<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 21, 1998
REGISTRATION NO. 333-66461
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------
ASPECT TELECOMMUNICATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 94-2974062
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1730 FOX DRIVE
SAN JOSE, CALIFORNIA 95131-2312
(408) 325-2200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES R. CARREKER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ASPECT TELECOMMUNICATIONS CORPORATION
1730 FOX DRIVE
SAN JOSE, CALIFORNIA 95131-2312
(408) 325-2200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
JON E. GAVENMAN
BROOKE CAMPBELL
VENTURE LAW GROUP
A PROFESSIONAL CORPORATION
2800 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
(650) 854-4488
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE(1)
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PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT(2) OFFERING PRICE(2) FEE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Zero Coupon Convertible
Subordinated
Debentures due 2018... $490,000,000 100% $490,000,000 $136,220
Common Stock, $.01 par 4,269,370
value(3).............. shares(2) -- -- --
========================================================================================
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(1) The registration fee was paid with the initial filing.
(2) Estimated solely for the purpose of calculating the registration fee. This
fee is calculated on the basis of the proposed offering price of the
debentures alone, unless Aspect will receive additional consideration when
holders of the debentures exercise their option to convert. In this case,
the maximum amount which may be received shall be added to the to the
proposed offering price of the debentures.
(3) This number represents the number of shares of common stock that are
initially issuable upon conversion of the zero coupon convertible
subordinated debentures due 2018 registered under this registration
statement. In addition, pursuant to Rule 416 under the Securities Act of
1933, as amended, and as a result of the debentures' antidilution
provisions, this number also represents the indeterminate number of shares
of common stock that may be issued from time to time when the debentures
are converted. Pursuant to rule 457(i) no registration fee is required for
these shares.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
$490,000,000
ASPECT TELECOMMUNICATIONS CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018 AND
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE DEBENTURES
THE DEBENTURES
. Aggregate principal amount at maturity: $490,000,000
. Common Stock into which the Debentures are convertible: 4,269,370
shares(/1/)
. Yield to maturity: 6.0% per year
. Conversion rate: 8.713 shares of Aspect common stock per $1,000 principal
amount at maturity of debentures
. Date of maturity: August 10, 2018
THE DEBENTURES AND COMMON
STOCK OFFERED IN THIS
PROSPECTUS INVOLVE A HIGH
DEGREE OF RISK. CONSIDER
CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 8.
CONVERSION
. Debenture holders can convert the debentures into Aspect common stock any
time prior to maturity.
SUBORDINATION
. The debentures are not secured by any of Aspect's assets.
. The debentures are subordinate in right of payment to all of Aspect's senior
indebtedness and effectively subordinate to the debt of Aspect's
subsidiaries.
. The debentures do not restrict Aspect from incurring additional debt.
REDEMPTION
. Aspect can redeem the debentures at any time on or after August 10, 2003.
. Holders can require Aspect to repurchase the debentures on August 10, 2003,
August 10, 2008 and August 10, 2013 for cash or, at Aspect's election, for
Aspect common stock, if certain conditions are met.
. Holders can require Aspect to redeem the debentures for cash in the event of
a fundamental change.
. You can find the table which lists the redemption prices on page 27 and the
repurchase prices on page 30.
(1) This number represents the number of shares of common stock that are
initially issuable upon conversion of the debentures. This number excludes
an indeterminate number of shares of common stock that may be issued from
time to time when the debentures are converted, as a result of the
debentures' antidilution provisions.
SALE OF SECURITIES
. The debentures and shares of common stock issuable upon conversion may be
sold either directly or through broker dealers.
. The selling holders will pay for underwriting discounts and selling
commission related to the sale of the debentures or the conversion shares.
Aspect will pay for all other expenses related to such sales. Broker dealers
may receive compensation for these sales.
Once resold pursuant to this prospectus there will be no public market for the
debentures. Aspect common stock is traded on the Nasdaq National Market under
the symbol "ASPT."
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY CONTRARY
REPRESENTATION IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
, 1998
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
The Company................................................................ 3
Summary.................................................................... 4
Information Available to You............................................... 7
Risk Factors............................................................... 8
Use of Proceeds............................................................ 17
Ratio of Earnings to Fixed Charges......................................... 17
Selling Securityholders.................................................... 18
Description of Debentures.................................................. 20
Certain Federal Income Tax Considerations.................................. 40
Plan of Distribution....................................................... 46
Legal Matters.............................................................. 48
Experts.................................................................... 48
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THE COMPANY
Aspect call-center products integrate telephone, data and internet
communications for our clients' customer-service operations, in order to
enhance agent productivity and improve customer service. Our solutions are
designed for reliable around-the-clock performance in critical business
applications, and include:
. telecommunications systems and software that automatically distribute
incoming phone calls to groups of customer service representatives, based
upon rules that match customer needs to customer service representative
skills
. software for integrating telecommunications systems with data systems
information to direct calls and deliver information to agents
. hardware and software that respond to voice and telephone keypad inputs
. software to help customers navigate web sites and conduct transactions over
the world wide web
. software for monitoring and reporting call-center performance
. forecasting and planning software applications for predicting call-center
load, and for planning workforce schedules.
We also consult, train, and deliver systems integration services to help
organizations effectively plan, integrate, staff and manage call centers. We
market our products and services worldwide to organizations in a broad array of
industries including financial services, government, healthcare, retailing,
technology, telecommunications, and transportation.
We are incorporated in the State of California. Our principal executive offices
are located at 1730 Fox Drive, San Jose, California 95131 and our telephone
number is (408) 325-2200.
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SUMMARY
The Debentures...................... .$490,000,000 principal amount at
maturity of zero coupon convertible
subordinated debentures due 2018.
.Periodic interest will not be paid on
the debentures. SEE "DESCRIPTION OF
DEBENTURES--GENERAL."
Yield to Maturity of Debentures..... .6.00% per year (computed on a semi-
annual bond equivalent basis)
calculated from August 10, 1998.
Conversion.......................... .The holder has the option to convert the
debentures into Aspect common stock at
any time prior to maturity.
.The debentures are convertible into
common stock at a conversion rate of
8.713 shares per $1,000 principal
amount at maturity of debentures. The
conversion rate will be subject to
adjustment if certain events occur. SEE
"DESCRIPTION OF DEBENTURES--CONVERSION
OF DEBENTURES."
.The holder must exercise the option to
convert before the debentures reach
maturity.
.If Aspect has redeemed the debentures
the holder can no longer exercise this
option to convert.
Subordination....................... .The debentures will be subordinated in
right of payment to all existing and
future senior indebtedness.
.The debentures will also be effectively
subordinated in right of payment to all
indebtedness and other liabilities of
Aspect's subsidiaries.
.At September 30, 1998 Aspect had
approximately $62.8 million of senior
indebtedness outstanding, of which
approximately $58.3 million related to
foreign exchange contracts.
.At September 30, 1998 Aspect's
subsidiaries had approximately $46.9
million of
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indebtedness and other liabilities,
including trade and other payables
outstanding, but excluding intercompany
liabilities and liabilities that are
not required to be reflected on a
balance sheet by generally accepted
accounting principals. SEE "DESCRIPTION
OF DEBENTURES--SUBORDINATION OF
DEBENTURES."
Original Issue Discount............. .The debentures are being offered at
original issue discount for Federal
income tax purposes equal to the excess
of the principal amount at maturity of
the debentures over the amount of their
issue price.
.Although Aspect will not make periodic
payments of interest on the debentures,
holders should be aware that accrued
original issue discount will be
included periodically in the holder's
gross income for Federal income tax
purposes prior to conversion,
redemption, other disposition or
maturity of the debentures, whether or
not such debentures are ultimately
converted, redeemed, sold (to Aspect or
otherwise) or paid at maturity. SEE
"CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS."
. Holders should be aware that they will
be responsible for the payment of taxes
that may be due notwithstanding the
fact that the holder may not receive
any cash payment at the time as
original issue discount is included in
the holder's gross income.
Sinking Fund........................ .None
Redemption at the Option of the
Company............................. .Aspect cannot redeem the debentures
prior to August 10, 2003.
.After August 10, 2003, Aspect has the
option to redeem all or part of the
debentures for cash at any time.
.Redemption prices are equal to the issue
price plus accrued original issue
discount to the date of redemption. You
can find a table on page 27 that lists
the redemption prices. SEE
5
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"DESCRIPTION OF DEBENTURES--REDEMPTION
OF DEBENTURES AT THE OPTION OF THE
COMPANY."
Fundamental Change.................. .The holder may redeem the debentures if
Aspect experiences a fundamental change
(as defined).
.The fundamental change redemption price
is equal to the issue price plus
accrued original issue discount to the
date of redemption, subject to
adjustment in certain circumstances.
You can find a table on page 27 that
lists the redemption prices. SEE
"DESCRIPTION OF DEBENTURES--REDEMPTION
AT THE OPTION OF THE HOLDER UPON A
FUNDAMENTAL CHANGE."
Purchase at the Option of the
Holder.............................. .Aspect will purchase the debentures at
the option of the holder on August 10,
2003, August 10, 2008 and August 10,
2013 for a purchase price equal to the
issue price plus accrued original issue
discount to the date of purchase.
Aspect may elect to pay the purchase
price in common stock instead of cash
if certain conditions are met. You can
find a table on page 30 that lists the
purchase prices. SEE "DESCRIPTION OF
DEBENTURES--PURCHASE OF DEBENTURES AT
THE OPTION OF THE HOLDER."
Use of Proceeds..................... .Aspect will not receive any of the
proceeds from the sale by selling
securityholders of the debentures or
the conversion shares.
6
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INFORMATION AVAILABLE TO YOU
Aspect files annual, quarterly and special reports, proxy statements and
other information with the SEC. You can inspect and copy the Registration
Statement on Form S-3 of which this prospectus is a part, as well as reports,
proxy statements and other information filed by Aspect, at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the SEC:
7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can obtain
copies of such material from the Public Reference Room of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. You can call the SEC
at 1-800-732-0330 for information regarding the operation of its Public
Reference Room. The SEC also maintains a World Wide Web site at
http:\\www.sec.gov that contains reports, proxy and information statements, and
other information regarding registrants (like Aspect) that file electronically.
This prospectus provides you with a general description of the debentures and
common stock being registered. This prospectus is part of a registration
statement that we have filed with the SEC. To see more detail, you should read
the exhibits and schedules filed with our registration statement.
The SEC allows this prospectus to "incorporate by reference" certain other
information that Aspect files with them, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that Aspect files later with the SEC will automatically update and
replace this information. We incorporate by reference the documents listed
below and any future filings made by Aspect with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities and Exchange Act of 1934 until we have
sold all of the securities that we have registered.
(1)Our Annual Report on Form 10-K for the year ended December 31, 1997;
(2)Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
(3)Our Current Reports on Form 8-K filed on March 5, 1998, May 22, 1998,
July 24, 1998, and August 5, 1998; and
(4)The description of our capital stock contained in the Registration
Statement on Form 8-A which was filed with the Commission on March 22,
1990.
If you make a request for such information in writing or by telephone, we
will provide to you, at no cost, a copy of any or all of the information
incorporated by reference in the Registration Statement of which this
Prospectus is a part. Requests should be addressed to: Aspect
Telecommunications Corporation, 1730 Fox Drive, San Jose, California 95131-
2312, Attention: Investor Relations (telephone number (408) 325-2200).
7
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RISK FACTORS
An investment in the securities offered in this prospectus involves a high
degree of risk. You should not make an investment in these securities if you
cannot afford to lose your entire investment. Before purchasing these
securities you must consider carefully the following risk factors as well as
the other information contained or incorporated by reference in this
prospectus. Some of the statements contained in this prospectus and the
documents incorporated by reference into this prospectus contain projections of
results of operations and financial condition or state other "forward-looking"
information. You should read the cautionary statements in this prospectus as
applying to all related forward-looking statements wherever they appear in this
prospectus. Our actual results may differ materially from our projections. The
risks set forth below, among others, could have a material adverse effect on
our business, operating results or financial condition.
OUR REVENUES AND OPERATING RESULTS ARE UNCERTAIN AND MAY FLUCTUATE.
There are many reasons for this including:
. reduced demand for our products and services
. a limited number of large systems or multisystem orders accounting for a
significant portion of product revenues in any particular quarter
. the timing of consulting and systems integration projects
. dependence on new customers for a significant percentage of product
revenues
. fluctuations in the results of operations of existing operations,
recently acquired subsidiaries, newly established business units or
distributors of our products or services
. mix of products and services and channels of distribution
. changes in market growth rates for different products and services.
In addition, our products typically represent substantial capital commitments
by customers, involving a long sales cycle. As a result, customer purchase
decisions may be significantly affected by a variety of factors including:
. general economic and financial market conditions
. trends in capital spending for telecommunications products
. market competition and the availability or announcement of alternative
technologies
. the degree to which call transaction processing is mission-critical for
customers.
OUR REVENUES ARE DEPENDENT ON A SMALL NUMBER OF PRODUCTS. Sales and
installations of Aspect automatic call distribution systems account for a
substantial portion of net revenues. Demand for our products could be adversely
affected if any of the following occurred:
. failure to meet customer specifications
. problems with system performance, system availability, installation or
service delivery commitments.
8
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TECHNOLOGY IS RAPIDLY CHANGING. The market for our products and services is
subject to rapid technological change and new product introductions. Current
competitors or new market entrants may develop new, proprietary products with
features that could adversely affect the competitive position of our products.
We may not successfully anticipate market demand for new products or services
or introduce them in a timely manner.
NEW PRODUCT DEFECTS AND IMPLEMENTATION. Because our products are complex and
sophisticated, sometimes they contain defects that are hard to correct.
Software defects may cause delays in product introductions and shipments,
resulting in:
. increased costs or penalties
. design modifications
. reduced customer satisfaction
. unanticipated downtime
. lost revenues, or product returns.
Further, implementation of our software solutions (including consulting and
systems integration projects), could have additional risks of performance
failures or delays in implementation. Such delays could adversely affect our
reputation in the market and could result in increased costs and delayed or
lost revenues. In addition, failure to meet completion schedules for systems
integration projects could contribute to quarterly fluctuations in revenues and
result in penalties for delayed completion.
OUR MARKET IS INTENSELY COMPETITIVE.
Our competition includes companies that sell:
. automatic call distributor systems
. private branch exchange systems that include automatic call distributor
features and
. computer-telephony integration software.
Our competitors include companies such as:
. systems integrators
. telephone operating companies that market automatic call distributor
functionality
. participants in the problem tracking and resolution software market
. companies with technologies which independently balance calls across
several call centers and
. interactive voice response companies.
As the hardware requirements for a traditional call center diminish, other
companies, including companies offering alternative or complementary
technologies, may obtain a significant position in the call transaction
processing market. For example, the anticipated convergence of voice and data
over a single network could result in increased competition for us.
In addition, many current and potential competitors, including Lucent
Technologies, Inc., Northern Telecom Limited, Rockwell International
Corporation, and Siemens Business Communication Systems Inc., have longer
operating histories, considerably greater resources, and larger customer bases
than Aspect. We expect to encounter significant competition from these and
other sources.
9
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ACQUISITIONS AND INVESTMENTS MAY HAVE ADVERSE CONSEQUENCES. In the past
several years we have made a number of acquisitions and have made minority
equity investments in other companies. We may continue to do so and there are a
number of risks that future acquisitions and investments could entail. These
risks include the following:
. inability to successfully integrate or commercialize acquired
technologies or otherwise realize anticipated synergies or economies of
scale on a timely basis
. diversion of management attention
. disruption of our ongoing business
. inability to retain key technical and managerial personnel for both
companies
. inability to establish and maintain uniform standards, controls,
procedures, and processes
. governmental or competitive responses to the proposed transactions
. impairment of relationships with employees, vendors, and/or customers
including, in particular, Voicetek's original equipment manufacturers and
value-added reseller relationships.
In addition, acquisitions or investments we make may result in significant
write-offs, the creation of goodwill or the issuance of additional equity or
debt securities.
WE MAY BE UNABLE TO MANAGE OUR GROWTH. Our rapid growth has placed a
significant strain on our operational and financial systems. We are upgrading
these systems and may experience substantial disruption and incur significant
expenses during these transitions. We must carefully manage accounts
receivables to limit credit risk. We must also maintain inventories at levels
consistent with product demand. Inaccurate data (e.g., credit histories or
supply/demand forecasts) could quickly result in excessive balances or
insufficient reserves.
WE MAY BE SUED. There has been extensive litigation regarding patents and
other intellectual property rights in our industry and we are periodically
notified of such claims by third parties. For example, in March 1997, Lucent
filed a lawsuit alleging that we infringed four of Lucent's U.S. patents. In
its complaint, Lucent sought to enjoin us from allegedly continuing to infringe
the Lucent patents and sought an unspecified amount of compensatory damages,
treble damages for alleged willful infringement, and interest, expenses, and
attorneys' fees. On February 4, 1998, we filed a lawsuit asserting that Lucent
infringed seven Aspect patents. Lucent responded by filing for a declaratory
judgment regarding these Aspect patents. On February 27, 1998, we announced
that we had entered into a patent cross-license agreement with Lucent, under
which each party agreed to dismiss our patent lawsuits against each other,
released each other from claims of past infringement, and settled our patent
disputes. Under the agreement, we paid Lucent a one-time fee and, for the
duration of the cross-license agreement, will pay royalties that are not
expected to be material to our future results of operations. As part of the
settlement, we recorded a non-recurring charge of $14,000,000 (approximately
$0.17 per diluted share) for the quarter and year ended December 31, 1997.
In the future, claims asserting infringement of patent or proprietary rights
may be asserted or prosecuted against us. Although we periodically negotiate
with third parties to establish patent license or cross-license agreements,
such negotiations may not succeed. Moreover, even if we
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negotiate license agreements with a third party, future disputes with such
parties are possible. If we are unable to resolve an intellectual property
dispute through a license, settlement or successful litigation, we could be
subject to damage assessments and be prevented from making, using, or selling
certain products or services.
In the future, we could become involved in other types of litigation, such as
shareholder lawsuits for alleged violations of securities laws, claims by
employees, and product liability claims. Any litigation could result in
substantial cost to and diversion of effort by our company.
RISK OF IMPERFECT INTELLECTUAL PROPERTY RIGHTS. Our success depends in part
upon our internally developed technology. Despite the precautions we take to
protect our intellectual property, unauthorized third parties may copy or
otherwise obtain and use our technology. In addition, third parties may develop
similar technology independently.
WE MAY BE UNABLE TO EXPAND OUR DISTRIBUTION CHANNELS. We have historically
sold our products and services through our direct sales force and a limited
number of distributors. In connection with the Voicetek acquisition, we
implemented a broadened OEM distribution channel, and in the future may depend
increasingly on expanded distributor, electronic, and other alternate
distribution channels to accommodate changing customer preferences, competitive
environment, or other factors. We may not be successful in expanding these
distribution channels.
DOING BUSINESS INTERNATIONALLY INVOLVES SIGNIFICANT RISK. We market our
products and services in over 30 countries worldwide and anticipate entering
additional countries in the future. For the year ended December 31, 1997 and
for the nine months ended September 30, 1998, sales outside of North America
made up approximately 28.3% and 30.8% of our total revenues, respectively. The
financial resources required to enter a new international market may be
substantial, and international operations are subject to additional risks
including:
. the cost and timing of the multiple governmental approvals and product
modifications required by many countries
. market acceptance
. exchange rate fluctuations
. delays in telecommunications deregulation
. difficulties in staffing and managing foreign subsidiary operations
. potentially negative tax and foreign and domestic trade legislation,
which could result in the creation of trade barriers such as tariffs,
duties, quotas, and other restrictions.
If we fail to successfully enter certain major international markets, our
competitive position could be impaired and we may be unable to compete on a
global scale.
WE DEPEND ON CERTAIN KEY MANAGEMENT AND TECHNICAL PERSONNEL. We may be unable
to attract and retain highly qualified personnel. The labor markets we compete
in are characterized by high turnover among, high demand for, and limited
supply of, qualified people.
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We have recently perceived increased levels of turnover among such personnel,
particularly among technology companies located in the Silicon Valley area of
California. These increased turnover levels may be disruptive to our culture
and operations, and may make retention of highly qualified personnel
increasingly challenging.
WE DEPEND ON LICENSING RELATIONSHIPS. We depend upon licensors to help us
effectively use licensed technologies. Should any licensors fail to provide
adequate support, we would have to develop internal or locate external
capabilities. As a result, we could be unable to meet development or delivery
commitments.
OUR OPERATIONS ARE FOCUSED IN A SINGLE LOCATION. Significant elements of our
product development, manufacturing, information technology systems, corporate
offices, and support functions are concentrated at a single location in the
Silicon Valley area of California. In the event of a natural disaster, such as
an earthquake or flood, or in localized extended outages of critical utilities
or transportation systems, we could experience a significant business
interruption.
WE HAVE LIMITED SUPPLIERS OF CERTAIN COMPONENTS. We depend on certain
critical components in the production of our products and services. Certain of
these components can be obtained only from a single supplier and only in
limited quantities. In addition, some of our major suppliers:
. use proprietary technology that could require significant redesign of our
products in the case of a change in vendor
. could discontinue or modify components in a manner incompatible with our
current use
. use manufacturing processes and tools that cannot be easily migrated to
other vendors.
If any of our component vendors experience difficulty meeting our
requirements for components, we may be unable to meet development or delivery
commitments.
