* Note: This Cross Reference Table shall not, for any purpose, be deemed to be part of the Indenture ** Note: N.A. means Not Applicable 3 TABLE OF CONTENTS

PAGE ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1 Section 1.1. Definitions................................................................1 Section 1.2. Other Definitions..........................................................8 Section 1.3. Incorporation by Reference of Trust Indenture Act..........................9 Section 1.4. Rules of Construction......................................................9 ARTICLE 2 THE SECURITIES.........................................................................9 Section 2.1. Form and Dating............................................................9 Section 2.2. Execution and Authentication..............................................10 Section 2.3. Registrar, Paying Agent and Conversion Agent..............................11 Section 2.4. Paying Agent to Hold Money and Securities in Trust........................12 Section 2.5. Holder Lists..............................................................12 Section 2.6. Exchange and Registration of Transfer of Securities; Restrictions on Transfers; Depositary..................................................12 Section 2.7. Replacement Securities....................................................19 Section 2.8. Outstanding Securities, Determinations of Holders' Action.................20 Section 2.9. Temporary Securities......................................................20 Section 2.10. Cancellation..............................................................21 Section 2.11. Persons Deemed Owners.....................................................21 ARTICLE 3 REDEMPTION AND PURCHASES..............................................................21 Section 3.1. Right to Redeem; Notices to Trustee.......................................21 Section 3.2. Selection of Securities to be Redeemed....................................22 Section 3.3. Notice of Redemption......................................................22 Section 3.4. Effect of Notice of Redemption............................................23 Section 3.5. Deposit of Redemption Price...............................................23 Section 3.6. Securities Redeemed in Part...............................................24 Section 3.7. Conversion Arrangement on Call for Redemption.............................24 Section 3.8. Purchase of Securities at Option of the Holder............................25 Section 3.9. Redemption at Option of the Holder upon a Fundamental Change..............30 Section 3.10. Effect of Purchase Notice or Fundamental Change Redemption Notice.........31 Section 3.11. Deposit of Purchase Price or Fundamental Change Redemption Price..........32 Section 3.12. Securities Purchased in Part..............................................32 Section 3.13. Covenant to Comply with Securities Laws upon Purchase of Securities.......33 Section 3.14. Repayment to the Company..................................................33 Section 3.15. Modification to Fundamental Change Definitions............................33

-i- 4 TABLE OF CONTENTS (CONTINUED)

PAGE ---- ARTICLE 4 COVENANTS.............................................................................34 Section 4.1. Payment of Securities.....................................................34 Section 4.2. Financial Information; SEC Reports........................................34 Section 4.3. Compliance Certificate....................................................35 Section 4.4. Further Instruments and Acts..............................................35 Section 4.5. Maintenance of Office or Agency...........................................35 Section 4.6. Existence.................................................................36 Section 4.7. Maintenance of Properties.................................................36 Section 4.8. Payment of Taxes and Other Claims.........................................36 Section 4.9. Additional Interest.......................................................37 ARTICLE 5 SUCCESSOR CORPORATION.................................................................37 Section 5.1. When the Company May Merge or Transfer Assets.............................37 ARTICLE 6 DEFAULTS AND REMEDIES.................................................................38 Section 6.1. Events of Default.........................................................38 Section 6.2. Acceleration..............................................................39 Section 6.3. Other Remedies............................................................39 Section 6.4. Waiver of Past Defaults...................................................40 Section 6.5. Control by Majority.......................................................40 Section 6.6. Limitation on Suits.......................................................40 Section 6.7. Rights of Holders to Receive Payment......................................41 Section 6.8. Collection Suit by Trustee................................................41 Section 6.9. Trustee May File Proofs of Claim..........................................41 Section 6.10. Priorities................................................................42 Section 6.11. Undertaking for Costs.....................................................42 Section 6.12. Waiver of Stay, Extension or Usury Laws...................................43 ARTICLE 7 TRUSTEE...............................................................................43 Section 7.1. Duties of Trustee.........................................................43 Section 7.2. Rights of Trustee.........................................................44 Section 7.3. Individual Rights of Trustee..............................................45 Section 7.4. Trustee Disclaimer........................................................45 Section 7.5. Notice of Defaults........................................................45 Section 7.6. Reports by Trustee to Holders.............................................45 Section 7.7. Compensation and Indemnity................................................46 Section 7.8. Replacement of Trustee....................................................46

-ii- 5 TABLE OF CONTENTS (CONTINUED)

PAGE ---- Section 7.9. Successor Trustee by Merger...............................................47 Section 7.10. Eligibility; Disqualification.............................................48 Section 7.11. Preferential Collection of Claims Against Company.........................48 ARTICLE 8 DISCHARGE OF INDENTURE................................................................48 Section 8.1. Discharge of Liability on Securities......................................48 Section 8.2. Repayment to the Company..................................................49 ARTICLE 9 AMENDMENTS.............................................................................49 Section 9.1. Without Consent of Holders................................................49 Section 9.2. With Consent of Holders...................................................50 Section 9.3. Compliance with Trust Indenture...........................................51 Section 9.4. Revocation and Effect of Consents, Waivers and Actions....................51 Section 9.5. Trustee to Sign Supplemental Indentures...................................51 Section 9.6. Trustee's Discretion to Execute Supplemental Indentures..................51 Section 9.7. Effect of Supplemental Indentures.........................................52 ARTICLE 10 SUBORDINATION.........................................................................52 Section 10.1. Agreement of Subordination................................................52 Section 10.2. Payments to Holders.......................................................52 Section 10.3. Subrogation of Securities.................................................55 Section 10.4. Authorization to Effect Subordination.....................................56 Section 10.5. Notice to Trustee.........................................................56 Section 10.6. Trustee's Relation to Senior Indebtedness.................................57 Section 10.7. No Impairment of Subordination............................................58 Section 10.8. Certain Conversions Not Deemed Payment....................................58 Section 10.9. Article Applicable to Paying Agents.......................................58 Section 10.10. Senior Indebtedness Entitled to Rely......................................58 ARTICLE 11 CONVERSION............................................................................59 Section 11.1. Conversion Privilege......................................................59 Section 11.2. Conversion Procedure......................................................59 Section 11.3. Fractional Shares.........................................................60 Section 11.4. Taxes on Conversion.......................................................60 Section 11.5. Company to Provide Stock..................................................60 Section 11.6. Conversion to Semiannual Coupon Upon a Tax Event..........................61 Section 11.7. Adjustment for Change in Capital Stock....................................63

-iii- 6 TABLE OF CONTENTS (CONTINUED)

PAGE ---- Section 11.8. Adjustment for Rights Issue...............................................63 Section 11.9. Adjustment for Other Distributions........................................64 Section 11.10. When Adjustment May be Deferred...........................................67 Section 11.11. When No Adjustment Required...............................................67 Section 11.12. Notice of Adjustment......................................................68 Section 11.13. Voluntary Increase........................................................68 Section 11.14. Notice of Certain Transactions............................................68 Section 11.15. Effect Reclassification, Consolidation, Merger or Sale....................68 Section 11.16. Company Determination Final...............................................69 Section 11.17. Trustee's Adjustment Disclaimer...........................................69 Section 11.18. Simultaneous Adjustments..................................................70 Section 11.19. Successive Adjustments....................................................70 Section 11.20. Rights Issued in Respect of Common Stock Issued Upon Conversion...........70 Section 11.21. General Considerations....................................................71 ARTICLE 12 MISCELLANEOUS.........................................................................71 Section 12.1. Trust Indenture Act.......................................................71 Section 12.2. Notices...................................................................71 Section 12.3. Communication by Holders with Other Holders...............................72 Section 12.4. Certificate and Opinion as to Conditions Precedent........................72 Section 12.5. Statements Required in Certificate or Opinion.............................73 Section 12.6. Separability Clause.......................................................73 Section 12.7. Rules by Trustee, Paying Agent, Conversion Agent and Registrar............73 Section 12.8. Governing Law.............................................................73 Section 12.9. No Recourse Against Others................................................73 Section 12.10. Successors................................................................74 Section 12.11. Multiple Originals........................................................74

-iv- 7 THIS INDENTURE, dated as of May 23, 2001, is between Atmel Corporation, a Delaware corporation (the "Company"), and State Street Bank and Trust Company of California, N.A., a national banking association organized and existing under the laws of the United States of America (the "Trustee"). RECITALS OF THE COMPANY WHEREAS, the Company desires to issue its Zero Coupon Convertible Subordinated Debentures due May 23, 2021 (the "Securities"), the issuance of which was authorized by resolutions of the Board of Directors (as defined below); and WHEREAS, all things necessary have been done to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company in accordance with their terms, and to make this Indenture a valid agreement of the Company in accordance with its terms. NOW THEREFORE, in consideration of the premises provided for herein, each of the Company and the Trustee agrees as follows for the benefit of the other party hereto and for the equal and ratable benefit of the Holders of the Securities: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. DEFINITIONS. "Additional Interest" shall have the meaning specified in the Registration Rights Agreement. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person means the power to direct or cause the direction of 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. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of such board. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which the banking institutions in The City of New York or the city in which the Corporate Trust Office is located are authorized or obligated by law or executive order to close or be closed. 8 "Common Stock" means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. Subject to the provisions of Section 11.15, however, shares issuable upon conversion of the Securities shall include only shares of Common Stock, par value of $0.001 per share, of the Company as such shares exist on the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preferences in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means Atmel Corporation, a Delaware corporation, having its principal office at 2325 Orchard Parkway, San Jose, California 95131, until replaced by a successor entity pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor entity. The foregoing sentence shall likewise apply to any subsequent such successor entity or entities. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, the Chief Executive Officer, a Vice Chairman, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Conversion Rate" has the meaning specified in Section 11.1. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office is, as of the date hereof, located at 633 West 5th Street, 12th Floor, Los Angeles, California 90071, Attention: Corporate Trust Department (Atmel Corporation - Zero Coupon Convertible Subordinated Debentures due 2021). "Current Market Price" per share of the Common Stock on any date of determination means the average of the daily closing prices of the Common Stock on the Nasdaq National Market for the ten consecutive trading days ending on and including such date of determination. The last reported sale price for each day shall be (i) if the Common Stock is listed on the Nasdaq National Market, the last reported sale price of Common Stock on the Nasdaq National Market, or any similar system of automated dissemination of quotations of securities prices then in common use, if so quoted, (ii) if the Common Stock is not listed or admitted for trading as described in clause (i), the last reported sale price of the Common Stock on the NYSE or if the Common Stock is listed or admitted for trading on any other national securities exchange, the last sale price, or the closing bid price if no sale occurred, of the Common Stock on the principal securities exchange on which the Common Stock is listed, or (iii) if not quoted or listed as described in clauses (i) or (ii), the mean between the high bid and low asked quotations for Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for the -2- 9 Common Stock on at least five of the ten preceding Trading Days. If none of the conditions set forth above is met, the last reported sale; price of common stock on any day or the average of such last reported sale prices for any period shall be the fair market value of the Common stock as determined by a member firm of the NYSE selected by the Company. "Custodian" shall mean State Street Bank and Trust Company of California, N.A., as custodian with respect to the Securities in global form, or any successor entity thereto. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Depositary" means, with respect to the Securities issuable or issued in whole or in part in global form, the Person specified in Section 2.6 as the Depositary with respect to the Securities, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, "Depositary" shall mean or include such successor. "Designated Senior Indebtedness" means the Company's obligations under any particular Senior Indebtedness in which the instrument creating or evidencing the same or the assumption or guarantee thereof (or related agreements or documents to which the Company is a party) expressly provides that such Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes of this Indenture (provided that such instrument, agreement or other document may place limitations and conditions on the right of such Senior Indebtedness to exercise the rights of Designated Senior Indebtedness). "DTC" means The Depository Trust Company. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "Fundamental Change" means the occurrence of any transaction or event in connection with which all or substantially all Common Stock shall be exchanged for, converted into, acquired for or constitute solely the right to receive (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger , combination, reclassification, recapitalization or otherwise) consideration which is not all or substantially all common stock listed (or, upon consummation of or immediately following such transaction or event which will be listed, on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices). "Holder" means a Person in whose name a Security is registered on the Registrar's books. "Indebtedness" means, with respect to the Company and without duplication, (a) all indebtedness, obligations and other liabilities (contingent or otherwise) of the Company for borrowed money (including obligations of the Company in respect of overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection agreements, and any loans or advances from banks, whether or not evidenced by notes or similar instruments) or evidenced by -3- 10 bonds, debentures, notes or similar instruments (whether or not the recourse of the lender is to the whole of the assets of the Company or to only a portion thereof) (other than any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services), (b) all reimbursement obligations and other liabilities (contingent or otherwise) of the Company with respect to letters of credit, bank guarantees or bankers' acceptances, (c) all obligations and liabilities (contingent or otherwise) in respect of leases of the Company required, in conformity with generally accepted accounting principles, to be accounted for as capitalized lease obligations on the balance sheet of the Company and all obligations and other liabilities (contingent or otherwise) under any synthetic lease or other lease or related document (including a purchase agreement) in connection with the lease of real property which provides that the Company is contractually obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a minimum residual value of the leased property to the landlord and the obligations of the Company under such lease or related document to purchase or to cause a third party to purchase such leased property, (d) all obligations of the Company (contingent or otherwise) with respect to an interest rate or other swap, cap or collar agreement or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement, (e) all direct or indirect guaranties or similar agreements by the Company in respect of, and obligations or liabilities (contingent or otherwise) of the Company to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of, indebtedness, obligations or liabilities of another Person of the kind described in clauses (a) through (d), (f) any indebtedness or other obligations described in clauses (a) through (e) secured by any mortgage, pledge, lien or other encumbrance existing on property which is owned or held by the Company, regardless of whether the indebtedness or other obligation secured thereby shall have been assumed by the Company and (g) any and all deferrals, renewals, extensions and refundings of, or amendments, modifications or supplements to, any indebtedness, obligation or liability of the kind described in clauses (a) through (f). "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Initial Purchasers" means Morgan Stanley & Co. Incorporated, Credit Lyonnais Securities (USA) Inc. and Needham & Company, Inc. "Institutional Accredited Investor" means an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Issue Date" of any Security means the date on which the Security was originally issued or deemed issued as set forth on the face of the Security. "Issue Price" of any Security means, in connection with the original issuance of such Security, the initial issue price at which the Security is issued as set forth on the face of the Security. "Legal Holiday" is any day other than a Business Day. If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding date that is not -4- 11 a Legal Holiday, and to the extent applicable no Original Issue Discount or interest, if any, shall accrue for the intervening period. "Nasdaq" or "Nasdaq National Market" means the electronic inter-dealer quotation system operated by Nasdaq Stock Market, Inc., a subsidiary of the National Association of Securities Dealers, Inc. "NYSE" means The New York Stock Exchange, Inc. "Officer" means the Chairman of the Board, the Chief Executive Officer, any Vice Chairman, the President, any Vice President, the Treasurer or the Secretary or any Assistant Treasurer or Assistant Secretary of the Company. "Officers' Certificate" means a written certificate containing the information specified in Sections 12.4 and 12.5, signed in the name of the Company by its Chairman of the Board, the Chief Executive Officer, a Vice Chairman, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Opinion of Counsel" means a written opinion containing the information specified in Sections 12.4 and 12.5, from legal counsel who is acceptable to the Trustee. The counsel may be an employee of, or counsel to, the Company or the Trustee. "Original Issue Discount" of any Security means the difference between the Issue Price and the Principal Amount of the Security as set forth on the face of the Security. For purposes of this Indenture and the Securities, accrual of Original Issue Discount shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. "Payment Blockage Notice" has the meaning specified in Section 10.2. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. "Portal Market" means The Portal Market operated by the National Association of Securities Dealers, Inc. or any successor thereto. "Principal" or "Principal Amount" of a Security means the Principal Amount as set forth on the face of such Security, or on Schedule A thereto in the case of a Security in global form. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Redemption Date" means a date specified for redemption of the Securities (other than redemption upon a Fundamental Change at the option of the Holder) in accordance with the terms of the Securities and Section 3.1 of this Indenture. "Redemption Price" shall have the meaning set forth in paragraph 5 of the Securities. -5- 12 "Registration Rights Agreement" means that certain Registration Rights Agreement, dated as of the date hereof, among the Company and the Initial Purchasers. "Representative" means (a) the indenture trustee or other trustee, agent or representative for any Senior Indebtedness or (b) with respect to any Senior Indebtedness that does not have any such trustee, agent or other representative, (i) in the case of such Senior Indebtedness issued pursuant to an agreement providing for voting arrangements as among the holders or owners of such Senior Indebtedness, any holder or owner of such Senior Indebtedness acting with the consent of the required Persons necessary to bind such holders or owners of such Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness, the holder or owner of such Senior Indebtedness. "Rule 144A" means Rule 144A as promulgated under the Securities Act, or any successor rule. "Rule 144(k)" means Rule 144(k) as promulgated under the Securities Act, or any successor rule. "SEC" means the Securities and Exchange Commission. "Securities" means the Company's Zero Coupon Convertible Subordinated Debentures due 2021. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "Senior Indebtedness" means the principal of, premium, if any, interest (including all interest accruing subsequent to the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowable as a claim in such proceeding) and rent payable on or in connection with, and all fees, costs, expenses and other amounts accrued or due on or in connection with, Indebtedness of the Company, whether outstanding on the date of this Indenture or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company (including all deferrals, renewals, extensions or refundings of, or amendments, modifications or supplements to, the foregoing), unless in the case of any particular Indebtedness the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that such Indebtedness shall not be senior in right of payment to the Securities or expressly provides that such Indebtedness is "pari passu" or "junior" to the Securities. Notwithstanding the foregoing, the Senior Indebtedness shall not include (i) any Indebtedness of the Company to any Subsidiary of the Company a majority of the voting stock of which is owned, directly or indirectly, by the Company or (ii) the Company's obligations under its Zero-Coupon Convertible Subordinated Notes Due 2018. "Significant Subsidiary" means, with respect to any Person, a Subsidiary of such Person organized under the laws of the United States of America, any state thereof, or the District of Columbia that would constitute a "significant subsidiary" as such term is defined under Rule 1-02 of Regulation S-X of the Securities and Exchange Commission. -6- 13 "Stated Maturity", when used with respect to any Security, means the date specified in such Security as the fixed date on which an amount equal to the Principal of such Security is due and payable. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of capital stock 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 such Person or one or more of the other subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or managing general partner of which is such Person or a subsidiary of such Person or (b) the only general partners of which are such Person or of one or more subsidiaries of such Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939, as amended, as in effect on the date of this Indenture, except as provided in Section 9.3. "Tax Event" means that the Company shall have received an opinion from independent tax counsel experienced in such matters to the effect that, on or after May 23, 2001, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority, in each case, which amendment or change is enacted, promulgated, issued or announced or which interpretation is issued or announced or which action is taken, on or after May 23, 2001, there is more than an insubstantial risk that interest, including Original Issue Discount, payable on the Securities either (i) would not be deductible on a current accrual basis or (ii) would not be deductible under any other method, in either case, in whole or in part, by the Company (by reason of deferral, disallowance or otherwise) for United States Federal income tax purposes. "Trading Day" means a day during which trading in securities generally occurs on the Nasdaq National Market or, if the applicable security is not quoted on the Nasdaq National Market, on the NYSE, or if the applicable security is not listed on the NYSE, on the principal other national or regional securities exchange on which the applicable security is then listed or, if the applicable security is not listed on a national or regional securities exchange, on the principal other market on which the applicable security is then traded. "Trust Officer" means any officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Trustee" means State Street Bank and Trust Company of California, N.A. until a successor entity replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor entity. The foregoing sentence shall likewise apply to any subsequent such successor entity or entities. -7- 14 "Voting Stock" means stock of any class or classes, however designated, having ordinary voting power for the election of a majority of the board of directors of a corporation, other than stock having such power only by reason of the occurrence of a contingency. SECTION 1.2. OTHER DEFINITIONS.

DEFINED IN TERM SECTION --------------------------------------------------------------- ---------- "Agent Members"................................................ 2.1 "Cash"......................................................... 3.8(b) "Commission"................................................... 1.3 "Company Notice"............................................... 3.8(e) "Company Notice Date".......................................... 3.8(c) "Conversion Agent"............................................. 2.3 "Defaulted Interest"........................................... 11.6(d) "Expiration Time".............................................. 11.9(c) "Event of Default"............................................. 6.1 "Fundamental Change Redemption Date"........................... 3.9(a) "Fundamental Change Redemption Notice"......................... 3.9(a) "Fundamental Change Redemption Price".......................... 3.9(a) "Indenture to be Qualified".................................... 1.3 "Indenture Securities"......................................... 1.3 "Indenture Security Holder".................................... 1.3 "Indenture Trustee"............................................ 1.3 "Junior Securities"............................................ 10.12 "Market Price"................................................. 3.8(d) "Notice of Default"............................................ 6.1 "Option Exercise Rate"......................................... 11.6(a) "Over-Allotment Option"........................................ 2.2 "Payment Default".............................................. 10.2 "Paying Agent"................................................. 3.8(a) "Purchase Date"................................................ 3.8(a) "Purchase Notice".............................................. 3.8(a) "Purchase Price"............................................... 3.8(a) "Purchased Shares"............................................. 11.9(c) "Registrar".................................................... 2.3 "Restricted Securities"........................................ 2.6(d) "Sale Price"................................................... 3.8(d) "Tender Expiration Time"....................................... 11.9(d) "Tender Purchased Shares"...................................... 11.9(d)

