AGERE SYSTEMS INC.
as Issuer
LSI LOGIC CORPORATION
as Guarantor
THE BANK OF NEW YORK,
as Trustee
 
$410,000,000 6.5% Convertible Subordinated Notes due 2009
 
SUPPLEMENTAL INDENTURE NO. 2
Dated as of April 1, 2007
 
 

 

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          THIS SUPPLEMENTAL INDENTURE NO. 2, dated as of April 1, 2007 (this
“Supplement”), by and among Agere Systems Inc., a Delaware corporation (the
“Company”), LSI Logic Corporation, a Delaware corporation (“LSI”) and The Bank
of New York, a New York banking corporation, as trustee (the “Trustee”), hereby
supplements the Indenture, dated as of June 19, 2002, as supplemented by the
Supplemental Indenture No. 1, dated as of May 27, 2005 (as so supplemented, the
“Indenture”), by and between the Company and the Trustee.
RECITALS
          WHEREAS, the Company has certain 6.5% Convertible Subordinated Notes
due 2009 (the “Notes”) issued and outstanding pursuant to the terms and
conditions of the Indenture;
          WHEREAS, pursuant to the terms of the Indenture, the Notes are
convertible into shares of common stock, par value $0.01 per share, of the
Company (“Common Stock”);
          WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
December 3, 2006 (the “Merger Agreement”), by and among the Company, LSI and
Atlas Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
LSI (“Merger Sub”), Merger Sub will be merged with and into the Company, with
the Company continuing as the surviving corporation (the “Merger”);
          WHEREAS, as a result of the Merger, each share of Common Stock
outstanding immediately prior to the effective time of the merger (the
“Effective Time”) shall, except as provided in Section 2.7(a)(ii) of the Merger
Agreement with respect to shares of Common Stock held by the Company, LSI or
Merger Sub or any direct or indirect wholly owned subsidiary of any of them
immediately prior to the Effective Time, be converted into the right to receive
2.16 shares of LSI Common Stock (as defined in the Merger Agreement), and cash
in lieu of fractional shares pursuant to Section 2.7(c) of the Merger Agreement;
          WHEREAS, pursuant to Section 12.6 of the Indenture, as a result of the
Merger, the Company is required to execute and deliver to the Trustee a
supplemental indenture, to become effective as of the Effective Time,
(i) providing that the Notes shall be convertible into shares of LSI Common
Stock and cash in lieu of fractional shares, (ii) providing for adjustments
which shall be as nearly equivalent as practicable to the adjustments provided
for in Article 12 of the Indenture and (iii) modifying the provisions of the
Indenture relating to the right of holders of Notes to cause the Company to
repurchase Notes following a Fundamental Change (as defined in the Indenture) to
make such provision apply to the LSI Common Stock and LSI;
          WHEREAS, LSI desires, from and after the Effective Time, to
unconditionally and irrevocably guarantee the full and punctual payment of
principal of or premium, if any, and interest on, or Fundamental Change Payment
or Redemption Price with respect to, the Notes when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under the Indenture (including obligations to the Trustee) and the
Notes, and in the case of any extension of time of payment of any Notes or any
other obligations, the full and punctual performance within applicable grace
periods of all other obligations of the Company under the Indenture and the
Notes when due in accordance with the

 

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terms of any such extension as provided in Section 4(a) of this Supplement (the
“LSI Guarantee”) in order to preserve the exemption available under
Section 3(a)(9) of the Securities Act for the conversion of the Notes into
shares of LSI Common Stock;
          WHEREAS, Section 9.1 of the Indenture provides that the Company and
the Trustee may amend or supplement the Indenture without the consent of any
holder of Notes to, among other things, (i) provide for conversion rights of
holders of Notes in the event of consolidation, merger, or sale of all or
substantially all of the assets of the Company as required to comply with
Section 5.1 of the Indenture or (ii) provide any additional rights or benefits
to the holders of Notes or that does not affect the legal rights under the
Indenture of any such holder;
          WHEREAS, the Company and LSI desire to execute a supplemental
indenture that complies with Section 9.1 of the Indenture;
          WHEREAS, the Company has complied with all conditions precedent
provided for in the Indenture relating to this Supplement; and
          WHEREAS, the Company has requested that the Trustee execute and
deliver this Supplement pursuant to the terms of Section 12.6 of the Indenture.
          NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein and in the Indenture, the parties hereby agree as follows:
          Section 1. Definition. Capitalized terms used and not otherwise
defined herein have the meanings assigned to such terms in the Indenture.
          Section 2. Concerning the Merger.
               (a) Conversion Privilege. Pursuant to Section 12.6 of the
Indenture, from and after the Effective Time, any right of a holder of Notes to
convert Notes into Common Stock shall be changed into the right to convert such
Notes into (i) that number of fully paid and non-assessable shares of LSI Common
Stock (as such shares shall then be constituted, the “Stock Consideration”)
obtained by dividing the principal amount of the Notes or portion thereof to be
converted by $15.3125 (or such Conversion Price in effect at such time) (the
“New Conversion Price”), and (ii) in lieu of any fractional shares of LSI Common
Stock otherwise receivable pursuant to clause (i) hereof, cash in lieu of such
fractional shares in an amount that would have been paid in lieu of such amount
of fractional shares of LSI Common Stock pursuant to Section 2.7(c) of the
Merger Agreement (the “Cash Consideration”), subject to further adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in Article 12 of the Indenture (as so adjusted, the “Conversion
Consideration”).