WE ARE SUBJECT TO REGULATORY REQUIREMENTS. Our products are subject to
various regulations that require, among other things, that our products meet
certain radio frequency emission standards, be compatible with the public
telephone networks, and conform to certain safety and other standards.
We may not successfully obtain or maintain the necessary regulatory approvals
for our products, and sales of products that fail to comply may be prohibited.
WE MAY HAVE PROBLEMS COPING WITH "YEAR 2000" ISSUES.
Many computer systems are expected to experience problems handling dates
around the Year 2000.
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We believe the most reasonably likely worst case Year 2000 scenarios include
the following:
. Customers could change their buying patterns in a number of ways,
including accelerating or delaying purchases of, or replacement of, our
products and services.
. We could experience a disruption in service to our customers as a result
of the failure of third party products, including the following:
. Third party products which are non-compliant and are incorporated into
our products could cause our products to fail. A breakdown in telephone, e-
mail, voicemail, the World Wide Web or file transfer programs could impact
the responsiveness of our help desk;
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. Year 2000 problems at a number of our suppliers including banks,
telephone companies and the United States Postal Service could have a
pervasive impact on our business as a whole; and/or
. Product features that rely on date parameters (generally date
dependent routings and operating reports) could malfunction.
Our products may not contain all of the necessary date code or other
changes to operate in the Year 2000. Any failure of such products to
perform could result in:
. claims and lawsuits against us;
. significantly impaired customer satisfaction resulting in customers
withholding cash owed to us and delaying or canceling orders; and/or
. managerial and technical resources being diverted away from product
development and other business activities.
Any of the above stated consequences, in addition to others that we
cannot yet foresee, could have a significant adverse impact on our
business, operating results and financial condition.
WE HAVE SIGNIFICANT DEBT OBLIGATIONS. We incurred $150 million of principal
indebtedness ($490 million principal at maturity) from the sale of the
debentures in the August 1998 private placement. This new debt resulted in a
ratio of long-term debt to total shareholder's equity of approximately 57% at
September 30, 1998. As a result of the sale of the debentures, we have
substantially increased our principal and interest obligations. The degree to
which we are leveraged could materially and adversely affect our ability to
obtain additional financing and could make us more vulnerable to industry
downturns and competitive pressures. Our ability to meet our debt service
obligations will depend on our future performance, which will be subject to
financial, business, and other factors affecting our operations, many of which
are beyond our control.
OUR STOCK PRICE IS VOLATILE. The price of the debentures and the conversion
shares may be subject to significant volatility. You cannot consider our past
financial performance a reliable indicator of performance for any future period
and should not use historical data to predict future results or trends. For any
given quarter, a shortfall in our operating results from the levels expected by
securities analysts or others could immediately and adversely effect the price
of the debentures and the conversion shares. If we do not learn of such
shortfalls until late in a fiscal quarter, there could be an even more
immediate and adverse affect on the price of the debentures and the
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<PAGE>
conversion shares. In addition, this volatility could be exacerbated by the
relatively low trading volume of our common stock. Further, the market price of
the debentures and the conversion shares may decline.
We operate in a rapidly changing high-technology industry. In the past and
recently, the high technology industry has exhibited significant stock market
volatility. If the price of our common stock declines rapidly, we may become
subject to class action securities litigation. Litigation would be a costly
diversion for our management team.
YOU MAY NOT BE PAID ON THE DEBENTURES. The debentures are not secured by our
assets and are subordinated in right of payment to all of our existing and
future senior indebtedness. In the event of bankruptcy, liquidation or
reorganization and in certain other events, we will not be able to pay our
obligations with respect to the debentures until all senior indebtedness has
been fully paid. The debentures are effectively subordinated to all of the
liabilities of our subsidiaries since we are a shareholder of our subsidiaries
and will only receive funds as a shareholder after our subsidiaries have repaid
all obligations to their creditors. We may not have sufficient assets remaining
to pay amounts due on any or all of the debentures then outstanding. The
indenture does not prohibit or limit us or our subsidiaries from incurring
additional senior indebtedness, other debt or other liabilities. Our ability to
pay our obligations on the debentures could be adversely affected if we or our
subsidiaries incur more debt.
The following sets forth our indebtedness at September 30, 1998 to which the
debentures are subordinated:
<TABLE>
<C> <S>
Senior indebtedness.............. $62.8 million (of this amount, $58.3
million related to foreign exchange
contracts)
Indebtedness of subsidiaries..... $46.9 million (including trade and other
payables but excluding intercompany
liabilities and liabilities of a type not
required to be reflected on a balance sheet
in accordance with generally accepted
accounting principles)
</TABLE>
Both we and our subsidiaries expect that from time to time we will incur
additional indebtedness to which the debentures will be subordinated. SEE
"DESCRIPTION OF DEBENTURES -- SUBORDINATION OF DEBENTURES."
LIMITATIONS ON REPURCHASES AND REDEMPTIONS OF DEBENTURES. On each August 10,
2003, August 10, 2008 and August 10, 2013, we will become obligated to
purchase, at the debenture holder's option, any outstanding debenture, subject
to certain conditions. In addition, upon a fundamental change (as defined),
each holder will have the right, at the holder's option, to require Aspect to
redeem all or a portion of such holder's debentures. We may not have sufficient
funds to pay the repurchase price on any purchase date or the redemption price
in the event of a fundamental change. If we did not have sufficient funds on a
purchase date, we could be required to issue shares of common stock at
valuations based on then prevailing market prices, if we met certain
conditions.
Future debt to which we may become a party could contain covenants that
restrict our right to repurchase or redeem the debentures. We may then have to
refinance such debt or seek the consent
15
<PAGE>
of then-existing lenders to repurchase or redeem the debentures. If we were
unable to either refinance the existing debt or redeem the debentures, we would
be in default under the debentures, which may in turn cause us to default on
other debt and would likely prohibit or restrict payment on the debentures.
Additionally, if a fundamental change would constitute an event of default
under senior indebtedness then outstanding, the indenture's subordination
provisions would likely prohibit or restrict payments to the holders of
debentures.
The term "fundamental change" applies to certain types of transactions and
does not include all events that could adversely affect Aspect. Even though we
are required to redeem the debentures in the event of a fundamental change,
holders still may not be protected in the event that we are involved in certain
types of highly leveraged transactions, reorganizations, mergers or similar
transactions. SEE "DESCRIPTION OF DEBENTURES -- REDEMPTION AT OPTION OF THE
HOLDER UPON A FUNDAMENTAL CHANGE."
YOU MAY NOT BE ABLE TO SELL YOUR DEBENTURES. The debentures were issued in
August 1998 in a private placement to a small number of institutional buyers
and were designated for trading on the Portal Market. However, following their
resale pursuant to this prospectus, there will be no public market for the
debentures. As a result, you may be unable to sell your debentures. We do not
intend to list the debentures on any national securities exchange or on The
Nasdaq Stock Market.
An active trading market for the debentures may not develop or last, in which
case the trading price of such debentures could be adversely affected. In that
case, debenture holders may have difficulty in reselling the debentures or may
be unable to sell them at all. If a public trading market develops for the
debentures, the debentures' future trading prices will depend on many factors,
including, among other things, prevailing interest rates and the market price
of the shares of our common stock.
RATING OF DEBENTURES. We believe that it is likely that one or more rating
agencies may rate the debentures. If the debentures are rated by a rating
agency and the assigned rating is lower than generally expected by investors,
or if it is subsequently reduced, the market price for the debentures would be
materially adversely affected.
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<PAGE>
USE OF PROCEEDS
Aspect will not receive any proceeds from the sale by the selling
securityholders of the debentures or the conversion shares.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth Aspect's consolidated ratio of earnings to
fixed charges for the periods shown.
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED DECEMBER ENDED
31, SEPTEMBER 30,
--------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
1993 1994 1995 1996 1997 1997 1998
----- ---- ---- ----- ----- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1)......................... 12.6x 8.0x 9.6x 13.9x 25.8x 31.2x N/A
</TABLE>
- --------
(1) Ratio of earnings to fixed charges is computed by dividing fixed charges
into earnings before income taxes plus fixed charges. Fixed charges consist
of interest expense (including amortization of original issue discount and
debt issuance costs, as applicable) and the estimated portion of operating
lease rental expense which represents the interest factor (deemed to be
one-third of lease payments). For the nine months ended September 30, 1998,
there was a deficiency of earnings available to cover fixed charges
amounting to $4.2 million. Excluding the charge of $68.2 million for
purchased in-process technology associated with the acquisition of Voicetek
Corporation, the ratio of earnings to fixed charges for the nine months
ended September 30, 1998 would have been 17.4x.
17
<PAGE>
SELLING SECURITYHOLDERS
Aspect originally issued the debentures in a private placement. The
debentures were resold by the initial purchasers thereof to qualified
institutional buyers (within the meaning of Rule 144A under the Securities
Act) or other institutional accredited investors (as defined in Rule 501 (a)
(1), (2), (3) or (7) under the Securities Act) in transactions exempt from
registration under the Securities Act. The debentures and the conversion
shares that may be offered pursuant to this prospectus will be offered by the
selling securityholders. The following table sets forth certain information
concerning the principal amount of debentures beneficially owned by each
selling securityholder and the number of conversion shares that may be offered
from time to time pursuant to this prospectus.
<TABLE>
<CAPTION>
NUMBER OF
PRINCIPAL AMOUNT OF CONVERSION
DEBENTURES PERCENTAGE OF SHARES THAT PERCENT OF
BENEFICIALLY OWNED DEBENTURES MAY BE COMMON STOCK
NAME THAT MAY BE SOLD ($) OUTSTANDING (%) SOLD(1) OUTSTANDING(2)
---- -------------------- --------------- ----------- --------------
<S> <C> <C> <C> <C>
Salomon Brothers Asset
Management, Inc. ...... 122,706,900 25.0% 1,069,145 2.1%
Deutsche Bank Securi-
ties................... 50,500,000 10.3% 440,006 *
State of Connecticut
Combined Investment
Funds.................. 20,125,000 4.1% 175,349 *
Chrysler Corporation
Master Retirement
Trust.................. 16,255,000 3.3% 141,630 *
OCM Convertible Trust... 16,245,000 3.3% 141,543 *
J.P. Morgan & Co.
Inc.(3) ............... 15,000,000 3.1% 130,695 *
Aristeia International,
LLC.................... 14,354,000 2.9% 125,066 *
Vanguard Convertible
Securities Fund,
Inc. .................. 13,850,000 2.8% 120,675 *
Aristeia Trading,
L.L.C.................. 10,646,000 2.2% 92,758 *
Argent Classic
Convertible Heritage
Fund (Bermuda) L.P..... 10,000,000 2.0% 87,130 *
Highbridge Capital
Corporation............ 9,000,000 1.8% 78,417 *
Raytheon Company Master
Pension Trust.......... 8,120,000 1.6% 70,749 *
Delta Airline Master
Trust.................. 7,700,000 1.6% 67,090 *
State Employees'
Retirement Fund of the
State of Delaware...... 5,515,000 1.1% 48,052 *
Argent Convertible
Heritage Fund Ltd...... 5,000,000 1.0% 43,565 *
National Union Fire
Insurance Company of
Pittsburg.............. 3,000,000 * 26,139 *
South Dakota Retirement
System................. 3,000,000 * 26,139 *
The Zazove Convertible
Fund L.P. ............. 2,500,000 * 21,782 *
Winchester Convertible
Plus, Ltd. ............ 2,400,000 * 20,911 *
Partner Reinsurance
Company, Ltd. ......... 2,230,000 * 19,430 *
Orrington Investments
Limited Partnership.... 1,800,000 * 15,683 *
Foundations Account No.
1...................... 1,790,000 * 15,596 *
Orrington International
Fund Ltd............... 1,200,000 * 10,456 *
LLC Account No. 1....... 810,000 * 7,057 *
OCM Convertible Limited
Partnership............ 460,000 * 4,008 *
Any other holders of
debentures or future
transferee, pledgee,
donee or successor of
or from any such other
holder(4) (5).......... 145,793,100 29.8% 1,270,295 2.5%
</TABLE>
- --------
* Less than 1%.
(1) Assumes conversion of the full amount of debentures held by such holder at
the initial conversion rate of 8.713 shares per $1,000 principal amount at
maturity of debentures; such conversion rate is subject to certain
adjustments. Accordingly, the number of shares of common stock issuable
upon conversion of the debentures may increase or decrease from time to
time. Under the terms of the indenture, fractional shares
will not be issued upon conversion of the debentures; cash will be paid in
lieu of fractional shares, if any.
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<PAGE>
(2) As of September 30, 1998, Aspect had 51,156,055 shares outstanding.
(3) J.P. Morgan & Co. Inc. beneficially owns 152,695 shares of Aspect common
stock.
(4) Information concerning other selling securityholders will be set forth in
supplements to this prospectus from time to time, if required.
(5) Assumes that any other holders of debentures, or any future transferees,
pledgees, donees or successors of or from any such other holder of
debentures, do not beneficially own any common stock other than the common
stock issuable upon conversion of the debentures at the initial conversion
rate.
The preceding table has been prepared based upon the information furnished to
Aspect by the selling securityholders named therein.
None of the selling securityholders has had any position, office or other
material relationship with Aspect or its affiliates within the past three
years.
The selling securityholders identified above may have sold, transferred or
otherwise disposed of, in transactions exempt from the registration
requirements of the Securities Act, all or a portion of their debentures since
the date on which the information in the preceding table is presented.
Information concerning the selling securityholders may change from time to time
and any such changed information will be set forth in supplements to this
prospectus if and when necessary. Because the selling securityholders may offer
all or some of the debentures that they hold and/or conversion shares pursuant
to the offering contemplated by this prospectus, no estimate can be given as to
the amount of the debentures or conversion shares that will be held by the
selling securityholders upon the termination of this offering. SEE "PLAN OF
DISTRIBUTION."
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<PAGE>
DESCRIPTION OF DEBENTURES
The debentures were issued under an indenture dated as of August 10, 1998,
between Aspect and State Street Bank and Trust Company of California, N.A., as
trustee. The form of indenture and the registration rights agreement (defined
below) have been filed as exhibits to the registration statement. The following
are summaries of certain provisions of the debentures, the indenture and the
registration rights agreement. They do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the debentures, the indenture and the registration rights
agreement, including the definitions therein of certain terms that are not
otherwise defined in this prospectus. Wherever particular provisions or defined
terms of the indenture (or of the form of debenture which is a part thereof) or
registration rights agreement are referred to, such provisions or defined terms
are incorporated herein by reference. References in this section to "Aspect"
are solely to Aspect Telecommunications Corporation and not to its
subsidiaries.
GENERAL
The debentures are unsecured obligations of Aspect limited to $490,000,000
aggregate principal amount at maturity and will mature on August 10, 2018. The
debentures were issued in the initial private placement at an original issue
price of $306.56 per $1,000 principal amount at maturity, which represented an
original issue discount of 69.344% from the principal amount thereof payable at
maturity.
The debentures are being offered at a substantial discount from their
principal amount at maturity and will therefore have "original issue discount"
for U.S. federal income tax purposes. SEE "CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS."
There will be no periodic payments of interest on the debentures. The
calculation of the accrual of original issue discount (the difference between
the issue price of a debenture and the principal amount at maturity of a
debenture) in the period during which a debenture remains outstanding will be
on a semi-annual bond equivalent basis using a year composed of twelve 30-day
months. Such accrual will commence on the issue date of the debentures.
Maturity, conversion, purchase by Aspect the option of a holder or redemption
of a debenture will cause original issue discount and interest, if any, to
cease to accrue on such debenture, under the terms and subject to the
conditions of the indenture. Aspect may not reissue a debenture that has
matured or been converted, purchased by Aspect at the option of a holder,
redeemed or otherwise canceled (except for registration of transfer, exchange
or replacement thereof).
The principal amount at maturity of each debenture is payable at the office
or agency of the paying agent, initially the trustee, in the Borough of
Manhattan, The City of New York, or any other office of the paying agent
maintained for such purpose. Debentures may be presented for conversion or
exchange into common stock at the office of the conversion agent and debentures
in definitive form may be presented for exchange for other debentures or
registration of transfer at the office of the registrar, each such agent
initially being the trustee. Aspect will not charge a service charge for any
registration of transfer or exchange of debentures, however, Aspect may require
payment by a holder of a sum sufficient to cover any tax, assessment or other
governmental charge payable in connection therewith.
20
<PAGE>
FORM, DENOMINATION AND REGISTRATION
The debentures are issuable in fully registered form, without coupons, in
denominations of $1,000 principal amount and multiples thereof.
GLOBAL DEBENTURE; BOOK-ENTRY FORM. Debentures sold by the selling
securityholders pursuant to the registration statement of which this prospectus
forms a part may be represented by a global debenture. The global debenture
will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York and registered in the name of Cede and Co. as DTC's nominee.
Except as set forth below, the global debenture may be transferred, in whole or
in part, only to another nominee of DTC or to a successor of DTC or its
nominee.
Purchasers of the debentures may hold their interests in the global debenture
directly through DTC if such holder is a participant in DTC, or indirectly
through organizations which are participants in DTC. Transfers between
participants will be effected in the ordinary way in accordance with DTC rules
and will be settled in clearing house funds. The laws of some states require
that certain persons take physical delivery of securities in definitive form.
Consequently, the ability to transfer beneficial interests into the global
debenture to such persons may be limited.
Persons who are not participants may beneficially own interests in the global
debenture held by DTC only though participants, or certain banks, brokers,
dealers, trust companies and other parties that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. So
long as Cede, as the nominee of DTC, is the registered owner of the global
debenture, Cede for all purposes will be considered the sole holder of the
global debenture. Except as provided below, owners of beneficial interests in
the global debenture will not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive registered form and will not be considered the
holders thereof.
Payment of original issue discount and interest (if any) on and the
redemption price and the purchase price of the global debenture will be made to
Cede, the nominee for DTC, as the registered owner of the global debenture by
wire transfer of immediately available funds on the payment date therefor.
Neither Aspect, the trustee nor any paying agent will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the global debenture or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Aspect has been informed by DTC that, with respect to any payment of interest
(if any) on and the redemption price or the purchase price of, the global
debenture, DTC 's practice is to credit participants' accounts on the payment
date therefor with payments in amounts proportionate to their respective
beneficial interests in the principal amount represented by the global
debenture as shown on the records of DTC, unless DTC has reason to believe that
it will not receive payment on such payment date. Payments by participants to
owners of beneficial interests in the principal amount represented by the
global debenture held through such participants will be the responsibility of
such participants, as is now the case with securities held for the accounts of
customers registered in "street name."
Because DTC can only act on behalf of participants, who in turn act on behalf
of indirect participants and certain banks, the ability of a person having a
beneficial interest in the principal
21
<PAGE>
amount represented by the global debenture to pledge such interest to persons
or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interest, may be affected by the lack of physical
certificates evidencing such interest.
Neither Aspect nor the trustee (nor any registrar, paying agent nor
conversion agent under the indenture) will have any responsibility for the
performance by DTC or its participants or indirect participants of their
operations. DTC has advised Aspect that it will take any action permitted to be
taken by a holder of debentures (including, without limitation, the
presentation of debentures for exchange as described below), only at the
direction of one or more participants to whose account with DTC interests in
the global debenture are credited, and only in respect of the principal amount
of the debentures represented by the global debenture as to which such
participant or participants has or have given such direction.
DTC has advised Aspect as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations and may include certain other
organizations. Certain of such participants (or their representatives),
together with other entities, own DTC. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies that
clear through, or maintain a custodial relationship with, a participant, either
directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global debenture among participants, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
Aspect within 90 days, Aspect will cause the debentures to be issued in
definitive registered form in exchange for the global debenture.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and indirect participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices shall be sent to Cede, as nominee of DTC. If less than all of the
debentures are being redeemed, DTC will reduce the amount of interest of each
participant in such debentures in accordance with its procedures.
CERTIFICATED DEBENTURES. Holders of debentures may request that certificated
debentures be issued in exchange for debentures represented by the global
debenture. Furthermore, certificated debentures may be issued in exchange for
debentures represented by the global debenture if no successor depositary is
appointed by Aspect as set forth above under "GLOBAL DEBENTURE, BOOK-ENTRY
FORM."
22
<PAGE>
SUBORDINATION OF DEBENTURES
As set forth in the indenture, the debentures are subordinate in right of
payment to the holders of all existing and future senior indebtedness. Such
subordination will not prevent the occurrence of any event of default under the
indenture.
Upon any distribution of assets of Aspect upon any dissolution, winding up,
voluntary or involuntary bankruptcy, insolvency, liquidation, reorganization,
receivership or similar proceeding relating to Aspect or its property, an
assignment for the benefit of creditors or any marshaling of Aspect's assets or
liabilities, the holders of senior indebtedness will be entitled to receive
payment in full, in cash or other payment satisfactory to the holders of senior
indebtedness, of all obligations due in respect of such senior indebtedness
before the holders of debentures will be entitled to receive any payment of the
principal amount at maturity, issue price, accrued original issue discount,
redemption price, purchase price, fundamental change redemption price and
interest, if any (including liquidated damages, if any) or other payment in
respect of the debentures.
Until all obligations with respect to senior indebtedness are paid in full in
cash or other payment satisfactory to the holders of senior indebtedness, any
payment on the debentures to which the holders of debentures would be entitled
shall be made to the holders of senior indebtedness. By reason of the
subordination, in the event of Aspect's dissolution, winding up, bankruptcy,
liquidation, reorganization or similar proceeding relating to Aspect or its
property, an assignment for the benefit of creditors or any marshaling of
Aspect's assets, holders of senior indebtedness may receive more, ratably, and
the holders of debentures may receive less, ratably, than Aspect's other
creditors.