-8- 15 SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "Indenture Securities" means the Securities. "Indenture Security Holder" means a Holder. "Indenture to be Qualified" means this Indenture. "Indenture Trustee" or "Institutional Trustee" means the Trustee. 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 rules have the meanings assigned to them by such definitions. SECTION 1.4. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time; (3) "or" is not exclusive; (4) "including" means including, without limitation; and words in the singular include the plural, and words in the plural include the singular. ARTICLE 2 THE SECURITIES SECTION 2.1. FORM AND DATING. The Securities and the Trustee's certificate of authentication for the Securities shall be substantially in the form of Exhibit A, which is incorporated into and shall be deemed a part of this Indenture, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any automated quotation system or securities exchange or as may, consistently herewith, -9- 16 be determined by the officers of the Company executing such Securities, as evidenced by their execution of the Securities. The Company shall provide any such notations, legends or endorsements to the Trustee in writing. Each Security shall be dated the date of its authentication. Any Security in global form shall represent such of the outstanding Securities as shall be specified therein and shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be increased or reduced to reflect exchanges, redemptions, purchases or conversions of such Securities permitted by this Indenture. Any endorsement of a Security in global form to reflect the amount of any increase or decrease in the Principal Amount of outstanding Securities represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Security in accordance with the standing instructions and procedures existing between the Depositary and the Custodian. Payment of Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or interest, if any, on any Security in global form shall be made to the Holder of such Security. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Security in global form held on their behalf by the Depositary or under the Security in global form, and the Depositary (including, for this purpose, its nominee) 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 Security in global form for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (A) 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 (B) impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Securities. Any Security in global form may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Custodian, the Depositary or by the National Association of Securities Dealers, Inc. in order for such Securities to be tradeable on any market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any automated quotation system or securities exchange upon which the Securities may be quoted, listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Securities are subject. The Company initially appoints DTC to act as Depositary with respect to the Securities in global form. SECTION 2.2. EXECUTION AND AUTHENTICATION. The Securities shall be executed on behalf of the Company by its Chairman of the Board, the Chief Executive Officer, one of its Vice Chairmen, its President or one of its Vice Presidents. The signature of any of these officers may be manual or facsimile. -10- 17 Securities bearing the manual or facsimile signatures of individuals who were at any time the proper Officers of the Company shall bind the Company, notwithstanding the fact that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of authentication of such Securities. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. The Trustee shall authenticate and deliver Securities for original issue in an aggregate Principal Amount of $511,500,000 upon a Company Order without any further action by the Company (or an aggregate Principal Amount not to exceed $588,225,000 if the over-allotment option set forth in Section 2 of the Purchase Agreement dated May 17, 2001 (as amended from time to time by the parties thereto) by and among the Company and the Initial Purchasers (the "Over-Allotment Option") is exercised in full). The aggregate Principal Amount of Securities outstanding at anytime may not exceed the amount set forth in the foregoing sentence, except as provided in Section 2.7. SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar"), an office or agency where Securities may be presented for purchase or payment ("Paying Agent") and an office or agency where Securities may be presented for conversion into Common Stock ("Conversion Agent"). The Registrar shall keep a register of the Securities 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 Conversion Agent includes any additional conversion or agent, including any named pursuant to Section 4.5. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar (if not the Trustee or an Affiliate of the Trustee). The agreement shall implement the provisions of this Indenture that relate to such agent and the relevant Security. 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 7.7. The Company or an Affiliate of the Company may act as Paying Agent, Registrar, Conversion Agent or co-registrar. The Company initially appoints the Trustee as Registrar, Conversion Agent and Paying Agent in connection with the Securities. -11- 18 SECTION 2.4. PAYING AGENT TO HOLD MONEY AND SECURITIES IN TRUST. Except as otherwise provided in this Indenture, prior to or on each due date of payments in respect of any Security, the Company shall deposit with the Paying Agent a sum of money or securities sufficient to make such payments when such payments are due. The Company shall require the Paying Agent (if not the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money and securities held by the Paying Agent for the making of payments in respect of the Securities and shall notify the Trustee of any default by the Company in making any such payment. At any time during the continuance of any such default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and securities so held in trust. If the Company or an Affiliate of the Company acts as Paying Agent, it shall segregate the money and securities held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require the Paying Agent to pay all money and securities held by it to the Trustee and to account for any funds and securities disbursed by it. Upon doing so, the Paying Agent shall have no further liability for such money or securities. SECTION 2.5. HOLDER 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 Holders. If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee at least semiannually on March 12 and September 12 a listing of Holders dated within 15 days of the date on which the list is furnished 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 Holders. SECTION 2.6. EXCHANGE AND REGISTRATION OF TRANSFER OF SECURITIES; RESTRICTIONS ON TRANSFERS; DEPOSITARY. (a) Upon surrender for registration of transfer of any Security at any office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.3 and satisfaction of the requirements for such transfer set forth in this Section 2.6, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate Principal Amount and bearing such restrictive legends as may be required by this Indenture. Securities may be exchanged for a like aggregate Principal Amount of Securities of other authorized denominations. Securities to be exchanged shall be surrendered at any office or agency to be maintained by the Company designated as Registrar or co-registrar pursuant to Section 2.3 and the Company shall execute and register, and the Trustee shall authenticate and deliver in exchange therefor, the Security or Securities which the Holder making the exchange shall be entitled to receive, bearing registration numbers not contemporaneously outstanding. All Securities presented for registration of transfer or for exchange into like Securities, purchase, redemption or conversion into Common Stock or payment shall (if so required by the Company, the Trustee, the Registrar or any co-registrar) be duly endorsed by, or be accompanied by -12- 19 a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee, duly executed by the Holder or such Holder's attorney duly authorized in writing. No service charge shall be charged to the Holder for any exchange for like Securities or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax, assessments or other governmental charges that may be imposed in connection therewith. None of the Company, the Trustee, the Registrar or any co-registrar shall be required to exchange for like Securities or register a transfer of (a) any Securities for a period of 15 days next preceding any selection of Securities to be redeemed, or (b) any Securities or portions thereof selected or called for redemption, except the unredeemed portion of any Security redeemed in part. All Securities issued upon any transfer or exchange for like Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Securities surrendered upon such exchange or transfer. (b) So long as the Securities are eligible for book-entry settlement with the Depositary (as defined below), or unless otherwise required by law, all Securities that are so eligible may be represented by a Security in global form registered in the name of the Depositary or the nominee of the Depositary, except as otherwise specified below. The transfer and exchange of beneficial interests in such Security in global form shall be effected through the Depositary in accordance with this Indenture and the procedures of the Depositary therefore. Securities that upon initial issuance are beneficially owned by QIBs will be represented by one or more Securities in global form. Transfers of interests in a Security in global form will be made in accordance with the standing instructions and procedures of the Depositary and its participants. The Trustee shall make appropriate endorsements to reflect increases or decreases in the Principal Amounts of such Securities in global form as set forth on the face of the Security in global form to reflect any such transfers. Except as provided below, beneficial owners of a Security in global form 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 Securities in global form. (c) So long as the Securities are eligible for book-entry settlement, or unless otherwise required by law, upon any transfer of a definitive Security to a QIB in accordance with Rule 144A and upon receipt of the definitive Security or Securities being so transferred, together with a certification, substantially in the form of the reverse of the Security, from the transferor that the transfer is being made in compliance with Rule 144A (or other evidence satisfactory to the Trustee), the Trustee shall make an endorsement on the Security in global form to reflect an increase in the aggregate Principal Amount of the Securities represented by the Security in global form, the Trustee shall cancel such Security or Securities in certificated form in accordance with the standing instructions and procedures of the Depositary and the aggregate Principal Amount of Securities represented by the Security in global form will be increased accordingly; provided that no definitive Security, or portion thereof, in respect of which the Company or an Affiliate of the Company held -13- 20 any beneficial interest shall be included in such Security in global form until such definitive Security is freely tradable in accordance with Rule 144(k); provided further that upon any transfer of a beneficial interest in any Security in global form to the Company or any Affiliate of the Company, the Company shall issue and the Trustee, upon receipt of an Officers' Certificate and Company Order for authentication and delivery of Securities, shall authenticate and deliver, Securities in certificated form, in an aggregate Principal Amount equal to the Principal Amount of the Security in global form, in exchange for such Security in global form. (d) Upon any sale or transfer of a Security to an Institutional Accredited Investor (other than pursuant to a registration statement that has been declared effective under the Securities Act), such Institutional Accredited Investor shall, prior to such sale or transfer, furnish to the Company and/or the Trustee a signed letter containing representations and agreements relating to restrictions on transfer substantially in the form set forth in Exhibit B to this Indenture. Any Security in global form may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Custodian, the Depositary, by the National Association of Securities Dealers, Inc. or by the NYSE in order for the Securities to be tradeable on The Portal Market or as may be required for the Securities to be tradeable on any other market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange upon which the Securities may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Securities are subject. (e) Every Security that bears or is required under this Section 2.6(d) to bear the legend set forth in this Section 2.6(d) (together with any Common Stock issued upon conversion of the Securities and required to bear the legend set forth in Section 2.6(e), collectively, the "Restricted Securities") shall be subject to the restrictions on transfer set forth in this Section 2.6(d) (including those set forth in the legend set forth below) unless such restrictions on transfer shall be waived by written consent of the Company, and the holder of each such Restricted Security, by such Holder's acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in Sections 2.6(d) and 2.6(e), the term "transfer" encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security. Until the expiration of the holding period applicable to sales thereof under Rule 144(k), any certificate evidencing such Security (and all securities issued in exchange therefore or substitution thereof, other than Common Stock, if any, issued upon conversion therefore, which shall bear the legend set forth in Section 2.6(e), if applicable) shall bear a legend in substantially the following form, unless such 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 unless otherwise agreed by the Company in writing, with written notice thereof to the Trustee: THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE -14- 21 OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (K)(2) OF RULE 902 UNDER REGULATION S UNDER THE SECURITIES ACT) OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),(3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (4) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITIES WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF A U.S. PERSON EXCEPT (A) TO ATMEL CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a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ny Security (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the foregoing legend set forth therein have been satisfied may, upon surrender of such Securities for exchange to the Registrar in accordance with the provisions of this Section 2.6, be exchanged for a new Security or Securities, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.6(d). Notwithstanding any other provisions of this Indenture (other than the provisions set forth in this Section 2.6(d)), a Security in global form may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee or to a successor Depositary or a nominee of such successor Depositary. The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Securities in global form. Initially, a Security in global form shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Custodian for Cede & Co. If at any time the Depositary for a Security in global form notifies the Company that it is unwilling or unable to continue as Depositary for such Security, the Company may appoint a successor Depositary with respect to such Security. If (A) a successor Depositary for the Security is not appointed by the Company within 90 days after the Company receives such notice or (B) the -16- 23 Company in its sole discretion determines not to have the Securities represented by a Security in global form, the Company will execute, and the Trustee, upon receipt of an Officers' Certificate and Company Order for authentication and delivery of Securities, will authenticate and deliver, Securities in certificated form, in an aggregate Principal Amount equal to the Principal Amount of the Security in global form, in exchange for such Security in global form. Such exchange shall be effected in accordance with such rules and procedures of the Depositary as are applicable to the exchange. Only Restricted Securities shall be issued in exchange for Securities in global form that are restricted under Rule 144. Securities in certificated form issued in exchange for all or a part of a Security in global form pursuant to this Section 2.6 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Securities in certificated form to the Persons in whose names such Securities in certificated form are so registered. At such time as all interests in a Security in global form have been redeemed, converted, exchanged, repurchased or canceled for Securities in certificated form, or transferred to a transferee who receives Securities in certificated form, such Security in global form shall be, upon receipt thereof, canceled by the Trustee in accordance with the standing procedures and instructions existing between the Custodian and Depositary. At any time prior to such cancellation, if any interest in a Security in global form is exchanged for Securities in certificated form, redeemed, converted, exchanged, repurchased by the Company or canceled, or transferred for part of a Security in global form, the Principal Amount of such Security in global form shall, in accordance with the standing procedures and instructions existing between the Custodian and the Depositary, be reduced or increased, as the case may be, and an endorsement shall be made on such Security in global form, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase. (f) Until the expiration of the holding period applicable to sales thereof under Rule 144(k), any stock certificate representing Common Stock issued upon conversion of a Security shall bear a legend in substantially the following form, unless such Common Stock has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or such Common Stock has been issued upon conversion of Securities that have been transferred pursuant to a registration statement that has been declared effective under the Securities Act, or unless otherwise agreed by the Company in writing with written notice thereof to the transfer agent for the Common Stock: THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES -17- 24 ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OF, U.S. PERSONS EXCEPT (A) TO ATMEL CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a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k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. -18- 25 Any such Common Stock as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the foregoing legend set forth therein have been satisfied may, upon surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the transfer agent for the Common Stock, be exchanged for a new certificate or certificates for a like number of shares of Common Stock, which shall not bear the restrictive legend required by this Section 2.6(e). (g) Any Security or Common Stock issued upon the conversion or exchange of a Security that, prior to the expiration of the holding period applicable to sales thereof under Rule 144(k), is 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 Securities or Common Stock, as the case may be, no longer being "restricted securities" (as defined under Rule 144). SECTION 2.7. REPLACEMENT SECURITIES. If (a) any mutilated Security is surrendered to the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and, upon its written request, the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and Principal Amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased or redeemed by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Security, pay, purchase or redeem such Security, as the case maybe. Upon the issuance of any new Securities under this Section 2.7, the Company may, as a condition to such issuance, require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section 2.7 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. -19- 26 SECTION 2.8. OUTSTANDING SECURITIES, DETERMINATIONS OF HOLDERS' ACTION. Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate thereof holds the Security; provided, however, that in determining whether the Holders of the requisite Principal Amount of Securities have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time of such determination shall be considered in any such determination (including, without limitation, determinations pursuant to Articles 6 and 9). If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, or on the Business Day following a Purchase Date or a Fundamental Change Redemption Date, or on Stated Maturity, money or securities, if permitted hereunder, sufficient to pay Securities payable on that date, then on and after that date such Securities shall cease to be outstanding and Original Issue Discount and interest, if any, on such Securities shall cease to accrue; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made. If a Security is converted in accordance with Article 11, then from and after such conversion such Security shall cease to be outstanding and Original Issue Discount and interest, if any, shall cease to accrue on such Security. SECTION 2.9. TEMPORARY SECURITIES. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company shall cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 2.3, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like -20- 27 Principal Amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 2.10. CANCELLATION. All Securities surrendered for payment, purchase, conversion, redemption or registration of transfer or exchange for the Securities shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. The Company may not issue new Securities to replace Securities it has paid for or delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article 11. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 2. 10, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be destroyed by the Trustee and, following such destruction, the Trustee shall deliver a certificate of destruction to the Company, unless the Company. SECTION 2.11. PERSONS DEEMED OWNERS. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price and interest, if any, in respect thereof, for the purpose of conversion and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.1. RIGHT TO REDEEM; NOTICES TO TRUSTEE. The Company, at its option, may redeem the Securities in accordance with paragraphs 5 and 7 of the Securities and the provisions of this indenture. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the Principal Amount of Securities to be redeemed and the Redemption Price. The Company shall give the notice to the Trustee provided for in this Section 3.1 (i) in the case of any redemption of fewer than all of the Securities, at least 45 days before the Redemption Date and (ii) in the case of a redemption of all of the Securities, no later than the date that the -21- 28 Company is required to give notice to the Holders pursuant to Section 3.3, in each case unless a shorter notice shall be satisfactory to the Trustee. SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED. If less than all the Securities held in definitive form are to be redeemed pursuant to Section 3.1, the Trustee shall select the definitive Securities to be redeemed pro rata or by lot or by another method the Trustee considers fair and appropriate (as long as such method is not prohibited by the rules of any quotation system or securities exchange on which the Securities are then quoted or listed). The Trustee shall make the selection at least 35 days, but not more than 60 days, before the Redemption Date from outstanding definitive Securities not previously called for redemption. The Trustee may select for redemption portions of the Principal Amount of Securities that have denominations larger than $ 1,000. Securities and portions of them the Trustee selects shall be in Principal Amounts of $ 1,000 or an integral multiple of $ 1,000. Provisions of this Indenture that apply to definitive Securities called for redemption also apply to portions of definitive Securities called for redemption. The Trustee shall notify the Company promptly of the definitive Securities or portions of definitive Securities to be redeemed. Any interest in a Security held in global form by and registered in the name of the Depositary or its nominee to be redeemed in whole or in part will be redeemed in accordance with the procedures of the Depositary. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed to be (to the fullest extent possible) the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection. SECTION 3.3. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage prepaid, to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price; (3) the Conversion Rate; (4) the name and address of the Paying Agent and Conversion Agent; -22- 29 (5) that Securities called for redemption may be converted at any time before the close of business on the last Trading Day prior to the Redemption Date; (6) that Holders who want to convert Securities must satisfy the requirements set forth in paragraph 9 of the Securities; (7) that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; (8) if fewer than all the outstanding Securities are to be redeemed, the certificate number and Principal Amounts of the particular Securities to be redeemed; (9) that Original Issue Discount on Securities called for redemption will cease to accrue on and after the Redemption Date; and (10) the CUSIP number or numbers for the Securities. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. At the Company's written request delivered to the Trustee at least 45 days before the Redemption Date, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is given, pursuant to Section 3.3, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price stated in the notice except for Securities which are converted in accordance with the terms of this Indenture. Upon the later of the Redemption Date or the date such Securities are surrendered to the Paying Agent, such Securities shall be paid at the Redemption Price stated in the notice. SECTION 3.5. DEPOSIT OF REDEMPTION PRICE. Prior to or on the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price of all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which prior thereto have been delivered by the Company to the Trustee for cancellation or have been converted into Common Stock, and on or after the Redemption Date (unless the Company shall default in the payment of the Securities at the Redemption Price), Original Issue Discount on the Securities or portion of Securities called for redemption shall cease to accrue and such Securities shall cease after the close of business on the -23- 30 Business Day immediately preceding the Redemption Date to be convertible into Common Stock and, except as provided in Section 8.2, to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the Redemption Price thereof and unpaid interest up to and including the Redemption Date. The Paying Agent shall as promptly as practicable return to the Company any money, with interest, if any, thereon, not required for that purpose because of conversion of Securities. If such money is then held by the Company in trust and is not required for such purpose it shall be discharged from such trust. SECTION 3.6. SECURITIES REDEEMED IN PART. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security in an authorized denomination equal in Principal Amount to the unredeemed portion of the Security surrendered. SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection with any redemption of Securities, the Company may arrange for the purchase and conversion into Common Stock of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Paying Agent in trust for the Holders, on or before the close of business on the Redemption Date, an amount that, together with any amounts deposited with the Paying Agent by the Company for the redemption of the Securities, is not less than the Redemption Price up to and including the Redemption Date of such Securities. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the Redemption Price of such Securities shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article 11) surrendered by such purchasers for conversion, all immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it in the same manner as it would money deposited with it by the Company for the redemption of Securities. Without the Paying Agent's prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Paying Agent as set forth in this Indenture, and the Company agrees to indemnify the Paying Agent from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. -24- 31 SECTION 3.8. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER. (a) General. Securities shall be purchased by the Company pursuant to paragraph 6 of the Securities as of May 23, 2006, May 23, 2011 and May 23, 2016 (each, a "Purchase Date"), at the purchase price specified therein (each, a "Purchase Price") at the option of the Holder thereof, upon: (1) delivery to the Paying Agent by the Holder of a written notice of purchase (a "Purchase Notice") at any time from the opening of business on the date that is 20 Business Days prior to a Purchase Date until the close of business on such Purchase Date, stating: (A) the certificate number of the Security which the Holder will deliver to be purchased (or, if the Security is not certificated, such other identification necessary to comply with appropriate DTC procedures); (B) the portion of the Principal Amount of the Security which the Holder will deliver to be purchased, which portion must be $ 1,000 in Principal Amount or a multiple thereof; (C) that such Security shall be purchased as of the Purchase Date pursuant to the terms and conditions specified in paragraph 6 of the Securities and the provisions of this Indenture; and (D) if the Company elects, pursuant to a Company Notice, to pay the Purchase Price to be paid as of such Purchase Date, in whole or in part, in Common Stock but such portion of the Purchase Price shall ultimately be payable to such Holder in Cash because any of the conditions to the payment of the Purchase Price in Common Stock are not satisfied prior to or on the Purchase Date, as set forth in Section 3.8(d), whether such Holder elects (x) to withdraw such Purchase Notice as to some or all of the Securities to which such Purchase Notice relates (stating the Principal Amount and certificate numbers of the Securities as to which such withdrawal shall relate), or (y) to receive Cash in respect of the entire Purchase Price for all Securities (or portions thereof) to which such Purchase Notice relates; and (2) delivery of such Security to the Paying Agent prior to, on or after the Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Holder of the Purchase Price therefor; provided, however, that such Purchase Price shall be so paid pursuant to this Section 3.8 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Purchase Notice. If a Holder, in such Holder's Purchase Notice (and in any written notice of withdrawal of a portion of such Holder's Securities previously submitted for purchase pursuant to a Purchase Notice, the portion that remains subject to the Purchase Notice), fails to indicate such Holder's choice with respect to the election set forth in clause (D) of Section 3.8(a)(1), such Holder shall be deemed to -25- 32 have elected to receive Cash in respect of the entire Purchase Price for all Securities subject to such Purchase Notice in the circumstances set forth in such clause (D). The Company shall purchase from the Holder thereof, pursuant to this Section 3.8, a portion of a Security if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security. Any purchase by the Company contemplated pursuant to the provisions of this Section 3.8 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Purchase Date and the time of delivery of the Security. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Purchase Notice contemplated by this Section 3.8(a) shall have the right at any time prior to the close of business on the Purchase Date to withdraw such Purchase Notice by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.10. The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice or written notice of withdrawal thereof. (b) Company's Right to Elect Manner of Payment of Purchase Price. The Company may elect with respect to any Purchase Date to pay the Purchase Price in respect of the Securities to be purchased pursuant to Section 3.8(a) as of such Purchase Date, in U.S. legal tender ("Cash") or Common Stock, or in any combination of Cash and Common Stock, subject to the conditions set forth in Sections 3.8(c) and (d). The Company shall designate, in the Company Notice delivered pursuant to Section 3.8(e), whether the Company will purchase the Securities for Cash or Common Stock, or, if a combination thereof, the percentages of the Purchase Price of Securities in respect of which it will pay in Cash and/or Common Stock; provided that the Company will pay Cash for fractional interests in shares of Common Stock. For purposes of determining the existence of potential fractional interests, all Securities subject to purchase by the Company held by a Holder shall be considered together (no matter how many separate certificates are to be presented). Each Holder whose Securities are purchased pursuant to this Section 3.8 shall receive the same percentage of Cash and/or Common Stock in payment of the Purchase Price for such Securities, except (i) as provided in Section 3.8(d) with regard to the payment of Cash in lieu of fractional interests in Common Stock and (ii) in the event that the Company is unable to purchase the Securities of a Holder or Holders for Common Stock because any necessary qualifications or registrations of the Common Stock under applicable federal or state securities laws cannot be obtained, the Company may purchase the Securities of such Holder or Holders for Cash. The Company may not change its election with respect to the consideration (or components or percentages of components thereof) to be paid once the Company has given its Company Notice to Holders except pursuant to this Section 3.8(b) or Section 3.8(d). At least two Business Days before the Company Notice Date (as defined in Section 3.8(c)), the Company shall deliver an Officers' Certificate to the Trustee specifying: -26- 33 (i) the manner of payment selected by the Company, (ii) the information required by Section 3.8(e), (iii) if the Company elects to pay the Purchase Price, or a specified percentage thereof, in Common Stock, that the conditions to such manner of payment set forth in Section 3.8(d) have been or will be complied with, and (iv) whether the Company desires the Trustee to give the Company Notice required by Section 3.8(e). (c) Purchase with Cash. At the option of the Company, the Purchase Price of Securities in respect of which a Purchase Notice pursuant to Section 3.8(a) has been given, or a specified percentage thereof, may be paid by the Company with Cash equal to the aggregate Purchase Price, or such specified percentage thereof, as the case may be, of such Securities. If the Company elects to purchase Securities with Cash, a Company Notice as provided in Section 3.8(e) shall be sent to Holders (and to beneficial owners as required by applicable law) not less than 20 Business Days prior to the Purchase Date (the "Company Notice Date"). (d) Payment by Issuance of Common Stock. At the option of the Company, the Purchase Price of Securities in respect of which a Purchase Notice pursuant to Section 3.8(a) has been given, or a specified percentage thereof, may be paid by the Company by the issuance of a number of shares of Common Stock equal to the quotient obtained by dividing (i) the amount of Cash to which the Holders would have been entitled had the Company elected to pay all or such specified percentage, as the case may be, of the Purchase Price of such Securities in Cash by (ii) the Market Price of a share of Common Stock, subject to the next succeeding paragraph. The Company will not issue a fractional share of Common Stock in payment of the Purchase Price. Instead the Company will pay Cash for the current market value of the fractional share. The current market value of a fraction of a share shall be determined by multiplying the Market Price by such fraction and rounding the product to the nearest whole cent. It is understood that if a Holder elects to have more than one Security purchased, the number of shares of Common Stock shall be based on the aggregate amount of Securities to be purchased. If the Company elects to purchase the Securities by the issuance of shares of Common Stock, a Company Notice as provided in Section 3.8(e) shall be sent to the Holders (and to beneficial owners as required by applicable law) not later than the Company Notice Date. The Company's right to exercise its election to purchase the Securities pursuant to Section 3.8 through the issuance of shares of Common Stock shall be conditioned upon: (i) the Company having given timely Company Notice of election to purchase all or a specified percentage of the Securities with Common Stock as provided herein; -27- 34 (ii) the registration of the shares of Common Stock to be issued in respect of the payment of the specified percentage of the Purchase Price under the Securities Act; unless the shares of Common Stock so issued can be freely resold by the Holder (unless such Holder is the Company or an Affiliate of the Company) receiving such shares without registration under the Securities Act; (iii) any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration; and (iv) the receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the Common Stock are in conformity with this Indenture and (B) the shares of Common Stock to be issued by the Company in payment of the specified percentage of the Purchase Price in respect of Securities have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the specified percentage of the Purchase Price in respect of Securities, will be validly issued, fully paid and nonassessable, and, in the case of such Officers' Certificate, stating that conditions (i), (ii) and (iii) above have been satisfied and, in the case of such Opinion of Counsel, stating that conditions (ii) and (iii) above have been satisfied. Such Officers' Certificate shall also set forth the number of shares of Common Stock to be issued for each $ 1,000 Principal Amount of Securities, the Market Price and the Sale Price of a share of Common Stock on each Trading Day during the period during which the Market Price is calculated and ending on the Purchase Date. If such conditions are not satisfied with respect to a Holder or Holders prior to or on the Purchase Date and the Company elected to purchase the Securities to be purchased as of such Purchase Date pursuant to this Section 3.8 through the issuance of shares of Common Stock, the Company shall pay the entire Purchase Price in respect of such Securities of such Holder or Holders in Cash. The "Market Price" means the average of the Sale Prices of the Common Stock for the five Trading Day period ending on the third Business Day prior to the applicable Purchase Date (if the third Business Day prior to the applicable Purchase Date is a Trading Day or, if it is not a Trading Day, the five Trading Days ending on the last Trading Day prior to the third Business Day), appropriately adjusted to take into account the occurrence, during the period commencing on the first of such Trading Days during such five Trading Day period and ending on such Purchase Date, of any event described in Section 11.7, 11.8 or 11.9; subject, however, to the conditions set forth in Sections 11.10 and 11.11. The "Sale Price" of the Common Stock on any date means the closing per share sale price (or if no closing sale price is reported the average of the bid and ask prices or, if more than one, in either case, the average of the average bid and average ask prices) on such date as reported in the composite transactions for the Nasdaq National Market or, if the Common Stock is listed on a U.S. national or regional securities exchange, as reported in composite transactions for the principal United States securities exchange on which the Common Stock is traded. (e) Notice of Election. Company's notices of election to purchase with Cash or Common Stock, or any combination thereof, shall be sent to the Holders (and to beneficial owners as required by applicable law) in the manner provided in Section 12.2 at the time specified in -28- 35 Section 3.8(c) or (d), as applicable (each, a "Company Notice"). Such Company Notices shall state the manner of payment elected and shall contain the following information: In the event the Company has elected to pay a Purchase Price (or a specified percentage thereof) with Common Stock, the Company Notice shall: (1) state that each Holder will receive Common Stock with a Market Price determined as of a specified date prior to the Purchase Date equal to such specified percentage of the Purchase Price of the Securities held by such Holder (except any Cash amount to be paid in lieu of fractional share); and (2) set forth the method by which the Company is required to calculate the Market Price and state that because the Market Price of Common Stock will be determined prior to the Purchase Date, the Holders will bear the market risk with respect to the value of the Common Stock to be received from the date such Market Price is determined to the Purchase Date. In any case, each Company Notice shall include a form of Purchase Notice to be completed by a Holder and shall state: (i) the Purchase Price and Conversion Rate; (ii) the name and address of the Paying Agent and the Conversion Agent; (iii) that Securities as to which a Purchase Notice has been given may be converted only if the applicable Purchase Notice has been withdrawn in accordance with the terms of this Indenture; (iv) that Securities must be surrendered to the Paying Agent to collect payment; (v) that the Purchase Price for any Security as to which a Purchase Notice has been given and not withdrawn will be paid promptly following the later of the Purchase Date and the time of surrender of such Security as described in (iv); (vi) the procedures the Holder must follow under this Section 3.8; (vii) briefly, the conversion rights of the Securities; and (viii) the procedures for withdrawing a Purchase Notice (including, without limitation, for a conditional withdrawal pursuant to the terms of Section 3.8(a)(1)(D) or Section 3.10). At the Company's request, the Trustee shall give the Company Notice in the Company's name and at the Company's expense; provided, however, that, in all cases, the text of the Company Notice shall be prepared by the Company. -29- 36 (f) Covenants of the Company. All shares of Common Stock delivered upon conversion or purchase of the Securities shall be newly issued shares or treasury shares, shall be fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company shall use its best efforts to list or cause to have quoted all such shares of Common Stock on each United States over-the-counter or other domestic market on which the Common Stock is then quoted or national securities exchange on which the Common Stock is then listed. Upon determination of the actual number of shares of Common Stock to be delivered pursuant to this Section 3.8, the Company shall notify the securities exchange or quotation systems on which the Common Stock is then listed or quoted and disseminate the number of shares of Common Stock to be issued on the Company's website or through an alternative public medium. (g) Procedure upon Purchase. On the Business Day following the Purchase Date, the Company shall deposit with the Paying Agent (A) Cash (in respect of a Cash purchase under Section 3.8(c) or for fractional interests, as applicable), or (B) shares of Common Stock, or a combination of (A) and (B), as applicable, sufficient to pay the aggregate Purchase Price in respect of the Securities to be purchased pursuant to this Section 3.8. As soon as practicable after the Purchase Date, the Company shall deliver to each Holder entitled to receive Common Stock, through the Paying Agent, a certificate for the number of full shares of Common Stock, as applicable, issuable in payment of such Purchase Price and Cash in lieu of any fractional interests. The Person in whose name the certificate for Common Stock is registered shall be treated as a holder of record following the Purchase Date. Subject to Section 3.8(d), no payment or adjustment will be made for dividends on the Common Stock the record date for which occurred on or prior to the Purchase Date. (h) Taxes. If a Holder of a Security is paid in Common Stock, the Company shall- pay any documentary, stamp or similar issue or transfer tax due on such issue of shares of Common Stock. However, the Holder shall pay any such tax which is due because the Holder requests the shares of Common Stock to be issued in a name other than the Holder's name. The Paying Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder's name until the Paying Agent receives a sum sufficient to pay any tax which will be due because the shares of Common Stock are to be issued in a name other than the Holder's name. Nothing herein shall preclude any income tax withholding required by law or regulations. SECTION 3.9. REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE. (a) If a Fundamental Change shall occur at any time prior to May 23, 2021, each Holder of Securities shall have the right, at such Holder's option, to require the Company to redeem any or all of such Holder's Securities for Cash on the date that is 30 days after the date of the Company's notice of such Fundamental Change (the "Fundamental Change Redemption Date") (or if such date is not a Business Day, the next succeeding Business Day). The Securities will be redeemable in integral multiples of $1,000 of Principal Amount. The Company shall redeem such Securities at a price (the "Fundamental Change Redemption Price") equal to the Issue Price plus accrued Original Issue Discount up to and including the Fundamental Change Redemption Date (or, -30- 37 if the Securities are converted to interest-bearing debentures following a Tax Event pursuant to Section 11.6 and paragraph 9(b) of the Securities, a price equal to the Restated Principal Amount plus accrued interest from the date the Company exercised its right to convert the Securities up to and including the Fundamental Change Redemption Date). Payment for Securities surrendered for purchase (and not withdrawn) prior to the expiration of the 30-day period referenced in the first sentence of this subsection (a) shall be made promptly following the Fundamental Change Repurchase Date. No Securities may be redeemed at the option of the Holders as a result of a Fundamental Change if there has occurred and is continuing an Event of Default (other than a default in the payment of the Fundamental Change Redemption Price with respect to such Securities). (b) The Company, or at its request (which must be received by the Trustee at least three Business Days prior to the date the Trustee is requested to give such notice as described below) the Trustee in the name of and at the expense of the Company, shall mail to the Trustee and all Holders of record of the Securities a notice (a "Fundamental Change Redemption Notice") of the occurrence of a Fundamental Change and of the redemption right arising as a result thereof on or before the tenth day after the occurrence of such Fundamental Change. (c) For a Security to be so redeemed at the option of the Holder, the Paying Agent must receive such Security with the form entitled "Option to Elect Redemption Upon a Fundamental Change" on the reverse thereof duly completed, together with such Security duly endorsed for transfer, on or before the 30th day after the date of such notice (or if such 30th day is not a Business Day, the next succeeding Business Day). SECTION 3.10. EFFECT OF PURCHASE NOTICE OR FUNDAMENTAL CHANGE REDEMPTION NOTICE. Upon receipt by the Company of the Purchase Notice or Fundamental Change Redemption Notice specified in Section 3.8(a) or Section 3.9(b), as applicable, the Holder of the Security in respect of which such Purchase Notice or Fundamental Change Redemption Notice, as the case may be, was given shall (unless such Purchase Notice or Fundamental Change Redemption Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Purchase Price or Fundamental Change Redemption Price, as the case may be, with respect to such Security. Such Purchase Price or Fundamental Change Redemption Price shall be paid to such Holder promptly following the later of (x) the Purchase Date or the Fundamental Change Redemption Date, as the case may be, with respect to such Security (provided the conditions in Section 3.8(a) or Section 3.9(c), as applicable, have been satisfied) and (y) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.8(a) or Section 3.9(c), as applicable. Securities in respect of which a Purchase Notice or Fundamental Change Redemption Notice, as the case may be, has been given by the Holder thereof may not be converted for shares of Common Stock on or after the date of the delivery of such Purchase Notice (or Fundamental Change Redemption Notice, as the case may be), unless such Purchase Notice (or Fundamental Change Redemption Notice, as the case may be) has first been validly withdrawn as specified in the following two paragraphs. -31- 38 A Purchase Notice or Fundamental Change Redemption Notice, as the case may be, may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time prior to the close of business on the Purchase Date or the Fundamental Change Redemption Date, as the case may be, to which it relates specifying: (1) the certificate number of the Security in respect of which such notice of withdrawal is being submitted, (2) the Principal Amount of the Security with respect to which such notice of withdrawal is being submitted, and (3) the Principal Amount, if any, of such Security which remains subject to the original Purchase Notice or Fundamental Change Redemption Notice, as the case may be, and which has been or will be delivered for purchase or redemption by the Company. A written notice of withdrawal of a Purchase Notice may be in the form of (i) a conditional withdrawal contained in a Purchase Notice pursuant to the terms of Section 3.8(a)(1)(D) or (ii) a conditional withdrawal containing the information set forth in Section 3.8(a)(1)(D) and the preceding paragraph and contained in a written notice of withdrawal delivered to the Paying Agent as set forth in the preceding paragraph. There shall be no purchase of any Securities pursuant to Section 3.8 (other than through the issuance of Common Stock in payment of the Purchase Price, including Cash in lieu of any fractional shares) or redemption pursuant to Section 3.9 if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Purchase Notice or Fundamental Change Redemption Notice, as the case may be) and is continuing an Event of Default (other than a default in the payment of the Purchase Price or Fundamental Change Redemption Price, as the case may be, with respect to such Securities). SECTION 3.11. DEPOSIT OF PURCHASE PRICE OR FUNDAMENTAL CHANGE REDEMPTION PRICE. On or before the Business Day following a Purchase Date or a Fundamental Change Redemption Date, as the case may be, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or an Affiliate of the Company is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount of money and/or securities, if permitted hereunder, sufficient to pay the aggregate Purchase Price or Fundamental Change Redemption Price, as the case may be, of all the Securities or portions thereof which are to be purchased as of such Purchase Date or Fundamental Change Redemption Date, as the case may be. SECTION 3.12. Securities Purchased in Part. Any Security that is to be purchased or redeemed only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall -32- 39 execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate Principal Amount equal to, and in exchange for, the portion of the Principal Amount of the Security so surrendered which is not purchased or redeemed. SECTION 3.13. COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE OF SECURITIES. In connection with any purchase or redemption of Securities under Section 3.8 or 3.9 hereof, the Company shall (i) comply with Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act, if applicable, (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, if applicable, and (iii) otherwise comply with all Federal and state securities laws so as to permit the rights and obligations under Section 3.8 and 3.9 to be exercised in the time and in the manner specified in Section 3.8 and 3.9. SECTION 3.14. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall return to the Company any cash or shares of Common Stock (in the case of the Purchase Price that remain unclaimed as provided in paragraph 14 of the Securities, together with interest or dividends, if any, thereon, held by them for the payment of a Purchase Price or Fundamental Change Redemption Price, as the case may be; provided, however, that to the extent that the aggregate amount of cash or shares of Common Stock deposited by the Company pursuant to Section 3.11 exceeds the aggregate Purchase Price or Fundamental Change Redemption Price, as the case may be, of the Securities or portions thereof which the Company is obligated to purchase as of the Purchase Date or Fundamental Change Redemption Date, as the case may be, then promptly after the Business Day following the Purchase Date or Fundamental Change Redemption Date, as the case may be, the Trustee and the Paying Agent shall return any such excess to the Company together with interest or dividends, if any, thereon. SECTION 3.15. MODIFICATION TO FUNDAMENTAL CHANGE DEFINITIONS. In the case of a reclassification, change, consolidation, merger, combination, sale or conveyance to which Section 11.15 applies, in which the Common Stock of the Company is changed or exchanged as a result into the right to receive stock, securities or other property or assets (including Cash), which includes shares of common stock of another person that are, or upon issuance will be, traded on a United States national securities exchange or approved for trading on an established automated over-the-counter trading market in the United States and such shares of common stock constitute at the time such change or exchange becomes effective in excess of 50% of the aggregate fair market value of such stock, securities or other property or assets (including Cash) into which the Common Stock of the Company is or is to be changed or exchanged for (as determined by the Company, which determination shall be conclusive and binding), then the person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture (accompanied by an Opinion of Counsel that such supplemental indenture complies with the Trust Indenture Act as in force at the date of execution of such supplemental indenture) modifying the provisions of this Indenture relating to the right of holders of the Securities to cause the Company to repurchase the -33- 40 Securities in the event of a Fundamental Change, including, without limitation, the applicable provisions of this Article 3 and the definitions of Common Stock and Fundamental Change, as appropriate, as determined in good faith by the Company (which determination shall be conclusive and binding), to make such provisions apply to such other person if different from the Company and the common stock issued thereby (in lieu of the Company and the Common Stock of the Company). ARTICLE 4 COVENANTS SECTION 4.1. PAYMENT OF SECURITIES. The Company shall promptly pay or cause to be paid all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture. Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price and interest, if any, shall be considered paid on the applicable date due or, in the case of a Purchase Price or Fundamental Change Redemption Price, on the Business Day following the applicable Purchase Date or Fundamental Change Redemption Date, as the case may be, if on such date the Trustee or the Paying Agent holds, in accordance with this Indenture, money or securities, if permitted hereunder, sufficient to pay all such amounts then due. The Company shall pay interest on overdue amounts at the rate set forth in paragraph I of the Securities and it shall pay interest on overdue interest at the same rate compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest on overdue interest shall accrue from the date such amounts became overdue and shall be in lieu of, and not in addition to, the continued accrual of Original Issue Discount. SECTION 4.2. FINANCIAL INFORMATION; SEC REPORTS. The Company will deliver to the Trustee (a) as soon as available and in any event within 90 days after the end of each fiscal year of the Company (i) a consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and the related consolidated statements of operations, stockholders' equity and cash flows for such fiscal year, all reported on by an independent public accountant of nationally recognized standing and (ii) a report containing a management's discussion and analysis of the financial condition and results of operations and a description of the business and properties of the Company and (b) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company (i) an unaudited consolidated financial report for such quarter and (ii) a report containing a management's discussion and analysis of the financial condition and results of operations of the Company; provided that the foregoing shall not be required for any fiscal year or quarter, as the case may be, with respect to which the Company files or expects to file with the Trustee an annual report or quarterly report, as the case may be, pursuant to the third paragraph of this Section 4.2. -34- 41 So long as the Securities or the Common Stock issued upon conversion of the Securities are Restricted Securities, if the Company is not subject to either Section 13 or 15(d) of the Exchange Act, the Company shall at the request of any Holder (or holders of Common Stock issued upon conversion of the Securities) provide to such Holder (or holders of such Common Stock) and any prospective purchaser designated by such Holders (or holders of such Common Stock), as the case may be, such information, if any, required by Rule 144A(d)(4) under the Securities Act. The Company shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the 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. SECTION 4.3. COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, an Officers' Certificate in which one of the two Officers signing such certificate is either the principal executive officer, principal financial officer or principal accounting officer of the Company, stating whether or not to the knowledge of the signers thereof the Company is in Default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in Default, specifying all such Defaults and the nature and status thereof of which the signers may have knowledge. The Company will deliver to the Trustee, forthwith upon becoming aware of any Default in the performance or observance of any covenant, agreement or condition contained in this Indenture, or any Event of Default, an Officers' Certificate specifying with particularity such Default or Event of Default and further stating what action the Company has taken, is taking or proposes to take with respect thereto. Any notice required to be given under this Section 4.3 shall be delivered to the Trustee at its Corporate Trust Office. SECTION 4.4. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the respective Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. SECTION 4.5. MAINTENANCE OF OFFICE OR AGENCY. The Company will appoint in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, purchase, redemption or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be -35- 42 served. The office or agency in the Borough of Manhattan, the City of New York, shall initially be State Street Bank and Trust Company, N.A., an Affiliate of the Trustee located at 61 Broadway, 15th Floor, New York, New York 10006 (Attention: Corporate Trust Department - Atmel Corporation, Zero Coupon Convertible Subordinated Debentures due 2021), and shall be the office or agency for all of the aforesaid purposes unless the Company shall appoint some other office or agency for such purposes and shall give prompt written notice to the Trustee of the location, and any change in the location, of such other office or agency. 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 one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. SECTION 4.6. EXISTENCE. Subject to Article 5, 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, however, 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. SECTION 4.7. MAINTENANCE OF PROPERTIES. The Company will cause all properties used or useful in the conduct of its business or the business of any Significant Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 4.7 shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Significant Subsidiary and not disadvantageous in any material respect to the Holders. SECTION 4.8. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge, or cause to be paid or discharged, before the same may become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Company or any Significant Subsidiary or upon the income, profits or property, of the Company or any Significant Subsidiary, (ii) all claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon the property of the Company or any Significant Subsidiary, and -36- 43 (iii) all stamps and other duties, if any, which may be imposed by the United States or any political subdivision thereof or therein in connection with the issuance, transfer, exchange or conversion of any Securities or with respect to this Indenture; provided however, that, in the case of clauses (i) and (ii), the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim (A) if the failure to do so will not, in the aggregate, have a material adverse impact on the Company, or (B) if the amount applicability or validity is being contested in good faith by appropriate proceedings. SECTION 4.9. ADDITIONAL INTEREST. If Additional Interest is payable by the Company pursuant to the Registration Rights Agreement, the Company shall deliver to the Trustee a certificate to that effect stating (i) the amount of such Additional Interest that is payable and (ii) the date on which such interest is payable. Unless and until a Responsible Officer of the Trustee receives such a certificate, the Trustee may assume without inquiry that no Additional Interest is payable. If the Company has paid Additional Interest directly to the persons entitled to it, the Company shall deliver to the Trustee a certificate setting forth the particulars of such payment. ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.1. WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS. The Company shall not consolidate with, merge with or into any other Person (other than in a merger or consolidation in which the Company is the surviving Person) or convey, transfer or lease all or substantially all of its properties and assets to any Person, unless: (i) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease all or substantially all of the properties and assets of the Company shall be a corporation, limited liability company, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia, and shall expressly assume by an indenture supplemental hereto, executed and delivered to the Trustee in form reasonably satisfactory to the Trustee, the due and punctual payment of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or interest, if any, on the Securities, according to their tenor, and the due and punctual performance of all of the covenants and obligations of the Company under the Securities and this Indenture, and shall have provided for conversion rights in accordance with this Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and -37- 44 (iii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 5 and that all conditions precedent herein provided for relating to such transaction have been satisfied. The successor Person formed by such consolidation or into which the Company is merged or the successor Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of a lease, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.1. EVENTS OF DEFAULT. An "Event of Default" occurs if: (1) the Company defaults in the payment of the Principal Amount, Issue Price (or, if the Securities have been converted to interest-bearing Securities following a Tax Event pursuant to Section 11.6, the Restated Principal Amount), accrued Original Issue Discount (or, if the Securities have been converted to interest-bearing Securities following a Tax Event, accrued and unpaid interest), accrued Additional Interest, if any, Redemption Price, Purchase Price or a Fundamental Change Redemption Price on any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration, when due for purchase by the Company or otherwise (provided that in the case of a default in the payment of Additional interest, such default in payment of Additional Interest continues for a period of 30 days), whether or not such payment shall be prohibited by Article 10; (2) the Company fails to comply with any of its agreements or covenants in the Securities or this Indenture (other than those referred to in clause (1) above) and such failure continues for 90 days after receipt by the Company of a Notice of Default; (3) the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of the property of the Company, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or -38- 45 (4) an involuntary case or other proceeding shall be commenced against the Company seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of the property of the Company, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of ninety (90) consecutive days; A Default under clause (2) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate Principal Amount of the Securities at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (2) above after actual receipt of such notice (a "Notice of Default"). Any such notice must specify the Default, demand that it be remedied and state that such notice is a Notice of Default. SECTION 6.2. ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.1(3) or (4)) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate Principal Amount of the Securities at the time outstanding by notice to the Company and the Trustee, may declare the Issue Price and accrued Original Issue Discount up to and including the date of declaration (and Additional Interest, if any) on all the Securities to be immediately due and payable. Upon such a declaration, such Issue Price and accrued Original Issue Discount shall become and be due and payable immediately. If an Event of Default specified in Section 6.1(3) or (4) occurs and is continuing, the Issue Price and accrued Original Issue Discount (and Additional Interest, if any) on all the Securities shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. The Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding, by notice to the Company and the Trustee (and without notice to any other Holder), may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the Issue Price and accrued Original Issue Discount (and Additional Interest, if any) that have become due solely as a result of acceleration and if all amounts due to the Trustee under Section 7.7 have been paid. No such rescission shall affect any subsequent or other Default or Event of Default or impair any consequent right. SECTION 6.3. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the Issue Price and accrued Original Issue Discount on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if the Trustee does not possess any of the Securities or does not produce any of the Securities in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not -39- 46 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 6.4. WAIVER OF PAST DEFAULTS. The Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding, by notice to the Company and the Trustee (and without notice to any other Holder), may waive an existing Default or Event of Default and its consequences except (1) an Event of Default described in Section 6.1(1), (2) a Default in respect of a provision that under Section 9.2 cannot be amended without the consent of each Holder affected or (3) a Default that constitutes a failure to convert any Security in accordance with the terms of Article 11. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right. SECTION 6.5. CONTROL BY MAJORITY. The Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding may direct the time, method and place of conducting any proceeding 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 any law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Holders or would involve the Trustee in personal liability unless the Trustee is offered indemnity satisfactory to it. SECTION 6.6. LIMITATION ON SUITS. A Holder may not pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Company and the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 25% in aggregate Principal Amount of the Securities at the time outstanding make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense satisfactory to the Trustee; (4) the Trustee does not comply with the request within 60 days after receipt of the notice, the request and the offer of security or indemnity; and (5) the Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period. A Holder may not use this Indenture to prejudice the rights of any other Holder or to obtain a preference or priority over any other Holder. -40- 47 SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, but subject to Article 10, the right of any Holder to (i) receive payment of the Principal Amount, Issue Price, accrued Original Issue Discount, Redemption Price, Purchase Price, Fundamental Change Redemption Price, Additional Interest (under the Registration Rights Agreement) or interest, if any, in respect of the Securities held by such Holder on or after the respective due dates expressed in the Securities or any date of redemption, (ii) convert the Securities in accordance with Article 11, or (ii) bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, shall not be impaired or affected adversely without the consent of each such Holder. SECTION 6.8. COLLECTION SUIT BY TRUSTEE. If an Event of Default described in Section 6.1(1) 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 owing with respect to the Securities and the amounts provided for in Section 7.7. SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price, Additional Interest (under the Registration Rights Agreement) or interest, if any, in respect of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise: (a) to file and prove a claim for the whole amount of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or interest, if any, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and -41- 48 advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. If the Trustee does not file a claim or proof of debt in the form required in such proceedings prior to 30 days before the expiration of the time to file such claims or proofs, then any holder or holders of Senior Indebtedness or their representative or representatives shall have the right to demand, sue for, collect, receive and receipt for the payments and distributions in respect of the Securities which are required to be paid or delivered to the holders of Senior Indebtedness as provided in this Article and to file and prove all claims therefor and to take all such other action in the name of the holders or otherwise, as such holders of Senior Indebtedness or representative thereof may determine to be necessary or appropriate for the enforcement of the provisions of this Article. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claims of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 7.7; Second: to holders of Senior Indebtedness to the extent required by Article 10; Third: to Holders for amounts due and unpaid on the Securities for the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or interest, if any, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and Fourth: the balance, if any, to the Company. The Trustee may fix a proposed record date and payment date for any payment to Holders pursuant to this Section 6.10 and shall notify the Company in writing with respect to such proposed record date and payment date. At least 15 days before such record date, the Company (or the Trustee at the request of the Company) shall mail to each Holder and the Trustee 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 -42- 49 require the filing by any party litigant (other than the Trustee) 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, 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 6.11 does not apply to a suit by the Trustee, any suit by a Holder for the enforcement of the payment of the Principal Amount, accrued Original Issue Discount, Redemption Price, Purchase Price, Fundamental Change Redemption Price, Additional Interest (under the Registration Rights Agreement) or interest, if any, on or after the due date expressed in such Security or to any suit for the enforcement of the right to convert the Security pursuant to Article 11, or a suit by Holders of more than 10% in aggregate Principal Amount of the Securities at the time outstanding. SECTION 6.12. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price or Fundamental Change Redemption Price in respect of Securities, or any interest on any such amounts, as contemplated herein, or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such laws and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.1. DUTIES OF TRUSTEE. 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 his or her own affairs. (a) Except during the continuance of an Event of Default: (1) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; 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 -43- 50 Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. This Section 7.1(b) shall be in lieu of Section 315(a) of the TIA and such Section 315(a) is hereby expressly excluded from this Indenture, as permitted by the TIA. (b) 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: (1) this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.1; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) 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 6.5. Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the TIA. (c) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1. (d) The Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense. (e) Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. SECTION 7.2. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document reasonably 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 a Company Order, 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 a Company Order, 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. -44- 51 (d) Subject to the provisions of Section 7.1(c), 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 selected by it and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture, unless the Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby. SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion Agent or co-registrar may do the same with the like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.4. TRUSTEE DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities; it shall not be accountable for Company's use of the proceeds from the Securities; and it shall not be responsible for any statement in the offering memorandum for the Securities or in this Indenture or the Securities (other than its certificate of authentication), the acts of a prior Trustee hereunder, or the determination as to which beneficial owners are entitled to receive any notices hereunder. SECTION 7.5. NOTICE OF DEFAULTS. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall give to each Holder notice of the Default within 90 days after the Trustee becomes aware of such Default. Except in the case of a Default described in Section 6.1(1), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the best interests of the Holders. The second sentence of this Section 7.5 shall be in lieu of the proviso to Section 315(b) of the TIA and such provision is hereby expressly excluded from this Indenture, as permitted by the TIA. The Trustee shall not give notice of a Default pursuant to Section 6.1(2) until at least sixty days have passed since its occurrence. SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each October 1, beginning with the October 1 following the date of this Indenture, the Trustee shall mail to each Holder a brief report dated as of such October 1 that -45- 52 complies with TIA Section 313(a), if required by such Section 313(a). The Trustee also shall comply with TIA Section 313(b). A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each securities exchange on which the Securities are listed. The Company agrees to notify the Trustee whenever the Securities become listed on any securities exchange and of any delisting thereof SECTION 7.7. COMPENSATION AND INDEMNITY. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expense, advances and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (c) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. To secure the Company's payment obligations in this Section 7.7 the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or interest, if any, as the case may be, on particular Securities. The Company's payment obligations pursuant to this Section 7.7 shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.1(3) or (4), the expenses are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws. SECTION 7.8. REPLACEMENT OF TRUSTEE. The Trustee may resign by so notifying the Company; provided, however, that no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 7.8. The Holders of a majority in aggregate Principal Amount of the Securities at the time -46- 53 outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if- (1) the Trustee fails to comply with, or ceases to be eligible under Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or public officer takes charge or control of the Trustee or its property or affairs; or (4) the Trustee otherwise in the Company's reasonable judgment becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint, by resolution of its Board of Directors, a successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject to the lien provided for in Section 7.7. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be eligible under this Article. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding 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 Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trustee business (including the trust created by this Indenture) or assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the -47- 54 successor Trustee hereunder, provide such corporation shall be otherwise eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee shall have a combined capital and surplus of at least $50,000,000 (or if the Trustee is a member of a bank holding company system, its bank holding company shall have a combined capital and surplus of at least $50,000,000) as set forth in its most recent published annual report of conditions. Nothing herein contained shall prevent the Trustee from filing with the SEC the application referred to in the penultimate paragraph of TIA Section 310(b). If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.10, it shall correct such ineligibility or resign immediately in the manner and with the effect specified in this Article 7. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8 DISCHARGE OF INDENTURE. SECTION 8.1. DISCHARGE OF LIABILITY ON SECURITIES. When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.7) for cancellation or (ii) all outstanding Securities have become due and payable and the Company deposits with the Trustee Cash and/or securities, as permitted by the terms hereof, sufficient to pay at Stated Maturity the Principal Amount of all outstanding Securities (other than Securities replaced pursuant to Section 2.7), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 7.7, cease to be of further effect. The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and Opinion of Counsel and at the cost and expense of the Company. -48- 55 SECTION 8.2. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years; provided, however, that the Trustee or such Paying Agent, before being required to make any such return, shall, in the event that the Securities are no longer held in global form, at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person. ARTICLE 9 AMENDMENTS SECTION 9.1. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may amend this Indenture and the Securities without the consent of any Holder: (1) to cure any ambiguity or to correct or supplement any provision contained, herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions with regard to matters or questions arising under this Indenture which shall not materially affect the interests of the Holders; (2) to comply with Article 5 or Section 11.15 or Section 3.15; (3) to provide for uncertificated Securities in addition to certificated Securities so long as such uncertificated Securities are in registered form for purposes of the Internal Revenue Code of 1996, as amended; (4) to make any change that does not adversely affect the right of any Holder; or (5) to make any change to comply with the TIA, or any amendment thereto, or to comply with any requirement of the SEC in connection with the qualification, if any, of the indenture under the TIA. -49- 56 SECTION 9.2. WITH CONSENT OF HOLDERS. The Company and the Trustee, with the written consent of the Holders of at least a majority in aggregate Principal Amount of the Securities at the time outstanding, may amend this indenture or the Securities. However, without the consent of each Holder affected, an amendment or supplement to this Indenture or the Securities may not: (1) make any change to the Principal Amount of Securities whose Holders must consent to an amendment; (2) make any change to the manner or rate of accrual in connection with Original Issue Discount or interest, if any, reduce the rate of interest referred to in paragraph 1 of the Securities or extend the time for payment of Original Issue Discount or interest, if any, on any Security; (3) reduce the Principal Amount or the Issue Price of or extend the Stated Maturity of any Security; (4) reduce the Redemption Price, Purchase Price or Fundamental Change Redemption Price of any Security; (5) reduce the rate of, or make any change in the manner of paying, Additional Interest; (6) make any Security payable in money or securities other than that stated in the Security; (7) make any change in Article 10 that adversely affects the rights of any Securityholder; (8) make any change in Section 6.4, Section 6.7 or this Section 9.2, except to increase any such percentage; (9) make any change that adversely affects the right to convert any Security; (10) make any change that adversely affects the right to require the Company to purchase the Securities, or the right to require the Company to redeem the Securities upon a Fundamental Change, in accordance with the terms thereof and this Indenture, or (11) change any obligation of the Company to maintain an office or agency in the places and for the purposes specified in this Indenture. It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. -50- 57 An amendment under this Section 9.2 or Section 9.1 may not make any change that adversely affects the rights under Article 10 of any holder of Senior Indebtedness then outstanding unless the requisite holders of such Senior Indebtedness consent to such change pursuant to the terms of such Senior Indebtedness. After an amendment under this Section 9.2 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment. SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE. Every supplemental indenture executed pursuant to this Article 9 shall comply with the TIA as then in effect, if then required to so comply. SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS. Until an amendment, waiver or other action becomes effective, a consent to it or any other action by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder's Security, even if notation of the consent, waiver or action is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment, waiver or action becomes effective. After an amendment, waiver or action becomes effective, it shall bind every Holder. SECTION 9.5. TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article 9 may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Securities. SECTION 9.6. TRUSTEE'S DISCRETION TO EXECUTE SUPPLEMENTAL INDENTURES. The Trustee shall sign any supplemental indenture 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 such supplemental indenture. In signing such amendment the Trustee shall be entitled to receive, and (subject to the provisions of Section 7.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. -51- 58 SECTION 9.7. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article 9, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. ARTICLE 10 SUBORDINATION SECTION 10.1. AGREEMENT OF SUBORDINATION. The Company covenants and agrees, and each Holder of Securities issued hereunder by acceptance thereof likewise covenants and agrees, that all payments by the Company in respect of the Securities shall be subject to the provisions of this Article 10; and each Person holding any Security whether upon original issue or upon transfer, or assignment or exchange thereof, accepts and agrees to be bound by such provisions. The payment of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price and interest, if any, in respect to the Securities shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness, whether outstanding at the date of this Indenture or thereafter incurred. No provision of this Article 10 shall prevent the occurrence of any Default or Event of Default hereunder. SECTION 10.2. PAYMENTS TO HOLDERS. No payment shall be made with respect to the Principal Amount, Issue Price, accrued Additional Interest, if any, Original Issue Discount, Redemption Price, Purchase Price, Fundamental Change Redemption Price and interest, if any, on the Securities, except payments and distributions made by the Trustee as permitted by the first or second paragraph of Section 10.5, if: (i) a default in the payment of principal, premium, interest, rent or other obligations due on any Senior Indebtedness has occurred and is continuing (or, in the case of Senior Indebtedness for which there is a period of grace, in the event of such a default that continues beyond the period of grace, if any, specified in the instrument or lease evidencing such Senior Indebtedness) (a "Payment Default"), unless and until such Payment Default shall have been cured or waived or shall have ceased to exist; or (ii) a default, other than a payment default, on Designated Senior Indebtedness occurs and is continuing that permits the holders of such Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a notice of the default (a "Payment -52- 59 Blockage Notice") a Representative of Designated Senior Indebtedness or the Company (a "Non-Payment Default"). If the Trustee receives any Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until (A) at least 365 days shall have elapsed since the initial effectiveness of the immediately prior Payment Blockage Notice, and (B) all scheduled payments of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price and interest, if any on the Securities that have come due have been paid in full in cash. No Non-Payment Default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee (unless such default was waived, cured or otherwise ceased to exist and thereafter subsequently reoccurred) shall be, or be made, the basis for a subsequent Payment Blockage Notice. The Company may and shall resume payments on and distributions in respect of the Securities upon the earlier of: (1) in the case of a Payment Default, the date upon which the default is cured or waived or ceases to exist, or (2) in the case of a Non-Payment Default, the earlier of (a) date on which such default is cured or waived or ceases to exist or (b) 179 days after the date on which the applicable Payment Blockage Notice is received, if the maturity of such Designated Senior Indebtedness has not been accelerated unless this Article 10 otherwise prohibits the payment or distribution at the time of such payment or distribution (including, without limitation, in the case of a default referred to in clause (ii) above, as a result of a payment default with respect to the applicable Senior Indebtedness as a consequence of the acceleration of the maturity thereof or otherwise). Upon any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization, of the Company, whether voluntary or involuntary or in bankruptcy, moratorium of payments, insolvency, receivership or other proceedings, all amounts due or to become due upon all Senior Indebtedness shall first be paid in full in Cash or other payment satisfactory to the holders of such Senior Indebtedness, or payment thereof in accordance with its terms provided for in Cash or other payment satisfactory to the Holders of such Senior Indebtedness before any payment is made on account of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price, interest, if any, in respect to the Securities, (except payments made pursuant to Article 8 from monies deposited with the Trustee pursuant thereto prior to commencement of proceedings for such dissolution, winding-up, liquidation or reorganization); and upon any such dissolution or winding-up or liquidation or reorganization of the Company or bankruptcy, insolvency, receivership or other proceeding, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or -53- 60 securities, to which the Holders of the Securities or the Trustee would be entitled, except for the provisions of this Article 10, shall (except as aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, or as otherwise required by law or court order) or their Representative or Representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any such Senior Indebtedness may have been issued, as their respective interests may appear or to the extent necessary to pay all such Senior Indebtedness in full, in Cash or other payment satisfactory to the holders of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders of the Securities or to the Trustee. In the event of the acceleration of the Securities because of an Event of Default pursuant to Section 6.2, no payment or distribution shall be made to the Trustee or any Holder in respect of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price or interest, if any, on the Securities, except payments and distributions made by the Trustee as permitted by the first or second paragraph of Section 10.5, until all Senior Indebtedness has been paid in full in Cash or other payment satisfactory to the holders of Senior Indebtedness or such acceleration is rescinded in accordance with the terms of this Indenture. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the Company of the acceleration. In the event that, notwithstanding the foregoing provisions, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (including, without limitation, by way of setoff or otherwise), prohibited by the foregoing, shall be received by the Holders of the Securities before all Senior Indebtedness is paid in full in Cash or other payment satisfactory to the holders of such Senior Indebtedness, or provision is made for such payment thereof in accordance with its terms in Cash or other payment satisfactory to holders of such Senior Indebtedness, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness of the Company or their Representative or Representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all such Senior Indebtedness remaining unpaid to the extent necessary to pay all such Senior Indebtedness in full in Cash or other payment satisfactory to the holders of such Senior Indebtedness, after giving effect to any concurrent payment or distribution, or provision thereof, to or for the holders of such Senior Indebtedness. For purposes of this Article 10, the words, "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article 10 with respect to the Securities to the payment of all Senior Indebtedness of the Company which may at the time be outstanding; -54- 61 provided that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness (other than leases that are not assumed by the Company or the new corporation, as the case may be) are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article 5 hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 10.2 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article 5 hereof. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.7. This Section 10.2 shall be subject to the further provisions of Section 10.5. SECTION 10.3. SUBROGATION OF SECURITIES. Subject to the payment in full of all Senior Indebtedness, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article 10 (equally and ratably with the holders of all Indebtedness of the Company which by its express terms is subordinated to other Indebtedness of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Fundamental Change Redemption Price or interest, if any, on the Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article 10, and no payment over pursuant to the provisions of this Article 10, to or for the benefit of the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment by the Company to or on account of the Senior Indebtedness; and no payments or distributions of cash, property or securities to or for the benefit of the Holders of the Securities pursuant to the subrogation provisions of this Article 10, which would otherwise have been paid to the holders of Senior Indebtedness shall be deemed to be a payment by the Company to or for the account of the Securities. It is understood that the provisions of this Article 10 are and are intended solely for the purposes of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand. Nothing contained in this Article 10 or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities amounts due on the Securities as and when -55- 62 the same shall become due payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of Senior Indebtedness in respect of Cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee, subject to the provisions of Section 7.1 and the holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such bankruptcy, dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of the Securities, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon and all other facts pertinent thereto or to this Article 10. SECTION 10.4. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of a Security by the Holder's acceptance thereof authorizes and directs the Trustee on the Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 10 and appoints the Trustee to act as the Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.9 hereof at least 30 days before the expiration of the time to file such claim, the holders of any Senior Indebtedness or their Representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Securities. SECTION 10.5. NOTICE TO TRUSTEE. The Company shall give prompt written notice in a form of an Officers' Certificate to a Trust Officer and to any Paying Agent of any fact known to the Company which would prohibit the making of any payment of monies deposited by the Company to or by the Trustee or any Paying Agent in respect of the Securities pursuant to the provisions of this Article 10. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee in respect of the Securities pursuant to the provisions of this Article 10, unless and until a Trust Officer shall have received written notice thereof at the Corporate Trust Office from the Company (in the form of an Officers' Certificate) or a Representative or a holder or holders of Senior Indebtedness or a Representative or from any trustee thereof; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 7.1, shall be entitled in all respects to assume that no such facts exist; provided that if on a date not fewer than two Business Days prior to the date upon which by the terms hereof any such monies may become payable for any purpose (including, without limitation, the payment of the Principal Amount, Issue -56- 63 Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price and interest, if any, in respect of the Securities) the Trustee shall not have received, with respect to such monies, the notice provided for in this Section 10.5, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such prior date. Notwithstanding anything in this Article 10 to the contrary herein set forth, nothing shall prevent any payment by the Trustee to the Holders of monies deposited with it pursuant to Section 8.1, and any such payment shall not be subject to the provision of Section 10.1 or 10.2. The Trustee, subject to the provisions of Section 7.1, shall be entitled to rely on the delivery to it of a written notice by a Representative or a Person representing himself to be a holder of Senior Indebtedness of the Company (or a trustee on behalf of such holder) to establish that such notice has been given by a Representative or a holder of such Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 10, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 10.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article 10 in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Company and, subject to the provisions of Section 7.1, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Holders of Securities, the Company or any other Person money or assets to which any holder of Senior Indebtedness of the Company shall be entitled by virtue of this Article 10 or otherwise. -57- 64 SECTION 10.7. NO IMPAIRMENT OF SUBORDINATION. No right of any present or future holder of any Senior Indebtedness of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. SECTION 10.8. CERTAIN CONVERSIONS NOT DEEMED PAYMENT. For the purposes of this Article 10 only, (1) the issuance and delivery of junior securities upon conversion of Securities in accordance with Article 11 shall not be deemed to constitute a payment or distribution on account of the Principal Amount, Issue Price, Accrued Original Issue Discount, Accrued Additional Interest, if any, Redemption Price, Purchase Price, Fundamental Change Redemption Price and interest, if any, or on account of the purchase or other acquisition of Securities, and (2) the payment, issuance or delivery of cash (except in satisfaction of fractional shares pursuant to Section 15.3 or 3.8(d)), property or securities (other than junior securities) upon conversion of a Security shall be deemed to constitute payment on account of the principal of such Security. For the purposes of this Section 10.8, the term "junior securities" means (a) shares of any stock of any class of the Company or (b) securities of the Company which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. Nothing contained in this Article 10 or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors (other than holders of Senior Indebtedness) and the Holders, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article 11. SECTION 10.9. ARTICLE APPLICABLE TO PAYING AGENTS. If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that the first paragraph of Section 10.5 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. SECTION 10.10. SENIOR INDEBTEDNESS ENTITLED TO RELY. The holders of Senior Indebtedness (including, without limitation, Designated Senior Indebtedness) shall have the right to rely upon this Article 10, and no amendment or modification of the provisions contained herein shall diminish the rights of such holders unless such holders shall have agreed in writing thereto. -58- 65 ARTICLE 11 CONVERSION SECTION 11.1. CONVERSION PRIVILEGE. A Holder of a Security may convert such Security for Common Stock at any time during the period stated in paragraph 9 of the Securities. The number of shares of Common Stock issuable upon conversion of a Security per $1,000 of Principal Amount thereof (the "Conversion Rate") shall be that set forth in paragraph 9 in the Securities, subject to adjustment as herein set forth. A Holder may convert a portion of the Principal Amount of a Security if the portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. SECTION 11.2. CONVERSION PROCEDURE. To convert a Security, a Holder must satisfy the requirements in paragraph 9 of the Securities. The date on which the Holder of Securities satisfies all those requirements is the conversion date (the "Conversion Date"). As soon as practicable after the Conversion Date the Company shall deliver to the Holder, through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion and Cash in lieu of any fractional share determined pursuant to Section 11.3. The Person in whose name the certificate is registered shall be treated as the stockholder of record on and after the Conversion Date; provided, however, that no surrender of a Security on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the Person or Persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such conversion shall be at the Conversion Rate in effect on the date that such Security shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of a Security, such Person shall no longer be a Holder of such Security. No payment on the Securities or adjustment of the Conversion Rate will be made for dividends on or other distributions with respect to any Common Stock except as provided in this Article 11. On conversion of a Security, that portion of accrued Original Issue Discount attributable to the period from the Issue Date of the Security to the Conversion Date with respect to the converted Security shall not be canceled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through delivery of the Common Stock (together with the Cash payment, if any, in lieu of fractional shares) in exchange for the Security being converted pursuant to the provisions hereof. -59- 66 If a Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the total Principal Amount of the Securities converted. Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security in an authorized denomination equal in Principal Amount to the unconverted portion of the Security surrendered. If the last day on which a Security may be converted is a Legal Holiday in a place where a Conversion Agent is located, the Security may be surrendered to that Conversion Agent on the next succeeding day that it is not a Legal Holiday. SECTION 11.3. FRACTIONAL SHARES. The Company will not issue a fractional share of Common Stock upon conversion of a Security. Instead the Company will deliver Cash for the current market value of the fractional share. The current market value of a fractional share shall be determined to the nearest 1/10,000th of a share by multiplying the last reported sale price (determined as set forth in the definition of Current Market Price) on the last Trading Day prior to the Conversion Date of a full share by the fractional amount and rounding the product to the nearest whole cent. SECTION 11.4. TAXES ON CONVERSION. If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulations. SECTION 11.5. COMPANY TO PROVIDE STOCK. The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Securities. All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company covenants that if any shares of Common Stock to be provided for the purpose of conversion of Securities 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, -60- 67 the Company will in good faith and as expeditiously as possible 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 quoted on the Nasdaq National Market or any other automated quotation system or listed on the NYSE or any other national or regional securities exchange, the Company will, if permitted by the rules of such automated quotation system or exchange, list and keep listed, so long as the Common Stock shall be so listed on such automated quotation system or exchange, all shares of Common Stock issuable upon conversion of the Securities; provided, however, that if the rules of such automated quotation system or exchange permit the Company to defer the listing of such Common Stock until the first conversion of the Securities into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Securities in accordance with the requirements of such automated quotation system or exchange at such time. SECTION 11.6. CONVERSION TO SEMIANNUAL COUPON UPON A TAX EVENT. (a) If at any time after the date (the "Tax Event Date") of the occurrence of a Tax Event the Company exercises its option (the date of such exercise, (the "Option Exercise Date") to pay interest in lieu of Original Issue Discount, interest in lieu of future Original Issue Discount shall accrue at the rate of 4.75% per annum on a Principal Amount per Security (the "Restated Principal Amount") equal to the Issue Price plus Original Issue Discount accrued through the Option Exercise Date (as calculated by the Company and set forth in an Officer's Certificate delivered to the Trustee) and shall be payable semiannually on May 23 and November 23 of each year (each an "Interest Payment Date") to holders of record of the Securities on the May 8 or November 8 immediately preceding Interest Payment Date (each a "Regular Record Date"), immediately proceeding such Interest Payment Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Option Exercise Date. Interest on any Security that is payable on any Interest Payment Date shall be paid to the Person in whose name that Security is registered at the close of business on the Regular Record Date. (b) Within 15 days of the occurrence of a Tax Event, the Company shall mail a written notice of such Tax Event by first class mail to the Trustee and within 15 days of its exercise of such option the Company shall mail a written notice of the Option Exercise Date by first-class mail to the Trustee and the Holders of the Securities. From and after the Option Exercise Date, (i) the Company shall be obligated to pay at Stated Maturity, in lieu of the Principle Amount of a Security, the Restated Principal Amount thereof and (ii) "Issue Price and accrued Original Issue Discount," "Issue Price plus Original Issue Discount," or similar words, as used herein, shall mean Restated Principal Amount plus accrued and unpaid interest with respect to any Security. Securities authenticated and delivered after the Option Exercise Date may, and shall if required by the Trustee, bear a notation in a form approved by the Trustee as to the conversion of the Securities to semiannual coupon notes. (c) Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Security is -61- 68 registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose. Each installment of interest on any Security shall be paid in same-day funds by transfer to an account maintained by the payee located inside the United States. In the case of a permanent Global Security, in global form, interest payable on any Interest Payment Date will be paid to the Depositary, with respect to that portion of such permanent Global Security, in global form, held for its account by Cede & Co. for the purpose of permitting such party to credit the interest received by it in respect of such permanent Security in global form to the accounts of the beneficial owners thereof. (d) Except as otherwise specified with respect to the Security, any interest on any Security that is payable, but is not punctually paid or duly provided for, within 30 days following on any Interest Payment Date (herein called "Defaulted Interest", which term shall include any accrued and unpaid interest that has accrued on such defaulted amount in accordance with paragraph 1 of the Securities), shall forthwith cease to be payable to the registered Holder thereof on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the persons in whose names the Securities are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment (which shall not be less than 20 days after such notice is received by the Trustee), 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 on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities at his address as it appears on the list of Securityholders maintained pursuant to Section 2.5 not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the Securities are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest on the Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such -62- 69 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. Subject to the foregoing provisions of this Section 11.6 and Section 2.6, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. (e) In the event that the Company exercises its option following a Tax Event, any Security or portion thereof surrendered for conversion during the period from the close of business on the Regular Record Date to the opening of business on the immediately following Interest Payment Date (unless such Security or portion thereof being converted shall have been called for redemption on a date in such period) must be accompanied by a payment, in funds acceptable to the Company, of an amount of interest otherwise payable on such Interest Payment Date on the amount of principal being converted. Interest on any Security that is payable on any Interest Payment Date shall be paid to the Person in whose name that Security is registered at the close of business on the Regular Record Date. SECTION 11.7. ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. In case the Company shall (i) pay a dividend, or make a distribution, in shares of its Common Stock, on its Common Stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, or (iii) combine its outstanding Common Stock into a smaller number of shares, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which such Holder would have owned or have been entitled to receive after the occurrence of any of the events described above had such Security been converted immediately prior to the occurrence of such event. If any dividend or distribution of the type described in clause (i) above is not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then be in effect if such dividend as distribution had not been declared. An adjustment made pursuant to this Section 11.7 shall become effective immediately after the record date in the case of a dividend and still shall become effective immediately after the effective date in the case of a subdivision or combination. SECTION 11.8. ADJUSTMENT FOR RIGHTS ISSUE. In case the Company shall issue rights or warrants to all holders of its Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Stock at a price per share less than the Current Market Price per share of Common Stock at the record date for the determination of stockholders entitled to receive such rights or warrants, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the -63- 70 numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered to holders of Common Stock for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares of Common Stock which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately after the opening of business on the day following the record date for the determination of the stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which 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. If such rights or warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such record date for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price of such Common Stock, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than Cash, to be determined by the Board of Directors. SECTION 11.9. ADJUSTMENT FOR OTHER DISTRIBUTIONS. (a) In case the Company shall distribute to all holders of its Common Stock (excluding any distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary) any shares of any class of capital stock of the Company (other than Common Stock), of evidences of indebtedness of the Company or of assets (other than cash) or rights or warrants to subscribe for or purchase any of its securities (excluding those referred to in Section 11.8 hereof) (any of the foregoing hereinafter in this Section 11.9(a) called the "Distributed Securities"), then, the Conversion Rate shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below, and the denominator shall be the Current Market Price per share of the Common Stock on such record date less the fair market value on such record date (as determined by the Board of Directors of the Company, whose determination shall be conclusive, and described in a certificate filed with the Trustee) of the Distributed Securities so distributed applicable to one share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. Notwithstanding the foregoing, in the event that the then fair market value (as so determined) of the portion of the Distributed Securities so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion the amount of Distributed Securities such Holder would have received had such Holder converted each Security immediately prior to such -64- 71 record date. In the event that such distribution is not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then be in effect if such distribution had not been declared. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 11.9(a) by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock. Notwithstanding the foregoing provisions of this Section 11.9(a), no adjustment shall be made thereunder for any distribution of Distributed Securities if the Company makes proper provision so that each Holder of a Security who converts such Security (or any portion thereof) after the record date for such distribution shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion, the amount and kind of Distributed Securities that such Holder would have been entitled to receive if such Holder had, immediately prior to such record date, converted such Security for Common Stock; provided that, with respect to any Distributed Securities that are convertible, exchangeable or exercisable, the foregoing provision shall only apply to the extent (and so long as) the Distributed Securities receivable upon conversion of such Security would be convertible, exchangeable or exercisable, as applicable, without any loss of rights or privileges for a period of at least 60 days following conversion of such Security. (b) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock Cash (excluding (x) any quarterly Cash dividend on the Common Stock to the extent the aggregate Cash dividend per share of Common Stock in any fiscal quarter does not exceed the greater of (A) the amount per share of Common Stock of the next preceding quarterly Cash dividend on the Common Stock to the extent such preceding quarterly dividend did not require any adjustment of the Conversion Rate pursuant to this Section 11.9(b) (as adjusted to reflect subdivisions or combinations of the Common Stock), and (B) 3.75% of the average of the last reported sales price of the Common Stock (determined as provided in the definition of Current Market Price) during the ten Trading Days immediately prior to the date of declaration of such dividend and (y) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary), then, in such case, unless the Company elects to reserve such Cash for distribution to the holders of the Securities upon the conversion of the Securities so that any such holder converting Securities will receive upon such conversion in addition to the shares of Common Stock to which such holder is entitled, the amount of Cash which such holder would have received if such holder had, immediately prior to the record date for such distribution of Cash, converted its Securities for Common Stock, the Conversion Rate shall be increased so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the record date by a fraction of which the numerator shall be such Current Market Price of the Common Stock and the denominator shall be the Current Market Price of the Common Stock on the record date less the amount of Cash so distributed (and not excluded as provided above) applicable to one share of Common Stock, such increase to be effective immediately prior to the opening of business on the day following the record date; provided, however, that in the event that the portion of the Cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each -65- 72 Holder shall have the right to receive upon conversion the amount of Cash such Holder would have received had such Holder converted each Security on the record date. If such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. If any adjustment is required to be made as set forth in this Section 11.9(b) as a result of a distribution that is a quarterly dividend, such adjustment shall be based upon the amount by which such distribution exceeds the amount of the quarterly Cash dividend permitted to be excluded pursuant hereto. If an adjustment is required to be made as set forth in this Section 11.9(b) above as a result of a distribution that is not a quarterly dividend, such adjustment shall be based upon the full amount of the distribution. (c) In case a tender 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 shall involve the payment by the Company or such Subsidiary of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive, and described in a resolution of such Board of Directors at the last time (the "Expiration Time") tenders or exchanges maybe made pursuant to such tender or exchange offer (as it shall have been amended)) that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Rate shall be increased so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to holders of Common Stock based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares of Common Stock validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be effect if such tender or exchange offer had not been made. (d) In case of a tender or exchange offer by a Person other than the Company or any Subsidiary for an amount which increases the offeror's ownership of Common Stock to more than 25% of the Common Stock outstanding and shall involve the payment by such Person of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive, and described in a resolution of the Board of Directors at the last time (the "Tender Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended)) at the Tender Expiration -66- 73 Time that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Tender Expiration Time, and in which, as of the Tender Expiration Time the Board of Directors is not recommending rejection of the offer, the Conversion Rate shall be increased so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the Tender Expiration Time by a fraction of which the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to holders of Common Stock based on the acceptance (up to an maximum specified in the terms of the tender or exchanged offer) of all shares of Common Stock validly tendered or exchanged and not withdrawn as of the Tender Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Tender Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Tender Purchased Shares) on the Tender Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Tender Expiration Time and the denominator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Tender Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Tender Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Tender Expiration Time. in the event that such Person is obligated to purchase shares pursuant to any such tender or exchange offer, but such Person is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such tender or exchange offer had not been made. Notwithstanding the foregoing, the adjustment described in this Section 11.9(d) shall not be made if, as of the Tender Expiration Time, the offering documents with respect to such offer disclose a plan or intention to cause the Company to engage in any transaction described in Article 5. SECTION 11.10. WHEN ADJUSTMENT MAY BE DEFERRED. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are made shall be carried forward and taken into account any subsequent adjustment. All calculations under this Article 11 shall be made to the nearest cent or to the nearest 1/10,000th of a share, as the case may be. SECTION 11.11. WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value of the Common Stock. To the extent the Securities become convertible into Cash, assets, property or securities (other than capital stock of the Company), no adjustment need be made thereafter as to the cash, assets, property or such securities. Interest will not accrue on the Cash. -67- 74 SECTION 11.12. NOTICE OF ADJUSTMENT. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice. The certificate shall, absent manifest error, be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof. SECTION 11.13. VOLUNTARY INCREASE. The Company may make such increases in the Conversion Rate, in addition to those required by Sections 11.7, 11.8 and 11.9, as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. To the extent permitted by applicable law, the Company may from time to time increase the Conversion Rate by any amount for any period of time if the period is at least 20 days, the increase is irrevocable during the period and the Board of Directors shall have made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive. Whenever the Conversion Rate is so increased, the Company shall mail to Holders and file with the Trustee and the Conversion Agent a notice of such increase. The Company shall mail such notice at least seven days before the date the increased Conversion Rate takes effect. The notice shall state the increased Conversion Rate and the period it will be in effect. SECTION 11.14. NOTICE OF CERTAIN TRANSACTIONS. If: (1) the Company makes any distribution or dividend that would require an adjustment in the Conversion Rate pursuant to Section 11.7, 11.8 or 11.9; or (2) the Company takes any action that would require a supplemental indenture pursuant to Section 11.15; or (3) there is a liquidation, dissolution or winding-up of the Company; then the Company shall mail to Holders and file with the Trustee and the Conversion Agent a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. The Company shall file and mail the notice at least 15 days before such date. Failure to file or mail the notice or any defect in it shall not affect the validity of the transaction. SECTION 11.15. EFFECT RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If any of the following events occur, namely (i) any reclassification or change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or -68- 75 from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation, merger or combination of the Company with another corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including Cash) with respect to or in exchange for such Common Stock, or (iii) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including Cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture, providing that each Security shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including Cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance by a holder of a number of shares of Common Stock issuable upon conversion of such Securities immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder of Securities, at such Holder's address appearing on the Security register provided for in Section 2.3 of this Indenture. The above provisions of this Section shall similarly apply to successive reclassifications, consolidations, mergers, combinations, and sales. If this Section applies, neither Section 11.7, 11.8 nor 11.9 applies. SECTION 11.16. COMPANY DETERMINATION FINAL. Any determination that the Company or the Board of Directors must make pursuant to Section 11.3, 11.7, 11.8, 11.9, 11.10, 11.11, 11.15 or 11.18 is conclusive. SECTION 11.17. TRUSTEE'S ADJUSTMENT DISCLAIMER. The Trustee has no duty to determine when an adjustment under this Article 11 should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 11.15 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities. The Trustee shall not be responsible for the Company's failure to comply with this Article 11, and shall not be deemed to have knowledge of any adjustment unless and until it shall have received a notice of adjustment pursuant to Section 11.12. Each Conversion Agent shall have the same protection under this Section 11.7 as the Trustee. -69- 76 SECTION 11.18. SIMULTANEOUS ADJUSTMENTS. In the event that this Article 11 requires adjustments to the Conversion Rate under more than one of Sections 11.7, 11.8, 11.9(a) or 11.9(b), and the record dates for the distributions giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying, first, the provisions of Section 11.9(a), second, the provisions of Section 11.9(b), third the provisions of Section 11.7 and, fourth, the provisions of Section 11.8. SECTION 11.19. SUCCESSIVE ADJUSTMENTS. After an adjustment to the Conversion Rate under this Article 11, any subsequent event requiring an adjustment under this Article 11 shall cause an adjustment to the Conversion Rate as so adjusted. SECTION 11.20. RIGHTS ISSUED IN RESPECT OF COMMON STOCK ISSUED UPON CONVERSION. Notwithstanding any other provision hereof, in the event that the Company implements a stockholders' rights plan, such rights plan shall provide that upon conversion of the Securities the Holders will receive, in addition to the Common Stock issuable upon such conversion, such rights whether or not such rights have separated from the Common Stock at the time of such conversion. In the event that provision is made that a Holder of Securities will receive such rights upon conversion, whether or not the rights have separated from the Common Stock at the time of such conversion, no adjustment shall be made to the Conversion Rate pursuant to this Article 11 as a result of such rights distribution. Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"): (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable, and (iii) are also issued in respect of future issuances of Common Stock, shall not be deemed distributed for purposes of Section 11.9(a) until the occurrence of the earliest Trigger Event. In addition, in the event of any distribution of rights or warrants, or any Trigger Event with respect thereto, that shall have resulted in an adjustment to the Conversion Rate under Section 11.9(a), (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion 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 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 -70- 77 redemption or repurchase, and (2) in the case of any such rights or warrants all of which shall have expired without exercise by any holder thereof, the Conversion Rate shall be readjusted as if such issuance had not occurred. SECTION 11.21. GENERAL CONSIDERATIONS. Whenever successive adjustments to the Conversion Rate are called for pursuant to this Article 11, such adjustments shall be made to the Current Market Price or the conversion rate adjustment provisions of 11.7, 11.8, 11.9 and 11.18 as may be necessary or appropriate to effectuate the intent of this Article 11 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors. ARTICLE 12 MISCELLANEOUS SECTION 12.1. TRUST INDENTURE ACT. This Indenture is hereby made subject to, and shall be governed by, the provisions of the TIA required to be part of and to govern indentures qualified under the TIA; provided, however that this Section 12.1 shall not require this Indenture or the Trustee to be qualified under the TIA prior to the time such qualification is in fact required under the terms of the TIA, nor shall it constitute any admission or acknowledgment by any party that any such qualification is required prior to the time such qualification is in fact required under the terms of the TIA. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in an indenture qualified under the TIA, such required provision shall control. SECTION 12.2. NOTICES. Any request, demand, authorization, notice, waiver, consent or communication shall be in writing and delivered in Person or mailed by first class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by overnight courier) to the following facsimile numbers: if to the Company: Atmel Corporation 2325 Orchard Parkway San Jose, California 95131 Attn: General Counsel Telephone Number: (408) 441-0311 Facsimile Number: (408) 436-4377 -71- 78 if to the Trustee: State Street Bank and Trust Company of California, N.A. 633 West 5th Street, 12th Floor Los Angeles, California 90071 (Attention: Atmel Corporation, Zero Coupon Convertible Subordinated Debentures due 2021) Telephone Number: (213) 362-7338 Facsimile Number: (213) 362-7357 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 given to a Holder shall be mailed to the Holder, by first class mail, postage prepaid, at the Holder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee. If the Company mails a notice or communication to the Holders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar. SECTION 12.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of TIA Section 312(c). SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall finish to the Trustee: (1) an Officers' Certificate 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 (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. -72- 79 SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each Officers' Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that each individual making such Officers' Certificate or Opinion of Counsel has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers' Certificate or Opinion of Counsel are based; (3) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement that, in the opinion of such individual, such covenant or condition has been complied with. SECTION 12.6. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.7. RULES BY TRUSTEE, PAYING AGENT, CONVERSION AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar, Conversion Agent and the Paying Agent may make reasonable rules for their functions. SECTION 12.8. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. -73- 80 SECTION 12.10. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.11. 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. -74- 81 IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed this Indenture on behalf of the respective parties hereto as of date first written above. ATMEL CORPORATION By: ____________________________________ Title: 82 STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A. By: ____________________________________ Authorized Signatory 83 EXHIBIT A [FORM OF FACE OF SECURITY] FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, THIS SECURITY BEARS ORIGINAL ISSUE DISCOUNT. INFORMATION INCLUDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY WILL BE MADE AVAILABLE TO HOLDERS UPON REQUEST TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT (408) 441-0311. [FORM OF LEGEND FOR GLOBAL SECURITY] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.(1) [FORM OF RESTRICTIVE LEGEND] THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR - ------------------ (1) The first and second paragraphs should be included only if the Security is in global form. A-1 84 SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (K)(2) OF RULE 902 UNDER REGULATION S UNDER THE SECURITIES ACT) OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),(3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITIES WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF A U.S. PERSON EXCEPT (A) TO ATMEL CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a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o. R- Issue Date: May 23, 2001 Original Issue Discount: $608.94 Issue Price: $391.06 (for each $1,000 Principal Amount) (for each $1,000 Principal Amount) CUSIP: 049513AD6 Atmel Corporation, a Delaware corporation (the "Company") for value received, hereby promises to pay to Cede & Co., or registered assigns, the Principal Amount of _______________ Dollars ($________) on May 23, 2021. The principal of this Security shall not bear interest except in the case of default in payment of principal upon acceleration, redemption or maturity or as specified on the other side of this Security. Original Issue Discount will accrue as specified on the other side of this Security. This Security is convertible as specified on the other side of this Security. Payment of the principal of and interest, if any, on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company, payment of interest, if any, may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. [Payments in respect of this Security shall be made by transfer of immediately available funds to the account specified by the Holder.](2) Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. - ------------------ (2) This sentence should be included only if the Security is in global form s A-4 87 IN WITNESS WHEREOF, Atmel Corporation has caused this instrument to be duly executed. Dated: ATMEL CORPORATION By: ____________________________________ Name: __________________________________ Title: _________________________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION: STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A. as Trustee, certifies that this is one of the Securities referred to in the within-mentioned Indenture. By: ____________________________________ Authorized Signatory Dated: A-5 88 [FORM OF REVERSE SIDE OF SECURITY] ATMEL CORPORATION ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE 2021 1. INTEREST This Security shall not bear interest, except as specified in this paragraph or as described in paragraph 9(b) hereof If the Principal Amount hereof or any portion of such Principal Amount is not paid when due (whether upon acceleration pursuant to Section 6.2 of the Indenture, upon the date set for payment of the Redemption Price pursuant to paragraph 5 hereof, upon the date set for payment of a Purchase Price or Fundamental Change Redemption Price pursuant to paragraph 6 hereof or upon the Stated Maturity of this Security), then in each such case the overdue amount shall bear interest at the rate of 4.75% per annum compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest shall accrue from the date such overdue amount was due up to and including the date that payment of such amount, including interest thereon, has been made or duly provided for. All such interest shall be payable as set forth in the Indenture. The accrual of such interest on overdue amounts shall be in lieu of, and not in addition to, the continued accrual of Original Issue Discount. Original Issue Discount, or if the Security is converted to a semiannual interest Security following the occurrence of a Tax Event (as defined in the Indenture) interest on the Security (except as provided in the second sentence of this paragraph) will cease to accrue after the declaration of acceleration of the Securities. Original Issue Discount (the difference between the Issue Price and the Principal Amount of the Security) in the period during which a Security remains outstanding, shall accrue at the rate of 4.75% per annum, on a semiannual bond equivalent basis using a 360-day year composed of twelve 30-day months, commencing on the Issue Date of this Security. 2. METHOD OF PAYMENT Subject to the terms and conditions of the Indenture, the Company will make payments in respect of the Securities to the Persons who are registered Holders of Securities at the close of business on the Business Day preceding the Redemption Date or Stated Maturity, as the case may be, or at the close of business on a Purchase Date or Fundamental Change Redemption Date, as the case may be. Holders must surrender Securities to the Paying Agent to collect such payments in respect of the Securities. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. 3. PAYING AGENT, CONVERSION AGENT AND REGISTRAR Initially, State Street Bank and Trust Company of California, N.A., a national banking association organized under the laws of the United States of America (the "Trustee"), will act as A-6 89 Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any Paying Agent, Conversion Agent, Registrar or co-registrar without notice, other than notice to the Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar. 4. INDENTURE The Company issued the Securities under an Indenture (the "Indenture"), dated as of May 23, 2001, between the Company and the Trustee. Capitalized terms used but not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture for a statement of those terms. The Securities are general unsecured obligations of the Company limited to $511,500,000 aggregate Principal Amount (subject to exercise of the Over-Allotment Option and to Sections 2.2 and 2.7 of the Indenture). The Indenture does not limit other indebtedness of the Company, secured or unsecured, including Senior Indebtedness of the Company. 5. REDEMPTION AT THE OPTION OF THE COMPANY No sinking fund is provided for the Securities. The Securities are redeemable as a whole, or from time to time in part, at any time at the option of the Company at the redemption prices (in each case, the "Redemption Price") set forth below, provided that the Securities are not redeemable prior to May 23, 2006. The table below shows Redemption Prices of a Security per $1,000 Principal Amount on the dates shown below and at Stated Maturity, which prices reflect accrued Original Issue Discount calculated through each such date. The Redemption Price of a Security redeemed between such dates would include an additional amount reflecting the additional Original Issue Discount accrued from the next preceding date in the table through the actual Redemption Date.