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               (b) References to the Company, to Common Stock and the Conversion
Price.
                    (i) Subject to the other provisions of this Supplement, from
and after the Effective Time all references in the Indenture to Common Stock
shall be deemed to be references to the Conversion Consideration or LSI Common
Stock, to the extent necessary to give effect to Section 12.6 of the Indenture.
                    (ii) Subject to the other provisions of this Supplement,
from and after the Effective Time all references in the Indenture to the Company
shall be deemed to be references to LSI to the extent necessary to give effect
to Section 12.6 of the Indenture.
                    (iii) Subject to the other provisions of this Supplement,
from and after the Effective Time all references in the Indenture to the
Conversion Price shall be deemed to be references to the New Conversion Price to
the extent necessary to give effect to Section 12.6 of the Indenture.
               (c) Reservation of Shares. LSI hereby (i) agrees, from and after
the Effective Time, to (A) reserve and keep available out of its authorized but
unissued capital stock, solely for the purpose of issuance upon conversion of
Notes as provided in this Supplement, a number of shares of LSI Common Stock
sufficient to issue the Stock Consideration upon conversion of all outstanding
Notes and (B) issue and deliver in accordance with this Supplement, the Stock
Consideration and the Cash Consideration upon conversion of any Note, and
(ii) covenants that from and after the Effective Time all LSI Common Stock
issued upon conversion of the Notes, when so issued, shall be fully paid and
non-assessable.
          Section 3. Repurchase Upon Fundamental Change. Pursuant to
Sections 4.6 and 12.6 of the Indenture, following a Fundamental Change from and
after the Effective Time and prior to the Maturity Date, any Fundamental Change
Payment in respect of Notes properly tendered pursuant to a Fundamental Change
Offer and not withdrawn, shall be payable by LSI in lieu of the Company. All
references to the Company in the definitions of Fundamental Change, Change in
Control and Termination of Trading shall be deemed to be references to LSI. All
references to the Common Stock of the Company in the definitions of Fundamental
Change, Change in Control and Termination of Trading shall be deemed to be
references to LSI Common Stock.
          Section 4. The LSI Guarantee.
               (a) Guarantee. From and after the Effective Time, LSI irrevocably
and unconditionally guarantees, to each holder of Notes and to the Trustee and
its successors and

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assigns, (i) the full and punctual payment of principal of or premium, if any,
and interest on, or Fundamental Change Payment or Redemption Price with respect
to, the Notes when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company under the Indenture
(including obligations to the Trustee) and the Notes and (ii) in the case of any
extension of time of payment of any Notes or any other obligations, the full and
punctual performance within applicable grace periods of all other obligations of
the Company under the Indenture and the Notes when due in accordance with the
terms of any such extension. LSI further agrees that its obligations hereunder
shall be unconditional irrespective of the absence or existence of any action to
enforce the same, the recovery of any judgment against the Company or LSI
(except to the extent such judgment is paid) or any waiver or amendment of the
provisions of the Indenture or the Notes to the extent that any such action or
any similar action would otherwise constitute a legal or equitable discharge or
defense of a guarantor (except that such waiver or amendment shall be effective
in accordance with its terms.)
               (b) Payment, Performance and Compliance. LSI further agrees that
the LSI Guarantee constitutes a guarantee of payment, performance and compliance
and not merely of collection.
               (c) Waivers. LSI further agrees to waive presentment to, demand
of payment from and protest to the Company of the LSI Guarantee, and also waives
diligence, notice of acceptance of the LSI Guarantee, presentment, demand for
payment, notice of protest for nonpayment, the filing of claims with a court in
the event of merger or bankruptcy of the Company or any successor thereto and
any right to require a proceeding first against the Company, any successor
thereto or any other Person. The obligations of LSI shall not be affected by any
failure or policy on the part of the Trustee to exercise any right or remedy
under the Indenture or the Notes.
               (d) Payment by the Company. The obligation of LSI to make any
payment hereunder may be satisfied by causing the Company to make such payment.
If any holder of Notes or the Trustee is required by any court or otherwise to
return to the Company or LSI any amount paid by either of them to the Trustee or
such holder of Notes, the LSI Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
               (e) Costs and Expenses. LSI also agrees to pay any and all costs
and expenses (including reasonable attorneys’ fees) incurred by the Trustee or
any holder of Notes in enforcing any of their respective rights under the LSI
Guarantee.
               (f) Maximum. Any term or provision of this Supplement to the
contrary notwithstanding, the maximum aggregate amount of the LSI Guarantee
shall not exceed the maximum amount that can be hereby guaranteed without
rendering this Supplement, as it relates to LSI, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.