If the debentures are declared due and payable prior to their stated maturity
because of an event of default, then Aspect is obligated to notify promptly
holders of senior indebtedness of such acceleration. Aspect may not pay monies
owed pursuant to the debentures until 120 days have passed after such
acceleration occurs and after that point may pay the debentures only if the
terms of the indenture otherwise permit payment at that time.
Aspect also may not make any payment on the debentures if:
(1) a default in any payment obligations in respect of senior indebtedness
occurs and is continuing, without regard to any applicable period of
grace (whether at maturity or at a date fixed for payment or by
declaration or otherwise); or
(2) any other default occurs and is continuing with respect to designated
senior indebtedness that permits holders of the designated senior
indebtedness as to which such default relates to accelerate its
maturity and the trustee receives a notice of such default from Aspect
or from a representative for any issue of designated senior
indebtedness. Payments on the debentures may and shall be resumed;
. in case of a payment default, the earlier of the date on which such
default is cured or waived or ceases to exist; and
. in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or ceases to exist or 179
days after the date on which the applicable payment blockage notice
is received by the trustee, if the maturity of such
23
<PAGE>
designated senior indebtedness has not been accelerated, and in
either case only if the terms of the indenture otherwise permit
payment at that time.
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless and until 365 days have elapsed since the initial
effectiveness of the immediately prior payment blockage notice. No nonpayment
default that existed or was continuing on the date of delivery of any payment
blockage notice to the trustee shall be, or shall be made, the basis for a
subsequent payment blockage notice unless such default shall have been cured
or waived for a period of not less than 90 days (it being acknowledged that
(x) any action of Aspect or any of its subsidiaries occurring subsequent to
delivery of a payment blockage notice that would give rise to any event of
default pursuant to any provision of senior indebtedness under which an event
of default previously existed (or was continuing at the time of delivery of
such payment blockage notice) shall constitute a new event of default for this
purpose and (y) any breach of a financial covenant giving rise to a nonpayment
default for a period ending subsequent to the date of delivery of the
respective payment blockage notice shall constitute a new event of default for
this purpose).
The debentures are obligations exclusively of Aspect. Since a portion of the
operations of Aspect are conducted through subsidiaries, the cash flow and the
consequent ability to service debt, including the debentures, are dependent
upon the earnings of its subsidiaries and the distribution of those earnings
to, or upon loans or other payments of funds by those subsidiaries to, Aspect.
The subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amount pursuant to the
debentures or to make any funds available therefor, whether by dividends,
loans or other payments. In addition, the payment of dividends and making of
loans and advances to Aspect by its subsidiaries may be subject to statutory
or contractual restrictions, are contingent upon the earnings of those
subsidiaries and are subject to various business considerations.
Any right of Aspect to receive assets of any of its subsidiaries upon their
liquidation or reorganization (and the consequent right of the holders of the
debentures to participate in those assets) will be effectively subordinated to
the claims of that subsidiary's creditors (including trade creditors), except
to the extent that Aspect is itself recognized as a creditor of such
subsidiary, in which case Aspect's claims would still be subordinate to any
security interests in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that held by Aspect.
At September 30, 1998, Aspect had approximately $62.8 million of
indebtedness outstanding that would have constituted senior indebtedness, of
which approximately $58.3 million related to foreign exchange contracts, and
Aspect's subsidiaries had approximately $46.9 million of indebtedness and
other liabilities (including trade and other payables) outstanding (excluding
intercompany liabilities and liabilities of a type not required to be
reflected on a balance sheet in accordance with generally accepted accounting
principles) to which the debentures would have been effectively subordinated.
The indenture does not limit the amount of additional indebtedness, including
senior indebtedness, which Aspect can create, incur, assume or guarantee, nor
does the indenture limit the amount of indebtedness which any subsidiary can
create, incur, assume or guarantee.
In the event that, notwithstanding the foregoing, the trustee or any holder
of the debentures receives any payment or distribution of assets of Aspect of
any kind in contravention of any of the
24
<PAGE>
subordination provisions of the indenture, whether in cash, property or
securities, including, without limitation, by way of set-off or otherwise, in
respect of the debentures before all senior indebtedness is paid in full in
cash or other payment satisfactory to the holders of senior indebtedness, then
such payment or distribution will be held by the recipient in trust for the
benefit of, and paid over to, holders of senior indebtedness or their
representatives to the extent necessary to make payment in full in cash or
other payment satisfactory to the holders of senior indebtedness of all senior
indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of senior
indebtedness.
Aspect is obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by it in connection with its duties relating to the debentures. The trustee's
claims for such payments will generally be senior to those of holders of the
debentures in respect of all funds collected or held by the trustee.
CONVERSION OF DEBENTURES
A holder of a debenture may convert it into Aspect common stock at any time
prior to maturity; provided that if a debenture is called for redemption, the
holder may convert it only until the close of business on the last trading day
prior to the redemption date unless Aspect defaults in the payment of the
redemption price. A debenture in respect of which a holder has delivered a
purchase notice exercising the option of such holder to require Aspect to
purchase such debenture may be converted only if such notice is withdrawn in
accordance with the terms of the indenture. Similarly, a debenture in respect
of which a holder is exercising its option to require redemption upon a
fundamental change may be converted only if such holder withdraws its election
to exercise its option in accordance with the terms of the indenture. A holder
may convert its debentures in part so long as such part is $l,000 principal
amount at maturity or an integral multiple thereof.
The initial conversion rate is 8.713 shares of common stock per $1,000
principal amount at maturity of debentures, subject to adjustment upon the
occurrence of certain events, as described below. A holder entitled to a
fractional share of common stock shall receive cash equal to the then current
market value of such fractional share.
On conversion of a debenture, a holder will not receive any cash payment
representing accrued original issue discount. Aspect's delivery to the holder
of the fixed number of shares of common stock into which the debenture is
convertible (together with the cash payment, if any, in lieu of a fractional
share of common stock) will be deemed to satisfy Aspect's obligation to pay the
principal amount of the debenture including the accrued original issue discount
attributable to the period from the issue date to the conversion date. Thus,
the accrued original issue discount is deemed to be paid in full rather than
canceled, extinguished or forfeited. The conversion rate will not be adjusted
at any time during the term of the debentures for such accrued original issue
discount.
To convert a certificated debenture into common stock, a holder must:
(1) complete and manually sign the conversion notice on the back of the
debenture (or complete and manually sign a facsimile thereof) and
deliver such notice to the conversion agent;
25
<PAGE>
(2) surrender the debenture to the conversion agent;
(3) if required, furnish appropriate endorsements and transfer documents;
and
(4) if required, pay all transfer or similar taxes.
Pursuant to the indenture, the date on which all of the above requirements
have been satisfied is the conversion date.
The conversion rate is subject to adjustment under formulae as set forth in
the indenture in certain events, including:
(1) the issuance of Aspect common stock as a dividend or distribution on
the common stock;
(2) certain subdivisions and combinations of the common stock;
(3) the issuance to all holders of common stock of certain rights or
warrants to purchase common stock;
(4) the distribution to all holders of common stock of capital stock (other
than Aspect common stock) or evidences of Aspect's indebtedness or of
assets (including securities other than common stock, but excluding
those rights, warrants, dividends and distributions referred to in
clauses (1) and (3) above or paid in cash);
(5) distributions consisting of cash, excluding any quarterly cash dividend
on the common stock to the extent that the aggregate cash dividend per
share of common stock in any quarter does not exceed the greater of:
. the amount per share of common stock of the next preceding quarterly
cash dividend on the common stock to the extent that such preceding
quarterly dividend did not require an adjustment of the conversion
rate pursuant to this clause (5) (as adjusted to reflect
subdivisions or combinations of the common stock); and
. 3.75 percent of the average of the last reported sales price of the
common stock during the ten trading days immediately prior to the
date of declaration of such dividend, and excluding any dividend or
distribution in connection with the liquidation, dissolution or
winding up of Aspect
(6) payment in respect of a tender offer or exchange offer by Aspect or any
subsidiary (as defined) of Aspect for the common stock to the extent
that the cash and value of any other consideration included in such
payment per share of common stock exceeds the current market price (as
defined) per share of common stock on the trading day next succeeding
the last date on which tenders or exchanges may be made pursuant to such
tender or exchange offer; and
(7) payment in respect of a tender offer or exchange offer by a person
other than Aspect or any subsidiary of Aspect in which, as of the
closing date of the offer, the board of directors is not recommending
rejection of the offer.
If an adjustment is required to be made as set forth in clause (5) above as a
result of a distribution that is a quarterly dividend, such adjustment would be
based upon the amount by which
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<PAGE>
such distribution exceeds the amount of the quarterly cash dividend permitted
to be excluded pursuant to clause (5) above.
If an adjustment is required to be made as set forth in clause (5) above as a
result of a distribution that is not a quarterly dividend, such adjustment
would be based upon the full amount of the distribution. The adjustment
referred to clause (7) will only be made if the tender offer or exchange offer
is for an amount that increases the offeror's ownership of common stock to more
than 25% of the total shares of common stock outstanding, and if the cash and
value of any other consideration included in such payment per share of common
stock exceeds the current market price per share of common stock on the
business day next succeeding the last date on which tenders or exchanges may be
made pursuant to such tender or exchange offer. The adjustment referred to in
clause (7) above will generally not be made, however, if as of the closing of
such offer, the offering documents with respect to such offer disclose a plan
or an intention to cause Aspect to engage in a consolidation or merger of
Aspect or a sale of all or substantially all of Aspect's assets.
The indenture provides that if Aspect implements a stockholders' rights plan,
such rights plan must provide that upon conversion of the debentures 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.
No adjustment in the conversion rate will be required unless such adjustment
would require a change of at least 1% in the rate then in effect: provided that
any adjustment that would otherwise be required to be made shall be carried
forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion rate will not be adjusted for the
issuance of common stock or any securities convertible into or exchangeable for
common stock or carrying the right to purchase any of the foregoing.
In the case of either:
. any reclassification of the common stock, or
. a consolidation or merger involving Aspect or a sale or conveyance to
another corporation of the property and assets of Aspect as an entirety or
substantially as an entirety,
if holders of common stock shall be entitled to receive stock, securities,
other property or assets (including cash) with respect to or in exchange for
such common stock, the holders of the debentures then outstanding will be
entitled thereafter to convert such debentures into the kind and amount of
shares of stock, securities or other property or assets (including cash) which
they would have owned or been entitled to receive had such debentures been
converted immediately prior to such transaction. This assumes that a holder of
debentures would not have exercised any rights of election as to the stock,
securities or other property or assets (including cash) receivable in
connection with such transaction.
In the event of a taxable distribution to holders of common stock or in
certain other circumstances requiring an adjustment to the conversion rate, the
holders of debentures may, in certain circumstances, be deemed to have received
a distribution subject to United States income tax as a dividend, in certain
other circumstances, the absence of such an adjustment may result in a
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<PAGE>
taxable dividend to the holders of common stock. SEE "CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS."
Aspect from time to time may to the extent permitted by law increase the
conversion rate by any amount for any period of at least 20 business days, in
which case Aspect shall give at least 15 days' notice of such increase, if the
board of directors has made a determination that such increase would be in
Aspect's best interests, which determination shall be conclusive. Aspect may,
at its option, make such increases in the conversion rate, in addition to those
set forth above, as the Board of Directors deems advisable to avoid or diminish
any income tax to holders of common stock resulting from any dividend or
distribution to stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. SEE "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
REDEMPTION OF DEBENTURES AT THE OPTION OF THE COMPANY
No sinking fund is provided for the debentures. Aspect will not have the
option to redeem the debenture prior to August 10, 2003. Beginning on August
10, 2003, Aspect may redeem the debentures for cash as a whole at any time, or
from time to time in part, upon not less than 30 days' nor more than 60 days'
notice of redemption given by mail to holders of debentures. The debentures
will be redeemable in multiples of $l,000 principal amount at maturity.
The table below shows redemption prices of debentures per $1,000 principal
amount at maturity thereof at August 10, 2003 and at each August 10 thereafter
prior to maturity and at maturity on August 10, 2018, which prices reflect the
accrued original issue discount calculated to each such date. The redemption
price of a debenture redeemed between such dates would include an additional
amount reflecting the additional original issue discount accrued since the next
preceding date in the table to the actual redemption date.
<TABLE>
<CAPTION>
(2) (3)
(1) ACCRUED ORIGINAL REDEMPTION
DEBENTURE ISSUE DISCOUNT PRICE
ISSUE PRICE AT 6.00% (1)+(2)
----------- ---------------- ----------
<S> <C> <C> <C>
August 10, 2003......................... $306.56 $105.44 $ 412.00
August 10, 2004......................... 306.56 130.53 437.09
August 10, 2005......................... 306.56 157.14 463.70
August 10, 2006......................... 306.56 185.38 491.94
August 10, 2007......................... 306.56 215.34 521.90
August 10, 2008......................... 306.56 247.13 553.69
August 10, 2009......................... 306.56 280.85 587.41
August 10, 2010......................... 306.56 316.62 623.18
August 10, 2011......................... 306.56 354.57 661.13
August 10, 2012......................... 306.56 394.83 701.39
August 10, 2013......................... 306.56 437.55 744.11
August 10, 2014......................... 306.56 482.86 789.42
August 10, 2015......................... 306.56 530.94 837.50
August 10, 2016......................... 306.56 581.94 888.50
August 10, 2017......................... 306.56 636.05 942.61
August 10, 2018......................... 306.56 693.44 1,000.00
</TABLE>
If less than all of the outstanding debentures held in certificated form are
to be redeemed, the trustee shall select the debentures held in such form to be
redeemed in principal amounts at maturity
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<PAGE>
of $1,000 or integral multiples thereof by lot, pro rata or by another method
the trustee considers fair and appropriate. If a portion of a holder's
certificated debentures is selected for partial redemption and such holder
converts a portion of such debentures, such converted portion shall be deemed
to be the portion selected for redemption. Debentures registered in the name of
DTC or its nominee will be redeemed as described under "--FORM, DENOMINATION
AND REGISTRATION--GLOBAL DEBENTURE; BOOK-ENTRY FORM."
REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE
If a fundamental change (as defined) occurs at any time prior to August 10,
2018, each holder of debentures shall have the right, at the holder's option,
to require Aspect to redeem any or all of such holder's debentures. Holders can
exercise this request on the date that is 45 days after the date of Aspect's
notice of such fundamental change. The debentures will be redeemable in
multiples of $1,000 principal amount at maturity.
Aspect shall redeem such debentures at a price equal to the issue price plus
accrued original issue discount to the repurchase date; provided that if the
applicable price (as defined) in connection with the fundamental change is less
than the reference market price (as defined), Aspect shall redeem such
debentures at a price equal to the fundamental change redemption price
multiplied by the following fraction:
Applicable Price
-----------------
Reference Market Price
Aspect shall mail to all holders of record of the debentures a 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. Aspect shall deliver to the trustee a copy of such
applicable price of reference market price notice. To exercise the redemption
right, holders of debentures must deliver, on or before the 30th day after the
date of Aspect's notice of a fundamental change, the debentures to be so
redeemed, duly endorsed for transfer, together with the form entitled "Option
to Elect Redemption Upon a Fundamental Change" on the reverse thereof duly
completed, to Aspect (or an agent designated by Aspect for such purpose).
Aspect will comply with the provisions of Rule 13e-4 and any other tender
offer rules under the Exchange Act which may then be applicable in connection
with the redemption rights of debenture holders in the event of a fundamental
change.
The redemption rights of the holders of debentures could discourage a
potential acquiror of Aspect. The fundamental change redemption feature,
however, is not the result of management's knowledge of any specific effort to
obtain control of Aspect by any means or part of a plan by management to adopt
a series of anti-takeover provisions.
The term "fundamental change" is limited to certain specified transactions
and may not include other events that might adversely affect Aspect's financial
condition. In addition, holders may not be protected by the requirement that
Aspect offer to repurchase the debentures upon a fundamental change in the
event of a highly leveraged transaction, reorganization, merger or similar
transaction involving Aspect.
29
<PAGE>
No debentures may be redeemed at the option of holders upon a fundamental
change if there has occurred and is continuing an event of default described
under "EVENTS OF DEFAULT, NOTICE AND WAIVER" below (other than a default in the
payment of the fundamental change redemption price with respect to such
debentures). In the event of a fundamental change and exercise by holders of
the debentures of their associated rights to require Aspect to redeem all or a
portion of their debentures, Aspect may not have sufficient funds to pay the
redemption price for all the debentures tendered by the holders thereof. The
terms of future debt arrangements could prevent redemption of the debentures.
If a fundamental change occurs at a time when Aspect is prohibited from
redeeming the debentures, Aspect could ask existing lenders to consent to
Aspect's redemption of the debentures or could attempt to refinance the
borrowings that contain such prohibition. If Aspect does not obtain such a
consent or repay such borrowings, Aspect would remain prohibited from redeeming
the debentures. In such case, Aspect's failure to redeem debentures required to
be redeemed under the terms of the indenture would constitute an event of
default under the indenture and would likely constitute a default under the
terms of any other indebtedness of Aspect outstanding at such time. In such
circumstances, or if a fundamental change would in and of itself constitute an
event of default under agreements governing senior indebtedness then
outstanding, the subordination provisions in the indenture would likely prevent
holders from being paid.
PURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER
On August 10, 2003, August 10, 2008 and August 10, 2013, Aspect will become
obligated to purchase, at the option of the holder thereof, any outstanding
debenture for which a written purchase notice has been delivered by the holder
to the office of the paying agent (initially the trustee). This period will
begin at any time from the opening of business on the date that is 20 business
days (as defined) prior to such purchase date until the close of business on
such purchase date. If the purchase notice is withdrawn during the period,
Aspect will not be obligated to purchase. Aspect's purchase obligation will be
subject to certain additional conditions.
The purchase notice shall state:
(1) the certificate numbers of the debentures to be delivered by the holder
thereof for purchase by Aspect;
(2) the portion of the principal amount at maturity of debentures to be
purchased, which portion must be $1,000 or a multiple thereof;
(3) that such debentures are to be purchased by Aspect pursuant to the
applicable provisions of the debentures; and
(4) in the event Aspect elects, pursuant to a notice sent out by Aspect, to
pay the purchase price to be paid as of such purchase date in common
stock, in whole or in part, but such purchase price is ultimately to be
paid to such holder entirely in cash because any of the conditions to
payment of the purchase price (or portion thereof) in common stock is
not satisfied by the purchase date, as described below, whether such
holder elects (x) to withdraw such purchase notice as to some or all of
the debentures to which it relates (stating the principal amount at
maturity and certificate numbers of the debentures as to which such
withdrawal shall
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<PAGE>
relate), or (y) to receive cash in respect of the entire purchase price
for all debentures subject to such purchase notice.
If the holder fails to indicate, in the purchase notice and in any written
notice of withdrawal relating to such purchase notice, such holder's choice
with respect to the election described in clause (4) above, such holder shall
be deemed to have elected to receive cash in respect of the entire purchase
price for all debentures subject to such purchase notice in such circumstances.
For a discussion of the tax treatment of a holder receiving cash or common
stock pursuant to its election to tender its debentures to Aspect on a purchase
date. SEE "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
purchase date. The notice of withdrawal shall state the principal amount at
maturity and the certificate numbers of the debentures as to which the
withdrawal notice relates and the principal amount at maturity, if any, which
remains subject to the purchase notice.
The purchase price payable in respect of a debenture shall be equal to the
issue price plus accrued original issue discount to the purchase date. The
table below shows the purchase prices of a debenture as of the specified
purchase dates. Aspect may elect to pay the purchase price payable, as of any
purchase date, in cash or common stock or any combination thereof.
<TABLE>
<CAPTION>
PURCHASE DATE PRICE
------------- -----
<S> <C>
August 10, 2003...................................................... $412.00
August 10, 2008...................................................... $553.69
August 10, 2013...................................................... $744.11
</TABLE>
If Aspect elects to pay the purchase price, in whole or in part, in common
stock, the number of shares to be delivered in respect of the portion of the
purchase price to be paid in common stock shall be equal to such portion of the
purchase price divided by the market price (as defined) of the common stock.
However, no fractional shares of common stock will be delivered upon any
purchase by Aspect of debentures through the delivery of common stock in
payment, in whole or in part, of the purchase price. Instead, Aspect will pay
cash based on the market price for all fractional shares of common stock.
Aspect will give notice not less than 20 business days prior to the purchase
date to all holders at their addresses shown in the register of the registrar
(and to beneficial owners as required by applicable law) stating, among other
things:
. whether Aspect will pay the purchase price of the debentures in cash or
common stock, or any combination thereof (specifying the percentage of
each), and
. if Aspect elects to pay in common stock, in whole or in part the method
of calculating the market price of the common stock.
Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, Aspect will publish such
determination in a daily newspaper of national circulation.
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<PAGE>
Aspect's right to purchase debentures with common stock is subject to the
satisfaction of various conditions, including:
. the registration of the common stock under the Securities Act, if
required, and
. compliance with other applicable federal and state securities laws, if
any. If such conditions are not satisfied by a purchase date, Aspect
will pay the purchase price of the debentures to be purchased on such
purchase date entirely in cash. Aspect will comply with the provisions
of Rule 13e-4 and any other tender offer rules under the Exchange Act
which may then be applicable and will file a Schedule 13E-4 or any other
schedule required thereunder in connection with any offer by Aspect to
purchase debentures at the option of holders.