(2) ACCRUED (3) (1) ORIGINAL ISSUE REDEMPTION SECURITY DISCOUNT PRICE REDEMPTION DATE ISSUE PRICE AT 4.75% (1) + (2) ------------------------------ ----------- -------------- ---------- May 23, 2006 $ 391.06 $ 103.46 $ 494.52 May 23, 2007 $ 391.06 $ 127.23 $ 518.29 May 23, 2008 $ 391.06 $ 152.14 $ 543.20 May 23, 2009 $ 391.06 $ 178.25 $ 569.31 May 23, 2010 $ 391.06 $ 205.61 $ 596.67 May 23, 2011 $ 391.06 $ 234.29 $ 625.35 May 23, 2012 $ 391.06 $ 264.35 $ 655.41 May 23, 2013 $ 391.06 $ 295.85 $ 686.91 May 23, 2014 $ 391.06 $ 328.87 $ 719.93

A-7 90

(2) ACCRUED (3) (1) ORIGINAL ISSUE REDEMPTION SECURITY DISCOUNT PRICE REDEMPTION DATE ISSUE PRICE AT 4.75% (1) + (2) ------------------------------ ----------- -------------- ---------- May 23, 2015 $ 391.06 $ 363.47 $ 754.53 May 23, 2016 $ 391.06 $ 399.73 $ 790.79 May 23, 2017 $ 391.06 $ 437.74 $ 828.80 May 23, 2018 $ 391.06 $ 477.58 $ 868.64 May 23, 2019 $ 391.06 $ 519.33 $ 910.39 May 23, 2020 $ 391.06 $ 563.09 $ 954.15 May 23, 2021 $ 391.06 $ 608.94 $ 1,000.00

If converted to an interest-bearing debenture following a Tax Event as described in paragraph 9(b) hereof, this Security will be redeemable at the Restated Principal Amount plus accrued and unpaid interest from the date of this conversion through the Redemption Date. If the Company redeems less than all of the outstanding Securities, the Trustee will select the Securities to be redeemed (i) by lot; (ii) pro rata; or (iii) by another method the Trustee considers fair and appropriate. If the Trustee selects a portion of a Holder's Securities for partial redemption and the Holder converts a portion of the same Securities, the converted portion will be deemed to be from the portion selected for redemption. 6. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; REDEMPTION AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE (a) Subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the Holder, the Securities held by such Holder on the following Purchase Dates and at the following Purchase Prices per $1,000 Principal Amount, upon delivery of a Purchase Notice containing the information set forth in the Indenture, from the opening of business on the date that is 20 Business Days prior to such Purchase Date until the close of business on such Purchase Date and upon delivery of the Securities to the Paying Agent by the Holder as set forth in the Indenture. Such Purchase Prices may be paid, at the option of the Company, in cash or by the issuance and delivery of shares of Common Stock of the Company, or in any combination thereof.

PURCHASE DATE PURCHASE PRICE ------------- -------------- May 23, 2006 $ 494.52 May 23, 2011 $ 625.35 May 23, 2016 $ 790.79

Securities in denominations larger than $1,000 of Principal Amount may be purchased in part, but only in integral multiples of $1,000 of Principal Amount. A-8 91 (b) At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to redeem the Securities held by such Holder 30 days after the date of the Company's notice of a Fundamental Change occurring on or prior to May 23, 2021 for a Fundamental Change Redemption Price equal to the Issue Price plus accrued Original Issue Discount through the Fundamental Change Redemption Date (or, if the Securities are converted to interest-bearing debentures following a Tax Event as described in paragraph 9(b) hereof, a Fundamental Change Redemption Price equal to the Restated Principal Amount plus accrued interest through the Fundamental Change Redemption Date) which Fundamental Change Redemption Price shall be paid in cash. Securities in denominations larger than $1,000 of Principal Amount may be redeemed in part in connection with a Fundamental Change, but only in integral multiples of $1,000 of Principal Amount. (c) Holders have the right to withdraw any Purchase Notice or Fundamental Change Redemption Notice, as the case may be, by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. (d) If Cash (and/or securities if permitted under the Indenture with respect to the payment of the Purchase Price) sufficient to pay a Purchase Price or Fundamental Change Redemption Price, as the case may be, of all Securities or portions thereof to be purchased as of the Purchase Date or the Fundamental Change Redemption Date, as the case may be, is deposited with the Paying Agent on the Business Day following the Purchase Date or the Fundamental Change Redemption Date, as the case may be, Original Issue Discount ceases to accrue on such Securities (or portions thereof) on and after such date, and the Holder thereof shall have no other rights as such (other than the right to receive the Purchase Price or Fundamental Change Redemption Price, as the case maybe, upon surrender of such Security). 7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at its registered address. Securities in denominations larger than $1,000 Principal Amount maybe redeemed in part, but only in whole multiples of $1,000. On and after the Redemption Date, subject to the deposit with the paying Agent of funds sufficient to pay the Redemption Price, Original Issue Discount (or interest, if the Security is converted to an interest-bearing debenture as described in paragraph 9(b)) ceases to accrue on Securities or portions thereof called for redemption. 8. SUBORDINATION The Securities are subordinated to all existing and future Senior Indebtedness of the Company. To the extent provided in the Indenture, Senior Indebtedness of the Company must be paid before the Securities may be paid. The Indenture does not limit the present or future amount of Senior Indebtedness that the Company may have. The Company agrees, and each Holder by accepting a Security agrees, to the subordination and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. A-9 92 9. CONVERSION AT THE OPTION OF THE HOLDER; CONVERSION AT THE OPTION OF THE COMPANY FOLLOWING A TAX EVENT (a) Subject to the next two succeeding sentences, a Holder of a Security may convert this Security for Common Stock of the Company at any time prior to maturity. If this Security is called for redemption, the Holder may convert it at any time before the close of the last Trading Day prior to the Redemption Date. A Security in respect of which a Holder has delivered a notice of exercise of the option to require the Company to purchase such Security or to redeem such Security in the event of a Fundamental Change may be converted only if the notice of exercise is withdrawn in accordance with the terms of the Indenture. The initial Conversion Rate is 22.983 shares of Common Stock per $1,000 Principal Amount, subject to adjustment in certain events described in the Indenture. The Company will deliver Cash or a check in lieu of any fractional share of Common Stock. To convert this Security a Holder must (1) complete and manually sign the conversion notice on the back of this Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender this Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if required. A Holder may convert a portion of this Security if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment will be made for dividends on the Common Stock except as provided in the Indenture. On conversion of this Security, that portion of accrued Original Issue Discount attributable to the period from the Issue Date through the Conversion Date with respect to the converted portion of this Security shall not be canceled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through the delivery of the Common Stock (together with any cash payment in lieu of fractional shares) in exchange for the portion of this Security being converted pursuant to the terms hereof. (b) From and after the date (the "Option Exercise Date") that the Company exercises such option, at the option of the Company, interest in lieu of future Original Issue Discount shall accrue at the rate of 4.75% per annum on a Principal Amount per Security (the "Restated Principal Amount") equal to the Issue Price plus Original Issue Discount accrued to the Option Exercise Date and shall be payable semiannually on May 23 and November 23 of each year (each an "Interest Payment Date") to holders of record at the close of business on the May 8 and the November 8, respectively (each a "Regular Record Date"), immediately preceding such Interest Payment Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Option Exercise Date. Interest on any Security that is payable on any Interest Payment Date shall be paid to the person in whose name that Security is registered at the close of business on the Regular Record Date. A-10 93 10. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION Any Securities called for redemption, unless surrendered for conversion before the close of business on the last Trading Day prior to the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders, to convert them for Common Stock and to make payment for such Securities to the Trustee in trust for such Holders. 11. REGISTRATION RIGHTS The Holder of this Security and the Common Stock issuable upon conversion thereof is entitled to the benefits of a Registration Rights Agreement (subject to the provisions thereof), dated as of May 23, 2001, among the Company and the Initial Purchasers. 12. DENOMINATIONS; TRANSFER; EXCHANGE The Securities are in registered form, without coupons, in denominations of $1,000 of Principal Amount and integral multiples of $1,000. A Holder may transfer or convert Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to famish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities in respect of which a Purchase Notice or Fundamental Change Redemption Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before a selection of Securities to be redeemed. 13. PERSONS DEEMED OWNERS The registered Holder of this Security may be treated as the owner of this Security for all purposes. 14. UNCLAIMED MONEY OR SECURITIES The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such return, shall at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person. A-11 94 15. AMENDMENT; WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate Principal Amount of the Securities at the time outstanding and (ii) certain Defaults and Events of Defaults may be waived with the written consent of the Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, defect or inconsistency, or to comply with Article 5 or Section 11.15 of the Indenture, to provide for uncertificated Securities in addition to or in place of certificated Securities or to make any change that does not adversely affect the rights of any Holder or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA. 16. DEFAULTS AND REMEDIES Under the Indenture, Events of Default include (i) default in payment of the Principal Amount, Issue Price, accrued Original Issue Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price or Fundamental Change Redemption Price, as the case may be, in respect of the Securities when the same becomes due and payable, provided that in the case of any failure to pay Additional Interest, such failure to pay continues for a period of 30 days; (ii) failure by the Company to comply with other agreements in the Indenture or the Securities, subject to notice and lapse of time; and (iii) certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate Principal Amount of the Securities at the time outstanding, may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being declared due and payable immediately upon the occurrence of such Events of Default. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default in payment of amounts specified in clause (i) above) if it determines that withholding notice is in their interests. 17. DEALINGS WITH THE COMPANY The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities 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. A-12 95 18. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. AUTHENTICATION This Security shall not be valid until an authorized officer of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Security. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TENANT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. GOVERNING LAW THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK The Company will furnish to any Holder upon written request and without charge a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: Atmel Corporation 2325 Orchard Parkway San Jose, California 95131 Attn: Investor Relations A-13 96 [FORM OF CONVERSION NOTICE] CONVERSION NOTICE To: Atmel Corporation The undersigned registered holder of this Security hereby irrevocably exercises the option to convert this Security, or portion hereof (which is $1,000 principal amount or an integral multiple thereof) below designated, for shares of Common Stock of Atmel Corporation in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Security not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Date: ______________________________________ Name: __________________________ Signature: _____________________ Fill in name and address for registration of shares if to be delivered to, and Securities if to be issued to and in the name of an entity other than the registered holder: Name: ______________________________________ Street Address: ____________________________ City: ______________________________________ Social Security or Other Taxpayer Identification Number: _____________________ Principal amount to be converted (if less than all): $_____,000 -Conversion Notice- 97 [FORM OF OPTION TO ELECT REDEMPTION UPON A FUNDAMENTAL CHANGE] To: Atmel Corporation The undersigned registered holder of this Security hereby acknowledges receipt of a notice from Atmel Corporation (the "Company") as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to redeem this Security, or the portion hereof (which is $1,000 Principal Amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security. Dated: _____________________________ Name: ______________________________ Signature(s): ______________________ Signature(s) must be guaranteed by an eligible Guarantor Institution (a bank, a stock broker, a savings and loan association or a credit union) with membership in an approved signature guarantee program pursuant to Securities and Exchange Commission Rule 17Ad-15) if shares of Common Stock are to be issued, or Securities to be delivered, other than to or in the name of the registered holder. By: _________________________________ Signature Guarantor Principal amount to be redeemed (if less than all): $________________ Social Security or Other Taxpayer Identification Number: ______________ - Redemption Election - 98 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 Security, and hereby irrevocably constitutes and appoints _________________ as attorney-in-fact to transfer such Security on the books of the Company, with full power of substitution in the premises. In connection with any transfer of the Security within the period prior to the expiration of the holding period applicable to sales thereof under Rule 144(k) (other than any transfer pursuant to a registration statement that has been declared effective under the Securities Act) under the Securities Act of 1933, as amended, (or any successor provision), the undersigned confirms that such Security is being transferred: [ ] To Atmel Corporation or a subsidiary thereof; or [ ] Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or [ ] To an Institutional Accredited Investor pursuant to and in compliance with the Securities Act of 1933, as amended; or [ ] Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended; and unless the box below is checked, the undersigned confirms that to its knowledge such Security is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"). [ ] The transferee is an Affiliate of the Company. Dated: _____________________________ Name: ______________________________ Signature(s): ______________________ Signature(s) must be guaranteed by an eligible Guarantor Institution (a bank, a stock broker, a savings and loan association or a credit union) with membership in an approved signature guarantee program pursuant to Securities and Exchange Commission Rule 17Ad-15) if shares of Common Stock are to be issued, or Securities to be delivered, other than to or in the name of the registered holder. By: _________________________________ Signature Guarantor NOTICE: The above signatures of the holder(s) hereof must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever. - Assignment - 99 [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITY TO REFLECT CHANGES IN PRINCIPAL AMOUNT] Schedule A Changes to Principal Amount of Global Security

===================================================================================================== PRINCIPAL AMOUNT OF SECURITIES BY WHICH THIS GLOBAL SECURITY IS TO BE REDUCED OR INCREASED, AND REMAINING PRINCIPAL AMOUNT OF NOTATION DATE REASON FOR REDUCTION OR INCREASE THIS GLOBAL SECURITY MADE BY - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- =====================================================================================================