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          Section 5. Acceptance. The Trustee hereby accepts this Supplement and
agrees to perform the same under the terms and conditions set forth in the
Indenture.
          Section 6. Miscellaneous.
               (a) Effectiveness of Supplement. This Supplement shall be
effective as of the Effective Time.
               (b) Effect of Supplement. Upon the execution and delivery of this
Supplement by the Company and the Trustee, the Indenture shall be supplemented
and amended in accordance herewith, and this Supplement shall form a part of the
Indenture for all purposes, and every holder of Notes heretofore or hereafter
authenticated and delivered under the Indenture shall be bound thereby.
               (c) Use of the Term “Indenture”. The term “Indenture” as used in
the Indenture shall be deemed to refer to the Indenture as supplemented hereby.
               (d) Indenture Remains in Full Force and Effect. Except as set
forth herein, the Indenture shall remain in full force and effect and shall be
otherwise unaffected hereby.
               (e) Incorporation of Indenture. All the provisions of this
Supplement shall be deemed to be incorporated in, and made a part of, the
Indenture; and the Indenture, as supplemented and amended by this Supplement,
shall be read, taken and construed as one and the same instrument. If any
provision of this Supplement shall be inconsistent with any provision of the
Indenture, the provisions of this Supplement shall control.
               (f) Headings. The headings of the Articles and Sections of this
Supplement are inserted for convenience of reference and shall not be deemed to
be a part thereof.
               (g) Counterparts. This Supplement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all for which
together shall constitute one and the same instrument.
               (h) Conflict with Trust Indenture Act. If any provision of this
Supplement limits, qualifies or conflicts with any provision of the Trust
Indenture Act that is required under the Trust Indenture Act to be part of and
govern any provision of this Supplement, such provision of the Trust Indenture
Act shall control. If any provision of this Supplement modifies or excludes any
provision of the Trust Indenture Act that may be so

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modified or excluded, the provision of the Trust Indenture Act shall be deemed
to apply to the Indenture as so modified or to be excluded by this Supplement,
as the case may be.
               (i) Separability Clause. In case any provision in this Supplement
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.
               (j) Benefits of Supplemental Indenture, Etc. This Supplement and
all provisions hereof shall be binding upon, inure to the benefit of, and be
enforceable by the Company, LSI, the Trustee and any holder of the Notes.
               (k) Recitals. The recitals contained herein shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Supplement.
               (l) No Security Interest Created. Nothing in this Supplement,
express or implied, shall be construed to constitute a security interest under
the Uniform Commercial Code or similar legislation, as now or hereafter enacted
and in effect, in any jurisdiction in which property of the Company and its
Subsidiaries is located.
               (m) Governing Law. This Supplement shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
[SIGNATURE PAGE FOLLOWS]

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          IN WITNESS WHEREOF, the parties have caused this Supplement to be duly
executed and attested, all as of the date first above written, signifying their
agreements contained in this Supplement.

            AGERE SYSTEMS INC., as Issuer
      By:   /s/ Peter Kelly         Name:   Peter Kelly        Title:  
Executive Vice President and Chief Financial Officer        LSI LOGIC
CORPORATION, as Guarantor
      By:   /s/ Bryon Look         Name:   Bryon Look        Title:   Executive
Vice President and Chief Financial Officer        THE BANK OF NEW YORK, as
Trustee
      By:   /s/ Mary LaGumina         Name:   Mary LaGumina        Title:   Vice
President     

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