Payment of the purchase price for a debenture for which a purchase notice has
been delivered and not withdrawn is conditioned upon book-entry transfer or
delivery of such debenture (together with necessary endorsements) to the paying
agent at its office in the Borough of Manhattan, The City of New York, or any
other office of the paying agent, at any time after delivery of such purchase
notice. Payment of the purchase price for such debenture will be made promptly
following the later of the purchase date or the time of book-entry transfer or
delivery of such debenture. If the paying agent holds money or securities
sufficient to pay the purchase price of such debenture on the business day
following the purchase date, then, on and after such date, such debenture will
cease to be outstanding and original issue discount on such debenture will
cease to accrue whether or not book-entry transfer of such debenture is made or
such debenture is delivered to the paying agent, and all other rights of the
holder shall terminate (other than the right to receive the purchase price upon
delivery of the debenture).
No debentures may be purchased at the option of the holder for cash if there
has occurred (prior to, on or after the giving by the holders of such
Debentures of the required purchase notice) and is continuing an event of
default described under "EVENTS OF DEFAULT; NOTICE AND WAIVER" below (other
than a default in the payment of the purchase price with respect to such
debentures).
If Aspect becomes obligated to purchase any outstanding debenture on a
purchase date, there can be no assurance that Aspect would have sufficient
funds to pay the purchase price on that purchase date. In such a case, Aspect
could be required to issue shares of common stock to pay the purchase price at
valuations based on then prevailing market prices for all the debentures
tendered by the holders thereof. Any future credit agreements or other
agreements relating to other indebtedness (including senior indebtedness) to
which Aspect becomes a party may provide that the maturing of any obligation to
purchase the debentures would constitute an event of default thereunder and may
restrict or prohibit the repurchase of the debentures. In the event a purchase
date occurs at a time when Aspect is prohibited from repurchasing the
debentures, Aspect could seek the consent of its then existing lenders to
repurchase the debentures or could attempt to refinance the borrowings that
contain such prohibition. If Aspect does not obtain such a consent or repay
such borrowings, Aspect would remain prohibited from repurchasing the
debentures. Aspect's failure to repurchase debentures required to be
repurchased under the terms of the indenture would constitute an event of
default under the indenture and would likely constitute a default under the
terms of any other indebtedness of Aspect outstanding at such time, including
senior indebtedness. In such circumstances, the subordination provisions in the
indenture would likely prohibit or restrict payments to the holders of
debentures.
32
<PAGE>
MERGERS AND SALES OF ASSETS BY ASPECT
Aspect may not consolidate with or merge into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to
another person, unless, among other items:
. the resulting, surviving or transferee person (if other than Aspect) is
organized and existing under the laws of the United States, any state
thereof or the District of Columbia;
. such successor person assumes all of Aspect's obligations of Aspect
under the debentures and the indenture; and
. Aspect or such successor person shall not immediately thereafter be in
default under the indenture.
Upon the assumption of Aspect's obligations by such person in such
circumstances, subject to certain exceptions, Aspect shall be discharged from
all obligations under the debentures and the indenture. Certain such
transactions which would constitute a fundamental change would permit each
holder to require Aspect to redeem the debentures of such holder as described
under "--REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE."
EVENTS OF DEFAULT; NOTICE AND WAIVER
The indenture provides that, if an event of default specified in the
indenture shall have happened and be continuing, either the trustee or the
holders of not less than 25% in aggregate principal amount at maturity of the
debentures then outstanding may declare due and payable:
. the issue price of the debentures; plus
. the original issue discount on the debentures and any liquidated damages
under the registration rights agreement accrued to the date of such
declaration. In the case of certain events of bankruptcy or insolvency,
the issue price of the debentures plus the original issue discount
accrued thereon to the occurrence of such event shall automatically
become and be immediately due and payable. Under certain circumstances,
the holders of a majority in aggregate principal amount at maturity of
the outstanding debentures may rescind any such acceleration with
respect to the debentures and its consequences. Interest shall accrue at
the rate of 6.00% per annum and be payable on demand upon a default in
the payment of the issue price, accrued original issue discount, accrued
liquidated damages, if any, or any redemption price, purchase price or
fundamental change redemption price to the extent that payment of such
interest shall be legally enforceable.
Under the indenture, events of default are defined as:
(1) default in payment of the principal amount at maturity, issue price,
accrued original issue discount, accrued liquidated damages, if any,
redemption price, purchase price or fundamental chance redemption price
with respect to any debenture when such becomes due and payable
(whether or not payment is prohibited by the provisions of the
Indenture), provided that in the case of any failure to pay liquidated
damages, such failure continues for a period of 30 days;
33
<PAGE>
(2) Aspect's failure to comply with any of its other agreements in the
debentures or the indenture upon the receipt by Aspect of notice of such
default by the trustee or by holders of not less than 25% in aggregate
principal amount at maturity of the debentures then outstanding and
Aspect failure to cure such default within 60 days after receipt by
Aspect of such notice; or
(3) certain events of bankruptcy or insolvency.
The trustee shall give notice to holders of the debentures of any continuing
default known to the trustee within 90 days after the occurrence thereof;
provided that, except in the case of a default as described in clause (1)
above, the trustee may withhold such notice if it determines in good faith that
withholding the notice is in the interests of the holders.
The holders of a majority in aggregate principal amount at maturity of the
outstanding debentures may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. Any such direction shall not be in conflict
with any law or the indenture and shall be subject to certain other
limitations. Before proceeding to exercise any right or power under the
indenture at the direction of such holders, the trustee shall be entitled to
receive from such holders or which might be reasonable security indemnity
satisfactory to it against the costs, expenses and liabilities incurred by it
in complying with any such direction. No holder of any debenture will have any
right to pursue any remedy with respect to the indenture or the debentures
unless:
(1) such holder shall have previously given Aspect and the trustee written
notice of a continuing event of default;
(2) the holders of at least 25% in aggregate principal amount at maturity
of the outstanding debentures shall have made a written request to the
trustee to pursue such remedy;
(3) such holder or holders have offered to the trustee reasonable indemnity
satisfactory to the trustee;
(4) the holders of a majority in aggregate principal amount at maturity of
the outstanding debentures have not given the trustee a direction
inconsistent with such request within 60 days after receipt of such
request; and
(5) the trustee shall have failed to comply with the request within such
60-day period.
However, the right of any holder:
(1) to receive payment of the principal amount at maturity, issue price,
accrued original issue discount, redemption price, purchase price,
fundamental change redemption price and any interest in respect of a
default in the payment of any such amounts on a debenture, on or after
the due date expressed in such debenture;
(2) to institute suit for the enforcement of any such payments or
conversion; or
(3) to convert debentures shall not be impaired or adversely affected
without such holder's consent.
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<PAGE>
The holders of at least a majority in aggregate principal amount at maturity
of the outstanding debentures may waive an existing default and its
consequences, other than:
. any default in any payment on the debentures;
. any default with respect to the conversion rights of the debentures; or
. any default in respect of certain covenants or provisions in the
indenture which may not be modified without the consent of the holder of
each debenture as described in "--MODIFICATION" below.
Aspect will be required to furnish to the trustee annually a statement as to
any default by Aspect in the performance and observance of its obligations
under the indenture.
REGISTRATION RIGHTS
Aspect has entered into a registration rights agreement with the initial
purchasers pursuant to which Aspect, at its expense, for the benefit of the
holders, has filed with the SEC the shelf registration statement (of which this
prospectus forms a part) covering resale of the registrable securities. Aspect
will use its best efforts to cause the shelf registration statement to become
effective as promptly as is practicable, but in any event within 180 days of
such first date of original issuance and to keep the shelf registration
statement effective until the earlier of:
. the sale pursuant to the shelf registration statement of all the
securities registered thereunder; and
. the expiration of the holding period applicable to such securities held
by persons that are not affiliates of Aspect under Rule 144(k) under the
Securities Act or any successor provision, subject to certain permitted
exceptions.
Aspect will be permitted to suspend the use of this prospectus under certain
circumstances relating to pending corporate developments, public filings with
the SEC and similar events for a period not to exceed 30 days in any three-
month period and not to exceed an aggregate of 90 days in any 12-month period.
Aspect will agree to pay predetermined liquidated damages as described herein
to holders of debentures and holders of common stock issued upon conversion of
the debentures if the shelf registration statement is not timely filed or made
effective or if the prospectus is unavailable for periods in excess of those
permitted above. Such liquidated damages shall accrue until such failure to
file or become effective or unavailability is cured:
. in respect of any debenture, at a rate per annum equal to 0.25% for the
first 90 day period after the occurrence of such event and 0.5%
thereafter of the applicable principal amount (as defined) at maturity
thereof; and
. in respect of any shares of common stock into which the debentures have
been converted, at a rate per annum equal to 0.25% for the first 90 day
period and 0.5% thereafter of the then applicable conversion price (as
defined). A holder who sells debentures and common stock issued upon
conversion of the debentures pursuant to the shelf registration
statement generally will be required to be named as a selling
stockholder in the related prospectus, deliver a prospectus to
purchasers and be bound by certain provisions of the registration
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rights agreement that are applicable to such holder (including certain
indemnification provisions).
Aspect will pay all expenses of the shelf registration statement, provide to
each registered holder copies of such prospectus, notify each registered holder
when the shelf registration statement has become effective and take certain
other actions as are required to permit, subject to the foregoing, unrestricted
resales of the debentures and the common stock issued upon conversion of the
debentures.
Aspect has agreed in the registration rights agreement to give notice to all
holders of the filing and effectiveness of the shelf registration statement by
release made to Reuters Economic Services and Bloomberg Business News. Selling
securityholders have received a form of notice and questionnaire to be
completed and delivered by a holder to Aspect at least three business days
prior to any intended distribution of registrable securities pursuant to the
shelf registration statement. Holders are required to complete and deliver the
questionnaire prior to the effectiveness of the shelf registration statement so
that such holder may be named as a selling securityholders in the related
prospectus at the time of effectiveness. Upon receipt of such a completed
questionnaire, together with such other information as may be reasonably
requested by Aspect, from a holder following the effectiveness of the shelf
registration statement, Aspect will, as promptly as practicable but in any
event within five business days of such receipt, file such amendments to the
shelf registration statement or supplements to the related prospectus as are
necessary to permit such holder to deliver such prospectus to purchasers of
registrable securities (subject to Aspect's right to suspend the use of the
prospectus as described above). Aspect has agreed to pay liquidated damages in
the amount set forth above to such holder if Aspect fails to make such filing
in the time required or, if such filing is a post-effective amendment to the
shelf registration statement required to be declared effective under the
Securities Act, if such amendment is not declared effective within 45 days of
the filing thereof. Any holder that does not complete and deliver a
questionnaire or provide such other information will not be named as a selling
securityholder in the prospectus and therefore will not be permitted to sell
any registrable securities pursuant to the shelf registration statement.
The summary herein of certain provisions of the registration rights agreement
is subject to, and is qualified in its entirety by reference to, all the
provisions of the registration rights agreement.
MODIFICATION
Modification and amendment of the indenture or the debentures may be effected
by Aspect and the trustee with the consent of the holders of not less than a
majority in aggregate principal amount at maturity of the debentures then
outstanding. Notwithstanding the foregoing, no such amendment may, without the
consent of each holder affected thereby:
(1) reduce the principal amount at maturity, issue price, purchase price,
fundamental chance redemption price or redemption price, or extend the
stated maturity of any debenture or alter the manner or rate of accrual
of original issue discount or interest, or make any debenture payable
in money or securities other than that stated in the debenture;
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(2) make any change to the principal amount at maturity of debentures whose
holders must consent to an amendment or any waiver under the Indenture
or modify the indenture provisions relating to such amendments or
waivers;
(3) make any change that adversely affects the right to convert any
debenture or the right to require Aspect to purchase a debenture or the
right to require Aspect to redeem a debenture upon a fundamental
change;
(4) modify the provisions of the indenture relating to the subordination of
the Debentures in a manner adverse to the holders of the debentures; or
(5) impair the right to institute suit for the enforcement of any payment
with respect to, or conversion of, the debentures.
The indenture also provides for certain modifications of its terms without
the consent of the holders. No amendment may be made to the subordination
provisions of the indenture that adversely affects the rights of any holder of
senior indebtedness then outstanding, unless the holders of such senior
indebtedness (as required pursuant to the terms of such senior indebtedness)
consent to such change.
TAXATION OF DEBENTURES
See "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" for a discussion of certain
tax considerations relevant to a holder of debentures.
INFORMATION CONCERNING THE TRUSTEE
State Street Bank and Trust Company of California, N.A., as trustee under the
indenture, has been appointed by Aspect as paying agent, conversion agent,
registrar and custodian with regard to the debentures.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the prospectus.
The term "applicable conversion price" means, as of any date of
determination, the applicable principal amount per $1,000 principal amount at
maturity of debentures as of such date of determination divided by the
conversion rate in effect as of such date of determination or, if no debentures
are then outstanding, the conversion rate that would be in effect were
debentures then outstanding.
The term "applicable price" means:
. in the event of a fundamental change in which the holders of the common
stock receive only cash, the amount of cash received by the holder of
one share of common stock, and
.in the event of any other fundamental change, the average of the last
reported sale price for the common stock during the ten trading days
prior to the record date for the determination of the holders of common
stock entitled to receive cash, securities, property or other assets in
connection with such fundamental change, or, if there is no such record
date, the date upon which the holders of the common stock shall have the
right to receive such cash, securities, property or other assets in
connection with the fundamental change.
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The term "applicable principal amount" means, as of any date of
determination, with respect to each $1,000 principal amount at maturity of
debentures, the sum of the initial issue price of such debentures ($306.56)
plus accrued original issue discount with respect to such debentures through
such date of determination or, if no debentures are then outstanding, such sum
calculated as if such debentures were then outstanding.
The term "designated senior indebtedness" means 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
Aspect is a party) expressly provides that such senior indebtedness shall be
"designated senior indebtedness" for purposes of the 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.
The term "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 any form of 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.
The term "indebtedness" means, with respect to any person (as defined) and
without duplication:
(1) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such person for borrowed money (including obligations of
Aspect 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 debentures or
similar instruments) or evidenced by bonds, debentures, debentures or
similar instruments (whether or not the recourse of the lender is to
the whole of the assets of such person or to only a portion thereof);
(2) all reimbursement obligations and other liabilities (contingent or
otherwise) of such person with respect to letters of credit, bank
guarantees or bankers' acceptances;
(3) all obligations and liabilities (contingent or otherwise) in respect of
leases of such person;
(.)required, in conformity with generally accepted accounting
principles, to be accounted for as capitalized lease obligations on
the balance sheet of such person; or
(.)required, in conformity with generally accepted accounting
principles to be accounted for as an operating lease, provided
either (A) such operating lease requires, at the end of the term
thereof, that such person make any payment other than accrued
periodic rent in the event that such person does not acquire the
leased real property and related fixtures subject to such lease, or
(B) such person has an option to acquire the leased real property
and related fixtures, whether such option is exercisable at any time
or under specified circumstances;
(4) all obligations of such person (contingent or otherwise) with respect
to an interest rate swap, cap or collar agreement or other similar
instrument or agreement;
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(5) all direct or indirect guaranties or similar agreements by such person
in respect of, and obligations or liabilities (contingent or otherwise)
of such person 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 (1)
through (4) above;
(6) any indebtedness or other obligations described in clauses (1) through
(4) above secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such person, regardless
of whether the indebtedness or other obligation secured thereby shall
have been assumed by such person; and
(7) 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 (1) through
(6).
The term "reference market price" shall initially mean $18.917 and in the
event of any adjustment to the conversion rate pursuant to the provisions of
the indenture, the reference market price shall also be adjusted so that the
reference market initial reference price shall be equal to:
Initial Conversion Rate
---------------------------
Initial Reference Price X
Adjusted Initial Conversion Rate
( )
The "market price" means the average of the sale prices (as defined) 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, then
on the last trading day prior to such 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 certain events that would result in an adjustment of
the conversion rate under the indenture with respect to the common stock.
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 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 principal United States securities exchange on which the common stock is
traded or, if the common stock is not listed on a United States national or
regional stock exchange, as reported by The Nasdaq National Market. Because the
market price of the common stock is determined prior to the applicable purchase
date, holders of debentures bear the market risk with respect to the value of
the common stock to be received from the date of determination of such market
price to such purchase date. Aspect may elect to pay the purchase price in
common stock only if the information necessary to calculate the market price is
reported in a daily newspaper of national circulation.
The term "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 any such proceeding), rent and end of term
payments payable on or in connection with, and, to the extent not included in
the foregoing, all amounts payable as fees, costs, expenses, liquidated
damages, indemnities, repurchase and other put obligations and other amounts to
the extent accrued or due on or in connection with indebtedness
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(as defined) of Aspect, whether outstanding on the date of the indenture or
thereafter created, incurred, assumed, guaranteed or in effect guaranteed by
Aspect (including all deferrals, renewals, extensions or refundings of, or
amendments, modifications or supplements to, the foregoing). Notwithstanding
the foregoing, the term senior indebtedness does not include:
(1) indebtedness evidenced by the debentures;
(2) indebtedness of Aspect to any subsidiary of Aspect, a majority of the
voting stock of which is owned, directly or indirectly, by Aspect;
(3) accounts payable or other indebtedness to trade creditors created or
assumed by Aspect in the ordinary course of business; and
(4) any particular indebtedness in which 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, or is pari
passu with, or is subordinated or junior to, the debentures.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain material U.S. federal income
tax considerations relating to the purchase, ownership and disposition of the
debentures and conversion shares to U.S. holders (as defined below), and
certain material U.S. federal income and estate tax considerations relating to
the purchase, ownership and disposition of the debentures and conversion shares
to non-U.S. holders (as defined below). The discussion is a summary only and
does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This discussion is based upon the Internal
Revenue Code of 1986, as amended, existing and proposed Treasury Regulations,
and judicial decisions and administrative interpretations thereunder, as of the
date hereof, all of which are subject to change, possibly with retroactive
effect, or different interpretations. There can be no assurance that the IRS
will not challenge one or more of the tax consequences described herein, and
Aspect has not obtained, nor does it intend to obtain, a ruling from the IRS or
an opinion of counsel with respect to the U.S. federal tax consequences of
acquiring or holding debentures and conversion shares.
The discussion does not purport to address all tax consequences that may be
important to a particular holder in light of the holder's circumstances (such
as the alternative minimum tax provisions of the tax code), or to certain
categories of investors (such as certain financial institutions, insurance
companies, tax-exempt organizations, dealers in securities, or persons who hold
debentures or common stock as part of a hedge, conversion or constructive sale
transaction, straddle or other risk reduction transaction) that may be subject
to special rules. This discussion is limited to purchasers of debentures who
hold the debentures and any common stock into which the debentures are
converted as capital assets. This discussion also does not address the tax
consequences arising under the laws of any foreign, state or local jurisdiction
or U.S. estate and gift tax law as applicable to U.S. Holders.
PERSONS CONSIDERING THE PURCHASE OF A DEBENTURE SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING, HOLDING,
CONVERTING OR OTHERWISE DISPOSING OF
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THE DEBENTURES AND COMMON STOCK, INCLUDING THE EFFECT AND APPLICABILITY OF
STATE, LOCAL OR FOREIGN TAX LAWS.
U.S. HOLDERS
As used herein, the term "U.S. Holder" means a holder of a debenture or
conversion shares that is:
(1)for United States federal income tax purposes, a citizen or resident of
the United States;
(2) a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision
thereof;
(3) an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
(4) a trust, the administration of which is subject to the primary
supervision of a court within the United States and which has one or
more United States persons with authority to control all substantial
decisions.
A "non-U.S. holder" is any holder other than a U.S. holder.
ORIGINAL ISSUE DISCOUNT ON THE DEBENTURES. The debentures have been issued at
a substantial discount from their stated redemption price at maturity. For
federal income tax purposes, the excess of the stated redemption price at
maturity of each debenture over its issue price constitutes original issue
discount. The issue price of the debentures will equal the initial price at
which a substantial amount of the debentures is sold (not including sales to
initial purchasers or placement agents, including the initial purchasers). U.S.
holders of the debentures will be required to report original issue discount as
taxable ordinary income as it accrues, in accordance with the constant yield
method described below, before receipt of the cash attributable to such income,
regardless of such U.S. holder's regular method of accounting for United States
federal income tax purposes. A U.S. holder of a debenture must include in gross
income for federal income tax purposes the sum of the daily portions of
original issue discount with respect to the debenture for each day during the
taxable year or portion of a taxable year on which such U.S. holder holds the
debenture. The daily portion is determined by allocating to each day of each
accrual period a pro rata portion of an amount equal to the adjusted issue
price of the debenture at the beginning of the accrual period multiplied by the
yield to maturity of the debenture (determined by compounding at the close of
each accrual period and adjusted for the length of the accrual period). The
adjusted issue price of a debenture at the start of any accrual period will be
the issue price of the debenture increased by the accrued original issue
discount for each prior accrual period. Under these rules, U.S. holders will
have to include in gross income increasingly greater amounts of original issue
discount in each successive accrual period. A U.S. Holder's original tax basis
for determining gain or loss on the sale or other disposition of a Debenture
will be increased by any accrued original issue discount includable in such
U.S. holder's gross income.