- Endorsement Schedule - 100 EXHIBIT B [FORM OF INSTITUTIONAL ACCREDITED INVESTOR LETTER] Atmel Corporation 2325 Orchard Parkway San Jose, California 95131 Ladies and Gentlemen: We are delivering this letter in connection with an offering of Zero Coupon Convertible Subordinated Debentures due 2021 (the "Securities") which are convertible into shares of Common Stock, $0.01 par value (the "Common Stock"), of Atmel Corporation (the "Company"). We hereby confirm that: 1. we are an "accredited investor" within the meaning of Rule 501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the "Securities Act") or an entity in which all of the equity owners are accredited investors within the meaning of Rule 501(a)(1), (2) or (3) under the Securities Act (an "Institutional Accredited Investor"); 2. (A) any purchase of Debentures by us will be for our own account or for the account of one or more other Institutional Accredited Investors or as fiduciary for the account of one or more trusts, each of which is an "accredited investor" within the meaning of Rule 501(a)(7) under the Securities Act and for each of which we exercise sole investment discretion or (B) we are a "bank," within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and loan association" or other institution described in Section 3(1)(5)(a) of the Securities Act that is acquiring Securities as fiduciary for the account of one or more institutions for which we exercise sole investment discretion; 3. in the event that we purchase any Securities, we will acquire Securities having a minimum principal amount of not less than $250,000 for our own account or for any separate account for which we are acting; 4. we have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of purchasing the Securities; and 5. we are not acquiring Securities with a view to distribution thereof or with any present intention of offering or selling Securities or the Common Stock issuable upon conversion thereof, except as permitted below; provided that the disposition of our property and property of any accounts for which we are acting as fiduciary shall remain at all times within our control. We understand that the Securities are being offered in a transaction not involving any public offering within the United States within the meaning of the Securities Act and that the Securities and B-1 101 the shares of Common Stock issuable upon conversion thereof have not been registered under the Securities Act, and we agree, on our own behalf and on behalf of each account for which we acquire any Securities, that if in the future we decide to resell or otherwise transfer such Securities or the Common Stock issuable upon conversion thereof, such Securities or Common Stock may be resold or otherwise transferred only (i) to the Company or any subsidiary thereof, or (ii) to a person who is a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A, or (iii) to an Institutional Accredited Investor that, prior to such transfer, furnishes to the Trustee or transfer agent for such securities a signed letter containing certain representations and agreements relating to the restrictions on transfer of such securities (the form of which letter can be obtained from such Trustee or transfer agent), or (iv) pursuant to the exemption from registration provided by Rule 144 under the Securities Art (if applicable), or (v) pursuant to a registration statement which has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer), and in each case, in accordance with any applicable securities laws of any State of the United States or any other applicable jurisdiction and in accordance with the legends set forth on the Securities or the Common Stock issuable upon conversion thereof, as the case may be. We further agree to provide any person purchasing any of the Securities or the Common Stock issuable upon conversion thereof other than pursuant to clause (v)above from us a notice advising such purchaser that resales of such securities are restricted as stated herein. We understand that the Trustee or transfer agent for the Securities and the Common Stock will not be required to accept for registration of transfer any Securities or any shares of Common Stock issued upon conversion of the Securities except upon presentation of evidence satisfactory to the Company that the foregoing restrictions on transfer have been complied with. We further understand that any Securities and any certificates representing Common Stock will be in the form of definitive physical certificates and that such certificates will bear a legend reflecting the substance of this paragraph other than certificates representing Common Stock transferred pursuant to clause (v) above. We acknowledge that the Company, others and you will rely upon our confirmations, acknowledgments and agreements set forth herein, and we agree to notify you promptly in writing if any of our representations or warranties herein ceases to be accurate and complete. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. ________________________________________ (Name of Purchaser) By:_____________________________________ Name:___________________________________ Title:__________________________________ Address:________________________________ B-2 EX-10.10 5 f74490ex10-10.txt EXHIBIT 10.10 1 EXHIBIT 10.10 REGISTRATION RIGHTS AGREEMENT BY AND AMONG ATMEL CORPORATION AS ISSUER, AND MORGAN STANLEY & CO. INCORPORATED, CREDIT LYONNAIS SECURITIES (USA) INC. AND NEEDHAM & COMPANY, INCORPORATED AS INITIAL PURCHASERS DATED MAY 23, 2001 2 THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of May 23, 2001 by and among Atmel Corporation, a Delaware corporation (the "Company"), and Morgan Stanley & Co. Incorporated, Credit Lyonnais Securities (USA) Inc. and Needham & Company, Inc. pursuant to the Purchase Agreement, dated May 17, 2001 (the "Purchase Agreement"), among the Company and the Initial Purchasers. In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement. The Company agrees with the Initial Purchasers, (i) for their benefit as Initial Purchasers and (ii) for the benefit of the beneficial owners (including the Initial Purchasers) from time to time of the Debentures (as defined herein) and the beneficial owners from time to time of the Underlying Common Stock (as defined herein) issued upon conversion of the Debentures (each of the foregoing a "Holder" and together the "Holders"), as follows: SECTION 1. DEFINITIONS. Capitalized terms used herein without definition shall have their respective meanings set forth in the Placement Agreement. As used in this Agreement, the following terms shall have the following meanings: Additional Interest: See Section 2(e) hereof. Affiliate: With respect to any specified person, an "affiliate," as defined in Rule 144, of such person. Amendment Effectiveness Deadline Date: See Section 2(d) hereof. Applicable Conversion Price: The Applicable Conversion Price as of any date of determination means the Conversion Price in effect as of such date of determination or, if no Debentures are then outstanding, the Conversion Price that would be in effect were Debentures then outstanding. Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. Common Stock: The shares of common stock, par value $0.001 per share, of the Company and any other shares of common stock as may constitute "Common Stock" for purposes of the Indenture, including the Underlying Common Stock. Conversion Price: Conversion Price shall have the meaning assigned such term in the Indenture. Damages Accrual Period: See Section 2(e) hereof. Damages Payment Date: Each May 23 and November 23. Debentures: The Zero Coupon Convertible Subordinated Debentures due 2021 of the Company to be purchased pursuant to the Purchase Agreement. 2 3 Deferral Notice: See Section 3(i) hereof. Deferral Period: See Section 3(i) hereof. Effectiveness Deadline Date: See Section 2(a) hereof. Effectiveness Period: The period of two years from the later of (a) the Issue Date and (b) the last date of original issuance of the Debentures, or such shorter period ending on the date that all Registrable Securities have ceased to be Registrable Securities. Event: See Section 2(e) hereof. Event Date: See Section 2(e) hereof. Event Termination Date: See Section 2(e) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. Filing Deadline Date: See Section 2(a) hereof. Holder: See the second paragraph of this Agreement. Indenture: The Indenture, dated as of the date hereof, between the Company and State Street Bank and Trust Company of California, N.A., as trustee, pursuant to which the Debentures are being issued. Initial Purchasers: Means Morgan Stanley & Co. Incorporated, Credit Lyonnais Securities (USA) Inc. and Needham & Company, Inc. Initial Shelf Registration Statement: See Section 2(a) hereof. Issue Date: May 23, 2001. Losses: See Section 6 hereof. Material Event: See Section 3(i) hereof. Notice and Questionnaire: A written notice delivered to the Company containing substantially the information called for by the Selling Securityholder Notice and Questionnaire attached as Annex A to the Offering Memorandum of the Company issued May 18, 2001 relating to the Debentures. Notice Holder: On any date, any Holder that has delivered an appropriately completed Notice and Questionnaire to the Company on or prior to such date. Purchase Agreement: See the preamble hereof. 3 4 Prospectus: The prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any amendment or prospectus supplement, including post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Prospectus. Record Holder: (i) With respect to any Damages Payment Date relating to any Debentures as to which any such Additional Interest has accrued, the holder of record of such Debenture on the record date fifteen (15) days prior to such Damages Payment Date and (ii) with respect to any Damages Payment Date relating to the Underlying Common Stock as to which any such Additional Interest has accrued, the registered holder of such Underlying Common Stock fifteen (15) days prior to such Damages Payment Date. Registrable Securities: The Debentures until such Debentures have been converted or exchanged into the Underlying Common Stock and, at all times subsequent to any such conversion or exchange the Underlying Common Stock and any securities into or for which such Underlying Common Stock have been converted or exchanged, and any security issued with respect thereto upon any stock dividend, split or similar event until, in the case of any such security, (A) the earliest of (i) its effective registration under the Securities Act and resale in accordance with the Registration Statement covering it, (ii) expiration of the holding period that would be applicable thereto under Rule 144(k) were it not held by an Affiliate of the Company or (iii) its sale to the public pursuant to Rule 144, and (B) as a result of the event or circumstance described in any of the foregoing clauses (i) through (iii), the legends with respect to transfer restrictions required under the Indenture are removed or removable in accordance with the terms of the Indenture or such legends, as the case may be. Registration Expenses: See Section 5 hereof. Registration Statement: Any registration statement of the Company that covers any of the Registrable Securities pursuant to the provisions of this Agreement including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such registration statement. Restated Principal Amount: As this term is defined in the Indenture. Restricted Securities: As this term is defined in Rule 144. Rule 144: Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Rule 144A: Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. SEC: The Securities and Exchange Commission. 4 5 Securities Act: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder. Shelf Registration Statement: See Section 2(a) hereof. Subsequent Shelf Registration Statement: See Section 2(b) hereof. Tax Event: As this term is defined in the Indenture. TIA: The Trust Indenture Act of 1939, as amended. Trustee: Norwest Bank Minnesota, N.A. (or any successor entity), the Trustee under the Indenture. Underlying Common Stock: The Common Stock into which the Debentures are convertible or issued upon any such conversion. SECTION 2. SHELF REGISTRATION. (a) The Company shall use its reasonable efforts to prepare and file or cause to be prepared and filed with the SEC, as soon as practicable but in any event by the date (the "Filing Deadline Date") ninety (90) days after the Issue Date, a Registration Statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf Registration Statement") registering the resale from time to time by Holders thereof of all of the Registrable Securities (the "Initial Shelf Registration Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or another appropriate form permitting registration of such Registrable Securities for resale by such Holders in accordance with the methods of distribution elected by the Holders and set forth in the Initial Shelf Registration Statement. The Company shall use its reasonable efforts to cause the Initial Shelf Registration Statement to be declared effective under the Securities Act as promptly as is practicable but in any event by the date (the "Effectiveness Deadline Date") that is one hundred eighty (180) days after the Issue Date, and to keep the Initial Shelf Registration Statement (or any Subsequent Shelf Registration Statement) continuously effective under the Securities Act until the expiration of the Effectiveness Period. At the time the Initial Shelf Registration Statement is declared effective, each Holder that became a Notice Holder on or prior to the date ten (10) Business Days prior to such time of effectiveness shall be named as a selling securityholder in the Initial Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of Registrable Securities in accordance with applicable law. None of the Company's security holders (other than the Holders of Registrable Securities) shall have the right to include any of the Company's securities in the Shelf Registration Statement. (b) If the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement ceases to be effective for any reason at any time during the Effectiveness Period (other than because all Registrable Securities registered thereunder shall have been resold pursuant thereto or shall have otherwise ceased to be Registrable Securities), the Company shall use its reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within thirty (30) days of such cessation of 5 6 effectiveness amend the Shelf Registration Statement in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional Shelf Registration Statement covering all of the securities that as of the date of such filing are Registrable Securities (a "Subsequent Shelf Registration Statement"). If a Subsequent Shelf Registration Statement is filed, the Company shall use reasonable efforts to cause the Subsequent Shelf Registration Statement to become effective as promptly as is practicable after such filing and to keep such Registration Statement (or subsequent Shelf Registration Statement) continuously effective until the end of the Effectiveness Period. (c) The Company shall supplement and amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement, if required by the Securities Act or as reasonably requested by the Initial Purchasers or by the Trustee on behalf of the registered Holders or by any managing underwriter in the event of an underwritten offering. (d) Each Holder of Registrable Securities agrees that if such Holder wishes to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus, it will do so only in accordance with this Section 2(d) and Section 3(i). Each Holder of Registrable Securities wishing to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire to the Company at least three (3) Business Days prior to any intended distribution of Registrable Securities under the Shelf Registration Statement. From and after the date the Initial Shelf Registration Statement is declared effective, the Company shall, as promptly as practicable after the date a Notice and Questionnaire is delivered, and in any event upon the later of (x) five (5) Business Days after such date or (y) five (5) Business Days after the expiration of any Deferral Period in effect when the Notice and Questionnaire is delivered or put into effect within five (5) Business Days of such delivery date, (i) if required by applicable law, file with the SEC a post-effective amendment to the Shelf Registration Statement or prepare and, if required by applicable law, file a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that the Holder delivering such Notice and Questionnaire is named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Registrable Securities in accordance with applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration Statement, use reasonable efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is practicable, but in any event by the date (the "Amendment Effectiveness Deadline Date") that is forty-five (45) days after the date such post-effective amendment is required by this clause to be filed; (ii) provide such Holder copies of any documents filed pursuant to Section 2(d)(i); and (iii) notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 2(d)(i); provided, that if such Notice and Questionnaire is delivered during a Deferral Period, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in accordance with Section 3(i). Notwithstanding anything contained herein to the contrary, (i) the Company shall be under no obligation to name any Holder that is not a Notice Holder as a selling securityholder in any Registration Statement or related Prospectus and (ii) the Amendment Deadline Effective Date shall be extended by up to ten (10) Business Days from the expiration of 6 7 a Deferral Period (and the Company shall incur no obligation to pay Additional Interest during such extension) if such Deferral Period shall be in effect on the Amendment Deadline Effective Date. (e) The parties hereto agree that the Holders of Registrable Securities will suffer damages, and that it would not be feasible to ascertain the extent of such damages with precision, if (i) the Initial Shelf Registration Statement has not been filed on or prior to the Filing Deadline Date, (ii) the Initial Shelf Registration Statement has not been declared effective under the Securities Act on or prior to the Effectiveness Deadline Date, (iii) the Company has failed to perform its obligations set forth in Section 2(d) within the time period required therein, (iv) the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period pursuant to Section 3(i) hereof or (v) the number of Deferral Periods in any period exceeds the number permitted in respect of such period pursuant to Section 3(i) hereof (each of the events of a type described in any of the foregoing clauses (i) through (v) are individually referred to herein as an "Event," and the Filing Deadline Date in the case of clause (i), the Effectiveness Deadline Date in the case of clause (ii), the date by which the Company is required to perform its obligations set forth in Section 2(d) in the case of clause (iii) (including the filing of any post-effective amendment prior to the Amendment Effectiveness Deadline Date), the date on which the aggregate duration of Deferral Periods in any period exceeds the number of days permitted by Section 3(i) hereof in the case of clause (iv), and the date of the commencement of a Deferral Period that causes the limit on the number of Deferral Periods in any period under Section 3(i) hereof to be exceeded in the case of clause (v), being referred to herein as an "Event Date"). Events shall be deemed to continue until the "Event Termination Date," which shall be the following dates with respect to the respective types of Events: the date the Initial Shelf Registration Statement is filed in the case of an Event of the type described in clause (i), the date the Initial Shelf Registration Statement is declared effective under the Securities Act in the case of an Event of the type described in clause (ii), the date the Company performs its obligations set forth in Section 2(d) in the case of an Event of the type described in clause (iii) (including, without limitation, the date the relevant post-effective amendment to the Shelf Registration Statement is declared effective under the Securities Act), termination of the Deferral Period that caused the limit on the aggregate duration of Deferral Periods in a period set forth in Section 3(i) to be exceeded in the case of the commencement of an Event of the type described in clause (iv), and termination of the Deferral Period the commencement of which caused the number of Deferral Periods in a period permitted by Section 3(i) to be exceeded in the case of an Event of the type described in clause (v). Accordingly, commencing on (and including) any Event Date and ending on (but excluding) the next date on which there are no Events that have occurred and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as additional interest and not as a penalty, an amount (the "Additional Interest"), payable on the Damages Payment Dates to Record Holders of Debentures that are Registrable Securities and of shares of Underlying Common Stock issued upon conversion of Debentures that are Registrable Securities, as the case may be, accruing, for each portion of such Damages Accrual Period beginning on and including a Damages Payment Date (or, in respect of the first time that the Additional Interest is to be paid to Holders on a Damages Payment Date as a result of the occurrence of any particular Event, from the Event Date) and ending on but excluding the first to occur of (A) the date of the end of the Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum equal 7 8 to one-half of one percent (0.5%) of the principal amount at maturity of such Debentures (or, following a Tax Event, of the Restated Principal Amount plus accrued but unpaid interest) or one-half of one percent (0.5%) of the Applicable Conversion Price of such shares of Underlying Common Stock, as the case may be, in each case determined as of the Business Day immediately preceding the next Damages Payment Date; provided, that in the case of a Damages Accrual Period that is in effect solely as a result of an Event of the type described in clause (iii) of the immediately preceding paragraph, such Additional Interest shall be paid only to the Holders that have delivered Notice and Questionnaires that caused the Company to incur the obligations set forth in Section 2(d) the non-performance of which is the basis of such Event, provided further, that any Additional Interest accrued with respect to any Debenture or portion thereof called for redemption on a redemption date or converted into Underlying Common Stock on a conversion date prior to the Damages Payment Date, shall, in any such event, be paid instead to the Holder who submitted such Debenture or portion thereof for redemption or conversion on the applicable redemption date or conversion date, as the case may be, on such date (or promptly following the conversion date, in the case of conversion). Notwithstanding the foregoing, no Additional Interest shall accrue as to any Registrable Security from and after the earlier of (x) the date such security is no longer a Registrable Security and (y) expiration of the Effectiveness Period. The rate of accrual of the Additional Interest with respect to any period shall not exceed the rate provided for in this paragraph notwithstanding the occurrence of multiple concurrent Events. Following the cure of all Events requiring the payment by the Company of Additional Interest to the Holders of Registrable Securities pursuant to this Section, the accrual of Additional Interest will cease (without in any way limiting the effect of any subsequent Event requiring the payment of Additional Interest by the Company). The Trustee shall be entitled, on behalf of Holders of Debentures or Underlying Common Stock, to seek any available remedy for the enforcement of this Agreement, including for the payment of any Additional Interest. Notwithstanding the foregoing, the parties agree that the sole damages payable for a violation of the terms of this Agreement with respect to which Additional Interest are expressly provided shall be such Additional Interest. Nothing shall preclude a Notice Holder or Holder of Registrable Securities from pursuing or obtaining specific performance or other equitable relief with respect to this Agreement. All of the Company's obligations set forth in this Section 2(e) that are outstanding with respect to any Registrable Security at the time such security ceases to be a Registrable Security shall survive until such time as all such obligations with respect to such security have been satisfied in full (notwithstanding termination of this Agreement pursuant to Section 8(k)). The parties hereto agree that the Additional Interest provided for in this Section 2(e) constitute a reasonable estimate of the damages that may be incurred by Holders of Registrable Securities by reason of the failure of the Shelf Registration Statement to be filed or declared effective or available for effecting resales of Registrable Securities in accordance with the provisions hereof. SECTION 3. REGISTRATION PROCEDURES. In connection with the registration obligations of the Company under Section 2 hereof, the Company shall: 8 9 (a) A reasonable time before filing any Registration Statement or Prospectus or any amendments or supplements thereto with the SEC, furnish to counsel to the Initial Purchasers copies of all such documents proposed to be filed and use reasonable efforts to reflect in each such document when so filed with the SEC such comments as counsel to the Initial Purchasers reasonably shall propose within five (5) Business Days of the delivery of such copies to the Initial Purchasers. (b) Prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable period specified in Section 2(a); cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and use its reasonable efforts to comply with the provisions of the Securities Act applicable to it with respect to the disposition of all securities covered by such Registration Statement during the Effectiveness Period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or such Prospectus as so supplemented. (c) As promptly as practicable give notice to counsel to the Notice Holders and the Initial Purchasers (i) when any Prospectus, Prospectus supplement, Registration Statement or post-effective amendment to a Registration Statement has been filed with the SEC and, with respect to a Registration Statement or any post-effective amendment, when the same has been declared effective, (ii) of any request, following the effectiveness of the Initial Shelf Registration Statement under the Securities Act, by the SEC or any other federal or state governmental authority for amendments or supplements to any Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation or threatening of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the occurrence of (but not the nature of or details concerning) a Material Event and (vi) of the determination by the Company that a post-effective amendment to a Registration Statement will be filed with the SEC, which notice may, at the discretion of the Company (or as required pursuant to Section 3(i)), state that it constitutes a Deferral Notice, in which event the provisions of Section 3(i) shall apply. (d) Use reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in which they have been qualified for sale, in either case at the earliest possible moment. (e) If reasonably requested by any Initial Purchaser or any Notice Holder, as promptly as practicable incorporate in a Prospectus supplement or post-effective amendment to a Registration Statement such information as the Initial Purchaser or such Notice Holder shall, on the basis of a written opinion of nationally-recognized counsel experienced in such matters, 9 10 determine to be required to be included therein by applicable law and make any required filings of such Prospectus supplement or such post-effective amendment. (f) As promptly as practicable furnish to each Notice Holder and the Initial Purchasers, without charge, at least one (1) conformed copy of the Registration Statement and any amendment thereto, including financial statements but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits (unless requested in writing to the Company by such Notice Holder or the Initial Purchasers, as the case may be). (g) During the Effectiveness Period, deliver to each Notice Holder in connection with any sale of Registrable Securities pursuant to a Registration Statement, without charge, as many copies of the Prospectus or Prospectuses relating to such Registrable Securities (including each preliminary prospectus) and any amendment or supplement thereto as such Notice Holder may reasonably request; and the Company hereby consents (except during such periods that a Deferral Notice is outstanding and has not been revoked) to the use of such Prospectus or each amendment or supplement thereto by each Notice Holder in connection with any offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set forth therein. (h) Prior to any public offering of the Registrable Securities pursuant to the Shelf Registration Statement, register or qualify or cooperate with the Notice Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Notice Holder reasonably requests in writing (which request may be included in the Notice and Questionnaire); prior to any public offering of the Registrable Securities pursuant to the Shelf Registration Statement, keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period in connection with such Notice Holder's offer and sale of Registrable Securities pursuant to such registration or qualification (or exemption therefrom) and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of such Registrable Securities in the manner set forth in the relevant Registration Statement and the related Prospectus; provided, that the Company will not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Agreement or (ii) take any action that would subject it to general service of process in suits or to taxation in any such jurisdiction where it is not then so subject. (i) Upon (A) the issuance by the SEC of a stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of proceedings with respect to the Shelf Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or the existence of any fact (a "Material Event") as a result of which any Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or any Prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (C) the occurrence or existence of any pending corporate development that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Shelf Registration 10 11 Statement and the related Prospectus, (i) in the case of clause (B) above, subject to the next sentence, as promptly as practicable prepare and file, if necessary pursuant to applicable law, a post-effective amendment to such Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Registration Statement and Prospectus so that such Registration Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and such Prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, and, in the case of a post-effective amendment to a Registration Statement, subject to the next sentence, use its reasonable efforts to cause it to be declared effective as promptly as is practicable, and (ii) give notice to the Notice Holders that the availability of the Shelf Registration Statement is suspended (a "Deferral Notice") and, upon receipt of any Deferral Notice, each Notice Holder agrees not to sell any Registrable Securities pursuant to the Registration Statement until such Notice Holder's receipt of copies of the supplemented or amended Prospectus provided for in clause (i) above, or until it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. The Company will use all reasonable efforts to ensure that the use of the Prospectus may be resumed (x) in the case of clause (A) above, as promptly as is practicable, (y) in the case of clause (B) above, as soon as, in the sole judgment of the Company, public disclosure of such Material Event would not be prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter and (z) in the case of clause (C) above, as soon as, in the discretion of the Company, such suspension is no longer appropriate. The Company shall be entitled to exercise its right under this Section 3(i) to suspend the availability of the Shelf Registration Statement or any Prospectus, without incurring or accruing any obligation to pay Additional Interest pursuant to Section 2(e), no more than one (1) time in any three month period or four (4) times in any twelve month period, and any such period during which the availability of the Registration Statement and any Prospectus is suspended (the "Deferral Period") shall, without incurring any obligation to pay Additional Interest pursuant to Section 2(e), not exceed 30 days; provided, that in the case of a Material Event relating to an acquisition or a probable acquisition or financing, recapitalization, business combination or other similar transaction, the Company may, without incurring any obligation to pay Additional Interest pursuant to Section 2(e), deliver to Notice Holders a second notice to the effect set forth above, which shall have the effect of extending the Deferral Period by up to an additional 30 days, or such shorter period of time as is specified in such second notice, provided, that the aggregate duration of any Deferral Periods shall not, without incurring any obligation to pay Additional Interest pursuant to Section 2(e), exceed 60 days in any three month period or 90 days in any twelve (12) month period. (j) If requested in writing in connection with a disposition of Registrable Securities pursuant to a Registration Statement, make reasonably available for inspection during normal business hours by a representative for the Notice Holders of such Registrable Securities and any broker-dealers, attorneys and accountants retained by such Notice Holders, all relevant financial and other records, pertinent corporate documents and properties of the Company and its 11 12 subsidiaries, and cause the appropriate officers, directors and employees of the Company and its subsidiaries to make reasonably available for inspection during normal business hours on reasonable notice all relevant information reasonably requested by such representative for the Notice Holders or any such broker-dealers, attorneys or accountants in connection with such disposition, in each case as is customary for similar "due diligence" examinations; provided, however, that such persons shall first agree in writing with the Company that any information that is reasonably and in good faith designated by the Company in writing as confidential at the time of delivery of such information shall be kept confidential by such persons and shall be used solely for the purposes of exercising rights under this Agreement, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to federal securities laws in connection with the filing of any Registration Statement or the use of any Prospectus referred to in this Agreement), (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person or (iv) such information becomes available to any such person from a source other than the Company and such source is not bound by a confidentiality agreement, and provided further, that the foregoing inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of all the Notice Holders and the other parties entitled thereto by the counsel referred to in Section 5. (k) Use reasonable efforts to comply with all applicable rules and regulations of the SEC and make generally available to its securityholders earning statements (which need not be audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 3-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) commencing on the first day of the first fiscal quarter of the Company commencing after the effective date of a Registration Statement, which statements shall cover said periods. (l) Cooperate with each Notice Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities sold or to be sold pursuant to a Registration Statement, which certificates shall not bear any restrictive legends, and cause such Registrable Securities to be in such denominations as are permitted by the Indenture and registered in such names as such Notice Holder may request in writing at least two (2) Business Days prior to any sale of such Registrable Securities. (m) Provide a CUSIP number for all Registrable Securities covered by each Registration Statement not later than the effective date of such Registration Statement and provide the Trustee and the transfer agent for the Common Stock with printed certificates for the Registrable Securities that are in a form eligible for deposit with The Depository Trust Company. (n) Provide such information as is required for any filings required to be made with the National Association of Securities Dealers, Inc. (o) Upon (i) the filing of the Initial Registration Statement and (ii) the effectiveness of the Initial Registration Statement, announce the same, in each case by release to Reuters Economic Services and Bloomberg Business News. 12 13 SECTION 4. HOLDER'S OBLIGATIONS. Each Holder agrees, by acquisition of the Registrable Securities, that no Holder of Registrable Securities shall be entitled to sell any of such Registrable Securities pursuant to a Registration Statement or to receive a Prospectus relating thereto, unless such Holder has furnished the Company with a Notice and Questionnaire as required pursuant to Section 2(d) hereof (including the information required to be included in such Notice and Questionnaire) and the information set forth in the next sentence. Each Notice Holder agrees promptly to furnish to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Notice Holder not misleading and any other information regarding such Notice Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request. Any sale of any Registrable Securities by any Holder shall constitute a representation and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the Prospectus delivered by such Holder in connection with such disposition, that such Prospectus does not as of the time of such sale contain any untrue statement of a material fact relating to or provided by such Holder or its plan of distribution and that such Prospectus does not as of the time of such sale omit to state any material fact relating to or provided by such Holder or its plan of distribution necessary to make the statements in such Prospectus, in the light of the circumstances under which they were made, not misleading. SECTION 5. REGISTRATION EXPENSES. The Company shall bear all fees and expenses incurred in connection with the performance by the Company of its obligations under Sections 2 and 3 of this Agreement whether or not any of the Registration Statements are declared effective. Such fees and expenses shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (x) with respect to filings required to be made with the National Association of Securities Dealers, Inc. and (y) of compliance with federal and state securities or Blue Sky laws (including, without limitation, reasonable fees and disbursements of the counsel specified in the next sentence in connection with Blue Sky qualifications of the Registrable Securities under the laws of such jurisdictions as the Notice Holders of a majority of the Registrable Securities being sold pursuant to a Registration Statement may designate), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company), (iii) duplication expenses relating to copies of any Registration Statement or Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of counsel for the Company in connection with the Shelf Registration Statement, (v) reasonable fees and disbursements of the Trustee and its counsel and of the registrar and transfer agent for the Common Stock and (vi) Securities Act liability insurance obtained by the Company in its sole discretion. In addition, the Company shall bear or reimburse the Notice Holders for the reasonable fees and disbursements of one firm of legal counsel for the Holders, which shall initially be Gray, Cary, Ware & Freidenrich LLP, but which may, with the written consent of the Initial Purchasers (which shall not be unreasonably withheld), be another nationally recognized law firm experienced in securities law matters designated by the Company. In addition, the Company shall pay the internal expenses of the Company (including, without limitation, all salaries and expenses of officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange on which similar securities of the Company are then listed and the fees and expenses of any person, including special experts, retained by the 13 14 Company. Notwithstanding the provisions of this Section 5, each seller of Registrable Securities shall pay selling expenses and all registration expenses to the extent required by applicable law. SECTION 6. INDEMNIFICATION. (a) Indemnification by the Company. The Company shall indemnify and hold harmless each Notice Holder and each person, if any, who controls any Notice Holder (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any losses, liabilities, claims, damages and expenses (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) (collectively, "Losses"), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided, however, that the Company shall not be liable in any such case to the extent that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement contained in or omission or alleged omission from any of such documents in reliance upon and conformity with any of the information relating to the Holders furnished to the Company in writing by a Holder expressly for use therein; provided further, that the indemnification contained in this paragraph shall not inure to the benefit of any Holder of Registrable Securities (or to the benefit of any person controlling such Holder) on account of any such Losses arising out of or based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus provided in each case the Company has performed its obligations under Section 3(a) hereof if either (A) (i) such Holder failed to send or deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale by such Holder to the person asserting the claim from which such Losses arise and (ii) the Prospectus would have corrected such untrue statement or alleged untrue statement or such omission or alleged omission, or (B) (x) such untrue statement or alleged untrue statement, omission or alleged omission is corrected in an amendment or supplement to the Prospectus and (y) having previously been furnished by or on behalf of the Company with copies of the Prospectus as so amended or supplemented, such Holder thereafter fails to deliver such Prospectus as so amended or supplemented, with or prior to the delivery of written confirmation of the sale of a Registrable Security to the person asserting the claim from which such Losses arise. (b) Indemnification by Holders of Registrable Securities. Each Holder agrees severally and not jointly to indemnify and hold harmless the Company and its respective directors and officers, and each person, if any, who controls the Company (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) or any other Holder, from and against all Losses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information furnished to the Company by such Holder expressly for use in such Registration Statement or Prospectus or amendment or 14 15 supplement thereto. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the Registration Statement giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. Such separate firm shall be designated in writing by, in the case of parties indemnified pursuant to Section 6(a), the Holders of a majority (with Holders of Debentures deemed to be the Holders, for purposes of determining such majority, of the number of shares of Underlying Common Stock into which such Debentures are or would be convertible or exchangeable as of the date on which such designation is made) of the Registrable Securities covered by the Registration Statement held by Holders that are indemnified parties pursuant to Section 6(a) and, in the case of parties indemnified pursuant to Section 6(b), the Company. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel and the indemnified party would be entitled thereto pursuant to the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 15 16 (d) Contribution. To the extent that the indemnification provided for in this Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b) hereof in respect of any Losses or is insufficient to hold such indemnified party harmless, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other hand or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the initial placement pursuant to the Purchase Agreement (before deducting expenses) of the Registrable Securities to which such Losses relate. Benefits received by any Holder shall be deemed to be equal to the value of receiving Registrable Securities that are registered under the Securities Act. The relative fault of the Holders on the one hand and the Company on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Holders or by the Company, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders' respective obligations to contribute pursuant to this paragraph are several in proportion to the respective number of Registrable Securities they have sold pursuant to a Registration Statement, and not joint. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method or allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the Losses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding this Section 6(d), an indemnifying party that is a selling Holder of Registrable Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities sold by such indemnifying party and distributed to the public were offered to the public exceeds the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The indemnity, contribution and expense reimbursement obligations of the parties hereunder shall be in addition to any liability any indemnified party may otherwise have hereunder, under the Purchase Agreement or otherwise. (f) The indemnity and contribution provisions contained in this Section 6 shall remain operative and in full force and effect regardless of (i) any termination of this 16 17 Agreement, (ii) any investigation made by or on behalf of any Holder or any person controlling any Holder, or the Company, or the Company's officers or directors or any person controlling the Company and (iii) the sale of any Registrable Securities by any Holder. SECTION 7. INFORMATION REQUIREMENTS. The Company covenants that, if at any time before the end of the Effectiveness Period the Company is not subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder of Registrable Securities and take such further reasonable action as any Holder of Registrable Securities may reasonably request in writing (including, without limitation, making such reasonable representations as any such Holder may reasonably request), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 and Rule 144A under the Securities Act and customarily taken in connection with sales pursuant to such exemptions. Upon the written request of any Holder of Registrable Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such filing requirements, unless such a statement has been included in the Company's most recent report filed pursuant to Section 13 or Section 15(d) of the Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities (other than the Common Stock) under any section of the Exchange Act. SECTION 8. MISCELLANEOUS. (a) No Conflicting Agreements. The Company is not, as of the date hereof, a party to, nor shall it, on or after the date of this Agreement, enter into, any agreement with respect to its securities that conflicts with the rights granted to the Holders of Registrable Securities in this Agreement. The Company represents and warrants that the rights granted to the Holders of Registrable Securities hereunder do not in any way conflict with the rights granted to the holders of the Company's securities under any other agreements. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority of the then outstanding Underlying Common Stock constituting Registrable Securities (with Holders of Debentures deemed to be the Holders, for purposes of this Section, of the number of outstanding shares of Underlying Common Stock into which such Debentures are or would be convertible or exchangeable as of the date on which such consent is requested). Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders of Registrable Securities may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement; provided, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification, 17 18 supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 8(b), whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, by telecopier, by courier guaranteeing overnight delivery or by first-class mail, return receipt requested, and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after being deposited with such courier, if made by overnight courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows: (w) if to a Holder of Registrable Securities, at the most current address given by such Holder to the Company in a Notice and Questionnaire or any amendment thereto; (x) if to the Company, to: Atmel Corporation 2325 Orchard Parkway San Jose, CA 95131 Attention: Chief Financial Officer Telecopy No.: (408) 441-0311 and Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304-1050 Attention: Mark A. Bertelsen, Esq. Telecopy No.: (650) 493-6811 (y) if to the Initial Purchasers, to: Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attention: Equity Capital Markets Telecopy No.: (212) 761-0356 and Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, California 94301-1825 Attention: Gregory Gallo, Esq. Telecopy No.: (650) 833-2001 18 19 or to such other address as such person may have furnished to the other persons identified in this Section 8(c) in writing in accordance herewith. (d) Approval of Holders. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) (other than the Initial Purchasers or subsequent Holders of Registrable Securities if such subsequent Holders are deemed to be such affiliates solely by reason of their holdings f such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (e) Successors and Assigns. Any person who purchases any Registrable Securities from the Initial Purchasers shall be deemed, for purposes of this Agreement, to be an assignee of the Initial Purchasers. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and shall inure to the benefit of and be binding upon each Holder of any Registrable Securities. (f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be original and all of which taken together shall constitute one and the same agreement. (g) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (i) Severability. If any term provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (j) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and the registration rights granted by the Company with respect to the Registrable Securities. Except as provided in the Purchase Agreement, there are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the registration rights granted by the Company with respect to the Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the parties with respect to such registration rights. No party hereto shall have any rights, duties or obligations other than 19 20 those specifically set forth in this Agreement. In no event will such methods of distribution take the form of an underwritten offering of the Registrable Securities without the prior agreement of the Company. (k) Termination. This Agreement and the obligations of the parties hereunder shall terminate upon the end of the Effectiveness Period, except for any liabilities or obligations under Section 4, 5 or 6 hereof and the obligations to make payments of and provide for Additional Interest under Section 2(e) hereof to the extent such damages accrue prior to the end of the Effectiveness Period, each of which shall remain in effect in accordance with its terms. 20 21 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ATMEL CORPORATION By: ____________________________________ Name: Title: Confirmed and accepted as of the date first above written: MORGAN STANLEY & CO. INCORPORATED CREDIT LYONNAIS SECURITIES (USA) INC. NEEDHAM & COMPANY, INC. By: Morgan Stanley & Co. Incorporated By: ____________________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----

EX-3.1

   1

                                                                     EXHIBIT 3.1


                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                                ATMEL CORPORATION


        Atmel Corporation, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies that:

        A. The name of this Corporation is Atmel Corporation.


        B. The date of filing of this Corporation's original Certificate of
Incorporation with the Secretary of State of the State of Delaware was March 4,
1999.

        C. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates, integrates and amends the provisions of the Corporation's Certificate
of Incorporation as follows:

                                    ARTICLE I

        The name of the corporation is Atmel Corporation (the "Corporation").

                                   ARTICLE II

        The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.

                                   ARTICLE III

        The nature of the business or purposes to be conducted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware.



   2

                                   ARTICLE IV

        The Corporation is authorized to issue two classes of stock to be
designated, respectively, Common Stock and Preferred Stock. The total number of
shares of all classes of stock which the Corporation has authority to issue is
one billion six hundred five million (1,605,000,000), consisting of one billion
six hundred million (1,600,000,000) shares of Common Stock, par value $0.001 per
share (the "Common Stock"), and five million (5,000,000) shares of Preferred
Stock, par value $0.001 per share (the "Preferred Stock").

        The Corporation shall from time to time in accordance with the laws of
the State of Delaware increase the authorized amount of its Common Stock if at
any time the number of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred Stock.

        The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, subject to limitations
prescribed by law, to fix by resolution or resolutions the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of each such series of Preferred Stock, including without limitation
authority to fix by resolution or resolutions, the dividend rights, dividend
rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any wholly unissued series of Preferred Stock, and the number of
shares constituting any such series and the designation thereof, or any of the
foregoing.

        The Board of Directors is further authorized to increase (but not above
the total number of authorized shares of the class) or decrease (but not below
the number of shares of any such series then outstanding) the number of shares
of any series, the number of which was fixed by it, subsequent to the issue of
shares of such series then outstanding, subject to the powers, preferences and
rights, and the qualifications, limitations and restrictions thereof stated in
the resolution of the Board of Directors originally fixing the number of shares
of such series. If the number of shares of any series is so decreased, then the
shares constituting such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.

                                    ARTICLE V

        The Corporation is to have perpetual existence.

                                   ARTICLE VI

        The election of directors need not be by written ballot unless a
stockholder demands election by written ballot at a meeting of stockholders and
before voting begins or unless the Bylaws of the Corporation shall so provide.

                                   ARTICLE VII



                                      -2-
   3

        The number of directors which constitute the whole Board of Directors of
the Corporation shall be designated in the Bylaws of the Corporation.

        Vacancies occurring on the Board of Directors may be filled by vote of a
majority of the remaining members of the Board of Directors, although less than
a quorum, at a meeting of the Board of Directors. A person so elected by the
Board of Directors to fill a vacancy shall hold office until the next succeeding
annual meeting of stockholders of the Corporation or until his or her successor
shall have been duly elected and qualified.

                                  ARTICLE VIII

        No action shall be taken by the stockholders of the Corporation except
at an annual or special meeting of the stockholders called in accordance with
the Bylaws and no action shall be taken by the stockholders by written consent.

                                   ARTICLE IX

        Advance notice of stockholder nomination for the election of directors
and of any other business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.

                                    ARTICLE X

        In furtherance and not in limitation of the powers conferred by the laws
of the State of Delaware, the Board of Directors is expressly authorized to
adopt, alter, amend or repeal the Bylaws of the Corporation.

                                   ARTICLE XI

        To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or may hereafter be amended, no director of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.

        The Corporation may indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer, employee or agent of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer, employee or agent at the request of the
Corporation or any predecessor to the Corporation.

        Neither any amendment nor repeal of this Article, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of this Article in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article, would accrue or arise, prior to such amendment, repeal or adoption of
an inconsistent provision.



                                      -3-
   4

                                   ARTICLE XII

        At the election of directors of the Corporation, each holder of stock of
any class or series shall be entitled to one vote for each share held. No
stockholder will be permitted to cumulate votes at any election of directors.

                                  ARTICLE XIII

        Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the laws of the State of Delaware)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the Corporation.

                                   ARTICLE XIV

        The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by the laws of the State of Delaware, and all rights
conferred herein are granted subject to this reservation.

                                   ARTICLE XV

        The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.

        The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of his own knowledge.

        IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation this ___ day of August 1999.



                                   By:
                                       -----------------------------------------
                                       Mike Ross, Vice President and General
                                       Counsel and Assistant Secretary




                                      -4-

EX-10.9

   1
                                                                    EXHIBIT 10.9


                                                                  EXECUTION COPY

================================================================================









            Zero Coupon Convertible Subordinated Debentures due 2021


                                Atmel Corporation

                                     Issuer





                                ----------------



                                    INDENTURE



                            Dated as of May 23, 2001





                                ----------------





             State Street Bank and Trust Company of California, N.A.

                                     Trustee



   2

                             CROSS REFERENCE TABLE*





                                                                              INDENTURE
                              TIA SECTION                                      SECTION
- -------------------------------------------------------------------------     ---------
                                                                           
310 (a)(1)...............................................................        7.10
    (a)(2)...............................................................        7.10
    (a)(3)...............................................................       N.A.**
    (a)(4)...............................................................        N.A.
    (b)..................................................................        7.10
    (c)..................................................................        N.A.
311 (a)..................................................................        7.11
    (b)..................................................................        7.11
    (c)..................................................................        N.A.
312 (a)..................................................................        N.A.
    (b)..................................................................        12.3
    (c)..................................................................        12.3
    (d)..................................................................        N.A.
313 (a)..................................................................        7.6
    (b)..................................................................        7.6
    (b)(1)...............................................................        N.A.
    (b)(2)...............................................................        N.A.
    (c)..................................................................        N.A.
    (d)..................................................................        N.A.
314 (a)..................................................................        N.A.
    (b)..................................................................        N.A.
    (c)(1)...............................................................        N.A.
    (c)(2)...............................................................        N.A.
    (c)(3)...............................................................        N.A.
    (d)..................................................................        N.A.
    (e)..................................................................        N.A.
    (f)..................................................................        N.A.
315 (a)..................................................................        7.1
    (b)..................................................................        7.5
    (c)..................................................................        7.1
    (d)(1)...............................................................        7.1
    (d)(2)...............................................................        7.1
    (d)(3)...............................................................        7.1
    (e)..................................................................        N.A.
316 (a)(last sentence)...................................................        N.A.
    (a)(1)(A)............................................................        N.A.
    (a)(1)(B)............................................................        N.A.
    (a)(2)...............................................................        N.A.
    (b)..................................................................        N.A.
317 (a)(1)...............................................................        N.A.
    (a)(2)...............................................................        N.A.
    (b)..................................................................        N.A.
318 (a)..................................................................        N.A.
- ---------------------------------------------------------------------------------------



*    Note: This Cross Reference Table shall not, for any purpose, be deemed to
     be part of the Indenture

**   Note: N.A. means Not Applicable

   3

                                TABLE OF CONTENTS





                                                                                              PAGE
                                                                                              ----
                                                                                           
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1

        Section 1.1.  Definitions................................................................1
        Section 1.2.  Other Definitions..........................................................8
        Section 1.3.  Incorporation by Reference of Trust Indenture Act..........................9
        Section 1.4.  Rules of Construction......................................................9

ARTICLE 2 THE SECURITIES.........................................................................9

        Section 2.1.  Form and Dating............................................................9
        Section 2.2.  Execution and Authentication..............................................10
        Section 2.3.  Registrar, Paying Agent and Conversion Agent..............................11
        Section 2.4.  Paying Agent to Hold Money and Securities in Trust........................12
        Section 2.5.  Holder Lists..............................................................12
        Section 2.6.  Exchange and Registration of Transfer of Securities; Restrictions
                      on Transfers; Depositary..................................................12
        Section 2.7.  Replacement Securities....................................................19
        Section 2.8.  Outstanding Securities, Determinations of Holders' Action.................20
        Section 2.9.  Temporary Securities......................................................20
        Section 2.10. Cancellation..............................................................21
        Section 2.11. Persons Deemed Owners.....................................................21

ARTICLE 3 REDEMPTION AND PURCHASES..............................................................21

        Section 3.1.  Right to Redeem; Notices to Trustee.......................................21
        Section 3.2.  Selection of Securities to be Redeemed....................................22
        Section 3.3.  Notice of Redemption......................................................22
        Section 3.4.  Effect of Notice of Redemption............................................23
        Section 3.5.  Deposit of Redemption Price...............................................23
        Section 3.6.  Securities Redeemed in Part...............................................24
        Section 3.7.  Conversion Arrangement on Call for Redemption.............................24
        Section 3.8.  Purchase of Securities at Option of the Holder............................25
        Section 3.9.  Redemption at Option of the Holder upon a Fundamental Change..............30
        Section 3.10. Effect of Purchase Notice or Fundamental Change Redemption Notice.........31
        Section 3.11. Deposit of Purchase Price or Fundamental Change Redemption Price..........32
        Section 3.12. Securities Purchased in Part..............................................32
        Section 3.13. Covenant to Comply with Securities Laws upon Purchase of Securities.......33
        Section 3.14. Repayment to the Company..................................................33
        Section 3.15. Modification to Fundamental Change Definitions............................33





                                       -i-



   4

                                TABLE OF CONTENTS
                                   (CONTINUED)





                                                                                              PAGE
                                                                                              ----
                                                                                           
ARTICLE 4 COVENANTS.............................................................................34

        Section 4.1.  Payment of Securities.....................................................34
        Section 4.2.  Financial Information; SEC Reports........................................34
        Section 4.3.  Compliance Certificate....................................................35
        Section 4.4.  Further Instruments and Acts..............................................35
        Section 4.5.  Maintenance of Office or Agency...........................................35
        Section 4.6.  Existence.................................................................36
        Section 4.7.  Maintenance of Properties.................................................36
        Section 4.8.  Payment of Taxes and Other Claims.........................................36
        Section 4.9.  Additional Interest.......................................................37

ARTICLE 5 SUCCESSOR CORPORATION.................................................................37

        Section 5.1.  When the Company May Merge or Transfer Assets.............................37

ARTICLE 6 DEFAULTS AND REMEDIES.................................................................38

        Section 6.1.  Events of Default.........................................................38
        Section 6.2.  Acceleration..............................................................39
        Section 6.3.  Other Remedies............................................................39
        Section 6.4.  Waiver of Past Defaults...................................................40
        Section 6.5.  Control by Majority.......................................................40
        Section 6.6.  Limitation on Suits.......................................................40
        Section 6.7.  Rights of Holders to Receive Payment......................................41
        Section 6.8.  Collection Suit by Trustee................................................41
        Section 6.9.  Trustee May File Proofs of Claim..........................................41
        Section 6.10. Priorities................................................................42
        Section 6.11. Undertaking for Costs.....................................................42
        Section 6.12. Waiver of Stay, Extension or Usury Laws...................................43

ARTICLE 7 TRUSTEE...............................................................................43

        Section 7.1.  Duties of Trustee.........................................................43
        Section 7.2.  Rights of Trustee.........................................................44
        Section 7.3.  Individual Rights of Trustee..............................................45
        Section 7.4.  Trustee Disclaimer........................................................45
        Section 7.5.  Notice of Defaults........................................................45
        Section 7.6.  Reports by Trustee to Holders.............................................45
        Section 7.7.  Compensation and Indemnity................................................46
        Section 7.8.  Replacement of Trustee....................................................46





                                      -ii-


   5

                                TABLE OF CONTENTS
                                   (CONTINUED)





                                                                                               PAGE
                                                                                               ----
                                                                                            
        Section 7.9.   Successor Trustee by Merger...............................................47
        Section 7.10.  Eligibility; Disqualification.............................................48
        Section 7.11.  Preferential Collection of Claims Against Company.........................48

ARTICLE 8  DISCHARGE OF INDENTURE................................................................48

        Section 8.1.   Discharge of Liability on Securities......................................48
        Section 8.2.   Repayment to the Company..................................................49

ARTICLE 9 AMENDMENTS.............................................................................49

        Section 9.1.   Without Consent of Holders................................................49
        Section 9.2.   With Consent of Holders...................................................50
        Section 9.3.   Compliance with Trust Indenture...........................................51
        Section 9.4.   Revocation and Effect of Consents, Waivers and Actions....................51
        Section 9.5.   Trustee to Sign Supplemental Indentures...................................51
        Section 9.6.   Trustee's Discretion to Execute Supplemental Indentures..................51
        Section 9.7.   Effect of Supplemental Indentures.........................................52

ARTICLE 10 SUBORDINATION.........................................................................52

        Section 10.1.  Agreement of Subordination................................................52
        Section 10.2.  Payments to Holders.......................................................52
        Section 10.3.  Subrogation of Securities.................................................55
        Section 10.4.  Authorization to Effect Subordination.....................................56
        Section 10.5.  Notice to Trustee.........................................................56
        Section 10.6.  Trustee's Relation to Senior Indebtedness.................................57
        Section 10.7.  No Impairment of Subordination............................................58
        Section 10.8.  Certain Conversions Not Deemed Payment....................................58
        Section 10.9.  Article Applicable to Paying Agents.......................................58
        Section 10.10. Senior Indebtedness Entitled to Rely......................................58

ARTICLE 11 CONVERSION............................................................................59

        Section 11.1.  Conversion Privilege......................................................59
        Section 11.2.  Conversion Procedure......................................................59
        Section 11.3.  Fractional Shares.........................................................60
        Section 11.4.  Taxes on Conversion.......................................................60
        Section 11.5.  Company to Provide Stock..................................................60
        Section 11.6.  Conversion to Semiannual Coupon Upon a Tax Event..........................61
        Section 11.7.  Adjustment for Change in Capital Stock....................................63





                                      -iii-


   6

                                TABLE OF CONTENTS
                                   (CONTINUED)





                                                                                              PAGE
                                                                                              ----
                                                                                           
        Section 11.8.  Adjustment for Rights Issue...............................................63
        Section 11.9.  Adjustment for Other Distributions........................................64
        Section 11.10. When Adjustment May be Deferred...........................................67
        Section 11.11. When No Adjustment Required...............................................67
        Section 11.12. Notice of Adjustment......................................................68
        Section 11.13. Voluntary Increase........................................................68
        Section 11.14. Notice of Certain Transactions............................................68
        Section 11.15. Effect Reclassification, Consolidation, Merger or Sale....................68
        Section 11.16. Company Determination Final...............................................69
        Section 11.17. Trustee's Adjustment Disclaimer...........................................69
        Section 11.18. Simultaneous Adjustments..................................................70
        Section 11.19. Successive Adjustments....................................................70
        Section 11.20. Rights Issued in Respect of Common Stock Issued Upon Conversion...........70
        Section 11.21. General Considerations....................................................71

ARTICLE 12 MISCELLANEOUS.........................................................................71

        Section 12.1.  Trust Indenture Act.......................................................71
        Section 12.2.  Notices...................................................................71
        Section 12.3.  Communication by Holders with Other Holders...............................72
        Section 12.4.  Certificate and Opinion as to Conditions Precedent........................72
        Section 12.5.  Statements Required in Certificate or Opinion.............................73
        Section 12.6.  Separability Clause.......................................................73
        Section 12.7.  Rules by Trustee, Paying Agent, Conversion Agent and Registrar............73
        Section 12.8.  Governing Law.............................................................73
        Section 12.9.  No Recourse Against Others................................................73
        Section 12.10. Successors................................................................74
        Section 12.11. Multiple Originals........................................................74





                                      -iv-

   7


        THIS INDENTURE, dated as of May 23, 2001, is between Atmel Corporation,
a Delaware corporation (the "Company"), and State Street Bank and Trust Company
of California, N.A., a national banking association organized and existing under
the laws of the United States of America (the "Trustee").