There are several circumstances under which Aspect could make a payment on a
debenture which would affect the yield to maturity of a debenture, including
(as described under "DESCRIPTION OF DEBENTURES") the payment of liquidated
damages, or certain redemptions or repurchases of a debenture. According to
treasury regulations, the possibility of a change in the yield will not be
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treated as affecting the amount of original issue discount required to be
realized by a holder (or the timing of such recognition) if the likelihood of
the change, as of the date the debt obligations are issued, is remote. Aspect
intends to report on the basis that the likelihood of any change in the yield
on the debentures is remote. Aspect also intends to report on the basis that
there is no alternative payment schedule that would minimize the yield on the
debentures to Aspect.
Aspect or a paying agent will be required to furnish annually to the IRS and
each U.S. holder information regarding the amount of original issue discount
attributable to that year.
MARKET DISCOUNT. Any principal payment or gain realized by a U.S. holder on
disposition or retirement of a debenture will be treated as ordinary income to
the extent that there is accrued market discount on the debenture. The amount
of market discount on a debenture for a holder will equal the excess of the
adjusted issue price of such debenture over the initial tax basis of such
debentures in the hands of such holder. To the extent a holder exchanges or
converts a debenture into common stock in a transaction that is otherwise tax
free, any accrued market discount will carry over and generally be recognized
upon a disposition of the common stock. Unless a U.S. holder irrevocably elects
to accrue market discount under a constant-interest method, accrued market
discount is the total market discount multiplied by a fraction, the numerator
of which is the number of days the U.S. holder has held the obligation and the
denominator of which is the number of days from the date the holder acquired
the obligation until its maturity. A U.S. holder may be required to defer a
portion of its interest deductions for the taxable year attributable to any
indebtedness incurred or continued to purchase or carry a debenture purchased
with market discount. Any such deferred interest expense would not exceed the
market discount that accrues during such taxable year and is, in general,
allowed as a deduction not later than the year in which such market discount is
includable in income. If the holder elects to include market discount in income
currently as it accrues on all market discount instruments acquired by the U.S.
holder in that taxable year or thereafter, the (i) interest deferral described
above will not apply and (ii) market discount will not carry over into common
stock as described above. Any such election is terminable only with the consent
of the IRS and applies to all market discount bonds acquired during or after
the year for which it is made.
ACQUISITION PREMIUM. A U.S. holder will be considered to have "acquisition
premium" to the extent the U.S. holder's initial tax basis in a debenture is
greater than (x) the adjusted issue price of such debenture but less than (y)
the stated redemption price at maturity of such debenture. Acquisition premium
may offset the amount of original issue discount received on such debenture
that the U.S. holder is required to include in income.
SALE, EXCHANGE OR RETIREMENT OF THE DEBENTURES. Upon the sale, exchange or
retirement of a debenture, including as a result of a tender upon the
occurrence of a fundamental change, and, except as discussed in the next
paragraph on a purchase date, a U.S. holder will recognize gain or loss equal
to the difference between the sale or redemption proceeds and the U.S. holder's
adjusted tax basis in the debenture.
If a U.S. holder elects to exercise its option to tender the debentures to
Aspect on a purchase date and Aspect issues common stock in satisfaction of all
or part of the purchase price, the exchange of the debentures for common stock
should qualify as a reorganization for federal income tax purposes. If the
purchase price is paid solely in common stock, except in the case of a
fractional
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share described below, a U.S. holder shall not be required to recognize any
gain or loss realized. If the purchase price is paid in a combination of common
stock and cash (other than cash received in lieu of a fractional share), gain
(but not loss) realized by the U.S. holder would be recognized, but only to the
extent of the cash received. A U.S. holder's initial tax basis in the common
stock received would be equal to such U.S. holder's adjusted tax basis in the
debenture tendered (except for any portion allocable to a fractional share of
common stock), increased by the amount of gain recognized (other than with
respect to a fractional share) and decreased by the amount of any cash received
(except cash received in lieu of a fractional share). The holding period for
common stock received in the exchange will include the holding period of the
debenture tendered to Aspect in exchange therefor. The receipt of cash in lieu
of a fractional share of common stock should generally result in capital gain
or loss, measured by the difference between the amount of cash received for the
fractional share and the U.S. holder's tax basis in the fractional share
interest.
A holder's adjusted tax basis in a debenture will generally equal the
holder's cost of the debenture increased by any original issue discount
previously included in income by such holder with respect to such debenture and
decreased by any payments received thereon. Except to the extent of any accrued
market discount, gain or loss realized on the sale, exchange or retirement of a
debenture will generally be capital gain or loss and will be long-term capital
gain or loss if the debenture is held for more than one year. For individual
U.S. holders, under recently enacted legislation, gain on most capital assets
held by an individual U.S. holder more than one year would be subject to a
maximum U.S. federal rate of tax of 20%.
CONVERSION OF DEBENTURES. A U.S. holder's conversion of a debenture into
common stock will generally not be a taxable event (except with respect to cash
received in lieu of a fractional share). A U.S. holder's basis in the common
stock received on conversion of a debenture will be the same as the U.S.
holder's basis in the debenture at the time of conversion (exclusive of any tax
basis allocable to a fractional share), and the holding period for the common
stock received on conversion will include the holding period of the debenture
converted. The receipt of cash in lieu of a fractional share of common stock
should generally result in capital gain or loss (measured by the difference
between the cash received for the fractional share interest and the U.S.
holder's tax basis in the fractional share interest).
DIVIDENDS; ADJUSTMENT OF CONVERSION PRICE. Dividends, if any, paid on the
common stock generally will be includable in the income of a U.S. holder as
ordinary income to the extent of Aspect current or accumulated Aspect profits.
If at any time Aspect makes a distribution of property to shareholders that
would be taxable to such shareholders as a dividend for federal income tax
purposes (for example, distributions of evidences of indebtedness or assets of
Aspect but generally not stock dividends or rights to subscribe for common
stock) and, pursuant to the anti-dilution provisions of the indenture, the
conversion rate of the debentures is increased, such increase may be deemed to
be the payment of a taxable dividend to U.S. Holders of debentures. If the
conversion rate is increased at Aspect's discretion or in certain other
circumstances, such increase also may be deemed to be the payment of a taxable
dividend to U.S. holders of debentures.
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SALE OF COMMON STOCK. Upon the sale or exchange of common stock, a U.S.
holder generally will recognize capital gain or capital loss (except to the
extent of any accrued market discount not previously included in income) equal
to the difference between the amount realized on such sale or exchange and the
holder's adjusted tax basis in such shares. Such capital gain or loss will be
long-term capital gain or loss if the cumulative holding period of the common
stock (including the holding period of a debenture converted to such common
stock as described above) is more than one year. Individual U.S. holders may be
subject to certain maximum rates of tax on the sale of common stock. SEE "--
SALE, EXCHANGE OR RETIREMENT OF THE DEBENTURES."
NON-U.S. HOLDERS
The following discussion is a summary of the principal United States federal
income and estate tax consequences resulting from the ownership of the
debentures or common stock by non-U.S. holders.
WITHHOLDING TAX ON PAYMENTS OF PRINCIPAL AND ORIGINAL ISSUE DISCOUNT ON
DEBENTURES. The payment of principal (including any original issue discount
included therein) of a debenture by Aspect or any paying agent of Aspect to any
non-U.S. holder will not be subject to United States federal withholding tax,
provided that in the case of payment of cash in respect of original issue
discount (i) the non-U.S. holder does not actually or constructively own 10% or
more of the total voting combined power of all classes ofAspect stock , (ii)
the non-U.S. holder is not a controlled foreign corporation that is related to
Aspect within the meaning of the tax code and, (iii) either (A) the beneficial
owner of the debenture certifies to the applicable payor or its agent, under
penalties of perjury, that it is not a U.S. holder and provides its name and
address on United States Treasury Form W-8 (or a suitable substitute form), or
(B) a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "financial institution") and holds the debenture certifies under
penalties of perjury that such a Form W-8 (or suitable substitute form) has
been received from the beneficial owner by it or by a financial institution
between it and the beneficial owner and furnishes the payor with a copy
thereof. Except to the extent otherwise provided under an applicable tax
treaty, a non-U.S. holder generally will be taxed in the same manner as a U.S.
holder with respect to original issue discount on a debenture if such original
issue discount is effectively connected with a U.S. trade or business of the
non-U.S. holder. Effectively connected interest received by a corporate non-
U.S. holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Such effectively connected original issue discount will not be subject to
withholding tax if the holder delivers an IRS Form 4224 (and, beginning January
1, 2000, a Form W-8) to the payor.
DIVIDENDS. Dividends, if any, paid on the common stock to a non-U.S. holder
(and, after December 31, 1999, any deemed dividends resulting from an
adjustment to the conversion rate, see "U.S. HOLDERS--DIVIDENDS; ADJUSTMENT OF
CONVERSION PRICE" above) generally will be subject to a 30% United States
federal withholding tax, subject to reduction for non-U.S. holders eligible for
the benefits of certain income tax treaties. Currently, for purposes of
determining whether tax is to be withheld at the 30% rate or at a reduced
treaty rate, Aspect will ordinarily presume that dividends paid to an address
in a foreign country are paid to a resident of such country absent knowledge
that
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such presumption is not warranted. Under Treasury Regulations effective for
payments after December 31, 1999, holders will be required to satisfy certain
applicable certification requirements to claim treaty benefits. Except to the
extent otherwise provided under an applicable tax treaty, a non-U.S. holder
generally will be taxed in the same manner as a U.S. holder on dividends paid
(or deemed paid) that are effectively connected with the conduct of a trade or
business in the U.S. by the non-U.S. holder. If such non-U.S. holder is a
foreign corporation, it may also be subject to a United States branch profits
tax on such effectively connected income at a 30% rate or such lower rate as
may be specified by an applicable income tax treaty.
GAIN ON DISPOSITION OF THE DEBENTURES AND COMMON STOCK. A non-U.S. holder
generally will not be subject to United States federal income tax on gain
realized on the sale, exchange or redemption of a debenture, including the
exchange of a debenture for common stock, or the sale or exchange of common
stock unless:
(1) in the case of an individual non-U.S. holder, such holder is present in
the United States for 183 days or more in the year of such sale,
exchange or redemption and either (A) has a "tax home" in the United
States and certain other requirements are met, or (B) the gain from the
disposition is attributable to an office or other fixed place of
business in the United States;
(2) the non-U.S. holder is subject to tax pursuant to the provisions of
U.S. tax law applicable to certain U.S. expatriates;
(3) the gain is effectively connected with the conduct of a United States
trade or business of the non-U.S. holder; or
(4) in the case of the disposition of common stock, Aspect is a U.S. real
property holding corporation. Aspect does not believe that it is
currently a "United States real property holding corporation" or that
it will become one in the future.
U.S. FEDERAL ESTATE TAX. A debenture held by an individual who at the time of
death is not a citizen or resident of the United States (as specially defined
for United States federal estate tax purposes) will not be subject to United
States federal estate tax if the individual did not actually or constructively
own 10% or more of the total combined voting power of all classes of Aspect
stock and, at the time of the individual's death, payments with respect to such
debenture would not have been effectively connected with the conduct by such
individual of a trade or business in the United States. Common stock held by an
individual who at the time of death is not a citizen or resident of the United
States (as specially defined for United States federal estate tax purposes)
will be included in such individual's estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty otherwise applies.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS. Information reporting will apply to payments of interest or
dividends on or the proceeds of the sale or other disposition of the debentures
or shares of common stock with respect to certain noncorporate U.S. holders,
and backup withholding at a rate of 31% may apply unless the recipient of such
payment supplies a taxpayer identification number, certified under penalties of
perjury, as well as certain other information or otherwise establishes an
exemption from backup withholding. Any amount withheld under the backup
withholding rules is allowable as a credit
45
<PAGE>
against the U.S. holder's federal income tax, provided that the required
information is provided to the IRS.
NON-U.S. HOLDERS. Aspect must report annually to the IRS and to each non-
U.S. holder the amount of any dividends paid to, and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld.
Copies of these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax authorities of the
country in which the non-U.S. holder resides.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of principal, including cash payments in
respect of original issue discount, on the debentures by Aspect or any agent
thereof to a non-U.S. holder if the non-U.S. holder certifies as to its non-
U.S. holder status under penalties of perjury or otherwise establishes an
exemption (provided that neither Aspect nor its agent has actual knowledge
that the holder is a U.S. person or that the conditions of any other
exemptions are not in fact satisfied). The payment of the proceeds on the
disposition of debentures or shares of common stock to or through the United
States office of a United States or foreign broker will be subject to
information reporting and backup withholding unless the owner provides the
certification described above or otherwise establishes an exemption. The
proceeds of the disposition by a non-U.S. holder of debentures or shares of
common stock to or through a foreign office of a broker will not be subject to
backup withholding or information reporting. However, if such broker is a U.S.
person, a controlled foreign corporation for United States tax purposes, or a
foreign person, 50% or more of whose gross income from all sources for certain
periods is from activities that are effectively connected with a U.S. trade or
business, or, in the case of payments made after December 31, 1999, a foreign
partnership with certain connections to the United States, information
reporting requirements will apply unless such broker has documentary evidence
in its files of the holder's non-U.S. status and has no actual knowledge to
the contrary or unless the holder otherwise establishes an exemption. Recently
finalized Treasury Regulations would modify the application of the information
reporting requirements and the back-up withholding tax to non-U.S. holders
effective January 1, 2000.
PLAN OF DISTRIBUTION
Aspect will not receive any of the proceeds of the sale of the debentures
and the conversion shares offered hereby. The conversion shares may be sold
from time to time to purchasers directly by the selling securityholders.
Alternatively, the selling securityholders may from time to time offer the
conversion shares through underwriters, broker-dealers or agents who may
receive compensation in the form of discounts, concessions or commissions from
the selling securityholders and/or the purchasers of the conversion shares for
whom they may act as agent. The selling securityholders and any such broker-
dealers or agents who participate in the distribution of the conversion shares
may be deemed to be "underwriters," and any profits on the sale of the
conversion shares by them and any discounts, commissions or concessions
received by any such broker-dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. To the extent
the selling securityholders may be deemed to be underwriters, the selling
securityholders may be subject to certain statutory liabilities of, including,
but not limited, to Sections 11, 12 and 17 of the Securities Act and Rule 10b-
5 under the Exchange Act.
46
<PAGE>
The registrable securities offered hereby may be sold from time to time
directly by the selling securityholders or, alternatively, through
underwriters, broker-dealers or agents. If the conversion shares are sold
through underwriters or broker-dealers, the selling securityholders will be
responsible for underwriting discounts or commissions or agent's commissions.
Such conversion shares may be sold in one or more transactions at fixed prices,
at prevailing market prices at the time of sale, at varying prices determined
at the time of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve block transactions):
(1) on any national securities exchange or quotation service on which the
conversion shares may be listed or quoted at the time of the sale
(including the Nasdaq National Market in the case of the common stock);
(2) in the over-the-counter market;
(3) in transactions otherwise than on such exchanges or services or in the
over-the-counter market; or
(4) through the writing of options.
In connection with sales of the conversion shares or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers, which
may in turn engage in short sales of the conversion shares in the course of
hedging in positions they assume. The selling securityholders may also sell
conversion shares short and deliver conversion shares to close out short
positions, or loan or pledge Securities to broker-dealer that in turn may sell
such securities
To Aspect's best knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter, broker-
dealer or agent regarding the sale of the conversion shares by the selling
securityholders. There is no assurance that any selling securityholder will
sell any or all of the conversion shares offered by it hereunder or that any
such selling securityholder will not transfer, devise or gift such conversion
shares by other means not described herein.
The outstanding common stock is listed for trading on The Nasdaq National
Market under the symbol "ASPT". Aspect does not intend to apply for listing of
the debentures on any securities exchange or for quotation through Nasdaq.
Accordingly, no assurance can be given as to the development of liquidity or
any trading market for the debentures. SEE "RISK FACTORS--YOU MAY NOT BE ABLE
TO SELL YOUR DEBENTURES."
There can be no assurance that any selling securityholder will sell any or
all of the debentures or conversion shares registered pursuant to the
registration statement of which this prospectus forms a part. In addition, any
securities covered by the registration statement of which this prospectus forms
a part that qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to
this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation Regulation
M which may limit the timing of purchases and sales of any of the conversion
shares by the selling securityholders and any other such person. Furthermore,
47
<PAGE>
Regulation M of the Exchange Act may restrict the ability of any person engaged
in the distribution of the conversion shares to engage in market-making
activities with respect to the particular conversion shares being distributed
for a period of up to five business days prior to the commencement of such
distribution. All of the foregoing may affect the marketability of the
conversion shares and the ability of any person or entity to engage in market-
making activities with respect to the conversion shares.
Pursuant to the registration rights agreement entered into in connection with
the offer and sale of the debentures by Aspect, each of Aspect and the selling
securityholders will be indemnified by the other against certain liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
Aspect has agreed to pay substantially all the expenses incidental to the
registration, offering and sale of the conversion shares to the public other
than commissions, fees and discounts of underwriters, brokers, dealers and
agents.
LEGAL MATTERS
Certain legal matters with respect to the validity of the debentures and the
conversion shares offered hereby will be passed upon for Aspect by Venture Law
Group, A Professional Corporation, Menlo Park, California.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this Prospectus by reference from Aspect's Annual Report on
Form 10-K for the year ended December 31, 1997 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
48
<PAGE>
NEITHER THE COMPANY NOR ANY OTHER AUTHORITY HAS AUTHORIZED ANYONE TO GIVE
INFORMATION BEYOND WHAT IS SET FORTH IN THIS PROSPECTUS. SALES OF THE
SECURITIES DESCRIBED IN THIS PROSPECTUS ARE NOT DIRECTED AT ANYONE IN ANY
JURISDICTION IN WHICH AN OFFER OR SOLICITATION OF SUCH SECURITIES IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF
THE DATE OF THIS PROSPECTUS. NEITHER DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE PURSUANT TO THIS PROSPECTUS SHALL IMPLY THAT THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS.
----------------
ASPECT TELECOMMUNICATIONS CORPORATION
$490,000,000
ZERO COUPON CONVERTIBLE SUBORDINATED
DEBENTURES DUE 2018
AND SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION THEREOF
----------------
PROSPECTUS
----------------
, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities
being registered hereby. Normal commission expenses and brokerage fees are
payable individually by the Selling Securityholders. All amounts are estimated
except the Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee............................................. $136,220
Legal fees and expenses.......................................... $ 70,000
Accounting fees and expenses..................................... $ 25,000
Miscellaneous fees and expenses.................................. $ 5,000
--------
Total.......................................................... $236,220
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the California Corporations Code allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Article IV of the Registrant's Articles of Incorporation and
Article VI of the Registrant's Bylaws provides for indemnification of the
Registrant's directors, officers, employees and other agents to the extent and
under the circumstances permitted by the California Corporations Code. The
Registrant has also entered into agreements with its directors and officers
that will require the Registrant, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or
service as directors to the fullest extent not prohibited by law.
In addition, the Registrant carries director and officer liability insurance
in the amount of $20 million.
In connection with this offering, the Selling Securityholders have agreed to
indemnify the Registrant, its directors and officers and each such person who
controls the Registrant, against any and all liability arising from inaccurate
information provided to the Registrant by the Selling Securityholders and
contained herein.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
4.1 Indenture, dated August 10, 1998, by and among the Company and
State Street Bank and Trust Company of California, N.A., as
Trustee, including the form of Debenture.
4.2 Form of Debenture (included in Exhibit 4.1).
4.3 Registration Rights Agreement, dated August 10, 1998, by and among
the Company, Morgan Stanley & Co. Incorporated and Credit Suisse
First Boston Corporation.
5.1* Opinion of Venture Law Group, A Professional Corporation.
12.1 Statement re: computation of ratio of earnings to fixed charges.
23.1* Consent of Venture Law Group, A Professional Corporation (see
Exhibit 5.1).
23.2** Independent auditors' consent--Deloitte & Touche LLP.
23.3** Independent auditors' consent--PricewaterhouseCoopers LLP.
24.1* Power of Attorney.
25.1* Statement of Eligibility Under the Trust Indenture Act of 1939 of a
Corporation Designated to Act as Trustee on Form T-1.
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which is registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424 (b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above shall not apply if the information required to be included in a
post-effective amendment by these clauses is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the registrant's
annual report pursuant to Section 13 (a) or Section 15 (d) of the Exchange Act
that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report, to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14e-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
4. Insofar as indemnification of liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
II-2
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
5. The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424 (b) (1) or (4)
or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aspect
Telecommunications Corporation certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this amendment to the registration statement be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Jose,
State of California, on December 21, 1998.
ASPECT TELECOMMUNICATIONS
CORPORATION
By: /s/ Eric J. Keller
__________________________________
Eric J. Keller
Vice President, Finance and Chief
Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman, Chief Executive December 21, 1998
____________________________________ Officer and Director
James R. Carreker (Principal Executive Officer)
/s/ Eric J. Keller Vice President, Finance and December 21, 1998
____________________________________ Chief Financial Officer
Eric J. Keller (Principal Financial Officer
and Principal Accounting
Officer)
* Director December 21, 1998
____________________________________
Debra J. Engel
* Director December 21, 1998
____________________________________
Norman A. Fogelsong
Director
____________________________________
James L. Patterson
* Director December 21, 1998
____________________________________
John W. Peth
*By: /s/ Eric J. Keller
____________________________
Eric J. Keller,
Attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE
------- ----------------------- ----
<C> <S> <C>
4.1 Indenture, dated August 10, 1998, by and among the Company
and State Street Bank and Trust Company of California,
N.A., as Trustee, including the form of Debenture.