                             RECITALS OF THE COMPANY

        WHEREAS, the Company desires to issue its Zero Coupon Convertible
Subordinated Debentures due May 23, 2021 (the "Securities"), the issuance of
which was authorized by resolutions of the Board of Directors (as defined
below); and

        WHEREAS, all things necessary have been done to make the Securities,
when executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company in accordance with
their terms, and to make this Indenture a valid agreement of the Company in
accordance with its terms.

        NOW THEREFORE, in consideration of the premises provided for herein,
each of the Company and the Trustee agrees as follows for the benefit of the
other party hereto and for the equal and ratable benefit of the Holders of the
Securities:


                                   ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

        SECTION 1.1. DEFINITIONS.

        "Additional Interest" shall have the meaning specified in the
Registration Rights Agreement.

        "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person means the power to
direct or cause the direction of 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.

        "Board of Directors" means either the board of directors of the Company
or any duly authorized committee of such board.

        "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which the banking institutions in The City of New
York or the city in which the Corporate Trust Office is located are authorized
or obligated by law or executive order to close or be closed.


   8

        "Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 11.15, however, shares issuable upon conversion of the Securities
shall include only shares of Common Stock, par value of $0.001 per share, of the
Company as such shares exist on the date of this Indenture or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preferences in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

        "Company" means Atmel Corporation, a Delaware corporation, having its
principal office at 2325 Orchard Parkway, San Jose, California 95131, until
replaced by a successor entity pursuant to the applicable provisions of this
Indenture and, thereafter, shall mean such successor entity. The foregoing
sentence shall likewise apply to any subsequent such successor entity or
entities.

        "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, the Chief
Executive Officer, a Vice Chairman, its President or a Vice President, and by
its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.

        "Conversion Rate" has the meaning specified in Section 11.1.

        "Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, as of the date hereof, located at 633 West 5th
Street, 12th Floor, Los Angeles, California 90071, Attention: Corporate Trust
Department (Atmel Corporation - Zero Coupon Convertible Subordinated Debentures
due 2021).

        "Current Market Price" per share of the Common Stock on any date of
determination means the average of the daily closing prices of the Common Stock
on the Nasdaq National Market for the ten consecutive trading days ending on and
including such date of determination. The last reported sale price for each day
shall be (i) if the Common Stock is listed on the Nasdaq National Market, the
last reported sale price of Common Stock on the Nasdaq National Market, or any
similar system of automated dissemination of quotations of securities prices
then in common use, if so quoted, (ii) if the Common Stock is not listed or
admitted for trading as described in clause (i), the last reported sale price of
the Common Stock on the NYSE or if the Common Stock is listed or admitted for
trading on any other national securities exchange, the last sale price, or the
closing bid price if no sale occurred, of the Common Stock on the principal
securities exchange on which the Common Stock is listed, or (iii) if not quoted
or listed as described in clauses (i) or (ii), the mean between the high bid and
low asked quotations for Common Stock as reported by the National Quotation
Bureau Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the




                                      -2-
   9

Common Stock on at least five of the ten preceding Trading Days. If none of the
conditions set forth above is met, the last reported sale; price of common stock
on any day or the average of such last reported sale prices for any period shall
be the fair market value of the Common stock as determined by a member firm of
the NYSE selected by the Company.

        "Custodian" shall mean State Street Bank and Trust Company of
California, N.A., as custodian with respect to the Securities in global form, or
any successor entity thereto.

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

        "Depositary" means, with respect to the Securities issuable or issued in
whole or in part in global form, the Person specified in Section 2.6 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.

        "Designated Senior Indebtedness" means the Company's obligations under
any particular Senior Indebtedness in which the instrument creating or
evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides that
such Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes
of this Indenture (provided that such instrument, agreement or other document
may place limitations and conditions on the right of such Senior Indebtedness to
exercise the rights of Designated Senior Indebtedness).

        "DTC" means The Depository Trust Company.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.

        "Fundamental Change" means the occurrence of any transaction or event in
connection with which all or substantially all Common Stock shall be exchanged
for, converted into, acquired for or constitute solely the right to receive
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger , combination, reclassification, recapitalization or
otherwise) consideration which is not all or substantially all common stock
listed (or, upon consummation of or immediately following such transaction or
event which will be listed, on a United States national securities exchange or
approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices).

        "Holder" means a Person in whose name a Security is registered on the
Registrar's books.

        "Indebtedness" means, with respect to the Company and without
duplication, (a) all indebtedness, obligations and other liabilities (contingent
or otherwise) of the Company for borrowed money (including obligations of the
Company in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by




                                      -3-
   10

bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of the Company or to only a portion
thereof) (other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services), (b) all reimbursement obligations and other
liabilities (contingent or otherwise) of the Company with respect to letters of
credit, bank guarantees or bankers' acceptances, (c) all obligations and
liabilities (contingent or otherwise) in respect of leases of the Company
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of the
Company and all obligations and other liabilities (contingent or otherwise)
under any synthetic lease or other lease or related document (including a
purchase agreement) in connection with the lease of real property which provides
that the Company is contractually obligated to purchase or cause a third party
to purchase the leased property and thereby guarantee a minimum residual value
of the leased property to the landlord and the obligations of the Company under
such lease or related document to purchase or to cause a third party to purchase
such leased property, (d) all obligations of the Company (contingent or
otherwise) with respect to an interest rate or other swap, cap or collar
agreement or other similar instrument or agreement or foreign currency hedge,
exchange, purchase or similar instrument or agreement, (e) all direct or
indirect guaranties or similar agreements by the Company in respect of, and
obligations or liabilities (contingent or otherwise) of the Company to purchase
or otherwise acquire or otherwise assure a creditor against loss in respect of,
indebtedness, obligations or liabilities of another Person of the kind described
in clauses (a) through (d), (f) any indebtedness or other obligations described
in clauses (a) through (e) secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by the Company,
regardless of whether the indebtedness or other obligation secured thereby shall
have been assumed by the Company and (g) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any indebtedness, obligation or liability of the kind described in clauses (a)
through (f).

        "Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.

        "Initial Purchasers" means Morgan Stanley & Co. Incorporated, Credit
Lyonnais Securities (USA) Inc. and Needham & Company, Inc.

        "Institutional Accredited Investor" means an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.

        "Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.

        "Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is
issued as set forth on the face of the Security.

        "Legal Holiday" is any day other than a Business Day. If any specified
date (including a date for giving notice) is a Legal Holiday, the action shall
be taken on the next succeeding date that is not




                                      -4-
   11

a Legal Holiday, and to the extent applicable no Original Issue Discount or
interest, if any, shall accrue for the intervening period.

        "Nasdaq" or "Nasdaq National Market" means the electronic inter-dealer
quotation system operated by Nasdaq Stock Market, Inc., a subsidiary of the
National Association of Securities Dealers, Inc.

        "NYSE" means The New York Stock Exchange, Inc.

        "Officer" means the Chairman of the Board, the Chief Executive Officer,
any Vice Chairman, the President, any Vice President, the Treasurer or the
Secretary or any Assistant Treasurer or Assistant Secretary of the Company.

        "Officers' Certificate" means a written certificate containing the
information specified in Sections 12.4 and 12.5, signed in the name of the
Company by its Chairman of the Board, the Chief Executive Officer, a Vice
Chairman, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.

        "Opinion of Counsel" means a written opinion containing the information
specified in Sections 12.4 and 12.5, from legal counsel who is acceptable to the
Trustee. The counsel may be an employee of, or counsel to, the Company or the
Trustee.

        "Original Issue Discount" of any Security means the difference between
the Issue Price and the Principal Amount of the Security as set forth on the
face of the Security. For purposes of this Indenture and the Securities, accrual
of Original Issue Discount shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months.

        "Payment Blockage Notice" has the meaning specified in Section 10.2.

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

        "Portal Market" means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.

        "Principal" or "Principal Amount" of a Security means the Principal
Amount as set forth on the face of such Security, or on Schedule A thereto in
the case of a Security in global form.

        "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

        "Redemption Date" means a date specified for redemption of the
Securities (other than redemption upon a Fundamental Change at the option of the
Holder) in accordance with the terms of the Securities and Section 3.1 of this
Indenture.

        "Redemption Price" shall have the meaning set forth in paragraph 5 of
the Securities.




                                      -5-
   12

        "Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, among the Company and the Initial
Purchasers.

        "Representative" means (a) the indenture trustee or other trustee, agent
or representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required Persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.

        "Rule 144A" means Rule 144A as promulgated under the Securities Act, or
any successor rule.

        "Rule 144(k)" means Rule 144(k) as promulgated under the Securities Act,
or any successor rule.

        "SEC" means the Securities and Exchange Commission.

        "Securities" means the Company's Zero Coupon Convertible Subordinated
Debentures due 2021.

        "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

        "Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in such proceeding) and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, Indebtedness of the Company, whether outstanding on
the date of this Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by the Company (including all deferrals, renewals,
extensions or refundings of, or amendments, modifications or supplements to, the
foregoing), unless in the case of any particular Indebtedness the instrument
creating or evidencing the same or the assumption or guarantee thereof expressly
provides that such Indebtedness shall not be senior in right of payment to the
Securities or expressly provides that such Indebtedness is "pari passu" or
"junior" to the Securities. Notwithstanding the foregoing, the Senior
Indebtedness shall not include (i) any Indebtedness of the Company to any
Subsidiary of the Company a majority of the voting stock of which is owned,
directly or indirectly, by the Company or (ii) the Company's obligations under
its Zero-Coupon Convertible Subordinated Notes Due 2018.

        "Significant Subsidiary" means, with respect to any Person, a Subsidiary
of such Person organized under the laws of the United States of America, any
state thereof, or the District of Columbia that would constitute a "significant
subsidiary" as such term is defined under Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission.




                                      -6-
   13

        "Stated Maturity", when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the Principal of such Security is due and payable.

        "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock 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 such
Person or one or more of the other subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such Person or a subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
subsidiaries of such Person (or any combination thereof).

        "TIA" means the Trust Indenture Act of 1939, as amended, as in effect on
the date of this Indenture, except as provided in Section 9.3.

        "Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after May 23, 2001, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of such laws or regulations by any legislative body, court, governmental agency
or regulatory authority, in each case, which amendment or change is enacted,
promulgated, issued or announced or which interpretation is issued or announced
or which action is taken, on or after May 23, 2001, there is more than an
insubstantial risk that interest, including Original Issue Discount, payable on
the Securities either (i) would not be deductible on a current accrual basis or
(ii) would not be deductible under any other method, in either case, in whole or
in part, by the Company (by reason of deferral, disallowance or otherwise) for
United States Federal income tax purposes.

        "Trading Day" means a day during which trading in securities generally
occurs on the Nasdaq National Market or, if the applicable security is not
quoted on the Nasdaq National Market, on the NYSE, or if the applicable security
is not listed on the NYSE, on the principal other national or regional
securities exchange on which the applicable security is then listed or, if the
applicable security is not listed on a national or regional securities exchange,
on the principal other market on which the applicable security is then traded.

        "Trust Officer" means any officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.

        "Trustee" means State Street Bank and Trust Company of California, N.A.
until a successor entity replaces it pursuant to the applicable provisions of
this Indenture and, thereafter, shall mean such successor entity. The foregoing
sentence shall likewise apply to any subsequent such successor entity or
entities.




                                      -7-
   14

        "Voting Stock" means stock of any class or classes, however designated,
having ordinary voting power for the election of a majority of the board of
directors of a corporation, other than stock having such power only by reason of
the occurrence of a contingency.

        SECTION 1.2. OTHER DEFINITIONS.



                                                                             DEFINED IN
                                      TERM                                    SECTION
        ---------------------------------------------------------------      ----------
                                                                          
        "Agent Members"................................................          2.1
        "Cash".........................................................          3.8(b)
        "Commission"...................................................          1.3
        "Company Notice"...............................................          3.8(e)
        "Company Notice Date"..........................................          3.8(c)
        "Conversion Agent".............................................          2.3
        "Defaulted Interest"...........................................         11.6(d)
        "Expiration Time"..............................................         11.9(c)
        "Event of Default".............................................          6.1
        "Fundamental Change Redemption Date"...........................          3.9(a)
        "Fundamental Change Redemption Notice".........................          3.9(a)
        "Fundamental Change Redemption Price"..........................          3.9(a)
        "Indenture to be Qualified"....................................          1.3
        "Indenture Securities".........................................          1.3
        "Indenture Security Holder"....................................          1.3
        "Indenture Trustee"............................................          1.3
        "Junior Securities"............................................         10.12
        "Market Price".................................................          3.8(d)
        "Notice of Default"............................................          6.1
        "Option Exercise Rate".........................................         11.6(a)
        "Over-Allotment Option"........................................          2.2
        "Payment Default"..............................................         10.2
        "Paying Agent".................................................          3.8(a)
        "Purchase Date"................................................          3.8(a)
        "Purchase Notice"..............................................          3.8(a)
        "Purchase Price"...............................................          3.8(a)
        "Purchased Shares".............................................         11.9(c)
        "Registrar"....................................................          2.3
        "Restricted Securities"........................................          2.6(d)
        "Sale Price"...................................................          3.8(d)
        "Tender Expiration Time".......................................         11.9(d)
        "Tender Purchased Shares"......................................         11.9(d)





                                      -8-
   15

        SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

        Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:

        "Commission" means the SEC.

        "Indenture Securities" means the Securities.

        "Indenture Security Holder" means a Holder.

        "Indenture to be Qualified" means this Indenture.

        "Indenture Trustee" or "Institutional Trustee" means the Trustee.

        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 rules have the
meanings assigned to them by such definitions.

        SECTION 1.4. RULES OF CONSTRUCTION.

        Unless the context otherwise requires:

        (1) a term has the meaning assigned to it;

        (2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in effect from
time to time;

        (3) "or" is not exclusive;

        (4) "including" means including, without limitation; and words in the
singular include the plural, and words in the plural include the singular.


                                    ARTICLE 2

                                 THE SECURITIES

        SECTION 2.1. FORM AND DATING.

        The Securities and the Trustee's certificate of authentication for the
Securities shall be substantially in the form of Exhibit A, which is
incorporated into and shall be deemed a part of this Indenture, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by the Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any automated quotation
system or securities exchange or as may, consistently herewith,




                                      -9-
   16

be determined by the officers of the Company executing such Securities, as
evidenced by their execution of the Securities. The Company shall provide any
such notations, legends or endorsements to the Trustee in writing. Each Security
shall be dated the date of its authentication.

        Any Security in global form shall represent such of the outstanding
Securities as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be increased or reduced to reflect
exchanges, redemptions, purchases or conversions of such Securities permitted by
this Indenture. Any endorsement of a Security in global form to reflect the
amount of any increase or decrease in the Principal Amount of outstanding
Securities represented thereby shall be made by the Trustee or the Custodian, at
the direction of the Trustee, in such manner and upon instructions given by the
Holder of such Security in accordance with the standing instructions and
procedures existing between the Depositary and the Custodian. Payment of
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Additional Interest, if any, Redemption Price, Purchase Price, Fundamental
Change Redemption Price or interest, if any, on any Security in global form
shall be made to the Holder of such Security.

        Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Security in global form
held on their behalf by the Depositary or under the Security in global form, and
the Depositary (including, for this purpose, its nominee) 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 Security in global form for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall (A) 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 (B) impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Securities.

        Any Security in global form may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for such
Securities to be tradeable on any market developed for trading of securities
pursuant to Rule 144A or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any automated
quotation system or securities exchange upon which the Securities may be quoted,
listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Securities are subject.

        The Company initially appoints DTC to act as Depositary with respect to
the Securities in global form.

        SECTION 2.2. EXECUTION AND AUTHENTICATION.

        The Securities shall be executed on behalf of the Company by its
Chairman of the Board, the Chief Executive Officer, one of its Vice Chairmen,
its President or one of its Vice Presidents. The signature of any of these
officers may be manual or facsimile.




                                      -10-
   17

        Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of the Company shall bind the Company,
notwithstanding the fact that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of authentication of such Securities.

        No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.

        The Trustee shall authenticate and deliver Securities for original issue
in an aggregate Principal Amount of $511,500,000 upon a Company Order without
any further action by the Company (or an aggregate Principal Amount not to
exceed $588,225,000 if the over-allotment option set forth in Section 2 of the
Purchase Agreement dated May 17, 2001 (as amended from time to time by the
parties thereto) by and among the Company and the Initial Purchasers (the
"Over-Allotment Option") is exercised in full). The aggregate Principal Amount
of Securities outstanding at anytime may not exceed the amount set forth in the
foregoing sentence, except as provided in Section 2.7.

        SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.

        The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency where Securities may be presented for purchase or payment ("Paying
Agent") and an office or agency where Securities may be presented for conversion
into Common Stock ("Conversion Agent"). The Registrar shall keep a register of
the Securities 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 Conversion Agent includes any additional conversion or
agent, including any named pursuant to Section 4.5.

        The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar (if not the Trustee or
an Affiliate of the Trustee). The agreement shall implement the provisions of
this Indenture that relate to such agent and the relevant Security. 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 7.7. The Company or an Affiliate of the Company may
act as Paying Agent, Registrar, Conversion Agent or co-registrar.

        The Company initially appoints the Trustee as Registrar, Conversion
Agent and Paying Agent in connection with the Securities.




                                      -11-
   18

        SECTION 2.4. PAYING AGENT TO HOLD MONEY AND SECURITIES IN TRUST.

        Except as otherwise provided in this Indenture, prior to or on each due
date of payments in respect of any Security, the Company shall deposit with the
Paying Agent a sum of money or securities sufficient to make such payments when
such payments are due. The Company shall require the Paying Agent (if not the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money and securities held by the Paying
Agent for the making of payments in respect of the Securities and shall notify
the Trustee of any default by the Company in making any such payment. At any
time during the continuance of any such default, the Paying Agent shall, upon
the written request of the Trustee, forthwith pay to the Trustee all money and
securities so held in trust. If the Company or an Affiliate of the Company acts
as Paying Agent, it shall segregate the money and securities held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require the Paying Agent to pay all money and securities held by it to the
Trustee and to account for any funds and securities disbursed by it. Upon doing
so, the Paying Agent shall have no further liability for such money or
securities.

        SECTION 2.5. HOLDER 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
Holders. If the Trustee is not the Registrar, the Company shall cause to be
furnished to the Trustee at least semiannually on March 12 and September 12 a
listing of Holders dated within 15 days of the date on which the list is
furnished 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 Holders.

        SECTION 2.6. EXCHANGE AND REGISTRATION OF TRANSFER OF SECURITIES;
RESTRICTIONS ON TRANSFERS; DEPOSITARY.

               (a) Upon surrender for registration of transfer of any Security
at any office or agency of the Company designated as Registrar or co-registrar
pursuant to Section 2.3 and satisfaction of the requirements for such transfer
set forth in this Section 2.6, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations and of a
like aggregate Principal Amount and bearing such restrictive legends as may be
required by this Indenture.

        Securities may be exchanged for a like aggregate Principal Amount of
Securities of other authorized denominations. Securities to be exchanged shall
be surrendered at any office or agency to be maintained by the Company
designated as Registrar or co-registrar pursuant to Section 2.3 and the Company
shall execute and register, and the Trustee shall authenticate and deliver in
exchange therefor, the Security or Securities which the Holder making the
exchange shall be entitled to receive, bearing registration numbers not
contemporaneously outstanding.

        All Securities presented for registration of transfer or for exchange
into like Securities, purchase, redemption or conversion into Common Stock or
payment shall (if so required by the Company, the Trustee, the Registrar or any
co-registrar) be duly endorsed by, or be accompanied by




                                      -12-
   19

a written instrument or instruments of transfer in form satisfactory to the
Company and the Trustee, duly executed by the Holder or such Holder's attorney
duly authorized in writing.

        No service charge shall be charged to the Holder for any exchange for
like Securities or registration of transfer of Securities, but the Company may
require payment of a sum sufficient to cover any tax, assessments or other
governmental charges that may be imposed in connection therewith.

        None of the Company, the Trustee, the Registrar or any co-registrar
shall be required to exchange for like Securities or register a transfer of (a)
any Securities for a period of 15 days next preceding any selection of
Securities to be redeemed, or (b) any Securities or portions thereof selected or
called for redemption, except the unredeemed portion of any Security redeemed in
part.

        All Securities issued upon any transfer or exchange for like Securities
shall be valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture as the Securities surrendered
upon such exchange or transfer.

               (b) So long as the Securities are eligible for book-entry
settlement with the Depositary (as defined below), or unless otherwise required
by law, all Securities that are so eligible may be represented by a Security in
global form registered in the name of the Depositary or the nominee of the
Depositary, except as otherwise specified below. The transfer and exchange of
beneficial interests in such Security in global form shall be effected through
the Depositary in accordance with this Indenture and the procedures of the
Depositary therefore.

        Securities that upon initial issuance are beneficially owned by QIBs
will be represented by one or more Securities in global form. Transfers of
interests in a Security in global form will be made in accordance with the
standing instructions and procedures of the Depositary and its participants. The
Trustee shall make appropriate endorsements to reflect increases or decreases in
the Principal Amounts of such Securities in global form as set forth on the face
of the Security in global form to reflect any such transfers. Except as provided
below, beneficial owners of a Security in global form 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 Securities in global form.

               (c) So long as the Securities are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Security to a QIB in accordance with Rule 144A and upon receipt of
the definitive Security or Securities being so transferred, together with a
certification, substantially in the form of the reverse of the Security, from
the transferor that the transfer is being made in compliance with Rule 144A (or
other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Security in global form to reflect an increase in the
aggregate Principal Amount of the Securities represented by the Security in
global form, the Trustee shall cancel such Security or Securities in
certificated form in accordance with the standing instructions and procedures of
the Depositary and the aggregate Principal Amount of Securities represented by
the Security in global form will be increased accordingly; provided that no
definitive Security, or portion thereof, in respect of which the Company or an
Affiliate of the Company held




                                      -13-
   20

any beneficial interest shall be included in such Security in global form until
such definitive Security is freely tradable in accordance with Rule 144(k);
provided further that upon any transfer of a beneficial interest in any Security
in global form to the Company or any Affiliate of the Company, the Company shall
issue and the Trustee, upon receipt of an Officers' Certificate and Company
Order for authentication and delivery of Securities, shall authenticate and
deliver, Securities in certificated form, in an aggregate Principal Amount equal
to the Principal Amount of the Security in global form, in exchange for such
Security in global form.

               (d) Upon any sale or transfer of a Security to an Institutional
Accredited Investor (other than pursuant to a registration statement that has
been declared effective under the Securities Act), such Institutional Accredited
Investor shall, prior to such sale or transfer, furnish to the Company and/or
the Trustee a signed letter containing representations and agreements relating
to restrictions on transfer substantially in the form set forth in Exhibit B to
this Indenture.

        Any Security in global form may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the
Depositary, by the National Association of Securities Dealers, Inc. or by the
NYSE in order for the Securities to be tradeable on The Portal Market or as may
be required for the Securities to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
any securities exchange upon which the Securities may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Securities are subject.

               (e) Every Security that bears or is required under this Section
2.6(d) to bear the legend set forth in this Section 2.6(d) (together with any
Common Stock issued upon conversion of the Securities and required to bear the
legend set forth in Section 2.6(e), collectively, the "Restricted Securities")
shall be subject to the restrictions on transfer set forth in this Section
2.6(d) (including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security, by such Holder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.6(d) and 2.6(e), the term "transfer" encompasses any sale, pledge,
transfer or other disposition whatsoever of any Restricted Security.

        Until the expiration of the holding period applicable to sales thereof
under Rule 144(k), any certificate evidencing such Security (and all securities
issued in exchange therefore or substitution thereof, other than Common Stock,
if any, issued upon conversion therefore, which shall bear the legend set forth
in Section 2.6(e), if applicable) shall bear a legend in substantially the
following form, unless such 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 unless otherwise
agreed by the Company in writing, with written notice thereof to the Trustee:

        THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
        STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
        STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE




                                      -14-
   21

        OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
        BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
        BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
        "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
        SECURITIES ACT) OR (B) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED
        STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS
        OF PARAGRAPH (K)(2) OF RULE 902 UNDER REGULATION S UNDER THE SECURITIES
        ACT) OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
        RULE 501(a)(1), (2),(3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL
        ACCREDITED INVESTOR"); (4) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION
        OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
        HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
        PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY
        OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITIES WITHIN
        THE UNITED STATES OR TO OR FOR THE ACCOUNT OF A U.S. PERSON EXCEPT (A)
        TO ATMEL CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED
        INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT),
        (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
        501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH
        TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST COMPANY OF
        CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A
        SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
        TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE
        FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR
        TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
        PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E)
        PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
        UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
        TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A
        TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), AGREES THAT IT WILL FURNISH TO
        STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR
        A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS
        OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM
        THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
        TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
        SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
        WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
        PURSUANT TO CLAUSE 2(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
        THIS LEGEND IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED
        HEREBY. PRIOR TO THE EXPIRATION OF THE HOLDING




                                      -15-
   22

        PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
        144(K) UNDER THE SECURITIES ACT (OR A-NY SUCCESSOR PROVISION), THE
        HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
        RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
        STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR
        A SUCCESSOR TRUSTEE, AS APPLICABLE) IF THE PROPOSED TRANSFEREE IS AN
        INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S.
        PERSON, THE HOLDER MUST PRIOR TO SUCH TRANSFER FURNISH TO STATE STREET
        BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR
        TRUSTEE, AS APPLICABLE) SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
        INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
        IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
        SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS
        LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE SECURITY
        EVIDENCED HEREBY PURSUANT TO CLAUSE (2)(D) OR (2)(E) ABOVE OR UPON ANY
        TRANSFER OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
        SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS
        "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
        REGULATION S UNDER THE SECURITIES ACT.

        Any Security (or security issued in exchange or substitution therefor)
as to which such restrictions on transfer shall have expired in accordance with
their terms or as to which the conditions for removal of the foregoing legend
set forth therein have been satisfied may, upon surrender of such Securities for
exchange to the Registrar in accordance with the provisions of this Section 2.6,
be exchanged for a new Security or Securities, of like tenor and aggregate
principal amount, which shall not bear the restrictive legend required by this
Section 2.6(d).

        Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.6(d)), a Security in global form may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee or to a successor Depositary or a nominee of such successor Depositary.

        The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Securities in global form. Initially, a Security
in global form shall be issued to the Depositary, registered in the name of Cede
& Co., as the nominee of the Depositary, and deposited with the Custodian for
Cede & Co.

        If at any time the Depositary for a Security in global form notifies the
Company that it is unwilling or unable to continue as Depositary for such
Security, the Company may appoint a successor Depositary with respect to such
Security. If (A) a successor Depositary for the Security is not appointed by the
Company within 90 days after the Company receives such notice or (B) the




                                      -16-
   23

Company in its sole discretion determines not to have the Securities represented
by a Security in global form, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate and Company Order for authentication and
delivery of Securities, will authenticate and deliver, Securities in
certificated form, in an aggregate Principal Amount equal to the Principal
Amount of the Security in global form, in exchange for such Security in global
form. Such exchange shall be effected in accordance with such rules and
procedures of the Depositary as are applicable to the exchange. Only Restricted
Securities shall be issued in exchange for Securities in global form that are
restricted under Rule 144.

        Securities in certificated form issued in exchange for all or a part of
a Security in global form pursuant to this Section 2.6 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Securities in certificated form to the Persons in whose names such
Securities in certificated form are so registered.

        At such time as all interests in a Security in global form have been
redeemed, converted, exchanged, repurchased or canceled for Securities in
certificated form, or transferred to a transferee who receives Securities in
certificated form, such Security in global form shall be, upon receipt thereof,
canceled by the Trustee in accordance with the standing procedures and
instructions existing between the Custodian and Depositary. At any time prior to
such cancellation, if any interest in a Security in global form is exchanged for
Securities in certificated form, redeemed, converted, exchanged, repurchased by
the Company or canceled, or transferred for part of a Security in global form,
the Principal Amount of such Security in global form shall, in accordance with
the standing procedures and instructions existing between the Custodian and the
Depositary, be reduced or increased, as the case may be, and an endorsement
shall be made on such Security in global form, by the Trustee or the Custodian,
at the direction of the Trustee, to reflect such reduction or increase.

               (f) Until the expiration of the holding period applicable to
sales thereof under Rule 144(k), any stock certificate representing Common Stock
issued upon conversion of a Security shall bear a legend in substantially the
following form, unless such Common Stock has been sold pursuant to a
registration statement that has been declared effective under the Securities Act
(and which continues to be effective at the time of such transfer) or such
Common Stock has been issued upon conversion of Securities that have been
transferred pursuant to a registration statement that has been declared
effective under the Securities Act, or unless otherwise agreed by the Company in
writing with written notice thereof to the transfer agent for the Common Stock:

        THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
        UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
        OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
        SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
        U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER
        HEREOF AGREES THAT UNTIL THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE
        TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
        SECURITIES




                                      -17-
   24

        ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE
        TRANSFER THE COMMON STOCK EVIDENCED HEREBY WITHIN THE UNITED STATES OR
        TO, OR FOR THE ACCOUNT OF, U.S. PERSONS EXCEPT (A) TO ATMEL CORPORATION
        OR ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS
        DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (C) TO AN INSTITUTIONAL
        "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
        UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER, FURNISHES TO
        EQUSERVE, L.P., AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS
        APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
        AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK
        EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
        TRANSFER AGENT OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), (D)
        PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
        THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO A REGISTRATION
        STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT
        (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2)
        PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE I(E)
        ABOVE), IT WILL FURNISH TO EQUSERVE, L.P., AS TRANSFER AGENT (OR A
        SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
        OPINIONS OR OTHER INFORMATION AS THE TRANSFER AGENT MAY REASONABLY
        REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
        EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT AND (3) IT WILL DELIVER TO EACH
        PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER
        THAN A TRANSFER PURSUANT TO CLAUSE I (E) ABOVE) A NOTICE SUBSTANTIALLY
        TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN
        INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S.
        PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRANSFER
        AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
        REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
        TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
        REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
        REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED
        HEREBY PURSUANT TO CLAUSE I(D) OR I(E) ABOVE OR UPON ANY TRANSFER OF THE
        COMMON STOCK EVIDENCED HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD
        APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k)
        UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN,
        THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
        THEM BY REGULATION S UNDER THE SECURITIES ACT.




                                      -18-
   25

        Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.6(e).

               (g) Any Security or Common Stock issued upon the conversion or
exchange of a Security that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k), is 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 Securities or Common Stock, as the case may
be, no longer being "restricted securities" (as defined under Rule 144).

        SECTION 2.7. REPLACEMENT SECURITIES.

        If (a) any mutilated Security is surrendered to the Trustee, or (b) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and, upon its written request, the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new Security of like tenor and
Principal Amount, bearing a number not contemporaneously outstanding.

        In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be purchased or
redeemed by the Company pursuant to Article 3 hereof, the Company in its
discretion may, instead of issuing a new Security, pay, purchase or redeem such
Security, as the case maybe.

        Upon the issuance of any new Securities under this Section 2.7, the
Company may, as a condition to such issuance, require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.

        Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

        The provisions of this Section 2.7 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.




                                      -19-
   26

        SECTION 2.8. OUTSTANDING SECURITIES, DETERMINATIONS OF HOLDERS' ACTION.

        Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding. A
Security does not cease to be outstanding because the Company or an Affiliate
thereof holds the Security; provided, however, that in determining whether the
Holders of the requisite Principal Amount of Securities have given or concurred
in any request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any Affiliate of the Company shall
be disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Subject to the foregoing,
only Securities outstanding at the time of such determination shall be
considered in any such determination (including, without limitation,
determinations pursuant to Articles 6 and 9).

        If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

        If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following a Purchase Date or a
Fundamental Change Redemption Date, or on Stated Maturity, money or securities,
if permitted hereunder, sufficient to pay Securities payable on that date, then
on and after that date such Securities shall cease to be outstanding and
Original Issue Discount and interest, if any, on such Securities shall cease to
accrue; provided, that if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made.

        If a Security is converted in accordance with Article 11, then from and
after such conversion such Security shall cease to be outstanding and Original
Issue Discount and interest, if any, shall cease to accrue on such Security.

        SECTION 2.9. TEMPORARY SECURITIES.

        Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such Securities.

        If temporary Securities are issued, the Company shall cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.3,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like




                                      -20-
   27

Principal Amount of definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.

        SECTION 2.10. CANCELLATION.

        All Securities surrendered for payment, purchase, conversion, redemption
or registration of transfer or exchange for the Securities shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee and shall be
promptly canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. The Company may not
issue new Securities to replace Securities it has paid for or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to Article
11. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section 2. 10, except as expressly
permitted by this Indenture. All canceled Securities held by the Trustee shall
be destroyed by the Trustee and, following such destruction, the Trustee shall
deliver a certificate of destruction to the Company, unless the Company.

        SECTION 2.11. PERSONS DEEMED OWNERS.

        Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of Principal Amount, Issue Price, accrued
Original Issue Discount, accrued Additional Interest, if any, Redemption Price,
Purchase Price, Fundamental Change Redemption Price and interest, if any, in
respect thereof, for the purpose of conversion and for all other purposes
whatsoever, whether or not such Security be overdue, and none of the Company,
the Trustee or any agent of the Company or the Trustee shall be affected by
notice to the contrary.


                                   ARTICLE 3

                            REDEMPTION AND PURCHASES

        SECTION 3.1. RIGHT TO REDEEM; NOTICES TO TRUSTEE.

        The Company, at its option, may redeem the Securities in accordance with
paragraphs 5 and 7 of the Securities and the provisions of this indenture. If
the Company elects to redeem Securities pursuant to paragraph 5 of the
Securities, it shall notify the Trustee in writing of the Redemption Date, the
Principal Amount of Securities to be redeemed and the Redemption Price.

        The Company shall give the notice to the Trustee provided for in this
Section 3.1 (i) in the case of any redemption of fewer than all of the
Securities, at least 45 days before the Redemption Date and (ii) in the case of
a redemption of all of the Securities, no later than the date that the




                                      -21-
   28

Company is required to give notice to the Holders pursuant to Section 3.3, in
each case unless a shorter notice shall be satisfactory to the Trustee.

        SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED.

        If less than all the Securities held in definitive form are to be
redeemed pursuant to Section 3.1, the Trustee shall select the definitive
Securities to be redeemed pro rata or by lot or by another method the Trustee
considers fair and appropriate (as long as such method is not prohibited by the
rules of any quotation system or securities exchange on which the Securities are
then quoted or listed). The Trustee shall make the selection at least 35 days,
but not more than 60 days, before the Redemption Date from outstanding
definitive Securities not previously called for redemption. The Trustee may
select for redemption portions of the Principal Amount of Securities that have
denominations larger than $ 1,000. Securities and portions of them the Trustee
selects shall be in Principal Amounts of $ 1,000 or an integral multiple of $
1,000. Provisions of this Indenture that apply to definitive Securities called
for redemption also apply to portions of definitive Securities called for
redemption. The Trustee shall notify the Company promptly of the definitive
Securities or portions of definitive Securities to be redeemed.

        Any interest in a Security held in global form by and registered in the
name of the Depositary or its nominee to be redeemed in whole or in part will be
redeemed in accordance with the procedures of the Depositary.

        If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed to
be (to the fullest extent possible) the portion selected for redemption.
Securities which have been converted during a selection of Securities to be
redeemed may be treated by the Trustee as outstanding for the purpose of such
selection.

        SECTION 3.3. NOTICE OF REDEMPTION.

        At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail, postage prepaid,
to each Holder of Securities to be redeemed.

        The notice shall identify the Securities to be redeemed and shall state:

        (1) the Redemption Date;

        (2) the Redemption Price;

        (3) the Conversion Rate;

        (4) the name and address of the Paying Agent and Conversion Agent;




                                      -22-
   29

        (5) that Securities called for redemption may be converted at any time
before the close of business on the last Trading Day prior to the Redemption
Date;

        (6) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;

        (7) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;

        (8) if fewer than all the outstanding Securities are to be redeemed, the
certificate number and Principal Amounts of the particular Securities to be
redeemed;

        (9) that Original Issue Discount on Securities called for redemption
will cease to accrue on and after the Redemption Date; and

        (10) the CUSIP number or numbers for the Securities.

The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.

        At the Company's written request delivered to the Trustee at least 45
days before the Redemption Date, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense.

        SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.

        Once notice of redemption is given, pursuant to Section 3.3, Securities
called for redemption become due and payable on the Redemption Date and at the
Redemption Price stated in the notice except for Securities which are converted
in accordance with the terms of this Indenture.

        Upon the later of the Redemption Date or the date such Securities are
surrendered to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice.

        SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.

        Prior to or on the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or an Affiliate of the Company is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the Redemption
Price of all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which prior thereto have been
delivered by the Company to the Trustee for cancellation or have been converted
into Common Stock, and on or after the Redemption Date (unless the Company shall
default in the payment of the Securities at the Redemption Price), Original
Issue Discount on the Securities or portion of Securities called for redemption
shall cease to accrue and such Securities shall cease after the close of
business on the




                                      -23-
   30

Business Day immediately preceding the Redemption Date to be convertible into
Common Stock and, except as provided in Section 8.2, to be entitled to any
benefit or security under this Indenture, and the Holders thereof shall have no
right in respect of such Securities except the right to receive the Redemption
Price thereof and unpaid interest up to and including the Redemption Date. The
Paying Agent shall as promptly as practicable return to the Company any money,
with interest, if any, thereon, not required for that purpose because of
conversion of Securities. If such money is then held by the Company in trust and
is not required for such purpose it shall be discharged from such trust.

        SECTION 3.6. SECURITIES REDEEMED IN PART.

        Upon surrender of a Security that is redeemed in part, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder a new
Security in an authorized denomination equal in Principal Amount to the
unredeemed portion of the Security surrendered.

        SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.

        In connection with any redemption of Securities, the Company may arrange
for the purchase and conversion into Common Stock of any Securities called for
redemption by an agreement with one or more investment bankers or other
purchasers to purchase such Securities by paying to the Paying Agent in trust
for the Holders, on or before the close of business on the Redemption Date, an
amount that, together with any amounts deposited with the Paying Agent by the
Company for the redemption of the Securities, is not less than the Redemption
Price up to and including the Redemption Date of such Securities.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price of such Securities shall
be deemed to be satisfied and discharged to the extent such amount is so paid by
such purchasers. If such an agreement is entered into, any Securities not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 11) surrendered by such purchasers for conversion, all
immediately prior to the close of business on the Redemption Date, subject to
payment of the above amount as aforesaid. The Paying Agent shall hold and pay to
the Holders whose Securities are selected for redemption any such amount paid to
it in the same manner as it would money deposited with it by the Company for the
redemption of Securities. Without the Paying Agent's prior written consent, no
arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Paying Agent as set forth
in this Indenture, and the Company agrees to indemnify the Paying Agent from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Paying Agent in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.




                                      -24-
   31

        SECTION 3.8. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER.

               (a) General. Securities shall be purchased by the Company
pursuant to paragraph 6 of the Securities as of May 23, 2006, May 23, 2011 and
May 23, 2016 (each, a "Purchase Date"), at the purchase price specified therein
(each, a "Purchase Price") at the option of the Holder thereof, upon:

                   (1) delivery to the Paying Agent by the Holder of a written
notice of purchase (a "Purchase Notice") at any time from the opening of
business on the date that is 20 Business Days prior to a Purchase Date until the
close of business on such Purchase Date, stating:

                       (A) the certificate number of the Security which the
Holder will deliver to be purchased (or, if the Security is not certificated,
such other identification necessary to comply with appropriate DTC procedures);

                       (B) the portion of the Principal Amount of the Security
which the Holder will deliver to be purchased, which portion must be $ 1,000 in
Principal Amount or a multiple thereof;

                       (C) that such Security shall be purchased as of the
Purchase Date pursuant to the terms and conditions specified in paragraph 6 of
the Securities and the provisions of this Indenture; and

                       (D) if the Company elects, pursuant to a Company Notice,
to pay the Purchase Price to be paid as of such Purchase Date, in whole or in
part, in Common Stock but such portion of the Purchase Price shall ultimately be
payable to such Holder in Cash because any of the conditions to the payment of
the Purchase Price in Common Stock are not satisfied prior to or on the Purchase
Date, as set forth in Section 3.8(d), whether such Holder elects (x) to withdraw
such Purchase Notice as to some or all of the Securities to which such Purchase
Notice relates (stating the Principal Amount and certificate numbers of the
Securities as to which such withdrawal shall relate), or (y) to receive Cash in
respect of the entire Purchase Price for all Securities (or portions thereof) to
which such Purchase Notice relates; and

                   (2) delivery of such Security to the Paying Agent prior to,
on or after the Purchase Date (together with all necessary endorsements) at the
offices of the Paying Agent, such delivery being a condition to receipt by the
Holder of the Purchase Price therefor; provided, however, that such Purchase
Price shall be so paid pursuant to this Section 3.8 only if the Security so
delivered to the Paying Agent shall conform in all respects to the description
thereof in the related Purchase Notice.

        If a Holder, in such Holder's Purchase Notice (and in any written notice
of withdrawal of a portion of such Holder's Securities previously submitted for
purchase pursuant to a Purchase Notice, the portion that remains subject to the
Purchase Notice), fails to indicate such Holder's choice with respect to the
election set forth in clause (D) of Section 3.8(a)(1), such Holder shall be
deemed to




                                      -25-
   32

have elected to receive Cash in respect of the entire Purchase Price for all
Securities subject to such Purchase Notice in the circumstances set forth in
such clause (D).

        The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the Principal Amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security also apply to the purchase of such
portion of such Security.

        Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.8 shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Purchase Date and the
time of delivery of the Security.

        Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Purchase Notice contemplated by this Section 3.8(a)
shall have the right at any time prior to the close of business on the Purchase
Date to withdraw such Purchase Notice by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.

        The Paying Agent shall promptly notify the Company of the receipt by it
of any Purchase Notice or written notice of withdrawal thereof.

               (b) Company's Right to Elect Manner of Payment of Purchase Price.
The Company may elect with respect to any Purchase Date to pay the Purchase
Price in respect of the Securities to be purchased pursuant to Section 3.8(a) as
of such Purchase Date, in U.S. legal tender ("Cash") or Common Stock, or in any
combination of Cash and Common Stock, subject to the conditions set forth in
Sections 3.8(c) and (d). The Company shall designate, in the Company Notice
delivered pursuant to Section 3.8(e), whether the Company will purchase the
Securities for Cash or Common Stock, or, if a combination thereof, the
percentages of the Purchase Price of Securities in respect of which it will pay
in Cash and/or Common Stock; provided that the Company will pay Cash for
fractional interests in shares of Common Stock. For purposes of determining the
existence of potential fractional interests, all Securities subject to purchase
by the Company held by a Holder shall be considered together (no matter how many
separate certificates are to be presented). Each Holder whose Securities are
purchased pursuant to this Section 3.8 shall receive the same percentage of Cash
and/or Common Stock in payment of the Purchase Price for such Securities, except
(i) as provided in Section 3.8(d) with regard to the payment of Cash in lieu of
fractional interests in Common Stock and (ii) in the event that the Company is
unable to purchase the Securities of a Holder or Holders for Common Stock
because any necessary qualifications or registrations of the Common Stock under
applicable federal or state securities laws cannot be obtained, the Company may
purchase the Securities of such Holder or Holders for Cash. The Company may not
change its election with respect to the consideration (or components or
percentages of components thereof) to be paid once the Company has given its
Company Notice to Holders except pursuant to this Section 3.8(b) or Section
3.8(d).

        At least two Business Days before the Company Notice Date (as defined in
Section 3.8(c)), the Company shall deliver an Officers' Certificate to the
Trustee specifying:




                                      -26-
   33

                   (i) the manner of payment selected by the Company,

                   (ii) the information required by Section 3.8(e),

                   (iii) if the Company elects to pay the Purchase Price, or a
specified percentage thereof, in Common Stock, that the conditions to such
manner of payment set forth in Section 3.8(d) have been or will be complied
with, and

                   (iv) whether the Company desires the Trustee to give the
Company Notice required by Section 3.8(e).

               (c) Purchase with Cash. At the option of the Company, the
Purchase Price of Securities in respect of which a Purchase Notice pursuant to
Section 3.8(a) has been given, or a specified percentage thereof, may be paid by
the Company with Cash equal to the aggregate Purchase Price, or such specified
percentage thereof, as the case may be, of such Securities. If the Company
elects to purchase Securities with Cash, a Company Notice as provided in Section
3.8(e) shall be sent to Holders (and to beneficial owners as required by
applicable law) not less than 20 Business Days prior to the Purchase Date (the
"Company Notice Date").

               (d) Payment by Issuance of Common Stock. At the option of the
Company, the Purchase Price of Securities in respect of which a Purchase Notice
pursuant to Section 3.8(a) has been given, or a specified percentage thereof,
may be paid by the Company by the issuance of a number of shares of Common Stock
equal to the quotient obtained by dividing (i) the amount of Cash to which the
Holders would have been entitled had the Company elected to pay all or such
specified percentage, as the case may be, of the Purchase Price of such
Securities in Cash by (ii) the Market Price of a share of Common Stock, subject
to the next succeeding paragraph.

        The Company will not issue a fractional share of Common Stock in payment
of the Purchase Price. Instead the Company will pay Cash for the current market
value of the fractional share. The current market value of a fraction of a share
shall be determined by multiplying the Market Price by such fraction and
rounding the product to the nearest whole cent. It is understood that if a
Holder elects to have more than one Security purchased, the number of shares of
Common Stock shall be based on the aggregate amount of Securities to be
purchased.

        If the Company elects to purchase the Securities by the issuance of
shares of Common Stock, a Company Notice as provided in Section 3.8(e) shall be
sent to the Holders (and to beneficial owners as required by applicable law) not
later than the Company Notice Date.

        The Company's right to exercise its election to purchase the Securities
pursuant to Section 3.8 through the issuance of shares of Common Stock shall be
conditioned upon:

                   (i) the Company having given timely Company Notice of
election to purchase all or a specified percentage of the Securities with Common
Stock as provided herein;




                                      -27-
   34

                   (ii) the registration of the shares of Common Stock to be
issued in respect of the payment of the specified percentage of the Purchase
Price under the Securities Act; unless the shares of Common Stock so issued can
be freely resold by the Holder (unless such Holder is the Company or an
Affiliate of the Company) receiving such shares without registration under the
Securities Act;

                   (iii) any necessary qualification or registration under
applicable state securities laws or the availability of an exemption from such
qualification and registration; and

                   (iv) the receipt by the Trustee of an Officers' Certificate
and an Opinion of Counsel each stating that (A) the terms of the issuance of the
Common Stock are in conformity with this Indenture and (B) the shares of Common
Stock to be issued by the Company in payment of the specified percentage of the
Purchase Price in respect of Securities have been duly authorized and, when
issued and delivered pursuant to the terms of this Indenture in payment of the
specified percentage of the Purchase Price in respect of Securities, will be
validly issued, fully paid and nonassessable, and, in the case of such Officers'
Certificate, stating that conditions (i), (ii) and (iii) above have been
satisfied and, in the case of such Opinion of Counsel, stating that conditions
(ii) and (iii) above have been satisfied.

        Such Officers' Certificate shall also set forth the number of shares of
Common Stock to be issued for each $ 1,000 Principal Amount of Securities, the
Market Price and the Sale Price of a share of Common Stock on each Trading Day
during the period during which the Market Price is calculated and ending on the
Purchase Date. If such conditions are not satisfied with respect to a Holder or
Holders prior to or on the Purchase Date and the Company elected to purchase the
Securities to be purchased as of such Purchase Date pursuant to this Section 3.8
through the issuance of shares of Common Stock, the Company shall pay the entire
Purchase Price in respect of such Securities of such Holder or Holders in Cash.

        The "Market Price" means the average of the Sale Prices of the Common
Stock for the five Trading Day period ending on the third Business Day prior to
the applicable Purchase Date (if the third Business Day prior to the applicable
Purchase Date is a Trading Day or, if it is not a Trading Day, the five Trading
Days ending on the last Trading Day prior to the third Business Day),
appropriately adjusted to take into account the occurrence, during the period
commencing on the first of such Trading Days during such five Trading Day period
and ending on such Purchase Date, of any event described in Section 11.7, 11.8
or 11.9; subject, however, to the conditions set forth in Sections 11.10 and
11.11. The "Sale Price" of the Common Stock on any date means the closing per
share sale price (or if no closing sale price is reported the average of the bid
and ask prices or, if more than one, in either case, the average of the average
bid and average ask prices) on such date as reported in the composite
transactions for the Nasdaq National Market or, if the Common Stock is listed on
a U.S. national or regional securities exchange, as reported in composite
transactions for the principal United States securities exchange on which the
Common Stock is traded.

               (e) Notice of Election. Company's notices of election to purchase
with Cash or Common Stock, or any combination thereof, shall be sent to the
Holders (and to beneficial owners as required by applicable law) in the manner
provided in Section 12.2 at the time specified in




                                      -28-
   35

Section 3.8(c) or (d), as applicable (each, a "Company Notice"). Such Company
Notices shall state the manner of payment elected and shall contain the
following information:

        In the event the Company has elected to pay a Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:

               (1) state that each Holder will receive Common Stock with a
Market Price determined as of a specified date prior to the Purchase Date equal
to such specified percentage of the Purchase Price of the Securities held by
such Holder (except any Cash amount to be paid in lieu of fractional share); and

               (2) set forth the method by which the Company is required to
calculate the Market Price and state that because the Market Price of Common
Stock will be determined prior to the Purchase Date, the Holders will bear the
market risk with respect to the value of the Common Stock to be received from
the date such Market Price is determined to the Purchase Date.

        In any case, each Company Notice shall include a form of Purchase Notice
to be completed by a Holder and shall state:

               (i) the Purchase Price and Conversion Rate;

               (ii) the name and address of the Paying Agent and the Conversion
Agent;

               (iii) that Securities as to which a Purchase Notice has been
given may be converted only if the applicable Purchase Notice has been withdrawn
in accordance with the terms of this Indenture;

               (iv) that Securities must be surrendered to the Paying Agent to
collect payment;

               (v) that the Purchase Price for any Security as to which a
Purchase Notice has been given and not withdrawn will be paid promptly following
the later of the Purchase Date and the time of surrender of such Security as
described in (iv);

               (vi) the procedures the Holder must follow under this Section
3.8;

               (vii) briefly, the conversion rights of the Securities; and

               (viii) the procedures for withdrawing a Purchase Notice
(including, without limitation, for a conditional withdrawal pursuant to the
terms of Section 3.8(a)(1)(D) or Section 3.10).

        At the Company's request, the Trustee shall give the Company Notice in
the Company's name and at the Company's expense; provided, however, that, in all
cases, the text of the Company Notice shall be prepared by the Company.




                                      -29-
   36
               (f) Covenants of the Company. All shares of Common Stock
delivered upon conversion or purchase of the Securities shall be newly issued
shares or treasury shares, shall be fully paid and nonassessable and shall be
free from preemptive rights and free of any lien or adverse claim.

        The Company shall use its best efforts to list or cause to have quoted
all such shares of Common Stock on each United States over-the-counter or other
domestic market on which the Common Stock is then quoted or national securities
exchange on which the Common Stock is then listed. Upon determination of the
actual number of shares of Common Stock to be delivered pursuant to this Section
3.8, the Company shall notify the securities exchange or quotation systems on
which the Common Stock is then listed or quoted and disseminate the number of
shares of Common Stock to be issued on the Company's website or through an
alternative public medium.

               (g) Procedure upon Purchase. On the Business Day following the
Purchase Date, the Company shall deposit with the Paying Agent (A) Cash (in
respect of a Cash purchase under Section 3.8(c) or for fractional interests, as
applicable), or (B) shares of Common Stock, or a combination of (A) and (B), as
applicable, sufficient to pay the aggregate Purchase Price in respect of the
Securities to be purchased pursuant to this Section 3.8. As soon as practicable
after the Purchase Date, the Company shall deliver to each Holder entitled to
receive Common Stock, through the Paying Agent, a certificate for the number of
full shares of Common Stock, as applicable, issuable in payment of such Purchase
Price and Cash in lieu of any fractional interests. The Person in whose name the
certificate for Common Stock is registered shall be treated as a holder of
record following the Purchase Date. Subject to Section 3.8(d), no payment or
adjustment will be made for dividends on the Common Stock the record date for
which occurred on or prior to the Purchase Date.

               (h) Taxes. If a Holder of a Security is paid in Common Stock, the
Company shall- pay any documentary, stamp or similar issue or transfer tax due
on such issue of shares of Common Stock. However, the Holder shall pay any such
tax which is due because the Holder requests the shares of Common Stock to be
issued in a name other than the Holder's name. The Paying Agent may refuse to
deliver the certificates representing the Common Stock being issued in a name
other than the Holder's name until the Paying Agent receives a sum sufficient to
pay any tax which will be due because the shares of Common Stock are to be
issued in a name other than the Holder's name. Nothing herein shall preclude any
income tax withholding required by law or regulations.

        SECTION 3.9. REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL
CHANGE.

               (a) If a Fundamental Change shall occur at any time prior to May
23, 2021, each Holder of Securities shall have the right, at such Holder's
option, to require the Company to redeem any or all of such Holder's Securities
for Cash on the date that is 30 days after the date of the Company's notice of
such Fundamental Change (the "Fundamental Change Redemption Date") (or if such
date is not a Business Day, the next succeeding Business Day). The Securities
will be redeemable in integral multiples of $1,000 of Principal Amount. The
Company shall redeem such Securities at a price (the "Fundamental Change
Redemption Price") equal to the Issue Price plus accrued Original Issue Discount
up to and including the Fundamental Change Redemption Date (or,




                                      -30-
   37

if the Securities are converted to interest-bearing debentures following a Tax
Event pursuant to Section 11.6 and paragraph 9(b) of the Securities, a price
equal to the Restated Principal Amount plus accrued interest from the date the
Company exercised its right to convert the Securities up to and including the
Fundamental Change Redemption Date). Payment for Securities surrendered for
purchase (and not withdrawn) prior to the expiration of the 30-day period
referenced in the first sentence of this subsection (a) shall be made promptly
following the Fundamental Change Repurchase Date. No Securities may be redeemed
at the option of the Holders as a result of a Fundamental Change if there has
occurred and is continuing an Event of Default (other than a default in the
payment of the Fundamental Change Redemption Price with respect to such
Securities).

               (b) The Company, or at its request (which must be received by the
Trustee at least three Business Days prior to the date the Trustee is requested
to give such notice as described below) the Trustee in the name of and at the
expense of the Company, shall mail to the Trustee and all Holders of record of
the Securities a notice (a "Fundamental Change Redemption Notice") of the
occurrence of a Fundamental Change and of the redemption right arising as a
result thereof on or before the tenth day after the occurrence of such
Fundamental Change.

               (c) For a Security to be so redeemed at the option of the Holder,
the Paying Agent must receive such Security with the form entitled "Option to
Elect Redemption Upon a Fundamental Change" on the reverse thereof duly
completed, together with such Security duly endorsed for transfer, on or before
the 30th day after the date of such notice (or if such 30th day is not a
Business Day, the next succeeding Business Day).

        SECTION 3.10. EFFECT OF PURCHASE NOTICE OR FUNDAMENTAL CHANGE REDEMPTION
NOTICE.

        Upon receipt by the Company of the Purchase Notice or Fundamental Change
Redemption Notice specified in Section 3.8(a) or Section 3.9(b), as applicable,
the Holder of the Security in respect of which such Purchase Notice or
Fundamental Change Redemption Notice, as the case may be, was given shall
(unless such Purchase Notice or Fundamental Change Redemption Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Purchase Price or Fundamental Change Redemption Price, as
the case may be, with respect to such Security. Such Purchase Price or
Fundamental Change Redemption Price shall be paid to such Holder promptly
following the later of (x) the Purchase Date or the Fundamental Change
Redemption Date, as the case may be, with respect to such Security (provided the
conditions in Section 3.8(a) or Section 3.9(c), as applicable, have been
satisfied) and (y) the time of delivery of such Security to the Paying Agent by
the Holder thereof in the manner required by Section 3.8(a) or Section 3.9(c),
as applicable. Securities in respect of which a Purchase Notice or Fundamental
Change Redemption Notice, as the case may be, has been given by the Holder
thereof may not be converted for shares of Common Stock on or after the date of
the delivery of such Purchase Notice (or Fundamental Change Redemption Notice,
as the case may be), unless such Purchase Notice (or Fundamental Change
Redemption Notice, as the case may be) has first been validly withdrawn as
specified in the following two paragraphs.




                                      -31-
   38

        A Purchase Notice or Fundamental Change Redemption Notice, as the case
may be, may be withdrawn by means of a written notice of withdrawal delivered to
the office of the Paying Agent at any time prior to the close of business on the
Purchase Date or the Fundamental Change Redemption Date, as the case may be, to
which it relates specifying:

        (1) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted,

        (2) the Principal Amount of the Security with respect to which such
notice of withdrawal is being submitted, and

        (3) the Principal Amount, if any, of such Security which remains subject
to the original Purchase Notice or Fundamental Change Redemption Notice, as the
case may be, and which has been or will be delivered for purchase or redemption
by the Company.

        A written notice of withdrawal of a Purchase Notice may be in the form
of (i) a conditional withdrawal contained in a Purchase Notice pursuant to the
terms of Section 3.8(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.8(a)(1)(D) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.

        There shall be no purchase of any Securities pursuant to Section 3.8
(other than through the issuance of Common Stock in payment of the Purchase
Price, including Cash in lieu of any fractional shares) or redemption pursuant
to Section 3.9 if there has occurred (prior to, on or after, as the case may be,
the giving, by the Holders of such Securities, of the required Purchase Notice
or Fundamental Change Redemption Notice, as the case may be) and is continuing
an Event of Default (other than a default in the payment of the Purchase Price
or Fundamental Change Redemption Price, as the case may be, with respect to such
Securities).

        SECTION 3.11. DEPOSIT OF PURCHASE PRICE OR FUNDAMENTAL CHANGE REDEMPTION
PRICE.

        On or before the Business Day following a Purchase Date or a Fundamental
Change Redemption Date, as the case may be, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or an Affiliate of the
Company is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.4) an amount of money and/or securities, if permitted
hereunder, sufficient to pay the aggregate Purchase Price or Fundamental Change
Redemption Price, as the case may be, of all the Securities or portions thereof
which are to be purchased as of such Purchase Date or Fundamental Change
Redemption Date, as the case may be.

        SECTION 3.12. Securities Purchased in Part.

        Any Security that is to be purchased or redeemed only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and the Company
shall




                                      -32-
   39

execute and the Trustee shall authenticate and deliver to the Holder of such
Security, without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate Principal
Amount equal to, and in exchange for, the portion of the Principal Amount of the
Security so surrendered which is not purchased or redeemed.

        SECTION 3.13. COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE OF
SECURITIES.

        In connection with any purchase or redemption of Securities under
Section 3.8 or 3.9 hereof, the Company shall (i) comply with Rule 13e-4 (which
term, as used herein, includes any successor provision thereto) under the
Exchange Act, if applicable, (ii) file the related Schedule TO (or any successor
schedule, form or report) under the Exchange Act, if applicable, and (iii)
otherwise comply with all Federal and state securities laws so as to permit the
rights and obligations under Section 3.8 and 3.9 to be exercised in the time and
in the manner specified in Section 3.8 and 3.9.

        SECTION 3.14. REPAYMENT TO THE COMPANY.

        The Trustee and the Paying Agent shall return to the Company any cash or
shares of Common Stock (in the case of the Purchase Price that remain unclaimed
as provided in paragraph 14 of the Securities, together with interest or
dividends, if any, thereon, held by them for the payment of a Purchase Price or
Fundamental Change Redemption Price, as the case may be; provided, however, that
to the extent that the aggregate amount of cash or shares of Common Stock
deposited by the Company pursuant to Section 3.11 exceeds the aggregate Purchase
Price or Fundamental Change Redemption Price, as the case may be, of the
Securities or portions thereof which the Company is obligated to purchase as of
the Purchase Date or Fundamental Change Redemption Date, as the case may be,
then promptly after the Business Day following the Purchase Date or Fundamental
Change Redemption Date, as the case may be, the Trustee and the Paying Agent
shall return any such excess to the Company together with interest or dividends,
if any, thereon.

        SECTION 3.15. MODIFICATION TO FUNDAMENTAL CHANGE DEFINITIONS.

        In the case of a reclassification, change, consolidation, merger,
combination, sale or conveyance to which Section 11.15 applies, in which the
Common Stock of the Company is changed or exchanged as a result into the right
to receive stock, securities or other property or assets (including Cash), which
includes shares of common stock of another person that are, or upon issuance
will be, traded on a United States national securities exchange or approved for
trading on an established automated over-the-counter trading market in the
United States and such shares of common stock constitute at the time such change
or exchange becomes effective in excess of 50% of the aggregate fair market
value of such stock, securities or other property or assets (including Cash)
into which the Common Stock of the Company is or is to be changed or exchanged
for (as determined by the Company, which determination shall be conclusive and
binding), then the person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture (accompanied by an Opinion of
Counsel that such supplemental indenture complies with the Trust Indenture Act
as in force at the date of execution of such supplemental indenture) modifying
the provisions of this Indenture relating to the right of holders of the
Securities to cause the Company to repurchase the




                                      -33-
   40

Securities in the event of a Fundamental Change, including, without limitation,
the applicable provisions of this Article 3 and the definitions of Common Stock
and Fundamental Change, as appropriate, as determined in good faith by the
Company (which determination shall be conclusive and binding), to make such
provisions apply to such other person if different from the Company and the
common stock issued thereby (in lieu of the Company and the Common Stock of the
Company).


                                    ARTICLE 4

                                    COVENANTS

        SECTION 4.1. PAYMENT OF SECURITIES.

        The Company shall promptly pay or cause to be paid all payments in
respect of the Securities on the dates and in the manner provided in the
Securities or pursuant to this Indenture. Principal Amount, Issue Price, accrued
Original Issue Discount, accrued Additional Interest, if any, Redemption Price,
Purchase Price, Fundamental Change Redemption Price and interest, if any, shall
be considered paid on the applicable date due or, in the case of a Purchase
Price or Fundamental Change Redemption Price, on the Business Day following the
applicable Purchase Date or Fundamental Change Redemption Date, as the case may
be, if on such date the Trustee or the Paying Agent holds, in accordance with
this Indenture, money or securities, if permitted hereunder, sufficient to pay
all such amounts then due.

        The Company shall pay interest on overdue amounts at the rate set forth
in paragraph I of the Securities and it shall pay interest on overdue interest
at the same rate compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest on overdue interest shall
accrue from the date such amounts became overdue and shall be in lieu of, and
not in addition to, the continued accrual of Original Issue Discount.

        SECTION 4.2. FINANCIAL INFORMATION; SEC REPORTS.

        The Company will deliver to the Trustee (a) as soon as available and in
any event within 90 days after the end of each fiscal year of the Company (i) a
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of operations,
stockholders' equity and cash flows for such fiscal year, all reported on by an
independent public accountant of nationally recognized standing and (ii) a
report containing a management's discussion and analysis of the financial
condition and results of operations and a description of the business and
properties of the Company and (b) as soon as available and in any event within
45 days after the end of each of the first three quarters of each fiscal year of
the Company (i) an unaudited consolidated financial report for such quarter and
(ii) a report containing a management's discussion and analysis of the financial
condition and results of operations of the Company; provided that the foregoing
shall not be required for any fiscal year or quarter, as the case may be, with
respect to which the Company files or expects to file with the Trustee an annual
report or quarterly report, as the case may be, pursuant to the third paragraph
of this Section 4.2.




                                      -34-
   41

        So long as the Securities or the Common Stock issued upon conversion of
the Securities are Restricted Securities, if the Company is not subject to
either Section 13 or 15(d) of the Exchange Act, the Company shall at the request
of any Holder (or holders of Common Stock issued upon conversion of the
Securities) provide to such Holder (or holders of such Common Stock) and any
prospective purchaser designated by such Holders (or holders of such Common
Stock), as the case may be, such information, if any, required by Rule
144A(d)(4) under the Securities Act.

        The Company shall file with the Trustee, within 15 days after it files
such annual and quarterly reports, information, documents and other reports with
the SEC, copies of its annual report and of the 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.

        SECTION 4.3. COMPLIANCE CERTIFICATE.

        The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, an Officers' Certificate in which one of the
two Officers signing such certificate is either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the knowledge of the signers thereof the Company is in
Default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
Default, specifying all such Defaults and the nature and status thereof of which
the signers may have knowledge.

        The Company will deliver to the Trustee, forthwith upon becoming aware
of any Default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such Default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.

        Any notice required to be given under this Section 4.3 shall be
delivered to the Trustee at its Corporate Trust Office.

        SECTION 4.4. FURTHER INSTRUMENTS AND ACTS.

        Upon request of the Trustee, the respective Company will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purposes of this
Indenture.

        SECTION 4.5. MAINTENANCE OF OFFICE OR AGENCY.

        The Company will appoint in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer,
exchange, purchase, redemption or conversion and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be




                                      -35-
   42

served. The office or agency in the Borough of Manhattan, the City of New York,
shall initially be State Street Bank and Trust Company, N.A., an Affiliate of
the Trustee located at 61 Broadway, 15th Floor, New York, New York 10006
(Attention: Corporate Trust Department - Atmel Corporation, Zero Coupon
Convertible Subordinated Debentures due 2021), and shall be the office or agency
for all of the aforesaid purposes unless the Company shall appoint some other
office or agency for such purposes and shall give prompt written notice to the
Trustee of the location, and any change in the location, of such other office or
agency. 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 one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes.

        SECTION 4.6. EXISTENCE.

        Subject to Article 5, 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, however, 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.

        SECTION 4.7. MAINTENANCE OF PROPERTIES.

        The Company will cause all properties used or useful in the conduct of
its business or the business of any Significant Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4.7 shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Significant Subsidiary and not
disadvantageous in any material respect to the Holders.

        SECTION 4.8. PAYMENT OF TAXES AND OTHER CLAIMS.

        The Company will pay or discharge, or cause to be paid or discharged,
before the same may become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Significant
Subsidiary or upon the income, profits or property, of the Company or any
Significant Subsidiary, (ii) all claims for labor, materials and supplies which,
if unpaid, might by law become a lien or charge upon the property of the Company
or any Significant Subsidiary, and




                                      -36-
   43

(iii) all stamps and other duties, if any, which may be imposed by the United
States or any political subdivision thereof or therein in connection with the
issuance, transfer, exchange or conversion of any Securities or with respect to
this Indenture; provided however, that, in the case of clauses (i) and (ii), the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(B) if the amount applicability or validity is being contested in good faith by
appropriate proceedings.

        SECTION 4.9. ADDITIONAL INTEREST.

        If Additional Interest is payable by the Company pursuant to the
Registration Rights Agreement, the Company shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such Additional Interest
that is payable and (ii) the date on which such interest is payable. Unless and
until a Responsible Officer of the Trustee receives such a certificate, the
Trustee may assume without inquiry that no Additional Interest is payable. If
the Company has paid Additional Interest directly to the persons entitled to it,
the Company shall deliver to the Trustee a certificate setting forth the
particulars of such payment.


                                   ARTICLE 5

                              SUCCESSOR CORPORATION

        SECTION 5.1. WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS.

        The Company shall not consolidate with, merge with or into any other
Person (other than in a merger or consolidation in which the Company is the
surviving Person) or convey, transfer or lease all or substantially all of its
properties and assets to any Person, unless:

               (i) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance, transfer or lease all or substantially all of the properties and
assets of the Company shall be a corporation, limited liability company,
partnership or trust organized and validly existing under the laws of the United
States or any State thereof or the District of Columbia, and shall expressly
assume by an indenture supplemental hereto, executed and delivered to the
Trustee in form reasonably satisfactory to the Trustee, the due and punctual
payment of the Principal Amount, Issue Price, accrued Original Issue Discount,
accrued Additional Interest, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price or interest, if any, on the Securities,
according to their tenor, and the due and punctual performance of all of the
covenants and obligations of the Company under the Securities and this
Indenture, and shall have provided for conversion rights in accordance with this
Indenture;

               (ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and




                                      -37-
   44

               (iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article 5 and that all conditions precedent herein
provided for relating to such transaction have been satisfied.

        The successor Person formed by such consolidation or into which the
Company is merged or the successor Person to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor had been named as the Company herein; and thereafter, except in
the case of a lease, the Company shall be discharged from all obligations and
covenants under this Indenture and the Securities.


                                   ARTICLE 6

                              DEFAULTS AND REMEDIES

        SECTION 6.1. EVENTS OF DEFAULT.

        An "Event of Default" occurs if:

               (1) the Company defaults in the payment of the Principal Amount,
Issue Price (or, if the Securities have been converted to interest-bearing
Securities following a Tax Event pursuant to Section 11.6, the Restated
Principal Amount), accrued Original Issue Discount (or, if the Securities have
been converted to interest-bearing Securities following a Tax Event, accrued and
unpaid interest), accrued Additional Interest, if any, Redemption Price,
Purchase Price or a Fundamental Change Redemption Price on any Security when the
same becomes due and payable at its Stated Maturity, upon redemption, upon
declaration, when due for purchase by the Company or otherwise (provided that in
the case of a default in the payment of Additional interest, such default in
payment of Additional Interest continues for a period of 30 days), whether or
not such payment shall be prohibited by Article 10;

               (2) the Company fails to comply with any of its agreements or
covenants in the Securities or this Indenture (other than those referred to in
clause (1) above) and such failure continues for 90 days after receipt by the
Company of a Notice of Default;

               (3) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
the property of the Company, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due; or




                                      -38-
   45

               (4) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
the property of the Company, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of ninety (90) consecutive days;

        A Default under clause (2) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default (and
such Default is not waived) within the time specified in clause (2) above after
actual receipt of such notice (a "Notice of Default"). Any such notice must
specify the Default, demand that it be remedied and state that such notice is a
Notice of Default.

        SECTION 6.2. ACCELERATION.

        If an Event of Default (other than an Event of Default specified in
Section 6.1(3) or (4)) occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding by notice to the Company and the Trustee, may
declare the Issue Price and accrued Original Issue Discount up to and including
the date of declaration (and Additional Interest, if any) on all the Securities
to be immediately due and payable. Upon such a declaration, such Issue Price and
accrued Original Issue Discount shall become and be due and payable immediately.
If an Event of Default specified in Section 6.1(3) or (4) occurs and is
continuing, the Issue Price and accrued Original Issue Discount (and Additional
Interest, if any) on all the Securities shall become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holders. The Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding, by notice to the Company and the Trustee
(and without notice to any other Holder), may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of the Issue Price and accrued Original Issue Discount (and
Additional Interest, if any) that have become due solely as a result of
acceleration and if all amounts due to the Trustee under Section 7.7 have been
paid. No such rescission shall affect any subsequent or other Default or Event
of Default or impair any consequent right.

        SECTION 6.3. OTHER REMEDIES.

        If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of the Issue Price and accrued
Original Issue Discount on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.

        The Trustee may maintain a proceeding even if the Trustee does not
possess any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy accruing upon an Event of Default shall not




                                      -39-
   46

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 6.4. WAIVER OF PAST DEFAULTS.

        The Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding, by notice to the Company and the Trustee
(and without notice to any other Holder), may waive an existing Default or Event
of Default and its consequences except (1) an Event of Default described in
Section 6.1(1), (2) a Default in respect of a provision that under Section 9.2
cannot be amended without the consent of each Holder affected or (3) a Default
that constitutes a failure to convert any Security in accordance with the terms
of Article 11. When a Default or Event of Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right.

        SECTION 6.5. CONTROL BY MAJORITY.

        The Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding may direct the time, method and place of
conducting any proceeding 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 any law or this Indenture or
that the Trustee determines in good faith is unduly prejudicial to the rights of
other Holders or would involve the Trustee in personal liability unless the
Trustee is offered indemnity satisfactory to it.

        SECTION 6.6. LIMITATION ON SUITS.

        A Holder may not pursue any remedy with respect to this Indenture or the
Securities unless:

               (1) the Holder gives to the Company and the Trustee written
notice stating that an Event of Default is continuing;

               (2) the Holders of at least 25% in aggregate Principal Amount of
the Securities at the time outstanding make a written request to the Trustee to
pursue the remedy;

               (3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense satisfactory to the
Trustee;

               (4) the Trustee does not comply with the request within 60 days
after receipt of the notice, the request and the offer of security or indemnity;
and

               (5) the Holders of a majority in aggregate Principal Amount of
the Securities at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day period.

        A Holder may not use this Indenture to prejudice the rights of any other
Holder or to obtain a preference or priority over any other Holder.




                                      -40-
   47

        SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.

        Notwithstanding any other provision of this Indenture, but subject to
Article 10, the right of any Holder to (i) receive payment of the Principal
Amount, Issue Price, accrued Original Issue Discount, Redemption Price, Purchase
Price, Fundamental Change Redemption Price, Additional Interest (under the
Registration Rights Agreement) or interest, if any, in respect of the Securities
held by such Holder on or after the respective due dates expressed in the
Securities or any date of redemption, (ii) convert the Securities in accordance
with Article 11, or (ii) bring suit for the enforcement of any such payment on
or after such respective dates or the right to convert, shall not be impaired or
affected adversely without the consent of each such Holder.

        SECTION 6.8. COLLECTION SUIT BY TRUSTEE.

        If an Event of Default described in Section 6.1(1) 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 owing with respect to
the Securities and the amounts provided for in Section 7.7.

        SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.

        In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Additional Interest, if any,
Redemption Price, Purchase Price, Fundamental Change Redemption Price,
Additional Interest (under the Registration Rights Agreement) or interest, if
any, in respect of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of any such amount)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:

               (a) to file and prove a claim for the whole amount of the
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Additional Interest, if any, Redemption Price, Purchase Price, Fundamental
Change Redemption Price or interest, if any, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and

               (b) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and




                                      -41-
   48

advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7.

        If the Trustee does not file a claim or proof of debt in the form
required in such proceedings prior to 30 days before the expiration of the time
to file such claims or proofs, then any holder or holders of Senior Indebtedness
or their representative or representatives shall have the right to demand, sue
for, collect, receive and receipt for the payments and distributions in respect
of the Securities which are required to be paid or delivered to the holders of
Senior Indebtedness as provided in this Article and to file and prove all claims
therefor and to take all such other action in the name of the holders or
otherwise, as such holders of Senior Indebtedness or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article.

        Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claims of any Holder in any such proceeding.

        SECTION 6.10. PRIORITIES.

        If the Trustee collects any money or property pursuant to this Article
6, it shall pay out the money in the following order:

        First: to the Trustee for amounts due under Section 7.7;

        Second: to holders of Senior Indebtedness to the extent required by
Article 10;

        Third: to Holders for amounts due and unpaid on the Securities for the
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Additional Interest, if any, Redemption Price, Purchase Price, Fundamental
Change Redemption Price or interest, if any, as the case may be, ratably,
without preference or priority of any kind, according to such amounts due and
payable on the Securities; and

        Fourth: the balance, if any, to the Company.

        The Trustee may fix a proposed record date and payment date for any
payment to Holders pursuant to this Section 6.10 and shall notify the Company in
writing with respect to such proposed record date and payment date. At least 15
days before such record date, the Company (or the Trustee at the request of the
Company) shall mail to each Holder and the Trustee 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




                                      -42-
   49

require the filing by any party litigant (other than the Trustee) 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, 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 6.11 does not apply
to a suit by the Trustee, any suit by a Holder for the enforcement of the
payment of the Principal Amount, accrued Original Issue Discount, Redemption
Price, Purchase Price, Fundamental Change Redemption Price, Additional Interest
(under the Registration Rights Agreement) or interest, if any, on or after the
due date expressed in such Security or to any suit for the enforcement of the
right to convert the Security pursuant to Article 11, or a suit by Holders of
more than 10% in aggregate Principal Amount of the Securities at the time
outstanding.

        SECTION 6.12. WAIVER OF STAY, EXTENSION OR USURY LAWS.

        The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the Principal
Amount, Issue Price, accrued Original Issue Discount, accrued Additional
Interest, if any, Redemption Price, Purchase Price or Fundamental Change
Redemption Price in respect of Securities, or any interest on any such amounts,
as contemplated herein, or which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such laws and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.


                                   ARTICLE 7

                                     TRUSTEE

        SECTION 7.1. DUTIES OF TRUSTEE.

        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 his or her own affairs.

               (a) Except during the continuance of an Event of Default:

                   (1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; 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




                                      -43-
   50

Indenture. However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture.

This Section 7.1(b) shall be in lieu of Section 315(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.

               (b) 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:

                   (1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;

                   (2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and

                   (3) 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 6.5. Subparagraphs (c)(1), (2) and (3) shall
be in lieu of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and such
Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby expressly excluded from
this Indenture, as permitted by the TIA.

               (c) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.

               (d) The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.

               (e) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.

        SECTION 7.2. RIGHTS OF TRUSTEE.

               (a) The Trustee may rely on any document reasonably 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 a Company Order, 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 a Company Order, 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.




                                      -44-
   51

               (d) Subject to the provisions of Section 7.1(c), 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 selected by it and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel.

               (f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture, unless the Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.

        SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.

        The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent, Registrar, Conversion Agent or co-registrar may do the same with the like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.

        SECTION 7.4. TRUSTEE DISCLAIMER.

        The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities; it shall not be accountable for Company's use
of the proceeds from the Securities; and it shall not be responsible for any
statement in the offering memorandum for the Securities or in this Indenture or
the Securities (other than its certificate of authentication), the acts of a
prior Trustee hereunder, or the determination as to which beneficial owners are
entitled to receive any notices hereunder.

        SECTION 7.5. NOTICE OF DEFAULTS.

        If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall give to each Holder notice of the Default within 90 days after
the Trustee becomes aware of such Default. Except in the case of a Default
described in Section 6.1(1), the Trustee may withhold the notice if and so long
as a committee of its Trust Officers in good faith determines that withholding
the notice is in the best interests of the Holders. The second sentence of this
Section 7.5 shall be in lieu of the proviso to Section 315(b) of the TIA and
such provision is hereby expressly excluded from this Indenture, as permitted by
the TIA. The Trustee shall not give notice of a Default pursuant to Section
6.1(2) until at least sixty days have passed since its occurrence.

        SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS.

        Within 60 days after each October 1, beginning with the October 1
following the date of this Indenture, the Trustee shall mail to each Holder a
brief report dated as of such October 1 that




                                      -45-
   52

complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).

        A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each securities exchange on which the Securities are
listed. The Company agrees to notify the Trustee whenever the Securities become
listed on any securities exchange and of any delisting thereof

        SECTION 7.7. COMPENSATION AND INDEMNITY.

        The Company agrees:

               (a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);

               (b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expense, advances and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and

               (c) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.

        To secure the Company's payment obligations in this Section 7.7 the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay the Principal
Amount, Issue Price, accrued Original Issue Discount, accrued Additional
Interest, if any, Redemption Price, Purchase Price, Fundamental Change
Redemption Price or interest, if any, as the case may be, on particular
Securities.

        The Company's payment obligations pursuant to this Section 7.7 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(3) or (4), the expenses are
intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.

        SECTION 7.8. REPLACEMENT OF TRUSTEE.

        The Trustee may resign by so notifying the Company; provided, however,
that no such resignation shall be effective until a successor Trustee has
accepted its appointment pursuant to this Section 7.8. The Holders of a majority
in aggregate Principal Amount of the Securities at the time




                                      -46-
   53

outstanding may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if-

                   (1) the Trustee fails to comply with, or ceases to be
eligible under Section 7.10;

                   (2) the Trustee is adjudged bankrupt or insolvent;

                   (3) a receiver or public officer takes charge or control of
the Trustee or its property or affairs; or

                   (4) the Trustee otherwise in the Company's reasonable
judgment becomes incapable of acting.

        If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee.

        Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject to the lien provided for in Section
7.7. Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts. No successor Trustee
shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be eligible under this Article.

        If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate Principal Amount of the Securities at the
time outstanding 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 Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

        SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER.

        If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trustee business (including the trust
created by this Indenture) or assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the




                                      -47-
   54

successor Trustee hereunder, provide such corporation shall be otherwise
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.

        SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.

        The Trustee shall at all times satisfy the requirements of TIA Sections
310(a)(1) and 310(b). The Trustee shall have a combined capital and surplus of
at least $50,000,000 (or if the Trustee is a member of a bank holding company
system, its bank holding company shall have a combined capital and surplus of at
least $50,000,000) as set forth in its most recent published annual report of
conditions. Nothing herein contained shall prevent the Trustee from filing with
the SEC the application referred to in the penultimate paragraph of TIA Section
310(b). If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 7.10, it shall correct such ineligibility or
resign immediately in the manner and with the effect specified in this Article
7.

        SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

        The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.


                                   ARTICLE 8

                             DISCHARGE OF INDENTURE.

        SECTION 8.1. DISCHARGE OF LIABILITY ON SECURITIES.

        When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.7) for cancellation or
(ii) all outstanding Securities have become due and payable and the Company
deposits with the Trustee Cash and/or securities, as permitted by the terms
hereof, sufficient to pay at Stated Maturity the Principal Amount of all
outstanding Securities (other than Securities replaced pursuant to Section 2.7),
and if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section 7.7, cease to be of
further effect. The Trustee shall join in the execution of a document prepared
by the Company acknowledging satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certificate and Opinion of
Counsel and at the cost and expense of the Company.




                                      -48-
   55

        SECTION 8.2. REPAYMENT TO THE COMPANY.

        The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such return, shall, in the event that the Securities are no longer
held in global form, at the expense of the Company cause to be published once in
a newspaper of general circulation in The City of New York or mail to each such
Holder notice that such money or securities remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed money or securities then remaining
will be returned to the Company. After return to the Company, Holders entitled
to the money or securities must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person.


                                   ARTICLE 9

                                   AMENDMENTS

        SECTION 9.1. WITHOUT CONSENT OF HOLDERS.

        The Company and the Trustee may amend this Indenture and the Securities
without the consent of any Holder:

                   (1) to cure any ambiguity or to correct or supplement any
provision contained, herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions with regard to matters
or questions arising under this Indenture which shall not materially affect the
interests of the Holders;

                   (2) to comply with Article 5 or Section 11.15 or Section
3.15;

                   (3) to provide for uncertificated Securities in addition to
certificated Securities so long as such uncertificated Securities are in
registered form for purposes of the Internal Revenue Code of 1996, as amended;

                   (4) to make any change that does not adversely affect the
right of any Holder; or

                   (5) to make any change to comply with the TIA, or any
amendment thereto, or to comply with any requirement of the SEC in connection
with the qualification, if any, of the indenture under the TIA.




                                      -49-
   56

        SECTION 9.2. WITH CONSENT OF HOLDERS.

        The Company and the Trustee, with the written consent of the Holders of
at least a majority in aggregate Principal Amount of the Securities at the time
outstanding, may amend this indenture or the Securities. However, without the
consent of each Holder affected, an amendment or supplement to this Indenture or
the Securities may not:

                   (1) make any change to the Principal Amount of Securities
whose Holders must consent to an amendment;

                   (2) make any change to the manner or rate of accrual in
connection with Original Issue Discount or interest, if any, reduce the rate of
interest referred to in paragraph 1 of the Securities or extend the time for
payment of Original Issue Discount or interest, if any, on any Security;

                   (3) reduce the Principal Amount or the Issue Price of or
extend the Stated Maturity of any Security;

                   (4) reduce the Redemption Price, Purchase Price or
Fundamental Change Redemption Price of any Security;

                   (5) reduce the rate of, or make any change in the manner of
paying, Additional Interest;

                   (6) make any Security payable in money or securities other
than that stated in the Security;

                   (7) make any change in Article 10 that adversely affects the
rights of any Securityholder;

                   (8) make any change in Section 6.4, Section 6.7 or this
Section 9.2, except to increase any such percentage;

                   (9) make any change that adversely affects the right to
convert any Security;

                   (10) make any change that adversely affects the right to
require the Company to purchase the Securities, or the right to require the
Company to redeem the Securities upon a Fundamental Change, in accordance with
the terms thereof and this Indenture, or

                   (11) change any obligation of the Company to maintain an
office or agency in the places and for the purposes specified in this Indenture.

        It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.




                                      -50-
   57

        An amendment under this Section 9.2 or Section 9.1 may not make any
change that adversely affects the rights under Article 10 of any holder of
Senior Indebtedness then outstanding unless the requisite holders of such Senior
Indebtedness consent to such change pursuant to the terms of such Senior
Indebtedness.

        After an amendment under this Section 9.2 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment.

        SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE.

        Every supplemental indenture executed pursuant to this Article 9 shall
comply with the TIA as then in effect, if then required to so comply.

        SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS.

        Until an amendment, waiver or other action becomes effective, a consent
to it or any other action by a Holder of a Security is a continuing consent by
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same obligation as the consenting Holder's Security,
even if notation of the consent, waiver or action is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent, waiver or
action as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date the amendment, waiver or
action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Holder.

        SECTION 9.5. TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES.

        Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 9 may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for outstanding Securities.

        SECTION 9.6. TRUSTEE'S DISCRETION TO EXECUTE SUPPLEMENTAL INDENTURES.

        The Trustee shall sign any supplemental indenture 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 such supplemental indenture. In signing such amendment the Trustee
shall be entitled to receive, and (subject to the provisions of Section 7.1)
shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.




                                      -51-
   58

        SECTION 9.7. EFFECT OF SUPPLEMENTAL INDENTURES.

        Upon the execution of any supplemental indenture under this Article 9,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.


                                   ARTICLE 10

                                  SUBORDINATION

        SECTION 10.1. AGREEMENT OF SUBORDINATION.

        The Company covenants and agrees, and each Holder of Securities issued
hereunder by acceptance thereof likewise covenants and agrees, that all payments
by the Company in respect of the Securities shall be subject to the provisions
of this Article 10; and each Person holding any Security whether upon original
issue or upon transfer, or assignment or exchange thereof, accepts and agrees to
be bound by such provisions.

        The payment of the Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Additional Interest, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price and interest, if any, in respect to the
Securities shall, to the extent and in the manner hereinafter set forth, be
subordinated and subject in right of payment to the prior payment in full of all
Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred.

        No provision of this Article 10 shall prevent the occurrence of any
Default or Event of Default hereunder.

        SECTION 10.2. PAYMENTS TO HOLDERS.

        No payment shall be made with respect to the Principal Amount, Issue
Price, accrued Additional Interest, if any, Original Issue Discount, Redemption
Price, Purchase Price, Fundamental Change Redemption Price and interest, if any,
on the Securities, except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 10.5, if:

                   (i) a default in the payment of principal, premium, interest,
rent or other obligations due on any Senior Indebtedness has occurred and is
continuing (or, in the case of Senior Indebtedness for which there is a period
of grace, in the event of such a default that continues beyond the period of
grace, if any, specified in the instrument or lease evidencing such Senior
Indebtedness) (a "Payment Default"), unless and until such Payment Default shall
have been cured or waived or shall have ceased to exist; or

                   (ii) a default, other than a payment default, on Designated
Senior Indebtedness occurs and is continuing that permits the holders of such
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment




                                      -52-
   59

Blockage Notice") a Representative of Designated Senior Indebtedness or the
Company (a "Non-Payment Default").

        If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until (A) at least 365 days shall have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice, and (B) all scheduled payments of the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Additional Interest, if any,
Redemption Price, Purchase Price, Fundamental Change Redemption Price and
interest, if any on the Securities that have come due have been paid in full in
cash. No Non-Payment Default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee (unless such default was
waived, cured or otherwise ceased to exist and thereafter subsequently
reoccurred) shall be, or be made, the basis for a subsequent Payment Blockage
Notice.

        The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of:

                   (1) in the case of a Payment Default, the date upon which the
default is cured or waived or ceases to exist, or

                   (2) in the case of a Non-Payment Default, the earlier of (a)
date on which such default is cured or waived or ceases to exist or (b) 179 days
after the date on which the applicable Payment Blockage Notice is received, if
the maturity of such Designated Senior Indebtedness has not been accelerated

unless this Article 10 otherwise prohibits the payment or distribution at the
time of such payment or distribution (including, without limitation, in the case
of a default referred to in clause (ii) above, as a result of a payment default
with respect to the applicable Senior Indebtedness as a consequence of the
acceleration of the maturity thereof or otherwise).

        Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization,
of the Company, whether voluntary or involuntary or in bankruptcy, moratorium of
payments, insolvency, receivership or other proceedings, all amounts due or to
become due upon all Senior Indebtedness shall first be paid in full in Cash or
other payment satisfactory to the holders of such Senior Indebtedness, or
payment thereof in accordance with its terms provided for in Cash or other
payment satisfactory to the Holders of such Senior Indebtedness before any
payment is made on account of the Principal Amount, Issue Price, accrued
Original Issue Discount, accrued Additional interest, if any, Redemption Price,
Purchase Price, Fundamental Change Redemption Price, interest, if any, in
respect to the Securities, (except payments made pursuant to Article 8 from
monies deposited with the Trustee pursuant thereto prior to commencement of
proceedings for such dissolution, winding-up, liquidation or reorganization);
and upon any such dissolution or winding-up or liquidation or reorganization of
the Company or bankruptcy, insolvency, receivership or other proceeding, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or




                                      -53-
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securities, to which the Holders of the Securities or the Trustee would be
entitled, except for the provisions of this Article 10, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Securities or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, or as otherwise required by law or court order) or their
Representative or Representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any such Senior
Indebtedness may have been issued, as their respective interests may appear or
to the extent necessary to pay all such Senior Indebtedness in full, in Cash or
other payment satisfactory to the holders of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness, before any payment or distribution is made to the
Holders of the Securities or to the Trustee.