4.2 Form of Debenture (included in Exhibit 4.1).
4.3 Registration Rights Agreement, dated August 10, 1998, by and
among the Company, Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
5.1* Opinion of Venture Law Group, A Professional Corporation.
12.1 Statement re: computation of ratio of earnings to fixed
charges.
23.1* Consent of Venture Law Group, A Professional Corporation
(see Exhibit 5.1).
23.2** Independent auditors' consent--Deloitte & Touche LLP.
23.3** Independent auditors' consent--PricewaterhouseCoopers LLP.
24.1* Power of Attorney.
25.1* Statement of Eligibility Under the Trust Indenture Act of
1939 of a Corporation Designated to Act as Trustee on Form
T-1.
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
<PAGE>
EXHIBIT 4.1
================================================================================
Zero Coupon Convertible Subordinated Debentures due 2018
Aspect Telecommunications Corporation, Issuer
------------------------------------
INDENTURE
Dated as of August 10, 1998
----------------------------------
State Street Bank and Trust Company of California, N.A.,
Trustee
================================================================================
<PAGE>
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ---------- ---------
<S> <C>
310 (a)(1).............................................. 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.**
(a)(4).............................................. N.A.
(b)................................................. 7.08; 7.10
(c)................................................. N.A.
3.11(a)................................................. 7.11
(b)................................................. 7.11
(c)................................................. N.A.
3.12(a)................................................. 2.05
(b)................................................. 12.03
(c)................................................. 12.03
(d)................................................. 7.06
3.13(a)................................................. 7.06
(b)(1).............................................. N.A.
(b)(2).............................................. 7.06
(c)................................................. 12.02
(d)................................................. 7.06
3.14(a)................................................. 4.02; 12.02
(b)................................................. N.A.
(c)(1).............................................. 12.04
(c)(2).............................................. 12.04
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 12.05
(f)................................................. 4.03
3.15(a)................................................. 7.01
(b)................................................. 7.05; 12.02
(c)................................................. 7.01
(d)................................................. 7.01
(e)................................................. 6.11
3.16(a)(last sentence).................................. 2.08
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. N.A.
(b)................................................. 6.07
3.17(a)(1).............................................. 6.08
(a)(2).............................................. 6.09
(b)................................................. 2.04
3.18(a)................................................. 12.01
</TABLE>
* Note: This Cross Reference Table shall not, for any purpose, be deemed
to be part of the Indenture
** Note: N.A. means Not Applicable
<PAGE>
TABLE OF CONTENTS/1/
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE....................................................... 1
Section 1.01. Definitions....................................................................... 1
Section 1.02. Other Definitions................................................................. 8
Section 1.03. Incorporation by Reference of Trust Indenture Act................................. 8
Section 1.04. Rules of Construction............................................................. 9
ARTICLE 2 THE SECURITIES................................................................................... 9
Section 2.01. Form and Dating................................................................... 9
Section 2.02. Execution and Authentication...................................................... 10
Section 2.03. Registrar, Paying Agent and Conversion Agent...................................... 10
Section 2.04. Paying Agent to Hold Money and Securities in Trust................................ 11
Section 2.05. Holder Lists...................................................................... 11
Section 2.06. Exchange and Registration of Transfer of Securities; Restrictions on Transfers;
Depositary....................................................................... 11
Section 2.07. Replacement Securities............................................................ 18
Section 2.08. Outstanding Securities; Determinations of Holders' Action......................... 18
Section 2.09. Temporary Securities.............................................................. 19
Section 2.10. Cancellation...................................................................... 19
Section 2.11. Persons Deemed Owners............................................................. 20
ARTICLE 3 REDEMPTION AND PURCHASES......................................................................... 20
Section 3.01. Right to Redeem; Notices to Trustee............................................... 20
Section 3.02. Selection of Securities to be Redeemed............................................ 20
Section 3.03. Notice of Redemption.............................................................. 21
Section 3.04. Effect of Notice of Redemption.................................................... 22
Section 3.05. Deposit of Redemption Price....................................................... 22
Section 3.06. Securities Redeemed in Part....................................................... 22
Section 3.07. Conversion Arrangement on Call for Redemption..................................... 23
Section 3.08. Purchase of Securities at Option of the Holder.................................... 23
Section 3.09. Redemption at Option of the Holder upon a Fundamental Change...................... 29
Section 3.10. Effect of Purchase Notice or Fundamental Change Redemption Notice................. 30
Section 3.11. Deposit of Purchase Price or Fundamental Change Redemption Price.................. 31
Section 3.12. Securities Purchased in Part...................................................... 31
Section 3.13. Covenant to Comply with Securities Laws upon Purchase of Securities............... 31
Section 3.14. Repayment to the Company.......................................................... 31
</TABLE>
- -------------------------
/1/ This Table of Contents shall not, for any purpose, be deemed to be part
of the Indenture.
-i-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 4 COVENANTS........................................................................................ 32
Section 4.01. Payment of Securities............................................................. 32
Section 4.02. Financial Information; SEC Reports................................................ 32
Section 4.03. Compliance Certificate............................................................ 33
Section 4.04. Further Instruments and Acts...................................................... 33
Section 4.05. Maintenance of Office or Agency................................................... 33
Section 4.06. Existence......................................................................... 34
Section 4.07. Maintenance of Properties......................................................... 34
Section 4.08. Payment of Taxes and Other Claims................................................. 34
ARTICLE 5 SUCCESSOR CORPORATION............................................................................ 35
Section 5.01. When the Company May Merge or Transfer Assets..................................... 35
ARTICLE 6 DEFAULTS AND REMEDIES............................................................................ 36
Section 6.01. Events of Default................................................................. 36
Section 6.02. Acceleration...................................................................... 37
Section 6.03. Other Remedies.................................................................... 37
Section 6.04. Waiver of Past Defaults........................................................... 37
Section 6.05. Control by Majority............................................................... 37
Section 6.06. Limitation on Suits............................................................... 38
Section 6.07. Rights of Holders to Receive Payment.............................................. 38
Section 6.08. Collection Suit by Trustee........................................................ 38
Section 6.09. Trustee May File Proofs of Claim.................................................. 38
Section 6.10. Priorities........................................................................ 39
Section 6.11. Undertaking for Costs............................................................. 40
Section 6.12. Waiver of Stay, Extension or Usury Laws........................................... 40
ARTICLE 7 TRUSTEE.......................................................................................... 41
Section 7.01. Duties of Trustee................................................................. 41
Section 7.02. Rights of Trustee................................................................. 42
Section 7.03. Individual Rights of Trustee...................................................... 42
Section 7.04. Trustee's Disclaimer.............................................................. 42
Section 7.05. Notice of Defaults................................................................ 43
Section 7.06. Reports by Trustee to Holders..................................................... 43
Section 7.07. Compensation and Indemnity........................................................ 43
Section 7.08. Replacement of Trustee............................................................ 44
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 7.09. Successor Trustee by Merger....................................................... 45
Section 7.10. Eligibility; Disqualification..................................................... 45
Section 7.11. Preferential Collection of Claims Against Company................................. 45
ARTICLE 8 DISCHARGE OF INDENTURE........................................................................... 45
Section 8.01. Discharge of Liability on Securities.............................................. 45
Section 8.02. Repayment to the Company.......................................................... 46
ARTICLE 9 AMENDMENTS....................................................................................... 46
Section 9.01. Without Consent of Holders........................................................ 46
Section 9.02. With Consent of Holders........................................................... 47
Section 9.03. Compliance with Trust Indenture Act............................................... 48
Section 9.04. Revocation and Effect of Consents, Waivers and Actions............................ 48
Section 9.05. Notation on or Exchange of Securities............................................. 48
Section 9.06. Trustee to Sign Supplemental Indentures........................................... 48
Section 9.07. Effect of Supplemental Indentures................................................. 48
ARTICLE 10 SUBORDINATION................................................................................... 48
Section 10.01. Agreement of Subordination........................................................ 48
Section 10.02. Payments to Holders............................................................... 49
Section 10.03. Subrogation of Securities......................................................... 52
Section 10.04. Authorization by Holders.......................................................... 53
Section 10.05. Notice to Trustee................................................................. 53
Section 10.06. Trustee's Relation to Senior Indebtedness......................................... 54
Section 10.07. No Impairment of Subordination.................................................... 54
Section 10.08. Reliance by Holders of Senior Indebtedness on Subordination Provisions............ 54
Section 10.09. Reinstatement of Subordination.................................................... 55
Section 10.10. Permitted Payments................................................................ 55
Section 10.11. Article Applicable to Paying Agents............................................... 55
Section 10.12. Treatment of Conversion Payments.................................................. 55
Section 10.13. Reliance on Judicial Order or Certificate of Liquidating Agent.................... 56
ARTICLE 11 CONVERSION...................................................................................... 56
Section 11.01. Conversion Privilege.............................................................. 56
Section 11.02. Conversion Procedure.............................................................. 56
Section 11.03. Fractional Shares................................................................. 57
Section 11.04. Taxes on Conversion............................................................... 57
</TABLE>
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Section 11.05. Company to Provide Stock.......................................................... 58
Section 11.06. Adjustment for Change in Capital Stock............................................ 58
Section 11.07. Adjustment for Rights Issue....................................................... 59
Section 11.08. Adjustment for Other Distributions................................................ 59
Section 11.09. When Adjustment May be Deferred................................................... 62
Section 11.10. When No Adjustment Required....................................................... 63
Section 11.11. Notice of Adjustment.............................................................. 63
Section 11.12. Voluntary Increase................................................................ 63
Section 11.13. Notice of Certain Transactions.................................................... 63
Section 11.14. Effect of Reclassification, Consolidation, Merger or Sale......................... 64
Section 11.15. Company Determination Final....................................................... 64
Section 11.16. Trustee's Adjustment Disclaimer................................................... 64
Section 11.17. Simultaneous Adjustments.......................................................... 65
Section 11.18. Successive Adjustments............................................................ 65
Section 11.19. Rights Issued in Respect of Common Stock Issued Upon Conversion................... 65
Section 11.20. General Considerations............................................................ 66
ARTICLE 12 MISCELLANEOUS................................................................................... 66
Section 12.01. Trust Indenture Act............................................................... 66
Section 12.02. Notices........................................................................... 66
Section 12.03. Communication by Holders with other Holders....................................... 67
Section 12.04. Certificate and Opinion as to Conditions Precedent................................ 67
Section 12.05. Statements Required in Certificate or Opinion..................................... 68
Section 12.06. Separability Clause............................................................... 68
Section 12.07. Rules by Trustee, Paying Agent, Conversion Agent and Registrar.................... 68
Section 12.08. Governing Law..................................................................... 68
Section 12.09. No Recourse Against Others........................................................ 68
Section 12.10. Successors........................................................................ 68
Section 12.11. Multiple Originals................................................................ 68
</TABLE>
EXHIBIT A--Form of Security
EXHIBIT B--Form of Institutional Accredited Investor letter
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<PAGE>
INDENTURE, dated as of August 10, 1998, between Aspect Telecommunications
Corporation, a California 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").
Each party agrees as follows for the benefit of the other parties and for the
equal and ratable benefit of the Holders of the Company's Zero Coupon
Convertible Subordinated Debentures due 2018:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"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.
"Applicable Price" means (i) in the event of a Fundamental Change in which
the holders of the Common Stock receive only cash, the amount of cash received
by the holder of one share of Common Stock and (ii) in the event of any other
Fundamental Change, the average of the last reported sale price for the Common
Stock (determined as set forth in the definition of Current Market Price) during
the ten Trading Days immediately prior to the record date for the determination
of the holders of Common Stock entitled to receive cash, securities, property or
other assets in connection with such Fundamental Change, or, if there is no such
record date, the date upon which the holders of Common Stock shall have the
right to receive such cash, securities, property or other assets in connection
with the Fundamental Change.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of such board.
"Business Day" means each day of the year on which banking institutions are
not required or authorized to close in The City of New York or the city in which
the Corporate Trust Office is located.
"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 11.14, however, shares issuable upon conversion of the
<PAGE>
Securities shall include only shares of Common Stock, par value of $.01 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 preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company; provided that if at any time there shall be more than one such
--------
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
"Company" means the party named as the "Company" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Company Request" or "Company Order" means a written request or order signed
in the name of the Company by its Chairman of the Board, 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 11.01.
"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, at the date as of which this Indenture is dated,
located at Library Tower, 633 West 5th Street, 12th Floor, Los Angeles,
California 90071, Attention: Corporate Trust Department (Aspect
Telecommunications Corporation - Zero Coupon Convertible Subordinated Debentures
due 2018).
"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 five 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 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
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<PAGE>
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 2.06 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 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. If any payment made to any holder of any Designated Senior
Indebtedness or its Representative with respect to such Designated Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Designated Senior Indebtedness
effective as of the date of such rescission or return.
"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 any Person, and without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person 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,
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<PAGE>
whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion
thereof), (b) all reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit, bank guarantees or
bankers' acceptances, (c) all obligations and liabilities (contingent or
otherwise) in respect of leases of such Person (i) required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person, or (ii) required, in
conformity with generally accepted accounting principles, to be accounted for as
an operating lease, provided either (A) such operating lease requires, at the
end of the term thereof, that such Person make any payment other than accrued
periodic rent in the event that such Person does not acquire the leased real
property and related fixtures subject to such lease, or (B) such Person has an
option to acquire the leased real property and related fixtures, whether such
option is exercisable at any time or under specific circumstances, (d) all
obligations of such Person (contingent or otherwise) with respect to an interest
rate swap, cap or collar agreement or other similar instrument or agreement, (e)
all direct or indirect guaranties or similar agreements by such Person in
respect of, and obligations or liabilities (contingent or otherwise) of such
Person 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 (d) secured by any mortgage,
pledge, lien or other encumbrance existing on property which is owned or held by
such Person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such Person 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 and Credit
Suisse First Boston Corporation.
"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 a Legal Holiday, and to the extent
applicable no Original Issue Discount or interest, if any, shall accrue for the
intervening period.
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<PAGE>
"Liquidated Damages" shall have the meaning specified in the Registration
Rights Agreement.
"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, 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 12.04 and 12.05, signed in the name of the
Company by its Chairman of the Board, 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 12.04 and 12.05, 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 of
twelve 30 day months.
"Payment Blockage Notice" has the meaning specified in Section 10.02.
"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 3.01 of this Indenture.
"Redemption Price" shall have the meaning set forth in paragraph 5 of the
Securities.
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<PAGE>
"Reference Market Price" shall initially mean $18 11/12 and in the event
of any adjustment to the Conversion Rate pursuant to Article 11, the Reference
Market Price shall be adjusted to equal the initial Reference Market Price
multiplied by a fraction the numerator of which is the Conversion Rate specified
in the form of Security attached hereto as Exhibit A (without regard to any
---------
adjustment thereto), and the denominator of which is the Conversion Rate
following such adjustment.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, between the Company and the Initial
Purchasers.
"Representative" means the (a) 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 Zero Coupon Convertible Subordinated Debentures due
2018.
"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 any such proceeding), rent and end of term
payments payable on or in connection with, and, to the extent not included in
the foregoing, all amounts payable as fees, costs, expenses, liquidated damages,
indemnities, repurchase and other put obligations and other amounts to the
extent 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). Notwithstanding the foregoing,
the term Senior Indebtedness shall not include (i) Indebtedness evidenced by the
Securities, (ii) 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, (iii) accounts payable or other indebtedness to trade creditors created
or assumed by the Company in the ordinary course of business and (iv) any
particular Indebtedness in which the instrument creating or evidencing the same
or the assumption or guarantee thereof expressly provides that such
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<PAGE>
Indebtedness shall not be senior in right of payment to, or is pari passu with,
or is subordinated or junior to, the Securities. Notwithstanding the foregoing,
the term Senior Indebtedness shall not include 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. If any payment made to any holder
of any Senior Indebtedness or its Representative with respect to such Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Senior Indebtedness effective as of
the date of such rescission or return.
"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
SEC.
"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 9.03.
"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 the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall
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<PAGE>
mean such successor. The foregoing sentence shall likewise apply to any
subsequent such successor or successors.
"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 1.04. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
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<S> <C>
"Bankruptcy Law".................................. 6.01
"Cash"............................................ 3.08(b)
"Company Notice".................................. 3.08(e)
"Company Notice Date"............................. 3.08(c)
"Conversion Agent"................................ 2.03
"Expiration Time"................................. 11.08(c)
"Event of Default"................................ 6.01
"Fundamental Change Redemption Date".............. 3.09(a)
"Fundamental Change Redemption Notice"............ 3.09(a)
"Fundamental Change Redemption Price"............. 3.09(a)
"Market Price".................................... 3.08(d)
"Notice of Default"............................... 6.01
"Over-allotment Option"........................... 2.02
"Paying Agent".................................... 2.03
"Purchase Date"................................... 3.08(a)
"Purchase Notice"................................. 3.08(a)
"Purchase Price".................................. 3.08(a)
"Purchased Shares"................................ 11.08(c)
"Registrar"....................................... 2.03
"Restricted Securities"........................... 2.06(d)
"Rights".......................................... 3.08(d)
"Rights Agreement"................................ 3.08(d)
"Sale Price"...................................... 3.08(d)
"Tender Expiration Time".......................... 11.08(d)
"Tender Purchased Shares"......................... 11.08(d)
</TABLE>
SECTION 1.03. 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.
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<PAGE>
"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 1.04. 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
(5) words in the singular include the plural, and words in the plural
include the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.01. 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 a part of this Indenture. The Securities may have
- ---------
notations, legends or endorsements required by law, stock exchange rule or usage
(provided that any such notation, legend or endorsement required by usage is in
a form acceptable to the Company). 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
transfers or exchanges permitted hereby. Any endorsement of a Security in
global form to reflect the amount of any increase or decrease in the amount of
outstanding Security 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 this Indenture. Payment
of Principal
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<PAGE>
Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
Damages, 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.
SECTION 2.02. EXECUTION AND AUTHENTICATION. The Securities shall be
executed on behalf of the Company by its Chairman of the Board, one of its Vice
Chairmen, its President or one of its Vice Presidents, and attested by its
Treasurer or Secretary or one of its Assistant Treasurers or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
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 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 $490,000,000 upon a Company Order without any
further action by the Company (or an aggregate Principal Amount not to exceed
$564,000,000 if the over-allotment option set forth in Section 2 of the Purchase
Agreement dated August 5, 1998 (as amended from time to time by the parties
thereto) by and between the Company and the Initial Purchasers is exercised in
full). The aggregate Principal Amount of Securities outstanding at any time may
not exceed the amount set forth in the foregoing sentence, except as provided in
Section 2.07.
SECTION 2.03. 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 4.05.
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
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<PAGE>
such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.07. 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.
SECTION 2.04. PAYING AGENT TO HOLD MONEY AND SECURITIES IN TRUST. Except as
otherwise provided herein, 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 2.05. 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 February 10
and August 10 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 2.06. 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 2.03 and satisfaction of the requirements for such transfer set forth in
this Section 2.06, 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 2.03 and the Company
shall execute and register, and the Trustee shall authenticate and deliver in
exchange
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<PAGE>
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 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, or (c) any Securities or portion thereof surrendered for conversion
into Common Stock, or (d) any Securities or portion thereof surrendered for
purchase or redemption (and not withdrawn) pursuant to Sections 3.08 or 3.09,
respectively.
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 therefor.
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.
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<PAGE>
(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 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 the Trustee shall issue Securities in definitive form upon any
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transfer of a beneficial interest in any Security in global form to the Company
or any Affiliate of the Company.
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 NYSE or by the National Association of Securities Dealers,
Inc. 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.
(d) Every Security that bears or is required under this Section 2.06(d) to
bear the legend set forth in this Section 2.06(d) (together with any Common
Stock issued upon conversion of the Securities and required to bear the legend
set forth in Section 2.06(e), collectively, the "Restricted Securities") shall
be subject to the restrictions on transfer set forth in this Section 2.06(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 Securityholder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.06(d) and 2.06(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 therefor or substitution
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<PAGE>
thereof, other than Common Stock, if any, issued upon conversion therefor, which
shall bear the legend set forth in Section 2.06(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 OFFERED OR SOLD 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) 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 SECURITY EXCEPT (A) TO ASPECT
TELECOMMUNICATIONS CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR 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
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<PAGE>
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(D) OR 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 CERTIFICATE TO
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). THIS LEGEND WILL BE REMOVED UPON THE
TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) OR
CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY
AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
DEBENTURE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION).
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
2.06, 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 2.06(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.06(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 successor Depositary for the Security is
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<PAGE>
not appointed by the Company within 90 days after the Company receives such
notice, the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate 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.
Securities in certificated form issued in exchange for all or a part of a
Security in global form pursuant to this Section 2.06 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.
(e) 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 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
COMMON STOCK EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER
THE COMMON STOCK
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<PAGE>
EVIDENCED HEREBY EXCEPT (A) TO ASPECT TELECOMMUNICATIONS CORPORATION OR
ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE
144A, (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 BOSTON EQUISERVE, 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 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 1(E) ABOVE), IT WILL FURNISH TO BOSTON EQUISERVE, L.P., AS TRANSFER
AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THE TRANSFER AGENT MAY REASONABLE
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 SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 1(D) OR 1(E) ABOVE) A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OR
THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(D)
OR 1(E) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY
AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
COMMON STOCK EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION).
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 2.06(e).
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<PAGE>
(f) 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 2.07. 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 may be.