        In the event of the acceleration of the Securities because of an Event
of Default pursuant to Section 6.2, no payment or distribution shall be made to
the Trustee or any Holder in respect of the Principal Amount, Issue Price,
accrued Original Issue Discount, accrued Additional Interest, if any, Redemption
Price, Purchase Price, Fundamental Change Redemption Price or interest, if any,
on the Securities, except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 10.5, until all Senior
Indebtedness has been paid in full in Cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Securities is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Indebtedness of the Company of the acceleration.

        In the event that, notwithstanding the foregoing provisions, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Holders of the
Securities before all Senior Indebtedness is paid in full in Cash or other
payment satisfactory to the holders of such Senior Indebtedness, or provision is
made for such payment thereof in accordance with its terms in Cash or other
payment satisfactory to holders of such Senior Indebtedness, such payment or
distribution shall be held in trust for the benefit of and shall be paid over or
delivered to the holders of Senior Indebtedness of the Company or their
Representative or Representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all such Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full in Cash or other payment satisfactory to the holders of
such Senior Indebtedness, after giving effect to any concurrent payment or
distribution, or provision thereof, to or for the holders of such Senior
Indebtedness.

        For purposes of this Article 10, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article 10 with respect
to the Securities to the payment of all Senior Indebtedness of the Company which
may at the time be outstanding;




                                      -54-
   61

provided that (i) such Senior Indebtedness is assumed by the new corporation, if
any, resulting from any such reorganization or readjustment, and (ii) the rights
of the holders of such Senior Indebtedness (other than leases that are not
assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article 5 hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 10.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article 5 hereof.

        Nothing in this Article 10 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7. This Section 10.2 shall be subject to
the further provisions of Section 10.5.

        SECTION 10.3. SUBROGATION OF SECURITIES.

        Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article 10 (equally and ratably with the holders of all
Indebtedness of the Company which by its express terms is subordinated to other
Indebtedness of the Company to substantially the same extent as the Securities
are subordinated and is entitled to like rights of subrogation) to the rights of
the holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Indebtedness
until the Principal Amount, Issue Price, accrued Original Issue Discount,
accrued Additional Interest, if any, Redemption Price, Fundamental Change
Redemption Price or interest, if any, on the Securities shall be paid in full;
and, for the purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article 10, and no payment over pursuant to the provisions of
this Article 10, to or for the benefit of the holders of Senior Indebtedness by
Holders of the Securities or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness; and no payments or distributions of cash, property or
securities to or for the benefit of the Holders of the Securities pursuant to
the subrogation provisions of this Article 10, which would otherwise have been
paid to the holders of Senior Indebtedness shall be deemed to be a payment by
the Company to or for the account of the Securities. It is understood that the
provisions of this Article 10 are and are intended solely for the purposes of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of the Senior Indebtedness, on the other hand.

        Nothing contained in this Article 10 or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities amounts due on the Securities as and
when




                                      -55-
   62

the same shall become due payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
10 of the holders of Senior Indebtedness in respect of Cash, property or
securities of the Company received upon the exercise of any such remedy.

        Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee, subject to the provisions of Section 7.1 and the
holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article 10.

        SECTION 10.4. AUTHORIZATION TO EFFECT SUBORDINATION.

        Each Holder of a Security by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 10 and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.9 hereof at least 30 days before the expiration of the time to file such
claim, the holders of any Senior Indebtedness or their Representatives are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Securities.

        SECTION 10.5. NOTICE TO TRUSTEE.

        The Company shall give prompt written notice in a form of an Officers'
Certificate to a Trust Officer and to any Paying Agent of any fact known to the
Company which would prohibit the making of any payment of monies deposited by
the Company to or by the Trustee or any Paying Agent in respect of the
Securities pursuant to the provisions of this Article 10. Notwithstanding the
provisions of this Article 10 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article 10, unless
and until a Trust Officer shall have received written notice thereof at the
Corporate Trust Office from the Company (in the form of an Officers'
Certificate) or a Representative or a holder or holders of Senior Indebtedness
or a Representative or from any trustee thereof; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Section 7.1,
shall be entitled in all respects to assume that no such facts exist; provided
that if on a date not fewer than two Business Days prior to the date upon which
by the terms hereof any such monies may become payable for any purpose
(including, without limitation, the payment of the Principal Amount, Issue




                                      -56-
   63

Price, accrued Original Issue Discount, accrued Additional Interest, if any,
Redemption Price, Purchase Price, Fundamental Change Redemption Price and
interest, if any, in respect of the Securities) the Trustee shall not have
received, with respect to such monies, the notice provided for in this Section
10.5, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such prior
date.

        Notwithstanding anything in this Article 10 to the contrary herein set
forth, nothing shall prevent any payment by the Trustee to the Holders of monies
deposited with it pursuant to Section 8.1, and any such payment shall not be
subject to the provision of Section 10.1 or 10.2.

        The Trustee, subject to the provisions of Section 7.1, shall be entitled
to rely on the delivery to it of a written notice by a Representative or a
Person representing himself to be a holder of Senior Indebtedness of the Company
(or a trustee on behalf of such holder) to establish that such notice has been
given by a Representative or a holder of such Senior Indebtedness or a trustee
on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article 10, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article 10, and if
such evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

        SECTION 10.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.

        The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 10 in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.

        With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness of the Company and,
subject to the provisions of Section 7.1, the Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to Holders of
Securities, the Company or any other Person money or assets to which any holder
of Senior Indebtedness of the Company shall be entitled by virtue of this
Article 10 or otherwise.




                                      -57-
   64

        SECTION 10.7. NO IMPAIRMENT OF SUBORDINATION.

        No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.

        SECTION 10.8. CERTAIN CONVERSIONS NOT DEEMED PAYMENT.

        For the purposes of this Article 10 only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article 11
shall not be deemed to constitute a payment or distribution on account of the
Principal Amount, Issue Price, Accrued Original Issue Discount, Accrued
Additional Interest, if any, Redemption Price, Purchase Price, Fundamental
Change Redemption Price and interest, if any, or on account of the purchase or
other acquisition of Securities, and (2) the payment, issuance or delivery of
cash (except in satisfaction of fractional shares pursuant to Section 15.3 or
3.8(d)), property or securities (other than junior securities) upon conversion
of a Security shall be deemed to constitute payment on account of the principal
of such Security. For the purposes of this Section 10.8, the term "junior
securities" means (a) shares of any stock of any class of the Company or (b)
securities of the Company which are subordinated in right of payment to all
Senior Indebtedness which may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article. Nothing
contained in this Article 10 or elsewhere in this Indenture or in the Securities
is intended to or shall impair, as among the Company, its creditors (other than
holders of Senior Indebtedness) and the Holders, the right, which is absolute
and unconditional, of the Holder of any Security to convert such Security in
accordance with Article 11.

        SECTION 10.9. ARTICLE APPLICABLE TO PAYING AGENTS.

        If at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that the first
paragraph of Section 10.5 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.

        SECTION 10.10. SENIOR INDEBTEDNESS ENTITLED TO RELY.

        The holders of Senior Indebtedness (including, without limitation,
Designated Senior Indebtedness) shall have the right to rely upon this Article
10, and no amendment or modification of the provisions contained herein shall
diminish the rights of such holders unless such holders shall have agreed in
writing thereto.




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                                   ARTICLE 11

                                   CONVERSION

        SECTION 11.1. CONVERSION PRIVILEGE.

        A Holder of a Security may convert such Security for Common Stock at any
time during the period stated in paragraph 9 of the Securities. The number of
shares of Common Stock issuable upon conversion of a Security per $1,000 of
Principal Amount thereof (the "Conversion Rate") shall be that set forth in
paragraph 9 in the Securities, subject to adjustment as herein set forth.

        A Holder may convert a portion of the Principal Amount of a Security if
the portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to conversion of all of a Security also apply to conversion
of a portion of a Security.

        SECTION 11.2. CONVERSION PROCEDURE.

        To convert a Security, a Holder must satisfy the requirements in
paragraph 9 of the Securities. The date on which the Holder of Securities
satisfies all those requirements is the conversion date (the "Conversion Date").
As soon as practicable after the Conversion Date the Company shall deliver to
the Holder, through the Conversion Agent, a certificate for the number of full
shares of Common Stock issuable upon the conversion and Cash in lieu of any
fractional share determined pursuant to Section 11.3. The Person in whose name
the certificate is registered shall be treated as the stockholder of record on
and after the Conversion Date; provided, however, that no surrender of a
Security on any date when the stock transfer books of the Company shall be
closed shall be effective to constitute the Person or Persons entitled to
receive the shares of Common Stock upon such conversion as the record holder or
holders of such shares of Common Stock on such date, but such surrender shall be
effective to constitute the Person or Persons entitled to receive such shares of
Common Stock as the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock transfer books
are open; such conversion shall be at the Conversion Rate in effect on the date
that such Security shall have been surrendered for conversion, as if the stock
transfer books of the Company had not been closed. Upon conversion of a
Security, such Person shall no longer be a Holder of such Security.

        No payment on the Securities or adjustment of the Conversion Rate will
be made for dividends on or other distributions with respect to any Common Stock
except as provided in this Article 11. On conversion of a Security, that portion
of accrued Original Issue Discount attributable to the period from the Issue
Date of the Security to the Conversion Date with respect to the converted
Security shall not be canceled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder thereof through delivery of the Common
Stock (together with the Cash payment, if any, in lieu of fractional shares) in
exchange for the Security being converted pursuant to the provisions hereof.




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        If a Holder converts more than one Security at the same time, the number
of shares of Common Stock issuable upon the conversion shall be based on the
total Principal Amount of the Securities converted.

        Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Security in an authorized denomination equal in Principal Amount to the
unconverted portion of the Security surrendered.

        If the last day on which a Security may be converted is a Legal Holiday
in a place where a Conversion Agent is located, the Security may be surrendered
to that Conversion Agent on the next succeeding day that it is not a Legal
Holiday.

        SECTION 11.3. FRACTIONAL SHARES.

        The Company will not issue a fractional share of Common Stock upon
conversion of a Security. Instead the Company will deliver Cash for the current
market value of the fractional share. The current market value of a fractional
share shall be determined to the nearest 1/10,000th of a share by multiplying
the last reported sale price (determined as set forth in the definition of
Current Market Price) on the last Trading Day prior to the Conversion Date of a
full share by the fractional amount and rounding the product to the nearest
whole cent.

        SECTION 11.4. TAXES ON CONVERSION.

        If a Holder converts a Security, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificates
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by law
or regulations.

        SECTION 11.5. COMPANY TO PROVIDE STOCK.

        The Company shall, prior to issuance of any Securities hereunder, and
from time to time as may be necessary, reserve out of its authorized but
unissued Common Stock a sufficient number of shares of Common Stock to permit
the conversion of the Securities.

        All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.

        The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of Securities 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,




                                      -60-
   67

the Company will in good faith and as expeditiously as possible 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 quoted on the Nasdaq National Market or any other automated quotation system
or listed on the NYSE or any other national or regional securities exchange, the
Company will, if permitted by the rules of such automated quotation system or
exchange, list and keep listed, so long as the Common Stock shall be so listed
on such automated quotation system or exchange, all shares of Common Stock
issuable upon conversion of the Securities; provided, however, that if the rules
of such automated quotation system or exchange permit the Company to defer the
listing of such Common Stock until the first conversion of the Securities into
Common Stock in accordance with the provisions of this Indenture, the Company
covenants to list such Common Stock issuable upon conversion of the Securities
in accordance with the requirements of such automated quotation system or
exchange at such time.

        SECTION 11.6. CONVERSION TO SEMIANNUAL COUPON UPON A TAX EVENT.

               (a) If at any time after the date (the "Tax Event Date") of the
occurrence of a Tax Event the Company exercises its option (the date of such
exercise, (the "Option Exercise Date") to pay interest in lieu of Original Issue
Discount, interest in lieu of future Original Issue Discount shall accrue at the
rate of 4.75% per annum on a Principal Amount per Security (the "Restated
Principal Amount") equal to the Issue Price plus Original Issue Discount accrued
through the Option Exercise Date (as calculated by the Company and set forth in
an Officer's Certificate delivered to the Trustee) and shall be payable
semiannually on May 23 and November 23 of each year (each an "Interest Payment
Date") to holders of record of the Securities on the May 8 or November 8
immediately preceding Interest Payment Date (each a "Regular Record Date"),
immediately proceeding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the Option Exercise Date. Interest on any Security that is
payable on any Interest Payment Date shall be paid to the Person in whose name
that Security is registered at the close of business on the Regular Record Date.

               (b) Within 15 days of the occurrence of a Tax Event, the Company
shall mail a written notice of such Tax Event by first class mail to the Trustee
and within 15 days of its exercise of such option the Company shall mail a
written notice of the Option Exercise Date by first-class mail to the Trustee
and the Holders of the Securities. From and after the Option Exercise Date, (i)
the Company shall be obligated to pay at Stated Maturity, in lieu of the
Principle Amount of a Security, the Restated Principal Amount thereof and (ii)
"Issue Price and accrued Original Issue Discount," "Issue Price plus Original
Issue Discount," or similar words, as used herein, shall mean Restated Principal
Amount plus accrued and unpaid interest with respect to any Security. Securities
authenticated and delivered after the Option Exercise Date may, and shall if
required by the Trustee, bear a notation in a form approved by the Trustee as to
the conversion of the Securities to semiannual coupon notes.

               (c) Interest on any Security that is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
person in whose name that Security is




                                      -61-
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registered at the close of business on the Regular Record Date for such interest
at the office or agency of the Company maintained for such purpose. Each
installment of interest on any Security shall be paid in same-day funds by
transfer to an account maintained by the payee located inside the United States.
In the case of a permanent Global Security, in global form, interest payable on
any Interest Payment Date will be paid to the Depositary, with respect to that
portion of such permanent Global Security, in global form, held for its account
by Cede & Co. for the purpose of permitting such party to credit the interest
received by it in respect of such permanent Security in global form to the
accounts of the beneficial owners thereof.

               (d) Except as otherwise specified with respect to the Security,
any interest on any Security that is payable, but is not punctually paid or duly
provided for, within 30 days following on any Interest Payment Date (herein
called "Defaulted Interest", which term shall include any accrued and unpaid
interest that has accrued on such defaulted amount in accordance with paragraph
1 of the Securities), shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (1) or (2) below:

                   (1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities are registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed payment (which shall not be less
than 20 days after such notice is received by the Trustee), 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 on or prior
to the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the persons entitled to such Defaulted Interest as in
this clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of Securities
at his address as it appears on the list of Securityholders maintained pursuant
to Section 2.5 not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be paid
to the persons in whose names the Securities are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following clause (2).

                   (2) The Company may make payment of any Defaulted Interest on
the Securities in any other lawful manner not inconsistent with the requirements
of any securities exchange on which such Securities may be listed, and upon such
notice as may be required by such




                                      -62-
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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.

        Subject to the foregoing provisions of this Section 11.6 and Section
2.6, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

               (e) In the event that the Company exercises its option following
a Tax Event, any Security or portion thereof surrendered for conversion during
the period from the close of business on the Regular Record Date to the opening
of business on the immediately following Interest Payment Date (unless such
Security or portion thereof being converted shall have been called for
redemption on a date in such period) must be accompanied by a payment, in funds
acceptable to the Company, of an amount of interest otherwise payable on such
Interest Payment Date on the amount of principal being converted.

        Interest on any Security that is payable on any Interest Payment Date
shall be paid to the Person in whose name that Security is registered at the
close of business on the Regular Record Date.

        SECTION 11.7. ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.

        In case the Company shall (i) pay a dividend, or make a distribution, in
shares of its Common Stock, on its Common Stock, (ii) subdivide its outstanding
Common Stock into a greater number of shares, or (iii) combine its outstanding
Common Stock into a smaller number of shares, the Conversion Rate in effect
immediately prior thereto shall be adjusted so that the holder of any Security
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock which such Holder would have owned or have been entitled
to receive after the occurrence of any of the events described above had such
Security been converted immediately prior to the occurrence of such event. If
any dividend or distribution of the type described in clause (i) above is not so
paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate
which would then be in effect if such dividend as distribution had not been
declared. An adjustment made pursuant to this Section 11.7 shall become
effective immediately after the record date in the case of a dividend and still
shall become effective immediately after the effective date in the case of a
subdivision or combination.

        SECTION 11.8. ADJUSTMENT FOR RIGHTS ISSUE.

        In case the Company shall issue rights or warrants to all holders of its
Common Stock entitling them (for a period expiring within 45 days after the
record date mentioned below) to subscribe for or purchase Common Stock at a
price per share less than the Current Market Price per share of Common Stock at
the record date for the determination of stockholders entitled to receive such
rights or warrants, the Conversion Rate in effect immediately prior thereto
shall be adjusted so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to the date of
issuance of such rights or warrants by a fraction of which the




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numerator shall be the number of shares of Common Stock outstanding on the date
of issuance of such rights or warrants plus the number of additional shares of
Common Stock offered to holders of Common Stock for subscription or purchase,
and of which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares so offered would purchase at such Current Market Price. Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after the opening of business on
the day following the record date for the determination of the stockholders
entitled to receive such rights or warrants. To the extent that shares of Common
Stock are not delivered after the expiration of such rights or warrants, the
Conversion Rate shall be readjusted to the Conversion Rate which 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. If such rights or warrants are not so issued, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be in
effect if such record date for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such Current Market Price of such Common Stock, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the Company for such
rights or warrants, the value of such consideration, if other than Cash, to be
determined by the Board of Directors.

        SECTION 11.9. ADJUSTMENT FOR OTHER DISTRIBUTIONS.

               (a) In case the Company shall distribute to all holders of its
Common Stock (excluding any distribution in connection with the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary) any
shares of any class of capital stock of the Company (other than Common Stock),
of evidences of indebtedness of the Company or of assets (other than cash) or
rights or warrants to subscribe for or purchase any of its securities (excluding
those referred to in Section 11.8 hereof) (any of the foregoing hereinafter in
this Section 11.9(a) called the "Distributed Securities"), then, the Conversion
Rate shall be adjusted so that the same shall equal the Conversion Rate
determined by multiplying the Conversion Rate in effect immediately prior to the
date of such distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on the record date mentioned
below, and the denominator shall be the Current Market Price per share of the
Common Stock on such record date less the fair market value on such record date
(as determined by the Board of Directors of the Company, whose determination
shall be conclusive, and described in a certificate filed with the Trustee) of
the Distributed Securities so distributed applicable to one share of Common
Stock. Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event that the then fair market value (as
so determined) of the portion of the Distributed Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price of the Common Stock on the record date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion the amount of Distributed Securities such
Holder would have received had such Holder converted each Security immediately
prior to such




                                      -64-
   71

record date. In the event that such distribution is not so paid or made, the
Conversion Rate shall again be adjusted to the Conversion Rate which would then
be in effect if such distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for purposes of
this Section 11.9(a) by reference to the actual or when issued trading market
for any securities, it must in doing so consider the prices in such market over
the same period used in computing the Current Market Price of the Common Stock.

        Notwithstanding the foregoing provisions of this Section 11.9(a), no
adjustment shall be made thereunder for any distribution of Distributed
Securities if the Company makes proper provision so that each Holder of a
Security who converts such Security (or any portion thereof) after the record
date for such distribution shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, the amount
and kind of Distributed Securities that such Holder would have been entitled to
receive if such Holder had, immediately prior to such record date, converted
such Security for Common Stock; provided that, with respect to any Distributed
Securities that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the Distributed
Securities receivable upon conversion of such Security would be convertible,
exchangeable or exercisable, as applicable, without any loss of rights or
privileges for a period of at least 60 days following conversion of such
Security.

               (b) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock Cash (excluding (x) any quarterly
Cash dividend on the Common Stock to the extent the aggregate Cash dividend per
share of Common Stock in any fiscal quarter does not exceed the greater of (A)
the amount per share of Common Stock of the next preceding quarterly Cash
dividend on the Common Stock to the extent such preceding quarterly dividend did
not require any adjustment of the Conversion Rate pursuant to this Section
11.9(b) (as adjusted to reflect subdivisions or combinations of the Common
Stock), and (B) 3.75% of the average of the last reported sales price of the
Common Stock (determined as provided in the definition of Current Market Price)
during the ten Trading Days immediately prior to the date of declaration of such
dividend and (y) any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary), then, in such case, unless the Company elects to reserve such Cash
for distribution to the holders of the Securities upon the conversion of the
Securities so that any such holder converting Securities will receive upon such
conversion in addition to the shares of Common Stock to which such holder is
entitled, the amount of Cash which such holder would have received if such
holder had, immediately prior to the record date for such distribution of Cash,
converted its Securities for Common Stock, the Conversion Rate shall be
increased so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to the record date
by a fraction of which the numerator shall be such Current Market Price of the
Common Stock and the denominator shall be the Current Market Price of the Common
Stock on the record date less the amount of Cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock, such
increase to be effective immediately prior to the opening of business on the day
following the record date; provided, however, that in the event that the portion
of the Cash so distributed applicable to one share of Common Stock is equal to
or greater than the Current Market Price of the Common Stock on the record date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each




                                      -65-
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Holder shall have the right to receive upon conversion the amount of Cash such
Holder would have received had such Holder converted each Security on the record
date. If such dividend or distribution is not so paid or made, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be in
effect if such dividend or distribution had not been declared. If any adjustment
is required to be made as set forth in this Section 11.9(b) as a result of a
distribution that is a quarterly dividend, such adjustment shall be based upon
the amount by which such distribution exceeds the amount of the quarterly Cash
dividend permitted to be excluded pursuant hereto. If an adjustment is required
to be made as set forth in this Section 11.9(b) above as a result of a
distribution that is not a quarterly dividend, such adjustment shall be based
upon the full amount of the distribution.

               (c) In case a tender 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 shall involve the payment by the
Company or such Subsidiary of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive, and described in a resolution of such Board of Directors at
the last time (the "Expiration Time") tenders or exchanges maybe made pursuant
to such tender or exchange offer (as it shall have been amended)) that exceeds
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, the Conversion Rate shall be increased so that the same
shall equal the Conversion Rate determined by multiplying the Conversion Rate in
effect immediately prior to the Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to holders of Common Stock
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares of Common Stock validly tendered or exchanged
and not withdrawn as of the Expiration Time (the shares deemed so accepted up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, and the denominator
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) on the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such increase to become effective immediately prior to the
opening of business on the day following the Expiration Time. In the event that
the Company is obligated to purchase shares pursuant to any such tender or
exchange offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be
effect if such tender or exchange offer had not been made.

               (d) In case of a tender or exchange offer by a Person other than
the Company or any Subsidiary for an amount which increases the offeror's
ownership of Common Stock to more than 25% of the Common Stock outstanding and
shall involve the payment by such Person of consideration per share of Common
Stock having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the Board of
Directors at the last time (the "Tender Expiration Time") tenders or exchanges
may be made pursuant to such tender or exchange offer (as it shall have been
amended)) at the Tender Expiration




                                      -66-
   73

Time that exceeds the Current Market Price of the Common Stock on the Trading
Day next succeeding the Tender Expiration Time, and in which, as of the Tender
Expiration Time the Board of Directors is not recommending rejection of the
offer, the Conversion Rate shall be increased so that the same shall equal the
Conversion Rate determined by multiplying the Conversion Rate in effect
immediately prior to the Tender Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to holders of Common Stock
based on the acceptance (up to an maximum specified in the terms of the tender
or exchanged offer) of all shares of Common Stock validly tendered or exchanged
and not withdrawn as of the Tender Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Tender Purchased
Shares") and (y) the product of the number of shares of Common Stock outstanding
(less any Tender Purchased Shares) on the Tender Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the Tender
Expiration Time and the denominator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) on the Tender
Expiration Time multiplied by the Current Market Price of the Common Stock on
the Trading Day next succeeding the Tender Expiration Time, such increase to
become effective immediately prior to the opening of business on the day
following the Tender Expiration Time. in the event that such Person is obligated
to purchase shares pursuant to any such tender or exchange offer, but such
Person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Rate shall again
be adjusted to be the Conversion Rate which would then be in effect if such
tender or exchange offer had not been made. Notwithstanding the foregoing, the
adjustment described in this Section 11.9(d) shall not be made if, as of the
Tender Expiration Time, the offering documents with respect to such offer
disclose a plan or intention to cause the Company to engage in any transaction
described in Article 5.

        SECTION 11.10. WHEN ADJUSTMENT MAY BE DEFERRED.

        No adjustment in the Conversion Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Rate. Any
adjustments that are made shall be carried forward and taken into account any
subsequent adjustment.

        All calculations under this Article 11 shall be made to the nearest cent
or to the nearest 1/10,000th of a share, as the case may be.

        SECTION 11.11. WHEN NO ADJUSTMENT REQUIRED.

        No adjustment need be made for rights to purchase Common Stock pursuant
to a Company plan for reinvestment of dividends or interest.

        No adjustment need be made for a change in the par value of the Common
Stock.

        To the extent the Securities become convertible into Cash, assets,
property or securities (other than capital stock of the Company), no adjustment
need be made thereafter as to the cash, assets, property or such securities.
Interest will not accrue on the Cash.




                                      -67-
   74

        SECTION 11.12. NOTICE OF ADJUSTMENT.

        Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to Holders a notice of the adjustment. The Company shall file with the
Trustee and the Conversion Agent such notice. The certificate shall, absent
manifest error, be conclusive evidence that the adjustment is correct. Neither
the Trustee nor any Conversion Agent shall be under any duty or responsibility
with respect to any such certificate except to exhibit the same to any Holder
desiring inspection thereof.

        SECTION 11.13. VOLUNTARY INCREASE.

        The Company may make such increases in the Conversion Rate, in addition
to those required by Sections 11.7, 11.8 and 11.9, as the Board of Directors
considers to be advisable to avoid or diminish any income tax to holders of
Common Stock or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. To the extent permitted by applicable law, the
Company may from time to time increase the Conversion Rate by any amount for any
period of time if the period is at least 20 days, the increase is irrevocable
during the period and the Board of Directors shall have made a determination
that such increase would be in the best interests of the Company, which
determination shall be conclusive. Whenever the Conversion Rate is so increased,
the Company shall mail to Holders and file with the Trustee and the Conversion
Agent a notice of such increase. The Company shall mail such notice at least
seven days before the date the increased Conversion Rate takes effect. The
notice shall state the increased Conversion Rate and the period it will be in
effect.

        SECTION 11.14. NOTICE OF CERTAIN TRANSACTIONS.

        If:

        (1) the Company makes any distribution or dividend that would require an
adjustment in the Conversion Rate pursuant to Section 11.7, 11.8 or 11.9; or

        (2) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.15; or

        (3) there is a liquidation, dissolution or winding-up of the Company;
then the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.

        SECTION 11.15. EFFECT RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.

        If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or




                                      -68-
   75

from no par value to par value, or as a result of a subdivision or combination),
(ii) any consolidation, merger or combination of the Company with another
corporation as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including Cash) with
respect to or in exchange for such Common Stock, or (iii) any sale or conveyance
of the properties and assets of the Company as, or substantially as, an entirety
to any other corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
Cash) with respect to or in exchange for such Common Stock, then the Company or
the successor or purchasing corporation, as the case may be, shall execute with
the Trustee a supplemental indenture, providing that each Security shall be
convertible into the kind and amount of shares of stock and other securities or
property or assets (including Cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance by a holder of a
number of shares of Common Stock issuable upon conversion of such Securities
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance. Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article.

        The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Securities, at such Holder's address
appearing on the Security register provided for in Section 2.3 of this
Indenture.

        The above provisions of this Section shall similarly apply to successive
reclassifications, consolidations, mergers, combinations, and sales.

        If this Section applies, neither Section 11.7, 11.8 nor 11.9 applies.

        SECTION 11.16. COMPANY DETERMINATION FINAL.

        Any determination that the Company or the Board of Directors must make
pursuant to Section 11.3, 11.7, 11.8, 11.9, 11.10, 11.11, 11.15 or 11.18 is
conclusive.

        SECTION 11.17. TRUSTEE'S ADJUSTMENT DISCLAIMER.

        The Trustee has no duty to determine when an adjustment under this
Article 11 should be made, how it should be made or what it should be. The
Trustee has no duty to determine whether a supplemental indenture under Section
11.15 need be entered into or whether any provisions of any supplemental
indenture are correct. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities. The Trustee shall not be responsible for the
Company's failure to comply with this Article 11, and shall not be deemed to
have knowledge of any adjustment unless and until it shall have received a
notice of adjustment pursuant to Section 11.12. Each Conversion Agent shall have
the same protection under this Section 11.7 as the Trustee.




                                      -69-
   76

        SECTION 11.18. SIMULTANEOUS ADJUSTMENTS.

        In the event that this Article 11 requires adjustments to the Conversion
Rate under more than one of Sections 11.7, 11.8, 11.9(a) or 11.9(b), and the
record dates for the distributions giving rise to such adjustments shall occur
on the same date, then such adjustments shall be made by applying, first, the
provisions of Section 11.9(a), second, the provisions of Section 11.9(b), third
the provisions of Section 11.7 and, fourth, the provisions of Section 11.8.

        SECTION 11.19. SUCCESSIVE ADJUSTMENTS.

        After an adjustment to the Conversion Rate under this Article 11, any
subsequent event requiring an adjustment under this Article 11 shall cause an
adjustment to the Conversion Rate as so adjusted.

        SECTION 11.20. RIGHTS ISSUED IN RESPECT OF COMMON STOCK ISSUED UPON
CONVERSION.

        Notwithstanding any other provision hereof, in the event that the
Company implements a stockholders' rights plan, such rights plan shall provide
that upon conversion of the Securities the Holders will receive, in addition to
the Common Stock issuable upon such conversion, such rights whether or not such
rights have separated from the Common Stock at the time of such conversion. In
the event that provision is made that a Holder of Securities will receive such
rights upon conversion, whether or not the rights have separated from the Common
Stock at the time of such conversion, no adjustment shall be made to the
Conversion Rate pursuant to this Article 11 as a result of such rights
distribution.

        Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"):

                   (i) are deemed to be transferred with such shares of Common
Stock,

                   (ii) are not exercisable, and

                   (iii) are also issued in respect of future issuances of
Common Stock,

shall not be deemed distributed for purposes of Section 11.9(a) until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Conversion Rate under Section
11.9(a), (1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion 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 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




                                      -70-
   77

redemption or repurchase, and (2) in the case of any such rights or warrants all
of which shall have expired without exercise by any holder thereof, the
Conversion Rate shall be readjusted as if such issuance had not occurred.

        SECTION 11.21. GENERAL CONSIDERATIONS.

        Whenever successive adjustments to the Conversion Rate are called for
pursuant to this Article 11, such adjustments shall be made to the Current
Market Price or the conversion rate adjustment provisions of 11.7, 11.8, 11.9
and 11.18 as may be necessary or appropriate to effectuate the intent of this
Article 11 and to avoid unjust or inequitable results as determined in good
faith by the Board of Directors.


                                   ARTICLE 12

                                  MISCELLANEOUS

        SECTION 12.1. TRUST INDENTURE ACT.

        This Indenture is hereby made subject to, and shall be governed by, the
provisions of the TIA required to be part of and to govern indentures qualified
under the TIA; provided, however that this Section 12.1 shall not require this
Indenture or the Trustee to be qualified under the TIA prior to the time such
qualification is in fact required under the terms of the TIA, nor shall it
constitute any admission or acknowledgment by any party that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the TIA. If any provision hereof limits, qualifies
or conflicts with another provision hereof which is required to be included in
an indenture qualified under the TIA, such required provision shall control.

        SECTION 12.2. NOTICES.

        Any request, demand, authorization, notice, waiver, consent or
communication shall be in writing and delivered in Person or mailed by first
class mail, postage prepaid, addressed as follows or transmitted by facsimile
transmission (confirmed by overnight courier) to the following facsimile
numbers:

        if to the Company:

               Atmel Corporation
               2325 Orchard Parkway
               San Jose, California 95131
               Attn:  General Counsel
               Telephone Number:  (408) 441-0311
               Facsimile Number:  (408) 436-4377




                                      -71-
   78

        if to the Trustee:

               State Street Bank and Trust Company of California, N.A.
               633 West 5th Street, 12th Floor
               Los Angeles, California 90071
               (Attention:  Atmel Corporation, Zero Coupon
               Convertible Subordinated Debentures due 2021)
               Telephone Number:  (213) 362-7338
               Facsimile Number:  (213) 362-7357

        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 given to a Holder shall be mailed to the
Holder, by first class mail, postage prepaid, at the Holder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.

        Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not received by the addressee.

        If the Company mails a notice or communication to the Holders, it shall
mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or
co-registrar.

        SECTION 12.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

        Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and
anyone else shall have the protection of TIA Section 312(c).

        SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

        Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall finish to the Trustee:

        (1) an Officers' Certificate 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

        (2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.




                                      -72-
   79

        SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

        Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:

        (1) a statement that each individual making such Officers' Certificate
or Opinion of Counsel has read such covenant or condition;

        (2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such Officers'
Certificate or Opinion of Counsel are based;

        (3) a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

        (4) a statement that, in the opinion of such individual, such covenant
or condition has been complied with.

        SECTION 12.6. SEPARABILITY CLAUSE.

        In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

        SECTION 12.7. RULES BY TRUSTEE, PAYING AGENT, CONVERSION AGENT AND
REGISTRAR.

        The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.

        SECTION 12.8. GOVERNING LAW.

        THIS INDENTURE AND EACH SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

        No Recourse Against Others.

        A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder shall waive and release all such liability. The waiver and release shall
be part of the consideration for the issue of the Securities.




                                      -73-
   80

        SECTION 12.10. SUCCESSORS.

        All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.

        SECTION 12.11. 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.





                                      -74-
   81

        IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed
this Indenture on behalf of the respective parties hereto as of date first
written above.



                                        ATMEL CORPORATION



                                        By: ____________________________________
                                        Title:



   82

                                        STATE STREET BANK AND TRUST COMPANY OF
                                        CALIFORNIA, N.A.



                                        By: ____________________________________
                                                    Authorized Signatory



   83

                                    EXHIBIT A

                           [FORM OF FACE OF SECURITY]

FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, THIS SECURITY BEARS ORIGINAL
ISSUE DISCOUNT. INFORMATION INCLUDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY WILL BE MADE AVAILABLE TO
HOLDERS UPON REQUEST TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT (408)
441-0311.


                      [FORM OF LEGEND FOR GLOBAL SECURITY]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.(1)


                          [FORM OF RESTRICTIVE LEGEND]

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR


- ------------------
(1)  The first and second paragraphs should be included only if the Security is
     in global form.




                                      A-1
   84

SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S.
PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (K)(2) OF RULE 902 UNDER REGULATION S
UNDER THE SECURITIES ACT) OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2),(3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT, PRIOR TO
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH SECURITIES WITHIN THE UNITED STATES OR TO OR
FOR THE ACCOUNT OF A U.S. PERSON EXCEPT (A) TO ATMEL CORPORATION OR ANY
SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501 (a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT
PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
(D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN
A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO STATE STREET BANK
AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY.
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS




                                      A-2
   85

CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE) IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON,
THE HOLDER MUST PRIOR TO SUCH TRANSFER FURNISH TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE)
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF
THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE (2)(D) OR (2)(E) ABOVE OR UPON
ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.





                                      A-3
   86

                           [FORM OF FACE OF SECURITY]

                                ATMEL CORPORATION

             ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE 2021


No. R-
Issue Date:  May 23, 2001                     Original Issue Discount:  $608.94
Issue Price:  $391.06                         (for each $1,000 Principal Amount)
(for each $1,000 Principal Amount)            CUSIP:  049513AD6


        Atmel Corporation, a Delaware corporation (the "Company") for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
Principal Amount of _______________ Dollars ($________) on May 23, 2021.

        The principal of this Security shall not bear interest except in the
case of default in payment of principal upon acceleration, redemption or
maturity or as specified on the other side of this Security. Original Issue
Discount will accrue as specified on the other side of this Security. This
Security is convertible as specified on the other side of this Security.

        Payment of the principal of and interest, if any, on this Security will
be made at the office or agency of the Company maintained for that purpose in
The City of New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company, payment of
interest, if any, may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
[Payments in respect of this Security shall be made by transfer of immediately
available funds to the account specified by the Holder.](2)

        Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

        Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.


- ------------------
(2)  This sentence should be included only if the Security is in global form




s                                      A-4
   87

        IN WITNESS WHEREOF, Atmel Corporation has caused this instrument to be
duly executed.


Dated:                                  ATMEL CORPORATION


                                        By: ____________________________________

                                        Name: __________________________________

                                        Title: _________________________________


TRUSTEE'S CERTIFICATE OF AUTHENTICATION:

STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee, certifies that this is one of the Securities
referred to in the within-mentioned Indenture.


By: ____________________________________
            Authorized Signatory

Dated:





                                      A-5
   88

                       [FORM OF REVERSE SIDE OF SECURITY]

                                ATMEL CORPORATION

             ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE 2021


        1. INTEREST

        This Security shall not bear interest, except as specified in this
paragraph or as described in paragraph 9(b) hereof If the Principal Amount
hereof or any portion of such Principal Amount is not paid when due (whether
upon acceleration pursuant to Section 6.2 of the Indenture, upon the date set
for payment of the Redemption Price pursuant to paragraph 5 hereof, upon the
date set for payment of a Purchase Price or Fundamental Change Redemption Price
pursuant to paragraph 6 hereof or upon the Stated Maturity of this Security),
then in each such case the overdue amount shall bear interest at the rate of
4.75% per annum compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which interest shall accrue from the
date such overdue amount was due up to and including the date that payment of
such amount, including interest thereon, has been made or duly provided for. All
such interest shall be payable as set forth in the Indenture. The accrual of
such interest on overdue amounts shall be in lieu of, and not in addition to,
the continued accrual of Original Issue Discount. Original Issue Discount, or if
the Security is converted to a semiannual interest Security following the
occurrence of a Tax Event (as defined in the Indenture) interest on the Security
(except as provided in the second sentence of this paragraph) will cease to
accrue after the declaration of acceleration of the Securities.

        Original Issue Discount (the difference between the Issue Price and the
Principal Amount of the Security) in the period during which a Security remains
outstanding, shall accrue at the rate of 4.75% per annum, on a semiannual bond
equivalent basis using a 360-day year composed of twelve 30-day months,
commencing on the Issue Date of this Security.

        2. METHOD OF PAYMENT

        Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of the Securities to the Persons who are registered
Holders of Securities at the close of business on the Business Day preceding the
Redemption Date or Stated Maturity, as the case may be, or at the close of
business on a Purchase Date or Fundamental Change Redemption Date, as the case
may be. Holders must surrender Securities to the Paying Agent to collect such
payments in respect of the Securities. The Company will pay cash amounts in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may make such cash
payments by check payable in such money.

        3. PAYING AGENT, CONVERSION AGENT AND REGISTRAR

        Initially, State Street Bank and Trust Company of California, N.A., a
national banking association organized under the laws of the United States of
America (the "Trustee"), will act as




                                      A-6
   89

Paying Agent, Conversion Agent and Registrar. The Company may appoint and change
any Paying Agent, Conversion Agent, Registrar or co-registrar without notice,
other than notice to the Trustee. The Company or any of its Subsidiaries or any
of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or
co-registrar.

        4. INDENTURE

        The Company issued the Securities under an Indenture (the "Indenture"),
dated as of May 23, 2001, between the Company and the Trustee. Capitalized terms
used but not defined herein have the meanings ascribed thereto in the Indenture.
The Securities are subject to all such terms, and Holders are referred to the
Indenture for a statement of those terms.

        The Securities are general unsecured obligations of the Company limited
to $511,500,000 aggregate Principal Amount (subject to exercise of the
Over-Allotment Option and to Sections 2.2 and 2.7 of the Indenture). The
Indenture does not limit other indebtedness of the Company, secured or
unsecured, including Senior Indebtedness of the Company.

        5. REDEMPTION AT THE OPTION OF THE COMPANY

        No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the redemption prices (in each case, the "Redemption Price")
set forth below, provided that the Securities are not redeemable prior to May
23, 2006.

        The table below shows Redemption Prices of a Security per $1,000
Principal Amount on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated through each such date. The
Redemption Price of a Security redeemed between such dates would include an
additional amount reflecting the additional Original Issue Discount accrued from
the next preceding date in the table through the actual Redemption Date.



                                                                   (2)
                                                                 ACCRUED           (3)
                                                  (1)        ORIGINAL ISSUE     REDEMPTION
                                                SECURITY        DISCOUNT          PRICE
                 REDEMPTION DATE              ISSUE PRICE       AT 4.75%        (1) + (2)
       ------------------------------         -----------    --------------     ----------
                                                                       
       May 23, 2006                             $ 391.06        $ 103.46        $   494.52
       May 23, 2007                             $ 391.06        $ 127.23        $   518.29
       May 23, 2008                             $ 391.06        $ 152.14        $   543.20
       May 23, 2009                             $ 391.06        $ 178.25        $   569.31
       May 23, 2010                             $ 391.06        $ 205.61        $   596.67
       May 23, 2011                             $ 391.06        $ 234.29        $   625.35
       May 23, 2012                             $ 391.06        $ 264.35        $   655.41
       May 23, 2013                             $ 391.06        $ 295.85        $   686.91
       May 23, 2014                             $ 391.06        $ 328.87        $   719.93





                                      A-7
   90



                                                                   (2)
                                                                 ACCRUED           (3)
                                                  (1)        ORIGINAL ISSUE     REDEMPTION
                                                SECURITY        DISCOUNT          PRICE
                 REDEMPTION DATE              ISSUE PRICE       AT 4.75%        (1) + (2)
       ------------------------------         -----------    --------------     ----------
                                                                       
       May 23, 2015                             $ 391.06        $ 363.47        $   754.53
       May 23, 2016                             $ 391.06        $ 399.73        $   790.79
       May 23, 2017                             $ 391.06        $ 437.74        $   828.80
       May 23, 2018                             $ 391.06        $ 477.58        $   868.64
       May 23, 2019                             $ 391.06        $ 519.33        $   910.39
       May 23, 2020                             $ 391.06        $ 563.09        $   954.15
       May 23, 2021                             $ 391.06        $ 608.94        $ 1,000.00


        If converted to an interest-bearing debenture following a Tax Event as
described in paragraph 9(b) hereof, this Security will be redeemable at the
Restated Principal Amount plus accrued and unpaid interest from the date of this
conversion through the Redemption Date.

        If the Company redeems less than all of the outstanding Securities, the
Trustee will select the Securities to be redeemed (i) by lot; (ii) pro rata; or
(iii) by another method the Trustee considers fair and appropriate. If the
Trustee selects a portion of a Holder's Securities for partial redemption and
the Holder converts a portion of the same Securities, the converted portion will
be deemed to be from the portion selected for redemption.

        6. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; REDEMPTION AT
           THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

(a) Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, the Securities held
by such Holder on the following Purchase Dates and at the following Purchase
Prices per $1,000 Principal Amount, upon delivery of a Purchase Notice
containing the information set forth in the Indenture, from the opening of
business on the date that is 20 Business Days prior to such Purchase Date until
the close of business on such Purchase Date and upon delivery of the Securities
to the Paying Agent by the Holder as set forth in the Indenture. Such Purchase
Prices may be paid, at the option of the Company, in cash or by the issuance and
delivery of shares of Common Stock of the Company, or in any combination
thereof.



                     PURCHASE DATE                     PURCHASE PRICE
                     -------------                     --------------
                                                    
                     May 23, 2006                         $ 494.52
                     May 23, 2011                         $ 625.35
                     May 23, 2016                         $ 790.79


Securities in denominations larger than $1,000 of Principal Amount may be
purchased in part, but only in integral multiples of $1,000 of Principal Amount.




                                      A-8
   91

        (b) At the option of the Holder and subject to the terms and conditions
of the Indenture, the Company shall become obligated to redeem the Securities
held by such Holder 30 days after the date of the Company's notice of a
Fundamental Change occurring on or prior to May 23, 2021 for a Fundamental
Change Redemption Price equal to the Issue Price plus accrued Original Issue
Discount through the Fundamental Change Redemption Date (or, if the Securities
are converted to interest-bearing debentures following a Tax Event as described
in paragraph 9(b) hereof, a Fundamental Change Redemption Price equal to the
Restated Principal Amount plus accrued interest through the Fundamental Change
Redemption Date) which Fundamental Change Redemption Price shall be paid in
cash. Securities in denominations larger than $1,000 of Principal Amount may be
redeemed in part in connection with a Fundamental Change, but only in integral
multiples of $1,000 of Principal Amount.

        (c) Holders have the right to withdraw any Purchase Notice or
Fundamental Change Redemption Notice, as the case may be, by delivering to the
Paying Agent a written notice of withdrawal in accordance with the provisions of
the Indenture.

        (d) If Cash (and/or securities if permitted under the Indenture with
respect to the payment of the Purchase Price) sufficient to pay a Purchase Price
or Fundamental Change Redemption Price, as the case may be, of all Securities or
portions thereof to be purchased as of the Purchase Date or the Fundamental
Change Redemption Date, as the case may be, is deposited with the Paying Agent
on the Business Day following the Purchase Date or the Fundamental Change
Redemption Date, as the case may be, Original Issue Discount ceases to accrue on
such Securities (or portions thereof) on and after such date, and the Holder
thereof shall have no other rights as such (other than the right to receive the
Purchase Price or Fundamental Change Redemption Price, as the case maybe, upon
surrender of such Security).