Upon the issuance of any new Securities under this Section 2.07, 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 2.07 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 2.07 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.08. 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 2.08 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
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requisite Principal Amount of Securities have given or concurred in any request,
demand,
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<PAGE>
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 2.07, 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 2.09. 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 2.03,
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 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.
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<PAGE>
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 directs by the Company Order
that the Trustee deliver canceled Securities to 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
Liquidated Damages, 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 3.01. RIGHT TO REDEEM; NOTICES TO TRUSTEE. The Company, at its
option, may redeem the Securities in accordance with the provisions of
paragraphs 5 and 7 of the Securities. 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
3.01 (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 Company is required to
give notice to the Holders pursuant to Section 3.03, in each case unless a
shorter notice shall be satisfactory to the Trustee.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If less than all the
Securities held in definitive form are to be redeemed pursuant to Section 3.01,
the Trustee shall select the definitive Securities to be redeemed pro rata or by
--- ----
lot or by a method the Trustee considers fair and appropriate (as long as such
method is not prohibited by the rules of any securities exchange or quotation
system on which the Securities are then listed or quoted). The Trustee shall
make the selection at least 35 days, but not more than 60 days, before the
Redemption Date from outstanding
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<PAGE>
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 (so far as
may be) to be the portion selected for redemption. Securities which have been
converted during a selection of Securities to be redeemed may be treated by the
Trustee as outstanding for the purpose of such selection.
SECTION 3.03. 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;
(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;
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(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 request, the Trustee shall give the notice of redemption in
the Company's name and at the Company's expense.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is
given, pursuant to Section 3.03, 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 3.05. 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 Business Day
immediately preceding the Redemption Date to be convertible into Common Stock
and, except as provided in Section 8.02, 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 to (but excluding) 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 3.06. 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.
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SECTION 3.07. 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 to 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.
SECTION 3.08. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER.
(a) General. Securities shall be purchased by the Company pursuant to
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paragraph 6 of the Securities as of August 10, 2003, August 10, 2008 and August
10, 2013 (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;
(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;
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(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 in 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 3.08(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
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paid pursuant to this Section 3.08 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 3.08(a)(1), such Holder shall be
deemed to 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
3.08, 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 3.08 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 3.08(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.
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(b) Company's Right to Elect Manner of Payment of Purchase Price. The
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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 3.08(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 3.08(c) and (d). The Company shall designate, in the Company Notice
delivered pursuant to Section 3.08(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 3.08 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 3.08(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 3.08(b) or
Section 3.08(d).
At least two Business Days before the Company Notice Date (as defined in
Section 3.08(c)), the Company shall deliver an Officers' Certificate to the
Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.08(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 3.08(d) have been or will be complied
with, and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 3.08(e).
(c) Purchase with Cash. At the option of the Company, the Purchase Price of
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Securities in respect of which a Purchase Notice pursuant to Section 3.08(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 3.08(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").
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(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 3.08(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 3.08(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 3.08 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;
(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.
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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 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.
The Company may elect to pay the Purchase Price (or any portion thereof) in
Common Stock only if the information necessary to calculate the Market Price is
reported in a daily newspaper of national circulation. 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 3.08 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, then on the last
Trading Day prior to such 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 11.06, 11.07 or 11.08; subject, however,
to the conditions set forth in Sections 11.09 and 11.10. 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 principal United
States securities exchange on which the Common Stock is traded or, if the Common
Stock is not listed on a United States national or regional stock exchange, as
reported by the Nasdaq National Market.
(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 12.02 at the time specified in Section 3.08(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 of calculating 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.
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In any case, each Company Notice shall include a form of Purchase Notice to
be completed by a Securityholder 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 Section 3.08;
(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 3.08 (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.
(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 national securities exchange
or over-the-counter or other domestic market on which the Common Stock is then
listed or quoted.
(g) Procedure upon Purchase. On the Business Day following the Purchase
-----------------------
Date, the Company shall deposit with the Paying Agent Cash (in respect of a Cash
purchase under Section 3.08(c) or for fractional interests, as applicable), or
shares of Common Stock, or a combination thereof, as applicable, sufficient to
pay the aggregate Purchase Price in respect of the Securities to be purchased
pursuant to this Section 3.08. As soon as practicable after the Purchase Date,
the Company shall deliver to each Holder entitled to receive Common Stock,
through the
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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 3.08(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 3.09. REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE.
(a) If a Fundamental Change shall occur at any time prior to August 10, 2018,
each Holder of Securities shall have the right, at such Holder's option, to
require the Company to redeem any or all of Holder's Securities on the date that
is 45 days after the date of the Company's notice of such Fundamental Change
(the "Fundamental Change Repurchase 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 to the Fundamental Change
Redemption Date; provided that, if the Applicable Price in connection with the
--------
Fundamental Change is less than the Reference Market Price, the Fundamental
Change Redemption Price shall be a price equal to the foregoing Fundamental
Change Redemption Price multiplied by the fraction obtained by dividing the
Applicable Price by the Reference Market Price. 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 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. The Company shall
promptly furnish the Trustee a copy of such notice.
(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
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transfer, on or before the 30th day after the date of such notice (or if such
30th day is not a Business Day, the immediately preceding Business Day). All
questions as to the validity, eligibility (including time of receipt) and
acceptance of any Security for redemption shall be determined by the Company,
whose determination shall be final and binding.
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 3.08(a) or Section 3.09(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 3.08(a) or Section 3.09(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 3.08(a) or Section 3.09(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.
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 3.08(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.08(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.
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There shall be no purchase of any Securities pursuant to Section 3.08 (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 3.09 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 2.04) 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 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 3.08 or 3.09 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 13E-4 (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 3.08 and 3.09 to be exercised in
the time and in the manner specified in Section 3.08 and 3.09.
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 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,
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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
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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.
ARTICLE 4
COVENANTS
SECTION 4.01. 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 Liquidated
Damages, 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 amount then due.
The Company shall pay interest on overdue amounts at the rate set forth in
paragraph 1 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 4.02. 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 4.02.
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
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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 4.03. 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 4.03 shall be delivered to
the Trustee at its Corporate Trust Office.
SECTION 4.04. 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 4.05. 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 served. The office or agency in the
Borough of Manhattan, the City of New York, shall 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 Administration-Aspect
Telecommunications Corporation, Zero Coupon Convertible Subordinated Debentures
due 2018), 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
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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 4.06. 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 4.07. 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 4.07
-------- -------
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 4.08. 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 (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.
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ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.0 WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS.
The Company shall not consolidate with or 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 its properties and assets substantially as
an entirety 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 the properties and assets of the Company
substantially as an entirety 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 Liquidated Damages, 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
(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.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in the payment of the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, 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 Liquidated Damages,
such default in payment of Liquidated Damages 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 60 days after receipt by the Company of a
Notice of Default;
(3) a decree or order by a court having jurisdiction in the premises shall
have been entered adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization of the Company under any
Bankruptcy Law, and such decree or order shall have continued undischarged and
unstayed for a period of 60 consecutive days; or a decree or order of a court
having jurisdiction in the premises of the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the Company or
of its property, or for the winding-up or liquidation of its affairs, shall have
been entered, and such decree or order shall have remained in force undischarged
and unstayed of a period of 60 consecutive days; or
(4) the Company shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy proceeding against it,
or shall file a petition or answer or consent seeking reorganization under any
Bankruptcy Law, or shall consent to the filing of any such petition, or shall
consent to the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of it or of its property or shall make an assignment
for the benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due.
"Bankruptcy Law" means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors.
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.
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SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of
Default specified in Section 6.01(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 to the date of declaration (and Liquidated Damages, 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 6.01(3) or (4)
occurs and is continuing, the Issue Price and accrued Original Issue Discount
(and Liquidated Damages, 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 Liquidated Damages, if any) that have become due solely as a result of
acceleration and if all amounts due to the Trustee under Section 7.07 have been
paid. No such rescission shall affect any subsequent or other Default or Event
of Default or impair any consequent right.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of 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 impair the right or
remedy or constitute a waiver of, or acquiescence in, the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in
aggregate Principal Amount of the 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 6.01(l), (2) a Default in respect of a
provision that under Section 9.02 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 6.05. 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
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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 6.06. 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.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, but subject to Article 10, the right of any
Holder to receive payment of the Principal Amount, Issue Price, accrued Original
Issue Discount, Redemption Price, Purchase Price, Fundamental Change Redemption
Price 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 and to convert the Securities in accordance with Article 11, or to
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 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default described
in Section 6.01(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 7.07.
SECTION 6.09. 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
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(irrespective of whether the Principal Amount, Issue Price, accrued Original
Issue Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase
Price, Fundamental Change Redemption Price 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 Liquidated
Damages, 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 advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
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 pursuant to
this Article 6, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
-----
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Second: to holders of Senior Indebtedness to the extent required by Article
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10;
Third: to Holders for amounts due and unpaid on the Securities for the
-----
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, 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
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 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 Liquidated Damages, 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.
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ARTICLE 7
TRUSTEE
SECTION 7.0 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) 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 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 7.01(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.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) this paragraph (c) does not limit the effect of paragraph (b)
of this Section 7.01;
(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 6.05.
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.
(d) 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 7.01.
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(e) 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.
(f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law.
SECTION 7.02. 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.
(d) Subject to the provisions of Section 7.01(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 7.03. 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 7.04. TRUSTEE'S 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
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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 7.05. 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 it occurs. Except in the case of a Default
described in Section 6.01(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 interests of Holders. The second sentence of this Section
7.05 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 6.01(2)
until at least sixty days have passed since its occurrence.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May
1, beginning with the May 1 following the date of this Indenture, the Trustee
shall mail to each Holder a brief report dated as of such May 1 that 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 7.07. 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 7.07 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 Liquidated
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Damages, 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 7.07 shall survive
the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(3) or (4), the expenses are
intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.0 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 7.08. The Holders of a majority in aggregate Principal Amount of
the Securities at the time 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 judgement 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
7.07. 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
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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 7.09. 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 successor Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article,
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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 8.01. DISCHARGE OF LIABILITY ON SECURITIES. When (i) the Company
delivers to the Trustee all outstanding Securities (other than Securities
replaced pursuant to Section 2.07) 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 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 7.07, cease to be of further
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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.
SECTION 8.02. 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 9.01. 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 11.14;
(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 1986, 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.
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SECTION 9.02 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) make any Security payable in money or securities other than that
stated in the Security;
(6) make any change in Article 10 that adversely affects the rights of any
Securityholder;
(7) make any change in Section 6.04, Section 6.07 or this Section 9.02,
except to increase any such percentage;
(8) make any change that adversely affects the right to convert any
Security; or
(9) 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.
It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 or Section 9.01 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 9.02 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment.
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SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. 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 9.04. 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 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. 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 9.06. TRUSTEE TO SIGN 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 7.01) 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.
SECTION 9.07. 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 10.01. AGREEMENT OF SUBORDINATION. The Company covenants and agrees
for itself and its successors, and each Holder of Securities issued hereunder by
such Holder's acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of
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this Article 10; and each Person holding any such Security whether upon original
issue or upon transfer or assignment thereof, accepts and agrees to be bound by
such provisions.
The payment of the Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price, interest and any other amounts payable, if
any, in respect of all Securities issued hereunder 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 in cash or other payment satisfactory to
the holders of Senior Indebtedness of all Senior Indebtedness of the Company,
whether outstanding at the date of this Indenture or thereafter incurred, or
thereafter created, assumed or guaranteed.
No provision of this Article 10 shall prevent the occurrence of any Default
or Event of Default hereunder.
SECTION 10.02. PAYMENTS TO HOLDERS. No payment shall be made with respect
to the payment of Principal Amount, Issue Price, accrued Liquidated Damages, if
any, accrued Original Issue Discount, Redemption Price, Purchase Price,
Fundamental Change Redemption Price, interest and any other amounts payable, if
any, on the Securities, except payments and distributions made by the Trustee as
permitted by Section 10.05, if:
(i) a default in any payment obligations in respect of
Senior Indebtedness occurs and is continuing, without regard to any applicable
period of grace (whether at maturity or at a date fixed for payment or by
declaration or otherwise); or
(ii) any other default occurs and is continuing with respect
to Designated Senior Indebtedness that permits the holders of such Designated
Senior Indebtedness as to which such default relates to accelerate its maturity
and the Trustee receives a notice of the default (a "Payment Blockage Notice")
from a holder of Designated Senior Indebtedness, or a Representative of
Designated Senior Indebtedness.
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 at least 365 days shall have elapsed
since the initial effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 90 days (it being
acknowledged that (x) any action of the Company or any of its Subsidiaries
occurring subsequent to delivery of a Payment Blockage Notice that would give
rise to any event of default pursuant to any provision of Senior Indebtedness
under which an event of default previously existed (or was continuing at the
time of delivery of such Payment Blockage Notice) shall constitute a new event
of default for this purpose and (y) any breach of a financial covenant giving
rise to a nonpayment default for a period ending subsequent to the date of
delivery of the respective Payment Blockage Notice shall constitute a new event
of default for this purpose.)
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The Company may and shall resume payments on and distributions in respect
of the Securities upon the earlier of:
(1) in case of a default referred to in clause (i) above, the date upon
which the default is cured or waived in accordance with the terms of the
governing instrument or ceases to exist, or
(2) in the case of a default referred to in clause (ii) above, the date
upon which the default is cured, waived in accordance with the terms of the
governing instrument or ceases to exist or 179 days pass after 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.
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 or
bankruptcy of the Company, whether voluntary or involuntary or insolvency,
receivership or similar proceedings relating to the Company or its property, or
an assignment for the benefit of creditors or any marshaling of the Company's
assets or liabilities, all amounts due or to become due upon all Senior
Indebtedness of the Company shall first be paid in full 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 Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price, interest or any other amounts payable, if
any, in respect of the Securities (except payments made pursuant to Article 8
hereof from monies deposited with the Trustee pursuant thereto prior to the
happening of such dissolution or winding-up or liquidation or reorganization or
bankruptcy of the Company, whether voluntary or involuntary or insolvency,
receivership or similar proceedings relating to the Company or its property, or
an assignment of the benefit of creditors or any marshaling of the Company's
assets or liabilities), and upon any such dissolution or winding-up or
liquidation or reorganization or bankruptcy of Company, whether voluntary or
involuntary or insolvency, receivership or similar proceedings relating to the
Company or its property, or an assignment of the benefit of creditors or any
marshalling of the Company's assets or liabilities, any payment by the Company,
or distribution of assets of the Company of any kind or character, whether in
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, 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 of the Company as their interests may appear 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 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
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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 that any Securities are declared due and payable before their
Stated Maturity pursuant to Section 6.02, then and in such event the Company
shall promptly notify holders of its Senior Indebtedness of such acceleration.
The Company may not pay the Securities until 120 days have passed after such
acceleration occurs and may thereafter pay the Securities only to the extent
that this Article 10 permits the payment at that time.
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 provisions in this Section 10.02, shall
be received by the Trustee or the Holders of the Securities before all Senior
Indebtedness of the Company is paid in full in cash or other payment
satisfactory to the 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 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; provided that (i) such Senior Indebtedness is
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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 10.02 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 Section 10.02 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07. This Section 10.02 shall be subject
to the further provisions of Section 10.05.
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SECTION 10.03. SUBROGATION OF SECURITIES. Subject to the payment in full in
cash or other payment satisfactory to the holders of Senior Indebtedness of all
Senior Indebtedness of the Company, the rights of the Holders of the Securities
shall be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities of the Company
applicable to such Senior Indebtedness until the Principal Amount, Issue Price,
accrued Original Issue Discount, accrued Liquidated Damages, if any, Redemption
Price, Purchase Price, Fundamental Change Redemption Price and interest, if any,
in respect of the Securities shall be paid in full; and, for the purposes of
such subrogation, no payments or distributions to the holders of such 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 such Senior Indebtedness by Holders of
the Securities or the Trustee, shall, as between the Company, its creditors
other than holders of its Senior Indebtedness, and the Holders of the Securities
be deemed to be a payment by the Company to or on account of its Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes 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 purpose of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of 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 between the Company, its creditors
other than the holders of its 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 the Principal Amount, Issue Price,
accrued Original Issue Discount, accrued Liquidated Damages, if any, Redemption
Price, Purchase Price, Fundamental Change Redemption Price and interest, if any,
in respect of the Securities as and when the same shall become due and 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 its 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 7.01, 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 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, 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, the
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amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.04. AUTHORIZATION BY HOLDERS. Each Holder of a Security by such
Holder's acceptance thereof authorizes and directs the Trustee in his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article 10 and appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes.
SECTION 10.05. NOTICE TO TRUSTEE. The Company shall give prompt written
notice in a form of an Officers' Certificate to a Trust Officer of any fact
known to the Company which would prohibit the making of any payment of monies to
or by the Trustee or any Paying Agent in respect of the Securities pursuant to
the provisions of this Article 10, but failure to give such notice shall not
affect the subordination of the Securities to the Senior Indebtedness as
provided in 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 holder or holders of Senior
Indebtedness or a Representative or from any trustee therefor; and before the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 7.01, 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
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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 Price, accrued Original Issue Discount, accrued Liquidated Damages, if
any, Redemption Price, Purchase Price, Fundamental Change Redemption Price,
interest or any other amounts payable, if any, in respect of any Security) the
Trustee shall not have received, with respect to such monies, the notice
provided for in this Section 10.05, 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 to the contrary herein set forth, nothing shall
prevent any payment of amounts deposited with the Trustee pursuant to Section
8.01 so long as the Trustee had no notice that such amounts when so deposited
were prohibited pursuant to the provisions of Section 10.2.
The Trustee, subject to the provisions of Section 7.01, shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder or a Representative of Designated Senior Indebtedness or a
Representative of Senior Indebtedness of the Company (or a trustee on behalf of
such holder) to establish that such notice has been given by a holder or a
Representative of Designated Senior Indebtedness or a Representative 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
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Senior Indebtedness of the Company 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 such
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 10.06. 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 of the Company at any time held
by it, to the same extent as any other holder of such Senior Indebtedness, and
nothing or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, 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 7.01, 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.
SECTION 10.07. 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 (i)
any amendment of or addition or supplement to any such Senior Indebtedness or
any instrument or agreement relating thereto (unless otherwise expressly
provided therein), or (ii) 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 the
instrument, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with or (iii) a failure to act by any Holders of
Securities or the failure of such Holder to comply with this Indenture.
SECTION 10.08. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
PROVISIONS. Each Holder of Securities by such Holder's acceptance thereof,
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created,
assumed or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness, and no amendment or modification
of the provisions contained herein shall diminish the rights of such holder or
holders unless such holder or holders shall have agreed in writing thereto.
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SECTION 10.09. REINSTATEMENT OF SUBORDINATION. If, at any time, all or part
of any payment of any Senior Indebtedness theretofore made by the Company or any
other Person is rescinded or must otherwise be returned by the holders of such
Senior Indebtedness for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of the Company or such other
Person), these subordination provisions shall continue to be effective or be
reinstated, as the case may be, all as though such payment had not been made.
SECTION 10.10. PERMITTED PAYMENTS. Nothing contained in this Article 10 or
elsewhere in this Indenture, or in the Securities shall prevent (a) the Company
at any time, except under the conditions described in Section 10.02, from making
payments at any time of Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price or interest or any other amounts payable, if
any, in respect of the Securities, or from depositing with the Trustee or any
Paying Agent money for such payments, or (b) the application by the Trustee or
Paying Agent of any moneys deposited with it under this Indenture to the payment
of or on account of the Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price or interest or any other amounts payable, if
any, in respect of the Securities to the Holders of the Securities entitled
thereto to the beneficiaries thereof, if such payment would not have been
prohibited by the provisions of Section 10.02.
SECTION 10.11. 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 10 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 10 in addition to or
in place of the Trustee; provided, however, that the first paragraph of Section
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10.05 shall not apply to the Company or any Affiliate of the Company if it or
such Affiliate acts as Paying Agent.
SECTION 10.12. TREATMENT OF CONVERSION PAYMENTS. Notwithstanding anything
in this Indenture to the contrary, neither the issuance and delivery of junior
securities upon conversion of the Securities in accordance with Article 11 nor
the payment of cash in lieu of fractional shares of Common Stock in accordance
with Article 11 shall be deemed to constitute a payment or distribution on
account of the Principal Amount, Issue Price, accrued Original Issue Discount,
accrued Liquidated Damages, if any, Redemption Price or Fundamental Change
Purchase Price or interest or any other amounts payable, if any, in respect of
the Securities. For the purposes of this paragraph, the term "junior
securities" means (a) shares of any stock of any class of the Company, (b)
securities of the Company which are subordinated in right of payment to all
Senior Indebtedness of the Company 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 10, and (c) any securities into which the Securities become convertible
pursuant to Section 11.14 which are securities of a Person required to enter
into a supplemental indenture pursuant to such section (or Section 5.01) and are
either (x) shares of any stock of any class of such Person, or (y) securities of
such Person which are subordinated in right
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of payment to all Senior Indebtedness of such Person 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 or, are so subordinated
as provided in this Article 10. Nothing contained in this Article 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 right, which is absolute and unconditional,
of the holder of any Security to convert such Security in accordance with
Article 11.
SECTION 10.13. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Securities shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 10.
ARTICLE 11
CONVERSION
SECTION 11.01. 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 11.02. 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 11.03. 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
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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
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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.
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 11.03. 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 11.04. 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
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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 11.05. 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, 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 or listed on the Nasdaq National Market or the NYSE or any other
automated quotation system or national securities exchange or 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
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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 11.06. 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 11.06 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.
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SECTION 11.07. 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 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 11.08. 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 11.07 hereof) (any of the foregoing hereinafter in this Section
11.08(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
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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 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 11.08(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 11.08(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 11.08(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
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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
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portion of the Cash so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock on the
record date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Holder shall have the right to receive upon conversion 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
11.08(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 11.08(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 may be 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
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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 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 11.08(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 11.09. 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.
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SECTION 11.10. 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 or no 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.
SECTION 11.11. 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 11.12. VOLUNTARY INCREASE. The Company may make such increases in
the Conversion Rate, in addition to those required by Sections 11.06, 11.07 and
11.08, 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 15 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 11.13. 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 11.06, 11.07 or 11.08; or
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.14; 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,
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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 11.14. EFFECT OF 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 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 2.03 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 11.06, 11.07 nor 11.08 applies.
SECTION 11.15. COMPANY DETERMINATION FINAL. Any determination that the
Company or the Board of Directors must make pursuant to Section 11.03, 11.06,
11.07, 11.08, 11.09, 11.10, 11.14 or 11.17 is conclusive.
SECTION 11.16. 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 11.14 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
-64-
<PAGE>
Section 11.11. Each Conversion Agent shall have the same protection under this
Section 11.16 as the Trustee.
SECTION 11.17. SIMULTANEOUS ADJUSTMENTS. In the event that this Article 11
requires adjustments to the Conversion Rate under more than one of Sections
11.06, 11.07, 11.08(a) or 11.08(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
11.08(a), second, the provisions of Section 11.08(b), third the provisions of
Section 11.06 and, fourth, the provisions of Section 11.07.
SECTION 11.18. 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 11.19. 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.
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 11.08(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
11.08(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 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.
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<PAGE>
SECTION 11.20 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 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 12.01. 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 12.01 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 12.02. 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:
Aspect Telecommunications Corporation
1730 Fox Drive
San Jose, California 95131
Attn: Eric Keller
Telephone Number: (408) 325-2337
Facsimile Number: (408) 325-2261
-66-
<PAGE>
if to the Trustee:
State Street Bank and Trust Company of California, N.A.
Library Tower
633 West 5th Street
12th Floor
Los Angeles, California 90071
(Attention: Corporate Trust Administration-Aspect Telecommunications
Corporation, Zero Coupon Convertible Subordinated Debentures due 2018)
Telephone Number: (213) 362-7373
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 Securityholder'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 12.03. 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 12.04. 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 furnish 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.
-67-
<PAGE>
SECTION 12.05. 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 12.06 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 12.07 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 12.08 GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS.
SECTION 12.09 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.
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.
-68-
<PAGE>
IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed this
Indenture on behalf of the respective parties hereto as of the date first
written above.
Aspect Telecommunications Corporation
By /s/ ERIC J. KELLER
-------------------------------------------
Title: Vice President, Finance and Chief
Financial Officer
State Street Bank and Trust Company of California, N.A.
By /s/ MARK HENSON
-------------------------------------------
Authorized Signatory
-69-
<PAGE>
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 ERIC KELLER, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT
(408) 325-2337.
[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.]
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 SOLD 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) 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 SECURITY EXCEPT (A) TO ASPECT
TELECOMMUNICATIONS CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
TO AN INSTITUTIONAL ACCREDITED INVESTOR 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
A-1
<PAGE>
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) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 2(D) OR 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 CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). THIS LEGEND WILL BE REMOVED
UPON THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) OR
CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY AFTER
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE DEBENTURE
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION).
A-2
<PAGE>
ASPECT TELECOMMUNICATIONS CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE 2018
No.
Issue Date: August 10, 1998 Original Issue Discount: $693.44
Issue Price: $306.56 (for each $1,000 Principal Amount)
(for each $1,000 Principal Amount)
CUSIP:
Aspect Telecommunications Corporation, a California corporation, promises to
pay to or registered assigns, on August 10,
2018 [the Principal Amount of Dollars ($ )]./1/
This Security shall not bear interest except 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.
Additional provisions of this Security are set forth on the other side of
this Security.
IN WITNESS WHEREOF, Aspect Telecommunications Corporation has caused this
instrument to be duly executed.
ASPECT TELECOMMUNICATIONS CORPORATION
By:
--------------------------------------
Title:
By:
--------------------------------------
Title:
Dated:
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
- ------------------
/1/ The global Security will read instead: "The Principal Amount then shown
on Schedule A hereto."
A-3
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
ASPECT TELECOMMUNICATIONS CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE 2018
1. INTEREST
This Security shall not bear interest, except that if the Principal Amount
hereof or any portion of such Principal Amount is not paid when due (whether
upon acceleration pursuant to Section 6.02 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
6.00% 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 to the date payment of such amount, including
interest thereon, has been made or duly provided for. All such interest shall
be payable on demand. 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.
The 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 6.00% 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 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.
<PAGE>
4. INDENTURE
The Company issued the Securities under an Indenture (the "Indenture"), dated
as of August 10, 1998, between the Company and the Trustee. Capitalized terms
used herein and 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
$490,000,000 aggregate Principal Amount (subject to Sections 2.02 and 2.07 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 set forth below, provided that the
Securities are not redeemable prior to August 10, 2003.
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 to 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 since the next
preceding date in the table to the actual Redemption Date.
<TABLE>
<CAPTION>
ACCRUED
ORIGINAL
ISSUE REDEMPTION
SECURITY DISCOUNT PRICE
REDEMPTION DATE ISSUE PRICE AT 6.00% (1) + (2)
- --------------- ----------- -------- -----------
<S> <C> <C> <C>
August 10, 2003..... $306.56 $105.44 $ 412.00
August 10, 2004..... 306.56 130.53 437.09
August 10, 2005..... 306.56 157.14 463.70
August 10, 2006..... 306.56 185.38 491.94
August 10, 2007..... 306.56 215.34 521.90
August 10, 2008..... 306.56 247.13 553.69
August 10, 2009..... 306.56 280.85 587.41
August 10, 2010..... 306.56 316.62 623.18
August 10, 2011..... 306.56 354.57 661.13
August 10, 2012..... 306.56 394.83 701.39
August 10, 2013..... 306.56 437.55 744.11
August 10, 2014..... 306.56 482.86 789.42
August 10, 2015..... 306.56 530.94 837.50
August 10, 2016..... 306.56 581.94 888.50
August 10, 2017..... 306.56 636.05 942.61
At maturity......... 306.56 693.44 1,000.00
</TABLE>
A-5
<PAGE>
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.
<TABLE>
<CAPTION>
PURCHASE DATE PURCHASE PRICE
----------------- --------------
<S> <C>
August 10, 2003....................... $412.00
August 10, 2008....................... 553.69
August 10, 2013....................... 744.11
</TABLE>
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.
(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 45 days after the date of the Company's notice of a Fundamental
Change occurring on or prior to August 10, 2018 for a Fundamental Change
Redemption Price equal to the Issue Price plus accrued Original Issue Discount
to the Fundamental Change Redemption Date which Fundamental Change Redemption
Price shall be paid in cash; provided that if the Applicable Price in connection
--------
with the Fundamental Change is less than the Reference Market Price, the
Fundamental Change Redemption Price shall be equal to the Fundamental Change
Redemption Price multiplied by the fraction obtained by dividing the Applicable
Price by the Reference Market Price. 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)
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 may be, upon surrender of such Security).
A-6
<PAGE>
7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY
Notice of redemption at the option of the Company will be mailed at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at the Holder's registered address. If money
sufficient to pay the Redemption Price of all Securities (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent prior
to or on the Redemption Date, on and after such date Original Issue Discount
ceases to accrue on such Securities or portions thereof. Securities in
denominations larger than $1,000 of Principal Amount may be redeemed in part but
only in multiples of $1,000 of Principal Amount.
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 Securityholder 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.
9. CONVERSION
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 after 90 days
following the latest date of original issuance of the Securities and 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 8.713 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 to 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
A-7
<PAGE>
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.
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 August 10, 1998, between 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 furnish 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
A-8
<PAGE>
or securities must look to the Company for payment as general creditors unless
an applicable abandoned property law designates another Person.
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 11.14 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
Liquidated Damages, 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 Liquidated Damages, 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. TRUSTEE 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-9
<PAGE>
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 LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.
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:
Aspect Telecommunications Corporation
1730 Fox Drive
San Jose, California 95131
Attn: Chief Financial Officer
A-10
<PAGE>
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: Aspect Telecommunications 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 Aspect Telecommunications 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.
Dated:
--------------------------------------
--------------------------------------
Signature(s)
Fill in for registration of shares if to be delivered,
and Securities if to be issued other than to and in
the name of the registered holder:
- -------------------------
(Name)
- -------------------------
(Street Address)
- -------------------------
(City, state and zip code)
Please print name and address
Principal amount to be converted
(if less than all):
$___,000
-------------------------------------------
Social Security or Other Taxpayer
Identification Number
A-11
<PAGE>
[FORM OF OPTION TO ELECT REDEMPTION
UPON A FUNDAMENTAL CHANGE]
To: Aspect Telecommunications Corporation
The undersigned registered holder of this Security hereby acknowledges
receipt of a notice from Aspect Telecommunications 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:
----------------
--------------------------------------
--------------------------------------
Signature(s)
Principal amount to be redeemed
(if less than all):
$____________
----------------------------------------
Social Security or Other Taxpayer
Identification Number
A-12
<PAGE>
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 ________________ attorney to transfer the
said Security on the books of the Company, with full power of substitution in
the premises.
In connection with any transfer of the 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 (or
any successor provision), the undersigned confirms that such Security is being
transferred:
[_] To Aspect Telecommunications 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:
------------------
--------------------------------------
--------------------------------------
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.
--------------------------------------
Signature Guarantee
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.
A-13
<PAGE>
[FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITY
TO REFLECT CHANGES IN PRINCIPAL AMOUNT]
Schedule A
Changes to Principal Amount of Global Security
<TABLE>
<CAPTION>
================================================================================
PRINCIPAL AMOUNT OF
SECURITIES BY WHICH THIS
GLOBAL SECURITY IS TO BE
REDUCED OR INCREASED, AND
REASON FOR REMAINING PRINCIPAL AMOUNT NOTATION
DATE REDUCTION OR INCREASE OF THIS GLOBAL SECURITY MADE BY
- ------- -------------------------- -------------------------- ---------
<S> <C> <C> <C>
- ------- -------------------------- -------------------------- ---------
- ------- -------------------------- -------------------------- ---------
- ------- -------------------------- -------------------------- ---------
- ------- -------------------------- -------------------------- ---------
- ------- -------------------------- -------------------------- ---------
- ------- -------------------------- -------------------------- ---------
- ------- -------------------------- -------------------------- ---------
================================================================================
</TABLE>
A-14
<PAGE>
EXHIBIT B
---------
[FORM OF INSTITUTIONAL ACCREDITED INVESTOR LETTER]
Aspect Telecommunications Corporation
1730 Fox Drive
San Jose, California 95131
Ladies and Gentlemen:
We are delivering this letter in connection with an offering of Zero Coupon
Convertible Subordinated Debentures due 2018 (the "Debentures) which are
convertible into shares of Common Stock, $.01 par value (the "Common Stock"), of
Aspect Telecommunications 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 (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(l)(5)(a) of the Securities Act that is acquiring
Debentures 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 Debentures, we will acquire
Debentures 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 Debentures; and
5. we are not acquiring Debentures with a view to distribution thereof
or with any present intention of offering or selling Debentures 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 Debentures 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 Debentures and the shares of Common Stock issuable
upon conversion thereof have not been registered under the Securities
<PAGE>
Act, and we agree, on our own behalf and on behalf of each account for which we
acquire any Debentures, that if in the future we decide to resell or otherwise
transfer such Debentures or the Common Stock issuable upon conversion thereof,
such Debentures 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 Debentures or the Common Stock issuable upon conversion
thereof, as the case may be. We further agree to provide any person purchasing
any of the Debentures 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 Debentures and the Common Stock will not
be required to accept for registration of transfer any Debentures or any shares
of Common Stock issued upon conversion of the Debentures except upon
presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with. We further understand that any
Debentures 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.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK
-------------------------------------------------------
(Name of Purchaser)
By:
----------------------------------------------------
Name:
Title:
Address:
<PAGE>
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of August 10,
1998 by and among Aspect Telecommunications Corporation, a California
corporation ("the Company"), and Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston Corporation (the "Initial Purchasers") pursuant to the
Purchase Agreement, dated as of August 10, 1998 (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 Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
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 Applicable Principal Amount per $1,000 principal
amount at maturity of Debentures as of such date of determination divided by the
Conversion Rate in effect as of such date of determination or, if no Debentures
are then outstanding, the Conversion Rate that would be in effect were
Debentures then outstanding.
Applicable Principal Amount: Applicable Principal Amount as of any date of
determination, with respect to each $1,000 principal amount at maturity of
Debentures means the sum of the initial issue price of such Debenture ($306.56)
plus accrued original issue discount with respect such Debenture through such
date of determination or, if no Debentures are then outstanding, such sum
calculated as if such Debentures were 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.
<PAGE>
Common Stock: The shares of common stock $0.01 par value 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 Rate: Conversion Rate shall have the meaning assigned such term in
the Indenture.
Damages Accrual Period: See Section 2(e) hereof.
Damages Payment Date: Each February 10 and August 10 in the case of
Debentures and the Underlying Common Stock.
Debentures: The Zero Coupon Convertible Subordinated Debentures due 2018 of
the Company to be purchased pursuant to the Purchase Agreement.
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 or (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 Termination Date: See Section 2(e) hereof.
Event 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.
2
<PAGE>
Initial Purchasers: Morgan Stanley & Co. Incorporated and Credit Suisse First
Boston Corporation.
Initial Shelf Registration Statement: See Section 2(a) hereof.
Issue Date: August 10, 1998.
Liquidated Damages Amount: See Section 2(e) hereof.
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 Appendix B to the Offering
Memorandum of the Company issued August 5, 1998 relating to the Debentures.
Notice Holder: On any date, any Holder that has delivered a Notice and
Questionnaire to the Company on or prior to such date.
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.
Purchase Agreement: See the first paragraph of this Agreement.
Record Holder: With respect to any Damages Payment Date relating to any
Debenture or Underlying Common Stock as to which any Liquidated Damages Amount
has accrued, the registered holder of such Debenture or Underlying Common Stock,
as the case may be, 15 days prior to the next succeeding Damages Payment Date.
Registrable Securities: The Debentures and the Underlying Common Stock, until
such securities have been converted or exchanged, and, at all times subsequent
to any such conversion or exchange, any securities into or for which such
securities 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
3
<PAGE>
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.
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.
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.
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.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: State Street Bank and Trust Company of California, 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 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
4
<PAGE>
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 best 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 and 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 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
ceased to be Registrable Securities), the Company shall use its best 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
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 its best 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, to the extent to which the Company does not
reasonably object, as reasonably requested by the Initial Purchasers or by the
Trustee on behalf of the registered Holders.
(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
5
<PAGE>
(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 is practicable after the date a Notice and Questionnaire is
delivered, and in any event within five (5) Business Days after such 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 its best 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), provided, further, that if under applicable law the Company
has more than one option as to the type or manner of making any such filing,
it will make the required filing or filings in the manner or of a type
reasonably expected to result in the earliest availability of the Prospectus
for effecting resales of Registrable Securities. Notwithstanding anything
contained herein to the contrary, 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; provided, however, that any
Holder that becomes a Notice Holder pursuant to the provisions of Section 2(d)
of this Agreement (whether or not such Holder was a Notice Holder at the time
the Registration Statement was declared effective) shall be named as a selling
securityholder in the Registration Statement or related Prospectus in
accordance with the requirements of this Section 2(d).
(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) (each of
the events of a type described in any of the foregoing
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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
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), 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
Liquidation Damages Amount 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 to one-quarter of one percent (.25%) for the first 90-day period from the
Event Date and thereafter at a rate per annum equal to one-half of one percent
(.5%) of the aggregate Applicable Principal Amount of such Debentures and 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
Liquidated Damages Amount shall be paid only to the Holders that have delivered
Notice and Questionnaires that caused the Company to incur the obligations set
forth
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in Section 2(d) the non-performance of which is the basis of such Event;
provided further, that any Liquidated Damages Amount 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 Liquidated Damages Amounts
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 Liquidated Damages
Amount 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
Liquidated Damages Amounts to the Holders of Registrable Securities pursuant
to this Section, the accrual of Liquidated Damages Amounts will cease (without
in any way limiting the effect of any subsequent Event requiring the payment
of Liquidated Damages Amount 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 Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. 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 liquidated damages 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:
(a) Before filing any Registration Statement or Prospectus or any amendments
or supplements thereto with the SEC, furnish to the Initial Purchasers copies of
all such documents proposed to be filed and use its best efforts to reflect in
each such document when
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<PAGE>
so filed with the SEC such comments as the Initial Purchasers reasonably shall
propose within two (2) 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 best 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 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 its best 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 the Initial Purchasers 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
Purchasers or such Notice Holder shall, on the basis of an opinion of
nationally-recognized counsel experienced in such matters, determine to be
required to be included therein by applicable law and make any required filings
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<PAGE>
of such Prospectus supplement or such post-effective amendment; provided, that
the Company shall not be required to take any actions under this Section 3(e)
that are not, in the reasonable opinion of counsel for the Company, in
compliance with applicable law.
(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
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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 discretion of the Company, makes it appropriate to suspend the
availability of the Shelf Registration 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 best 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 its best 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 any obligation to pay liquidated damages pursuant to Section 2(e),
no more than one (1) time in any three (3) month period or three (3) times in
any twelve (12) month period, and the period during which the availability of
the Registration Statement and any Prospectus is suspended (the "Deferral
Period") shall, without incurring any obligation to pay liquidated damages
pursuant to Section 2(e), not exceed thirty (30) days; provided, that the
aggregate duration of any Deferral Periods shall not, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), exceed thirty
(30) days in any three (3) month period or ninety (90) days in any twelve (12)
month period.
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(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
subsidiaries, and cause the appropriate executive officers, directors and
designated employees of the Company and its subsidiaries to make reasonably
available for inspection during normal business hours 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 its best 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
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month 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 Business Days prior to
any sale of such Registrable Securities.
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(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) Make a reasonable effort to 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.
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
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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 Wilson Sonsini Goodrich & Rosati, P.C., 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 Company. Notwithstanding the provisions of this Section 5,
each seller of Registrable Securities shall pay 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 all 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 such Holder furnished to the Company in writing by such 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 if either (A) (i) such Holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written
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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), 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 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
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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 (and in the event of a settlement that involves an
unconditional release of such indemnified party, the indemnifying party will
send prompt written notice of such settlement to the indemnified party).
(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
16
<PAGE>
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 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. (a) 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
17
<PAGE>
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 required to be filed and filed pursuant to
Section 13 or Section 15(d) of 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, 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.
18
<PAGE>
(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:
Aspect Telecommunications Corporation
1730 Fox Drive
San Jose, CA 95131
Attention: Mark Meltzer
Telecopy No.: (408) 325-2261
and
(y) if to the Initial Purchasers, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York
Attention: Equity Capital Markets
Telecopy No.: (212) 761-0356
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 of 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.
19
<PAGE>
(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, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
(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 those
specifically set forth in this Agreement. Without limiting the generality of
the foregoing, the Company shall have no obligation to participate in "road
show" or, except as specifically provided in this Agreement, "due diligence"
activities in connection with any underwritten public offering of Registrable
Securities, and the Company shall have no obligation to enter into underwriting
or indemnification agreements with respect to, or deliver opinions, comfort
letters or closing certificates in connection with, any such underwritten public
offering.
(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 Sections 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages 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
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ASPECT TELECOMMUNICATIONS CORPORATION
By: /s/ ERIC J. KELLER
----------------------------------
Name: Eric J. Keller
Title: Vice President, Finance and
Chief Financial Officer
Accepted as of the date first
above written:
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
(for the benefit of themselves and for the benefit of the Holders)
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ ANDREW R. GUEVARA, JR.
---------------------------------
Name: Andrew R. Guevara, Jr.
Title: Vice President
<PAGE>
EXHIBIT 12.1
<TABLE>
<CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
----------------------------------------------------------------------------------
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------------- ----------------------------------------------------
1997 1998 1993 1994 1995 1996 1997
----------- ------------ -------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges:
Earnings (deficiency):
Income (loss) from continuing
operations before taxes $53,173 $ (4,209) $18,812 $28,343 $38,081 $59,828 $60,278
--------- --------- --------- --------- --------- --------- ---------
Fixed Charges:
Interest charges 199 1,666 887 3,172 3,188 2,774 293
Interest factor of operating rents 1,524 2,240 738 877 1,240 1,871 2,142
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges 1,723 3,906 1,625 4,049 4,428 4,645 2,435
--------- --------- --------- --------- --------- --------- ---------
Earnings (deficiency), as adjusted $54,896 $ (303) $20,437 $32,392 $42,509 $64,473 $62,713
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 31.9x N/A (1) 12.6x 8.0x 9.6x 13.9x 25.8x
========= ========= ========= ========= ========= ========= =========
</TABLE>
(1) For the nine months ended September 30, 1998, there was a deficiency of
earnings available to cover the fixed charges amounting to $4.2 million.
Excluding the charge of $68.2 million for purchased in-process technology
associated with the acquisition of Voicetek Corporation, the ratio of
earnings to fixed charges for the nine months ended September 30, 1998 would
have been 17.4x.