        7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY

        Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. Securities in denominations
larger than $1,000 Principal Amount maybe redeemed in part, but only in whole
multiples of $1,000. On and after the Redemption Date, subject to the deposit
with the paying Agent of funds sufficient to pay the Redemption Price, Original
Issue Discount (or interest, if the Security is converted to an interest-bearing
debenture as described in paragraph 9(b)) ceases to accrue on Securities or
portions thereof called for redemption.

        8. SUBORDINATION

        The Securities are subordinated to all existing and future Senior
Indebtedness of the Company. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Securities may be paid. The
Indenture does not limit the present or future amount of Senior Indebtedness
that the Company may have. The Company agrees, and each Holder by accepting a
Security agrees, to the subordination and authorizes the Trustee to give it
effect and appoints the Trustee as attorney-in-fact for such purpose.




                                      A-9
   92

        9. CONVERSION AT THE OPTION OF THE HOLDER; CONVERSION AT THE OPTION OF
           THE COMPANY FOLLOWING A TAX EVENT

        (a) Subject to the next two succeeding sentences, a Holder of a Security
may convert this Security for Common Stock of the Company at any time prior to
maturity. If this Security is called for redemption, the Holder may convert it
at any time before the close of the last Trading Day prior to the Redemption
Date. A Security in respect of which a Holder has delivered a notice of exercise
of the option to require the Company to purchase such Security or to redeem such
Security in the event of a Fundamental Change may be converted only if the
notice of exercise is withdrawn in accordance with the terms of the Indenture.

        The initial Conversion Rate is 22.983 shares of Common Stock per $1,000
Principal Amount, subject to adjustment in certain events described in the
Indenture. The Company will deliver Cash or a check in lieu of any fractional
share of Common Stock.

        To convert this Security a Holder must (1) complete and manually sign
the conversion notice on the back of this Security (or complete and manually
sign a facsimile of such notice) and deliver such notice to the Conversion
Agent, (2) surrender this Security to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if
required.

        A Holder may convert a portion of this Security if the Principal Amount
of such portion is $1,000 or an integral multiple of $1,000. No payment or
adjustment will be made for dividends on the Common Stock except as provided in
the Indenture. On conversion of this Security, that portion of accrued Original
Issue Discount attributable to the period from the Issue Date through the
Conversion Date with respect to the converted portion of this Security shall not
be canceled, extinguished or forfeited, but rather shall be deemed to be paid in
full to the Holder thereof through the delivery of the Common Stock (together
with any cash payment in lieu of fractional shares) in exchange for the portion
of this Security being converted pursuant to the terms hereof.

        (b) From and after the date (the "Option Exercise Date") that the
Company exercises such option, at the option of the Company, interest in lieu of
future Original Issue Discount shall accrue at the rate of 4.75% per annum on a
Principal Amount per Security (the "Restated Principal Amount") equal to the
Issue Price plus Original Issue Discount accrued to the Option Exercise Date and
shall be payable semiannually on May 23 and November 23 of each year (each an
"Interest Payment Date") to holders of record at the close of business on the
May 8 and the November 8, respectively (each a "Regular Record Date"),
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the Option Exercise Date.

        Interest on any Security that is payable on any Interest Payment Date
shall be paid to the person in whose name that Security is registered at the
close of business on the Regular Record Date.




                                      A-10
   93

        10. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION

        Any Securities called for redemption, unless surrendered for conversion
before the close of business on the last Trading Day prior to the Redemption
Date, may be deemed to be purchased from the Holders of such Securities at an
amount not less than the Redemption Price, by one or more investment bankers or
other purchasers who may agree with the Company to purchase such Securities from
the Holders, to convert them for Common Stock and to make payment for such
Securities to the Trustee in trust for such Holders.

        11. REGISTRATION RIGHTS

        The Holder of this Security and the Common Stock issuable upon
conversion thereof is entitled to the benefits of a Registration Rights
Agreement (subject to the provisions thereof), dated as of May 23, 2001, among
the Company and the Initial Purchasers.

        12. DENOMINATIONS; TRANSFER; EXCHANGE

        The Securities are in registered form, without coupons, in denominations
of $1,000 of Principal Amount and integral multiples of $1,000. A Holder may
transfer or convert Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to famish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or any Securities in
respect of which a Purchase Notice or Fundamental Change Redemption Notice has
been given and not withdrawn (except, in the case of a Security to be purchased
in part, the portion of the Security not to be purchased) or any Securities for
a period of 15 days before a selection of Securities to be redeemed.

        13. PERSONS DEEMED OWNERS

        The registered Holder of this Security may be treated as the owner of
this Security for all purposes.

        14. UNCLAIMED MONEY OR SECURITIES

        The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
provided, however, that the Trustee or such Paying Agent, before being required
to make any such return, shall at the expense of the Company cause to be
published once in a newspaper of general circulation in The City of New York or
mail to each such Holder notice that such money or securities remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed money or securities
then remaining will be returned to the Company. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another Person.




                                      A-11
   94

        15. AMENDMENT; WAIVER

        Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount of the Securities
at the time outstanding and (ii) certain Defaults and Events of Defaults may be
waived with the written consent of the Holders of a majority in aggregate
Principal Amount of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, defect or inconsistency, or to comply with
Article 5 or Section 11.15 of the Indenture, to provide for uncertificated
Securities in addition to or in place of certificated Securities or to make any
change that does not adversely affect the rights of any Holder or to comply with
any requirement of the SEC in connection with the qualification of the Indenture
under the TIA.

        16. DEFAULTS AND REMEDIES

        Under the Indenture, Events of Default include (i) default in payment of
the Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Additional Interest, if any, Redemption Price, Purchase Price or Fundamental
Change Redemption Price, as the case may be, in respect of the Securities when
the same becomes due and payable, provided that in the case of any failure to
pay Additional Interest, such failure to pay continues for a period of 30 days;
(ii) failure by the Company to comply with other agreements in the Indenture or
the Securities, subject to notice and lapse of time; and (iii) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding, may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being declared due and payable
immediately upon the occurrence of such Events of Default.

        Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
Default (except a Default in payment of amounts specified in clause (i) above)
if it determines that withholding notice is in their interests.

        17. DEALINGS WITH THE COMPANY

        The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities 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.




                                      A-12
   95

        18. NO RECOURSE AGAINST OTHERS

        A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.

        19. AUTHENTICATION

        This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.

        20. ABBREVIATIONS

        Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TENANT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

        21. GOVERNING LAW

        THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK

        The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture which has in it the text of this Security in
larger type. Requests may be made to:

        Atmel Corporation
        2325 Orchard Parkway
        San Jose, California 95131
        Attn:  Investor Relations




                                      A-13
   96

                           [FORM OF CONVERSION NOTICE]

                                CONVERSION NOTICE


To:     Atmel Corporation

        The undersigned registered holder of this Security hereby irrevocably
exercises the option to convert this Security, or portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, for
shares of Common Stock of Atmel Corporation in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Securities representing any unconverted principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this
Security not converted are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.


Date: ______________________________________    Name: __________________________

                                                Signature: _____________________

Fill in name and address for registration of shares if to be delivered to, and
Securities if to be issued to and in the name of an entity other than the
registered holder:

Name: ______________________________________

Street Address: ____________________________

City: ______________________________________

Social Security or Other Taxpayer
Identification Number: _____________________

                                                Principal amount to be converted
                                                (if less than all):  $_____,000



                              -Conversion Notice-

   97

                       [FORM OF OPTION TO ELECT REDEMPTION

                           UPON A FUNDAMENTAL CHANGE]


To:     Atmel Corporation

        The undersigned registered holder of this Security hereby acknowledges
receipt of a notice from Atmel Corporation (the "Company") as to the occurrence
of a Fundamental Change with respect to the Company and requests and instructs
the Company to redeem this Security, or the portion hereof (which is $1,000
Principal Amount or an integral multiple thereof) below designated, in
accordance with the terms of the Indenture referred to in this Security.


Dated: _____________________________        Name: ______________________________

                                            Signature(s): ______________________

                                            Signature(s) must be guaranteed by
                                            an eligible Guarantor Institution (a
                                            bank, a stock broker, a savings and
                                            loan association or a credit union)
                                            with membership in an approved
                                            signature guarantee program pursuant
                                            to Securities and Exchange
                                            Commission Rule 17Ad-15) if shares
                                            of Common Stock are to be issued, or
                                            Securities to be delivered, other
                                            than to or in the name of the
                                            registered holder.

                                           By: _________________________________
                                                      Signature Guarantor

                                           Principal amount to be redeemed
                                           (if less than all): $________________

                                           Social Security or Other Taxpayer
                                           Identification Number: ______________



                             - Redemption Election -


   98

                                   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 Security, and hereby
irrevocably constitutes and appoints _________________ as attorney-in-fact to
transfer such Security on the books of the Company, with full power of
substitution in the premises.

In connection with any transfer of the Security within the period prior to the
expiration of the holding period applicable to sales thereof under Rule 144(k)
(other than any transfer pursuant to a registration statement that has been
declared effective under the Securities Act) under the Securities Act of 1933,
as amended, (or any successor provision), the undersigned confirms that such
Security is being transferred:

        [ ]   To Atmel Corporation or a subsidiary thereof; or

        [ ]   Pursuant to and in compliance with Rule 144A under the Securities
              Act of 1933, as amended; or

        [ ]   To an Institutional Accredited Investor pursuant to and in
              compliance with the Securities Act of 1933, as amended; or

        [ ]   Pursuant to and in compliance with Rule 144 under the Securities
              Act of 1933, as amended;

and unless the box below is checked, the undersigned confirms that to its
knowledge such Security is not being transferred to an "affiliate" of the
Company as defined in Rule 144 under the Securities Act of 1933, as amended (an
"Affiliate").

        [ ]   The transferee is an Affiliate of the Company.


Dated: _____________________________        Name: ______________________________

                                            Signature(s): ______________________

                                            Signature(s) must be guaranteed by
                                            an eligible Guarantor Institution (a
                                            bank, a stock broker, a savings and
                                            loan association or a credit union)
                                            with membership in an approved
                                            signature guarantee program pursuant
                                            to Securities and Exchange
                                            Commission Rule 17Ad-15) if shares
                                            of Common Stock are to be issued, or
                                            Securities to be delivered, other
                                            than to or in the name of the
                                            registered holder.

                                           By: _________________________________
                                                      Signature Guarantor

NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Security in every particular without
alteration or enlargement or any change whatever.



                                 - Assignment -


   99

              [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITY

                     TO REFLECT CHANGES IN PRINCIPAL AMOUNT]

                                   Schedule A

                 Changes to Principal Amount of Global Security




=====================================================================================================
                  PRINCIPAL AMOUNT OF SECURITIES
                 BY WHICH THIS GLOBAL SECURITY IS
                  TO BE REDUCED OR INCREASED, AND     REMAINING PRINCIPAL AMOUNT OF      NOTATION
     DATE        REASON FOR REDUCTION OR INCREASE         THIS GLOBAL SECURITY            MADE BY
                                                                                
- -----------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------

=====================================================================================================




                            - Endorsement Schedule -


   100

                                    EXHIBIT B

               [FORM OF INSTITUTIONAL ACCREDITED INVESTOR LETTER]



Atmel Corporation
2325 Orchard Parkway
San Jose, California 95131


Ladies and Gentlemen:

        We are delivering this letter in connection with an offering of Zero
Coupon Convertible Subordinated Debentures due 2021 (the "Securities") which are
convertible into shares of Common Stock, $0.01 par value (the "Common Stock"),
of Atmel Corporation (the "Company").

        We hereby confirm that:

        1. we are an "accredited investor" within the meaning of Rule 501(a)(1),
(2) or (3) under the Securities Act of 1933, as amended (the "Securities Act")
or an entity in which all of the equity owners are accredited investors within
the meaning of Rule 501(a)(1), (2) or (3) under the Securities Act (an
"Institutional Accredited Investor");

        2. (A) any purchase of Debentures by us will be for our own account or
for the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which we exercise sole investment discretion or (B) we are a "bank,"
within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and
loan association" or other institution described in Section 3(1)(5)(a) of the
Securities Act that is acquiring Securities as fiduciary for the account of one
or more institutions for which we exercise sole investment discretion;

        3. in the event that we purchase any Securities, we will acquire
Securities having a minimum principal amount of not less than $250,000 for our
own account or for any separate account for which we are acting;

        4. we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of purchasing the
Securities; and

        5. we are not acquiring Securities with a view to distribution thereof
or with any present intention of offering or selling Securities or the Common
Stock issuable upon conversion thereof, except as permitted below; provided that
the disposition of our property and property of any accounts for which we are
acting as fiduciary shall remain at all times within our control.

        We understand that the Securities are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Securities and




                                      B-1
   101

the shares of Common Stock issuable upon conversion thereof have not been
registered under the Securities Act, and we agree, on our own behalf and on
behalf of each account for which we acquire any Securities, that if in the
future we decide to resell or otherwise transfer such Securities or the Common
Stock issuable upon conversion thereof, such Securities or Common Stock may be
resold or otherwise transferred only (i) to the Company or any subsidiary
thereof, or (ii) to a person who is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A, or (iii) to an Institutional Accredited Investor
that, prior to such transfer, furnishes to the Trustee or transfer agent for
such securities a signed letter containing certain representations and
agreements relating to the restrictions on transfer of such securities (the form
of which letter can be obtained from such Trustee or transfer agent), or (iv)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Art (if applicable), or (v) pursuant to a registration statement
which has been declared effective under the Securities Act (and which continues
to be effective at the time of such transfer), and in each case, in accordance
with any applicable securities laws of any State of the United States or any
other applicable jurisdiction and in accordance with the legends set forth on
the Securities or the Common Stock issuable upon conversion thereof, as the case
may be. We further agree to provide any person purchasing any of the Securities
or the Common Stock issuable upon conversion thereof other than pursuant to
clause (v)above from us a notice advising such purchaser that resales of such
securities are restricted as stated herein. We understand that the Trustee or
transfer agent for the Securities and the Common Stock will not be required to
accept for registration of transfer any Securities or any shares of Common Stock
issued upon conversion of the Securities except upon presentation of evidence
satisfactory to the Company that the foregoing restrictions on transfer have
been complied with. We further understand that any Securities and any
certificates representing Common Stock will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph other than certificates representing Common
Stock transferred pursuant to clause (v) above.

        We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.

        THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



                                        ________________________________________
                                                  (Name of Purchaser)

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________
                                        Address:________________________________




                                      B-2

EX-10.10

   1
                                                                   EXHIBIT 10.10






                          REGISTRATION RIGHTS AGREEMENT



                                  BY AND AMONG



                                ATMEL CORPORATION



                                   AS ISSUER,



                                       AND



                       MORGAN STANLEY & CO. INCORPORATED,



                      CREDIT LYONNAIS SECURITIES (USA) INC.



                                       AND



                         NEEDHAM & COMPANY, INCORPORATED



                              AS INITIAL PURCHASERS



                               DATED MAY 23, 2001




   2

        THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of May
23, 2001 by and among Atmel Corporation, a Delaware corporation (the "Company"),
and Morgan Stanley & Co. Incorporated, Credit Lyonnais Securities (USA) Inc. and
Needham & Company, Inc. pursuant to the Purchase Agreement, dated May 17, 2001
(the "Purchase Agreement"), among the Company and the Initial Purchasers. In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Purchase Agreement.

        The Company agrees with the Initial Purchasers, (i) for their benefit as
Initial Purchasers and (ii) for the benefit of the beneficial owners (including
the Initial Purchasers) from time to time of the Debentures (as defined herein)
and the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Debentures (each of the foregoing
a "Holder" and together the "Holders"), as follows:

        SECTION 1. DEFINITIONS. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Placement Agreement. As
used in this Agreement, the following terms shall have the following meanings:

        Additional Interest: See Section 2(e) hereof.

        Affiliate: With respect to any specified person, an "affiliate," as
defined in Rule 144, of such person.

        Amendment Effectiveness Deadline Date: See Section 2(d) hereof.

        Applicable Conversion Price: The Applicable Conversion Price as of any
date of determination means the Conversion Price in effect as of such date of
determination or, if no Debentures are then outstanding, the Conversion Price
that would be in effect were Debentures then outstanding.

        Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.

        Common Stock: The shares of common stock, par value $0.001 per share, of
the Company and any other shares of common stock as may constitute "Common
Stock" for purposes of the Indenture, including the Underlying Common Stock.

        Conversion Price: Conversion Price shall have the meaning assigned such
term in the Indenture.

        Damages Accrual Period: See Section 2(e) hereof.

        Damages Payment Date: Each May 23 and November 23.

        Debentures: The Zero Coupon Convertible Subordinated Debentures due 2021
of the Company to be purchased pursuant to the Purchase Agreement.




                                       2
   3

        Deferral Notice: See Section 3(i) hereof.

        Deferral Period: See Section 3(i) hereof.

        Effectiveness Deadline Date: See Section 2(a) hereof.

        Effectiveness Period: The period of two years from the later of (a) the
Issue Date and (b) the last date of original issuance of the Debentures, or such
shorter period ending on the date that all Registrable Securities have ceased to
be Registrable Securities.

        Event: See Section 2(e) hereof.

        Event Date: See Section 2(e) hereof.

        Event Termination Date: See Section 2(e) hereof.

        Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

        Filing Deadline Date: See Section 2(a) hereof.

        Holder: See the second paragraph of this Agreement.

        Indenture: The Indenture, dated as of the date hereof, between the
Company and State Street Bank and Trust Company of California, N.A., as trustee,
pursuant to which the Debentures are being issued.

        Initial Purchasers: Means Morgan Stanley & Co. Incorporated, Credit
Lyonnais Securities (USA) Inc. and Needham & Company, Inc.

        Initial Shelf Registration Statement: See Section 2(a) hereof.

        Issue Date: May 23, 2001.

        Losses:  See Section 6 hereof.

        Material Event: See Section 3(i) hereof.

        Notice and Questionnaire: A written notice delivered to the Company
containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company issued May 18, 2001 relating to the Debentures.

        Notice Holder: On any date, any Holder that has delivered an
appropriately completed Notice and Questionnaire to the Company on or prior to
such date.

        Purchase Agreement: See the preamble hereof.




                                       3
   4

        Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.

        Record Holder: (i) With respect to any Damages Payment Date relating to
any Debentures as to which any such Additional Interest has accrued, the holder
of record of such Debenture on the record date fifteen (15) days prior to such
Damages Payment Date and (ii) with respect to any Damages Payment Date relating
to the Underlying Common Stock as to which any such Additional Interest has
accrued, the registered holder of such Underlying Common Stock fifteen (15) days
prior to such Damages Payment Date.

        Registrable Securities: The Debentures until such Debentures have been
converted or exchanged into the Underlying Common Stock and, at all times
subsequent to any such conversion or exchange the Underlying Common Stock and
any securities into or for which such Underlying Common Stock have been
converted or exchanged, and any security issued with respect thereto upon any
stock dividend, split or similar event until, in the case of any such security,
(A) the earliest of (i) its effective registration under the Securities Act and
resale in accordance with the Registration Statement covering it, (ii)
expiration of the holding period that would be applicable thereto under Rule
144(k) were it not held by an Affiliate of the Company or (iii) its sale to the
public pursuant to Rule 144, and (B) as a result of the event or circumstance
described in any of the foregoing clauses (i) through (iii), the legends with
respect to transfer restrictions required under the Indenture are removed or
removable in accordance with the terms of the Indenture or such legends, as the
case may be.

        Registration Expenses: See Section 5 hereof.

        Registration Statement: Any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.

        Restated Principal Amount: As this term is defined in the Indenture.

        Restricted Securities: As this term is defined in Rule 144.

        Rule 144: Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.

        Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.

        SEC: The Securities and Exchange Commission.




                                       4
   5

        Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.

        Shelf Registration Statement: See Section 2(a) hereof.

        Subsequent Shelf Registration Statement: See Section 2(b) hereof.

        Tax Event: As this term is defined in the Indenture.

        TIA: The Trust Indenture Act of 1939, as amended.

        Trustee: Norwest Bank Minnesota, N.A. (or any successor entity), the
Trustee under the Indenture.

        Underlying Common Stock: The Common Stock into which the Debentures are
convertible or issued upon any such conversion.

        SECTION 2. SHELF REGISTRATION.

               (a) The Company shall use its reasonable efforts to prepare and
file or cause to be prepared and filed with the SEC, as soon as practicable but
in any event by the date (the "Filing Deadline Date") ninety (90) days after the
Issue Date, a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration
Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or
another appropriate form permitting registration of such Registrable Securities
for resale by such Holders in accordance with the methods of distribution
elected by the Holders and set forth in the Initial Shelf Registration
Statement. The Company shall use its reasonable efforts to cause the Initial
Shelf Registration Statement to be declared effective under the Securities Act
as promptly as is practicable but in any event by the date (the "Effectiveness
Deadline Date") that is one hundred eighty (180) days after the Issue Date, and
to keep the Initial Shelf Registration Statement (or any Subsequent Shelf
Registration Statement) continuously effective under the Securities Act until
the expiration of the Effectiveness Period. At the time the Initial Shelf
Registration Statement is declared effective, each Holder that became a Notice
Holder on or prior to the date ten (10) Business Days prior to such time of
effectiveness shall be named as a selling securityholder in the Initial Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of Registrable Securities
in accordance with applicable law. None of the Company's security holders (other
than the Holders of Registrable Securities) shall have the right to include any
of the Company's securities in the Shelf Registration Statement.

               (b) If the Initial Shelf Registration Statement or any Subsequent
Shelf Registration Statement ceases to be effective for any reason at any time
during the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
otherwise ceased to be Registrable Securities), the Company shall use its
reasonable efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within thirty (30) days of such
cessation of




                                       5
   6

effectiveness amend the Shelf Registration Statement in a manner reasonably
expected to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional Shelf Registration Statement covering all of the
securities that as of the date of such filing are Registrable Securities (a
"Subsequent Shelf Registration Statement"). If a Subsequent Shelf Registration
Statement is filed, the Company shall use reasonable efforts to cause the
Subsequent Shelf Registration Statement to become effective as promptly as is
practicable after such filing and to keep such Registration Statement (or
subsequent Shelf Registration Statement) continuously effective until the end of
the Effectiveness Period.

               (c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or as reasonably requested by the Initial
Purchasers or by the Trustee on behalf of the registered Holders or by any
managing underwriter in the event of an underwritten offering.

               (d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus, it will do so only in accordance with this
Section 2(d) and Section 3(i). Each Holder of Registrable Securities wishing to
sell Registrable Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire to the Company
at least three (3) Business Days prior to any intended distribution of
Registrable Securities under the Shelf Registration Statement. From and after
the date the Initial Shelf Registration Statement is declared effective, the
Company shall, as promptly as practicable after the date a Notice and
Questionnaire is delivered, and in any event upon the later of (x) five (5)
Business Days after such date or (y) five (5) Business Days after the expiration
of any Deferral Period in effect when the Notice and Questionnaire is delivered
or put into effect within five (5) Business Days of such delivery date, (i) if
required by applicable law, file with the SEC a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable law, file
a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use reasonable efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as is
practicable, but in any event by the date (the "Amendment Effectiveness Deadline
Date") that is forty-five (45) days after the date such post-effective amendment
is required by this clause to be filed; (ii) provide such Holder copies of any
documents filed pursuant to Section 2(d)(i); and (iii) notify such Holder as
promptly as practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 2(d)(i); provided, that if
such Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above upon expiration
of the Deferral Period in accordance with Section 3(i). Notwithstanding anything
contained herein to the contrary, (i) the Company shall be under no obligation
to name any Holder that is not a Notice Holder as a selling securityholder in
any Registration Statement or related Prospectus and (ii) the Amendment Deadline
Effective Date shall be extended by up to ten (10) Business Days from the
expiration of




                                       6
   7

a Deferral Period (and the Company shall incur no obligation to pay Additional
Interest during such extension) if such Deferral Period shall be in effect on
the Amendment Deadline Effective Date.

               (e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
Statement has not been filed on or prior to the Filing Deadline Date, (ii) the
Initial Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date, (iii) the Company
has failed to perform its obligations set forth in Section 2(d) within the time
period required therein, (iv) the aggregate duration of Deferral Periods in any
period exceeds the number of days permitted in respect of such period pursuant
to Section 3(i) hereof or (v) the number of Deferral Periods in any period
exceeds the number permitted in respect of such period pursuant to Section 3(i)
hereof (each of the events of a type described in any of the foregoing clauses
(i) through (v) are individually referred to herein as an "Event," and the
Filing Deadline Date in the case of clause (i), the Effectiveness Deadline Date
in the case of clause (ii), the date by which the Company is required to perform
its obligations set forth in Section 2(d) in the case of clause (iii) (including
the filing of any post-effective amendment prior to the Amendment Effectiveness
Deadline Date), the date on which the aggregate duration of Deferral Periods in
any period exceeds the number of days permitted by Section 3(i) hereof in the
case of clause (iv), and the date of the commencement of a Deferral Period that
causes the limit on the number of Deferral Periods in any period under Section
3(i) hereof to be exceeded in the case of clause (v), being referred to herein
as an "Event Date"). Events shall be deemed to continue until the "Event
Termination Date," which shall be the following dates with respect to the
respective types of Events: the date the Initial Shelf Registration Statement is
filed in the case of an Event of the type described in clause (i), the date the
Initial Shelf Registration Statement is declared effective under the Securities
Act in the case of an Event of the type described in clause (ii), the date the
Company performs its obligations set forth in Section 2(d) in the case of an
Event of the type described in clause (iii) (including, without limitation, the
date the relevant post-effective amendment to the Shelf Registration Statement
is declared effective under the Securities Act), termination of the Deferral
Period that caused the limit on the aggregate duration of Deferral Periods in a
period set forth in Section 3(i) to be exceeded in the case of the commencement
of an Event of the type described in clause (iv), and termination of the
Deferral Period the commencement of which caused the number of Deferral Periods
in a period permitted by Section 3(i) to be exceeded in the case of an Event of
the type described in clause (v).

        Accordingly, commencing on (and including) any Event Date and ending on
(but excluding) the next date on which there are no Events that have occurred
and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as
additional interest and not as a penalty, an amount (the "Additional Interest"),
payable on the Damages Payment Dates to Record Holders of Debentures that are
Registrable Securities and of shares of Underlying Common Stock issued upon
conversion of Debentures that are Registrable Securities, as the case may be,
accruing, for each portion of such Damages Accrual Period beginning on and
including a Damages Payment Date (or, in respect of the first time that the
Additional Interest is to be paid to Holders on a Damages Payment Date as a
result of the occurrence of any particular Event, from the Event Date) and
ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal




                                       7
   8

to one-half of one percent (0.5%) of the principal amount at maturity of such
Debentures (or, following a Tax Event, of the Restated Principal Amount plus
accrued but unpaid interest) or one-half of one percent (0.5%) of the
Applicable Conversion Price of such shares of Underlying Common Stock, as the
case may be, in each case determined as of the Business Day immediately
preceding the next Damages Payment Date; provided, that in the case of a Damages
Accrual Period that is in effect solely as a result of an Event of the type
described in clause (iii) of the immediately preceding paragraph, such
Additional Interest shall be paid only to the Holders that have delivered Notice
and Questionnaires that caused the Company to incur the obligations set forth in
Section 2(d) the non-performance of which is the basis of such Event, provided
further, that any Additional Interest accrued with respect to any Debenture or
portion thereof called for redemption on a redemption date or converted into
Underlying Common Stock on a conversion date prior to the Damages Payment Date,
shall, in any such event, be paid instead to the Holder who submitted such
Debenture or portion thereof for redemption or conversion on the applicable
redemption date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion).
Notwithstanding the foregoing, no Additional Interest shall accrue as to any
Registrable Security from and after the earlier of (x) the date such security is
no longer a Registrable Security and (y) expiration of the Effectiveness Period.
The rate of accrual of the Additional Interest with respect to any period shall
not exceed the rate provided for in this paragraph notwithstanding the
occurrence of multiple concurrent Events. Following the cure of all Events
requiring the payment by the Company of Additional Interest to the Holders of
Registrable Securities pursuant to this Section, the accrual of Additional
Interest will cease (without in any way limiting the effect of any subsequent
Event requiring the payment of Additional Interest by the Company).

        The Trustee shall be entitled, on behalf of Holders of Debentures or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of any Additional Interest.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which Additional
Interest are expressly provided shall be such Additional Interest. Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.

        All of the Company's obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).

        The parties hereto agree that the Additional Interest provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.

        SECTION 3. REGISTRATION PROCEDURES. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:




                                       8
   9

               (a) A reasonable time before filing any Registration Statement or
Prospectus or any amendments or supplements thereto with the SEC, furnish to
counsel to the Initial Purchasers copies of all such documents proposed to be
filed and use reasonable efforts to reflect in each such document when so filed
with the SEC such comments as counsel to the Initial Purchasers reasonably shall
propose within five (5) Business Days of the delivery of such copies to the
Initial Purchasers.

               (b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period specified in Section 2(a); cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and use its reasonable efforts to comply with the provisions of
the Securities Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement during the Effectiveness
Period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or such
Prospectus as so supplemented.

               (c) As promptly as practicable give notice to counsel to the
Notice Holders and the Initial Purchasers (i) when any Prospectus, Prospectus
supplement, Registration Statement or post-effective amendment to a Registration
Statement has been filed with the SEC and, with respect to a Registration
Statement or any post-effective amendment, when the same has been declared
effective, (ii) of any request, following the effectiveness of the Initial Shelf
Registration Statement under the Securities Act, by the SEC or any other federal
or state governmental authority for amendments or supplements to any
Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of any Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the occurrence of (but
not the nature of or details concerning) a Material Event and (vi) of the
determination by the Company that a post-effective amendment to a Registration
Statement will be filed with the SEC, which notice may, at the discretion of the
Company (or as required pursuant to Section 3(i)), state that it constitutes a
Deferral Notice, in which event the provisions of Section 3(i) shall apply.

               (d) Use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment.

               (e) If reasonably requested by any Initial Purchaser or any
Notice Holder, as promptly as practicable incorporate in a Prospectus supplement
or post-effective amendment to a Registration Statement such information as the
Initial Purchaser or such Notice Holder shall, on the basis of a written opinion
of nationally-recognized counsel experienced in such matters,




                                       9
   10

determine to be required to be included therein by applicable law and make any
required filings of such Prospectus supplement or such post-effective amendment.

               (f) As promptly as practicable furnish to each Notice Holder and
the Initial Purchasers, without charge, at least one (1) conformed copy of the
Registration Statement and any amendment thereto, including financial statements
but excluding schedules, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits (unless requested in writing to the
Company by such Notice Holder or the Initial Purchasers, as the case may be).

               (g) During the Effectiveness Period, deliver to each Notice
Holder in connection with any sale of Registrable Securities pursuant to a
Registration Statement, without charge, as many copies of the Prospectus or
Prospectuses relating to such Registrable Securities (including each preliminary
prospectus) and any amendment or supplement thereto as such Notice Holder may
reasonably request; and the Company hereby consents (except during such periods
that a Deferral Notice is outstanding and has not been revoked) to the use of
such Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.

               (h) Prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, register or qualify or cooperate
with the Notice Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Notice Holder reasonably requests
in writing (which request may be included in the Notice and Questionnaire);
prior to any public offering of the Registrable Securities pursuant to the Shelf
Registration Statement, keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period in connection
with such Notice Holder's offer and sale of Registrable Securities pursuant to
such registration or qualification (or exemption therefrom) and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of such Registrable Securities in the manner set forth in the
relevant Registration Statement and the related Prospectus; provided, that the
Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Agreement or (ii) take any action that would
subject it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.

               (i) Upon (A) the issuance by the SEC of a stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "Material Event") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or existence
of any pending corporate development that, in the reasonable discretion of the
Company, makes it appropriate to suspend the availability of the Shelf
Registration




                                       10
   11

Statement and the related Prospectus, (i) in the case of clause (B) above,
subject to the next sentence, as promptly as practicable prepare and file, if
necessary pursuant to applicable law, a post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document that would
be incorporated by reference into such Registration Statement and Prospectus so
that such Registration Statement does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and such Prospectus
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, and, in the case of a post-effective amendment
to a Registration Statement, subject to the next sentence, use its reasonable
efforts to cause it to be declared effective as promptly as is practicable, and
(ii) give notice to the Notice Holders that the availability of the Shelf
Registration Statement is suspended (a "Deferral Notice") and, upon receipt of
any Deferral Notice, each Notice Holder agrees not to sell any Registrable
Securities pursuant to the Registration Statement until such Notice Holder's
receipt of copies of the supplemented or amended Prospectus provided for in
clause (i) above, or until it is advised in writing by the Company that the
Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus. The Company will use all reasonable efforts to ensure that
the use of the Prospectus may be resumed (x) in the case of clause (A) above, as
promptly as is practicable, (y) in the case of clause (B) above, as soon as, in
the sole judgment of the Company, public disclosure of such Material Event would
not be prejudicial to or contrary to the interests of the Company or, if
necessary to avoid unreasonable burden or expense, as soon as practicable
thereafter and (z) in the case of clause (C) above, as soon as, in the
discretion of the Company, such suspension is no longer appropriate. The Company
shall be entitled to exercise its right under this Section 3(i) to suspend the
availability of the Shelf Registration Statement or any Prospectus, without
incurring or accruing any obligation to pay Additional Interest pursuant to
Section 2(e), no more than one (1) time in any three month period or four (4)
times in any twelve month period, and any such period during which the
availability of the Registration Statement and any Prospectus is suspended (the
"Deferral Period") shall, without incurring any obligation to pay Additional
Interest pursuant to Section 2(e), not exceed 30 days; provided, that in the
case of a Material Event relating to an acquisition or a probable acquisition or
financing, recapitalization, business combination or other similar transaction,
the Company may, without incurring any obligation to pay Additional Interest
pursuant to Section 2(e), deliver to Notice Holders a second notice to the
effect set forth above, which shall have the effect of extending the Deferral
Period by up to an additional 30 days, or such shorter period of time as is
specified in such second notice, provided, that the aggregate duration of any
Deferral Periods shall not, without incurring any obligation to pay Additional
Interest pursuant to Section 2(e), exceed 60 days in any three month period or
90 days in any twelve (12) month period.

               (j) If requested in writing in connection with a disposition of
Registrable Securities pursuant to a Registration Statement, make reasonably
available for inspection during normal business hours by a representative for
the Notice Holders of such Registrable Securities and any broker-dealers,
attorneys and accountants retained by such Notice Holders, all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its




                                       11
   12

subsidiaries, and cause the appropriate officers, directors and employees of the
Company and its subsidiaries to make reasonably available for inspection during
normal business hours on reasonable notice all relevant information reasonably
requested by such representative for the Notice Holders or any such
broker-dealers, attorneys or accountants in connection with such disposition, in
each case as is customary for similar "due diligence" examinations; provided,
however, that such persons shall first agree in writing with the Company that
any information that is reasonably and in good faith designated by the Company
in writing as confidential at the time of delivery of such information shall be
kept confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
Company and such source is not bound by a confidentiality agreement, and
provided further, that the foregoing inspection and information gathering shall,
to the greatest extent possible, be coordinated on behalf of all the Notice
Holders and the other parties entitled thereto by the counsel referred to in
Section 5.

               (k) Use reasonable efforts to comply with all applicable rules
and regulations of the SEC and make generally available to its securityholders
earning statements (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
3-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement, which
statements shall cover said periods.

               (l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold or to be sold pursuant to a Registration Statement, which certificates
shall not bear any restrictive legends, and cause such Registrable Securities to
be in such denominations as are permitted by the Indenture and registered in
such names as such Notice Holder may request in writing at least two (2)
Business Days prior to any sale of such Registrable Securities.

               (m) Provide a CUSIP number for all Registrable Securities covered
by each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee and the transfer agent for the
Common Stock with printed certificates for the Registrable Securities that are
in a form eligible for deposit with The Depository Trust Company.

               (n) Provide such information as is required for any filings
required to be made with the National Association of Securities Dealers, Inc.

               (o) Upon (i) the filing of the Initial Registration Statement and
(ii) the effectiveness of the Initial Registration Statement, announce the same,
in each case by release to Reuters Economic Services and Bloomberg Business
News.




                                       12
   13

        SECTION 4. HOLDER'S OBLIGATIONS. Each Holder agrees, by acquisition of
the Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities
as the Company may from time to time reasonably request. Any sale of any
Registrable Securities by any Holder shall constitute a representation and
warranty by such Holder that the information relating to such Holder and its
plan of distribution is as set forth in the Prospectus delivered by such Holder
in connection with such disposition, that such Prospectus does not as of the
time of such sale contain any untrue statement of a material fact relating to or
provided by such Holder or its plan of distribution and that such Prospectus
does not as of the time of such sale omit to state any material fact relating to
or provided by such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.

        SECTION 5. REGISTRATION EXPENSES. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of the counsel specified
in the next sentence in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Registration Statement may designate), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company), (iii)
duplication expenses relating to copies of any Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of
counsel for the Company in connection with the Shelf Registration Statement, (v)
reasonable fees and disbursements of the Trustee and its counsel and of the
registrar and transfer agent for the Common Stock and (vi) Securities Act
liability insurance obtained by the Company in its sole discretion. In addition,
the Company shall bear or reimburse the Notice Holders for the reasonable fees
and disbursements of one firm of legal counsel for the Holders, which shall
initially be Gray, Cary, Ware & Freidenrich LLP, but which may, with the written
consent of the Initial Purchasers (which shall not be unreasonably withheld), be
another nationally recognized law firm experienced in securities law matters
designated by the Company. In addition, the Company shall pay the internal
expenses of the Company (including, without limitation, all salaries and
expenses of officers and employees performing legal or accounting duties), the
expense of any annual audit, the fees and expenses incurred in connection with
the listing of the Registrable Securities on any securities exchange on which
similar securities of the Company are then listed and the fees and expenses of
any person, including special experts, retained by the




                                       13
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Company. Notwithstanding the provisions of this Section 5, each seller of
Registrable Securities shall pay selling expenses and all registration expenses
to the extent required by applicable law.

        SECTION 6. INDEMNIFICATION.

               (a) Indemnification by the Company. The Company shall indemnify
and hold harmless each Notice Holder and each person, if any, who controls any
Notice Holder (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) from and against any losses, liabilities,
claims, damages and expenses (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, "Losses"), arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
however, that the Company shall not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement contained in or omission or alleged omission from any
of such documents in reliance upon and conformity with any of the information
relating to the Holders furnished to the Company in writing by a Holder
expressly for use therein; provided further, that the indemnification contained
in this paragraph shall not inure to the benefit of any Holder of Registrable
Securities (or to the benefit of any person controlling such Holder) on account
of any such Losses arising out of or based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
prospectus provided in each case the Company has performed its obligations under
Section 3(a) hereof if either (A) (i) such Holder failed to send or deliver a
copy of the Prospectus with or prior to the delivery of written confirmation of
the sale by such Holder to the person asserting the claim from which such Losses
arise and (ii) the Prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (B) (x) such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, with or prior to the
delivery of written confirmation of the sale of a Registrable Security to the
person asserting the claim from which such Losses arise.

               (b) Indemnification by Holders of Registrable Securities. Each
Holder agrees severally and not jointly to indemnify and hold harmless the
Company and its respective directors and officers, and each person, if any, who
controls the Company (within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act) or any other Holder, from and against all
Losses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information furnished
to the Company by such Holder expressly for use in such Registration Statement
or Prospectus or amendment or




                                       14
   15

supplement thereto. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds received by such Holder upon the sale of the Registrable Securities
pursuant to the Registration Statement giving rise to such indemnification
obligation.

               (c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all indemnified parties, and that all such fees and
expenses shall be reimbursed as they are incurred. Such separate firm shall be
designated in writing by, in the case of parties indemnified pursuant to Section
6(a), the Holders of a majority (with Holders of Debentures deemed to be the
Holders, for purposes of determining such majority, of the number of shares of
Underlying Common Stock into which such Debentures are or would be convertible
or exchangeable as of the date on which such designation is made) of the
Registrable Securities covered by the Registration Statement held by Holders
that are indemnified parties pursuant to Section 6(a) and, in the case of
parties indemnified pursuant to Section 6(b), the Company. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel and the indemnified party
would be entitled thereto pursuant to the second and third sentences of this
paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.




                                       15
   16

               (d) Contribution. To the extent that the indemnification provided
for in this Section 6 is unavailable to an indemnified party under Section 6(a)
or 6(b) hereof in respect of any Losses or is insufficient to hold such
indemnified party harmless, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the initial placement pursuant
to the Purchase Agreement (before deducting expenses) of the Registrable
Securities to which such Losses relate. Benefits received by any Holder shall be
deemed to be equal to the value of receiving Registrable Securities that are
registered under the Securities Act. The relative fault of the Holders on the
one hand and the Company on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Holders or by the Company, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders' respective obligations to contribute
pursuant to this paragraph are several in proportion to the respective number of
Registrable Securities they have sold pursuant to a Registration Statement, and
not joint.

        The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

               (e) The indemnity, contribution and expense reimbursement
obligations of the parties hereunder shall be in addition to any liability any
indemnified party may otherwise have hereunder, under the Purchase Agreement or
otherwise.

               (f) The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this




                                       16
   17

Agreement, (ii) any investigation made by or on behalf of any Holder or any
person controlling any Holder, or the Company, or the Company's officers or
directors or any person controlling the Company and (iii) the sale of any
Registrable Securities by any Holder.

        SECTION 7. INFORMATION REQUIREMENTS.

        The Company covenants that, if at any time before the end of the
Effectiveness Period the Company is not subject to the reporting requirements of
the Exchange Act, it will cooperate with any Holder of Registrable Securities
and take such further reasonable action as any Holder of Registrable Securities
may reasonably request in writing (including, without limitation, making such
reasonable representations as any such Holder may reasonably request), all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 and Rule 144A under the Securities Act
and customarily taken in connection with sales pursuant to such exemptions. Upon
the written request of any Holder of Registrable Securities, the Company shall
deliver to such Holder a written statement as to whether it has complied with
such filing requirements, unless such a statement has been included in the
Company's most recent report filed pursuant to Section 13 or Section 15(d) of
the Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall
be deemed to require the Company to register any of its securities (other than
the Common Stock) under any section of the Exchange Act.

        SECTION 8. MISCELLANEOUS.

               (a) No Conflicting Agreements. The Company is not, as of the date
hereof, a party to, nor shall it, on or after the date of this Agreement, enter
into, any agreement with respect to its securities that conflicts with the
rights granted to the Holders of Registrable Securities in this Agreement. The
Company represents and warrants that the rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.

               (b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Debentures deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Debentures are or would be convertible or
exchangeable as of the date on which such consent is requested). Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence. Each Holder of Registrable
Securities outstanding at the time of any such amendment, modification,




                                       17
   18

supplement, waiver or consent or thereafter shall be bound by any such
amendment, modification, supplement, waiver or consent effected pursuant to this
Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.

               (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:

                      (w)    if to a Holder of Registrable Securities, at the
                             most current address given by such Holder to the
                             Company in a Notice and Questionnaire or any
                             amendment thereto;

                      (x)    if to the Company, to:

                             Atmel Corporation
                             2325 Orchard Parkway
                             San Jose, CA 95131
                             Attention:     Chief Financial Officer
                             Telecopy No.:  (408) 441-0311

                             and

                             Wilson Sonsini Goodrich & Rosati
                             650 Page Mill Road
                             Palo Alto, California 94304-1050
                             Attention:     Mark A. Bertelsen, Esq.
                             Telecopy No.:  (650) 493-6811

                      (y)    if to the Initial Purchasers, to:

                             Morgan Stanley & Co. Incorporated
                             1585 Broadway
                             New York, New York  10036
                             Attention:     Equity Capital Markets
                             Telecopy No.:  (212) 761-0356

                             and

                             Gray Cary Ware & Freidenrich LLP
                             400 Hamilton Avenue
                             Palo Alto, California 94301-1825
                             Attention:     Gregory Gallo, Esq.
                             Telecopy No.:  (650) 833-2001




                                       18
   19

or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.

               (d) Approval of Holders. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its affiliates (as such
term is defined in Rule 405 under the Securities Act) (other than the Initial
Purchasers or subsequent Holders of Registrable Securities if such subsequent
Holders are deemed to be such affiliates solely by reason of their holdings f
such Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.

               (e) Successors and Assigns. Any person who purchases any
Registrable Securities from the Initial Purchasers shall be deemed, for purposes
of this Agreement, to be an assignee of the Initial Purchasers. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.

               (f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.

               (g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

               (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

               (i) Severability. If any term provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.

               (j) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights. No
party hereto shall have any rights, duties or obligations other than




                                       19
   20

those specifically set forth in this Agreement. In no event will such methods of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company.

               (k) Termination. This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make payments of and provide for Additional Interest under
Section 2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.





                                       20
   21

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.



                                        ATMEL CORPORATION



                                        By: ____________________________________
                                            Name:
                                            Title:



Confirmed and accepted as of the date first above written:

MORGAN STANLEY & CO. INCORPORATED
CREDIT LYONNAIS SECURITIES (USA) INC.
NEEDHAM & COMPANY, INC.


By:  Morgan Stanley & Co. Incorporated



By: ____________________________________
    Name:
    Title: