EXHIBIT 10.75
[JPMORGAN LOGO]
JPMorgan Chase Bank
P.O. Box 161
60 Victoria Embankment
London EC4YO JP
England
August 11, 2003
To: CADENCE DESIGN SYSTEMS, INC.
2655 Seely Avenue
San Jose, CA 95134
Attention: Treasurer
Telephone No.: (408) 943-1234
Facsimile No.: (408) 943-0513
Re: Call Option Transaction
Reference:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between JPMORGAN CHASE BANK, LONDON
BRANCH ("JPMORGAN") AND CADENCE DESIGN SYSTEMS, INC. ("COUNTERPARTY") on the
Trade Date specified below (the "TRANSACTION"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below. This Confirmation shall replace any previous letter and serve
as the final documentation for this Transaction.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "EQUITY DEFINITIONS"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. Certain
defined terms used herein have the meanings assigned to them in the Offering
Memorandum dated August 11, 2003 (the "OFFERING MEMORANDUM") relating to the USD
350,000,000 principal amount of Zero Coupon Zero Yield Senior Convertible Notes
due August 15, 2023, (the "CONVERTIBLE NOTES") issued by the Counterparty
pursuant to an Indenture to be dated August 15, 2003 between Counterparty and
J.P. Morgan Trust Company, National Association, as trustee (the "INDENTURE").
In the event of any inconsistency between the terms defined in the Offering
Memorandum and this Confirmation, the Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges, that
the other party has engaged in, or refrained from engaging in, substantial
financial transactions and has taken other material actions in reliance upon the
parties' entry into the Transaction to which this Confirmation relates on the
terms and conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between
JPMorgan and the Counterparty as to the terms of the Transaction to which this
Confirmation relates. In addition, JPMorgan and the Counterparty agree to make
all reasonable efforts to promptly negotiate, execute, and deliver an agreement
in the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) (the
"AGREEMENT"), with such modifications as JPMorgan and the Counterparty will in
good faith agree together with related schedules. Upon the execution by JPMorgan
and the Counterparty of such an agreement, this Confirmation will supplement,
form a apart of, and be subject to, that agreement. All provisions contained or
incorporated by reference in that agreement upon its execution will govern this
Confirmation except as expressly modified below. Until JPMorgan and the
Counterparty execute such agreement, this Confirmation, together with all other
documents referring to an Agreement (each a "CONFIRMATION") confirming
transactions (each a "TRANSACTION") entered into between JPMorgan and the
Counterparty (notwithstanding
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
[JPMORGAN LOGO]
anything to the contrary in a Confirmation), shall supplement, form a part of,
and be subject to an agreement in the form of the Agreement as if JPMorgan and
the Counterparty had executed an agreement in such form (but without any
Schedule except for the election of the laws of the State of New York as the
governing law and United States dollars as the Termination Currency and Second
Method and Loss as the payments on early termination) on the Trade Date of the
first such Transaction between JPMorgan and the Counterparty. In the event of
any inconsistency between provisions of that agreement and this Confirmation,
this Confirmation will prevail for the purpose of the Transaction to which this
Confirmation relates. The parties hereby agree that if they have not executed an
Agreement within 60 days from the Trade Date it shall constitute an Additional
Termination Event under the Agreement in respect of which the Counterparty is
the sole Affected Party and this Transaction is the sole Affected Transaction.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 11, 2003
Option Style: "Modified American", as set forth
under "Exercise and Valuation"
below
Option Type: Call
Buyer: Counterparty
Seller: JPMorgan
Shares: The common stock of Counterparty,
par value USD 0.01 per Share
(Exchange symbol "CDN")
Number of Options: A number equal to the Conversion
Rate (as defined in the Offering
Memorandum, but without regard to
Section 13.08 and Section 13.13 of
the Indenture), multiplied by the
number of USD 1,000 principal
amount of Convertible Notes (each
such USD 1,000 principal amount, a
"CONVERTIBLE NOTE")
Option Entitlement: One Share per Option
Strike Price: USD 15.65
Premium: USD 110,998,055
Premium Payment Date: August 15, 2003
Exchange: The New York Stock Exchange
Related Exchange(s): The principal exchange(s) for
options contracts or futures
contracts, if any, with respect to
the Shares
Exercise and Valuation:
Exercise Period: Notwithstanding the Equity
Definitions, the Exercise Period
shall be, in respect of the
Exercise Options, each
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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period commencing from the date a
Notice of Conversion is submitted
to the Counterparty by a holder of
Convertible Notes to and including
the third Exchange Business Day
following the Conversion Date for
such Convertible Notes. For the
avoidance of doubt, only a number
of options equal to the Exercise
Options shall be exercisable
hereunder, and only during the
Exercise Period for such Exercise
Options.
Exercise Options: A number of Options equal to the
Conversion Rate (but without
regard to any adjustment under
Section 13.08 and Section 13.13 of
the Indenture) of Convertible
Notes surrendered to Counterparty
for conversion times the number of
such Convertible Notes.
Expiration Time: The Valuation Time
Expiration Date: In respect of any Exercise
Options, the earlier of August 15,
2008 and the final day of the
Exercise Period in respect of such
Exercise Options.
Multiple Exercise: Applicable; and means that
Counterparty may exercise, with
respect to an Exercise Period and
the Exercise Options relating to
such Period, a number of Options
not less than one (1) and not
greater than such Exercise
Options.
Automatic Exercise: Applicable; and means that a
number of Options not previously
exercised hereunder equal to the
Exercise Options shall be deemed
to be exercised on the Expiration
Date for the Exercise Period
relating to such Exercise Options;
provided that Counterparty has
notified JPMorgan (in writing or
orally) of the Conversion Date and
the number of such Exercise
Options one Exchange Business Day
prior to such Expiration Date.
Valuation Time: At the close of trading of the
regular trading session on the
Exchange
Settlement Terms:
Physical Settlement: Applicable; provided that if and
to the extent Counterparty is
required to deliver cash in lieu
of fractional Shares (or any
fractional Shares) with respect to
the settlement of Convertible
Notes, the Calculation Agent shall
adjust the settlement terms
hereunder to account for delivery
by JPMorgan to Counterparty of
such cash or fractional Shares in
the amount of such required
delivery obligation.
Settlement Date: For any Exercise Options relating
to the conversion of Convertible
Notes, the settlement date for
Shares to be
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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delivered under such Convertible
Notes under the terms of the
Indenture.
Failure to Deliver: Applicable
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Transaction:
Potential Adjustment Events: Notwithstanding Section 9.1(e) of
the Equity Definitions, a
"Potential Adjustment Event" means
any occurrence of any event or
condition, as set forth in Section
13.06 of the Indenture that would
result in an adjustment to the
Conversion Rate of the Convertible
Notes; provided that in no event
shall there be any adjustment
hereunder as a result of an
adjustment to the Conversion Rate
pursuant to Section 13.08 and
Section 13.13 of the Indenture.
Method of Adjustment: Calculation Agent Adjustment, and
means that, notwithstanding
Section 9.1(c) of the Equity
Definitions, upon any adjustment
to the Conversion Rate of the
Convertible Notes pursuant to the
Indenture (other than Section
13.08 and Section 13.13 of the
Indenture), the Calculation Agent
will make a corresponding
adjustment to any one or more of
the Strike Price, Number of
Options, the Option Entitlement
and any other variable relevant to
the exercise, settlement or
payment for the Transaction.
Extraordinary Events applicable to the Transaction:
Merger Events: Notwithstanding Section 9.2(a) of
the Equity Definition, a "Merger
Event" means the occurrence of any
event or condition set forth in
Section 8.01 of the Indenture.
Consequence of Merger Events: Notwithstanding Section 9.3 of the
Equity Definition, upon the
occurrence of a Merger Event, the
Calculation Agent shall make a
corresponding adjustment in
respect of any adjustment under
the Indenture to any one or more
of the nature of the Shares,
Strike Price, Number of Options,
the Option Entitlement and any
other variable relevant to the
exercise, settlement or payment
for the Transaction.
Additional Termination Events: If an event of default with respect to
Counterparty shall occur under the
terms of the Convertible Notes as set
forth in Section 5.01 of the
Indenture, then such event shall
constitute an Additional Termination
Event applicable to this Transaction
and, with respect to such event (i)
Counterparty shall be deemed to be
Affected Party and JPMorgan shall be
deemed to be the party that is not the
Affected Party and (ii) JPMorgan shall
be the party entitled to designate an
Early Termination Date pursuant to
Section 6(b) of the Agreement.
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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Payments on Early Termination: Second Method and Loss
4. Calculation Agent: JPMorgan, whose calculations and
determinations shall be made in
good faith and in a commercially
reasonable manner, including with
respect to calculations and
determinations that are made in
its sole discretion.
5. Account Details:
(a) Account for payments to Counterparty:
Cadence Design Systems, Inc.
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
Account for delivery of Shares to Counterparty:
Mellon Investor Services
235 Montgomery Street, 23rd Floor
San Francisco, CA 94104
Cadence Design Systems Book Memo Treasury Reserve Account
Comment: When you are ready to deliver shares contact Cadence
FIRST.
(b) Account for payments to JPMorgan:
JPMorgan Chase Bank, New York
_________________________________
_________________________________
_________________________________
_________________________________
Account for delivery of Shares from JPMorgan:
DTC 060
6. Offices:
The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is
not a Multibranch Party.
The Office of JPMorgan for the Transaction is: New York
JP Morgan Chase Bank
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP, England
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
Cadence Design Systems, Inc.
Attention: Treasurer
Telephone No.: (408) 943-1234
Telecopy No.: (408) 943-0513
Address for notices or communications to JPMorgan:
JPMorgan Chase Bank
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Kevin J. Moran
EDG Corporate Marketing
Telephone No.: (212)622-6707
Telecopy No.: (212)622- 8534
8. Other Provisions:
(a) No Reliance, etc. Each party represents that (i) it is
entering into the Transaction evidenced hereby as principal
(and not as agent or in any other capacity); (ii) neither the
other party nor any of its agents are acting as a fiduciary
for it; (iii) it is not relying upon any representations
except those expressly set forth in the Agreement or this
Confirmation; (iv) it has not relied on the other party for
any legal, regulatory, tax, business, investment, financial,
and accounting advice, and it has made its own investment,
hedging, and trading decisions based upon its own judgment and
upon any view expressed by the other party or any of its
agents; and (v) it is entering into this Transaction with a
full understanding of the terms, conditions and risks thereof
and it is capable of and willing to assume those risks.
(b) Share De-listing Event. If at any time during the period from
and including the Trade Date, to and including August 15,
2008, the Shares cease to be listed on the Exchange for any
reason (other than a Merger Event) and are not immediately
re-listed as of the date of such de-listing on The New York
Stock Exchange, The American Stock Exchange or the Nasdaq
National Market System (or their respective successors) (the
"SUCCESSOR EXCHANGE"), then Cancellation and Payment shall
apply, and the date of the de-listing shall be deemed the date
of termination for purposes of calculating any payment due
from one party to the other in connection with the
cancellation of this Transaction. If the Shares are
immediately re-listed on a Successor Exchange upon their
de-listing from the Exchange, this Transaction shall continue
in full force and effect, provided that the Successor Exchange
shall be deemed to be the Exchange for all purposes hereunder.
In addition, the Calculation Agent shall make any adjustments
it deems necessary to the terms of the Transaction in
accordance with Calculation Agent Adjustment method as defined
under Section 9.1(c) of the Equity Definitions.
(c) Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give
JPMorgan a written notice of such repurchase (a "REPURCHASE
NOTICE") if following such repurchase, the Options Equity
Percentage as determined on such day is (i) greater than 5%
and (ii) greater by 0.5% than the Options
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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Equity Percentage included in the immediately preceding
Repurchase Notice (or, in the case of the first such
Repurchase Notice, greater than the Options Equity Percentage
as of the date hereof). The "OPTIONS EQUITY PERCENTAGE" as of
any day is the fraction (A) the numerator of which is the
product of the Number of Options and the Option Entitlement
and (B) the denominator of which is the number of Shares
outstanding on such day. Counterparty agrees to indemnify and
hold harmless JPMorgan and its affiliates and their respective
officers, directors, employees, affiliates, advisors, agents
and controlling persons (each, an "INDEMNIFIED PERSON") from
and against any and all losses (including losses relating to
JPMorgan's hedging activities as a consequence of becoming, or
of the risk of becoming, a Section 16 "insider", including
without limitation, any forbearance from hedging activities or
cessation of hedging activities and any losses in connection
therewith with respect to this Transaction), claims, damages,
judgments, liabilities and expenses (including reasonable
attorney's fees), joint or several, to which an Indemnified
Person actually incurs as a result of Counterparty's failure
to provide JPMorgan with a Repurchase Notice on the day and in
the manner specified in this Section 8(c), and to reimburse,
within 30 days, upon written request, each of such Indemnified
Persons for any reasonable legal or other expenses incurred in
connection with investigating, preparing for, providing
testimony or other evidence in connection with or defending
any of the foregoing. If any suit, action, proceeding
(including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the
Indemnified Person, such Indemnified Person shall promptly
notify the Counterparty in writing, and the Counterparty, upon
request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent
the Indemnified Person and any others the Counterparty may
designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding.
Counterparty 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, Counterparty agrees to indemnify any
Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Counterparty shall not,
without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Person is or could have
been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such
proceeding on terms reasonably satisfactory to such
Indemnified Person. If the indemnification provided for in
this paragraph (c) is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then Counterparty under such
paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims,
damages or liabilities. The remedies provided for in this
paragraph (c) are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any
Indemnified Party at law or in equity. The indemnity and
contribution agreements contained in this paragraph (c) shall
remain operative and in full force and effect regardless of
the termination of this Transaction.
(d) Material Non-Public Information. Counterparty represents and
warrants that each of it and its Affiliates is not, on the
date hereof, in possession of any material non-public
information with respect to Counterparty.
(e) Eligible Contract Participant. Counterparty represents and
warrants that it is an "eligible contract participant" (as
such term is defined in Section 1(a)(12) of the Commodity
Exchange Act, as amended (the "CEA") because one or more of
the following is true:
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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Counterparty is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) Counterparty has total assets in excess of
USD 10,000,000;
(B) the obligations of Counterparty hereunder
are guaranteed, or otherwise supported by a
letter of credit or keepwell, support or
other agreement, by an entity of the type
described in Section 1a(12)(A)(i) through
(iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or
1a(12)(C) of the CEA; or
(C) Counterparty has a net worth in excess of
USD 1,000,000 and has entered into this
Agreement in connection with the conduct of
Counterparty's business or to manage the
risk associated with an asset or liability
owned or incurred or reasonably likely to be
owned or incurred by Counterparty in the
conduct of Counterparty's business.
(f) Regulation M. The Counterparty was not on the Trade Date and
is not on the date hereof engaged in a distribution, as such
term is used in Regulation M under the Securities Exchange Act
of 1934, as amended ("EXCHANGE ACT"), of any securities of
Counterparty, other than a distribution meeting the
requirements of the exception set forth in sections 101(b)(10)
and 102(b)(7) of Regulation M. The Counterparty shall not,
until the fifth Exchange Business Day immediately following
the Trade Date, engage in any such distribution.
(g) No Manipulation. The Counterparty is not entering into this
Transaction to create actual or apparent trading activity in
the Shares (or any security convertible into or exchangeable
for the Shares) or to raise or depress or otherwise manipulate
the price of the Shares (or any security convertible into or
exchangeable for the Shares).
(h) Number of Repurchased Shares. Counterparty represents that it
could have purchased Shares, in an amount equal to the product
of the Number of Options and the Option Entitlement, on the
Exchange or otherwise, in compliance with applicable law, its
organizational documents and any orders, decrees, contractual
agreements binding upon Counterparty, on the Trade Date.
(i) Board Authorization. Each of this Transaction and the issuance
of the Convertible Notes was approved by its board of
directors and publicly announced, solely for the purposes
stated in such board resolution and public disclosure and,
prior to any exercise of Options hereunder, Counterparty's
board of directors will have duly authorized any repurchase of
Shares pursuant to this Transaction. Counterparty further
represents that there is no internal policy, whether written
or oral, of Counterparty that would prohibit Counterparty from
entering into any aspect of this Transaction, including, but
not limited to, the purchases of Shares to be made pursuant
hereto.
(j) Transfer or Assignment. Neither party may transfer any of its
rights or obligations under this Transaction without the prior
written consent of the non-transferring party; provided that
if, as determined at JPMorgan's sole discretion, its
"beneficial ownership" (within the meaning of Section 16 of
the Exchange Act and rules promulgated thereunder) exceeds 8%
of Counterparty's outstanding Shares, JPMorgan may transfer or
assign a number of Options sufficient to reduce such
"beneficial ownership" to 7.5% to any third party with a
rating for its long term, unsecured and unsubordinated
indebtedness of A+ or better by Standard and Poor's Rating
Group, Inc. or its successor ("S&P"), or A1 or
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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better by Moody's Investor Service, Inc. ("MOODY'S") or, if
either S&P or Moody's ceases to rate such debt, at least an
equivalent rating or better by a substitute agency rating
mutually agreed by Counterparty and JPMorgan. If, in the
discretion of JPMorgan, JPMorgan is unable to effect such
transfer or assignment after its commercially reasonable
efforts on pricing terms reasonably acceptable to JPMorgan and
within a time period reasonably acceptable to JPMorgan,
JPMorgan may designate any Exchange Business Day as an Early
Termination Date with respect to a portion (the "TERMINATED
PORTION") of this Transaction, such that its "beneficial
ownership" following such partial termination will be equal to
or less than 8%. In the event that JPMorgan so designates an
Early Termination Date with respect to a portion of this
Transaction, a payment shall be made pursuant to Section 6 of
the Agreement as if (i) an Early Termination Date had been
designated in respect of a Transaction having terms identical
to this Transaction and a Number of Options equal to the
Terminated Portion, (ii) the Counterparty and JPMorgan shall
both be Affected Parties with respect to such partial
termination and (iii) such Transaction shall be the only
Terminated Transaction. Notwithstanding any other provision in
this Confirmation to the contrary requiring or allowing
JPMorgan to purchase, sell, receive or deliver any shares or
other securities to or from Counterparty, JPMorgan may
designate any of its affiliates to purchase, sell, receive or
deliver such shares or other securities and otherwise to
perform JPMorgan's obligations in respect of this Transaction
and any such designee may assume such obligations. JPMorgan
shall be discharged of its obligations to Counterparty to the
extent of any such performance.
(k) Amendment. Paragraph (i) of Section 9.7(b) of the Equity
Definitions is hereby amended for purposes of this Transaction
by replacing "two-year" with "90 calendar day".
(l) Damages. Neither party shall be liable under Section 6.10 of
the Equity Definitions for special, indirect or consequential
damages, even if informed of the possibility thereof.
(m) Early Unwind. In event the sale of Convertible Notes is not
consummated with the initial purchasers for any reason by the
close of business in New York on August 15, 2003 (or such
later date as agreed upon by the parties) (August 15, 2003 or
such later date as agreed upon being the "EARLY UNWIND DATE"),
this Transaction shall automatically terminate (the "EARLY
UNWIND"), on the Early Unwind Date and (i) the Transaction and
all of the respective rights and obligations of JPMorgan and
Counterparty under the Transaction shall be cancelled and
terminated and (ii) each party shall be released and
discharged by the other party from and agrees not to make any
claim against the other party with respect to any obligations
or liabilities of the other party arising out of and to be
performed in connection with the Transaction either prior to
or after the Early Unwind Date; provided that Counterparty
shall purchase from JPMorgan on the Early Unwind Date all
Shares purchased by JPMorgan or one or more of its affiliates
and assume, or reimburse the cost of, derivatives entered into
by JPMorgan or one or more of its affiliates in connection
with hedging this Transaction. The Purchase price paid by the
Counterparty shall be JPMorgan's actual cost of such Shares
and derivatives as JPMorgan informs Counterparty and shall be
paid in immediately available funds on the Early Unwind Date.
JPMorgan and Counterparty represent and acknowledge to the
other that, subject to the proviso included in the preceding
sentence, upon an Early Unwind, all obligations with respect
to the Transaction shall be deemed fully and finally
discharged.
(n) Role of Agent. Each party agrees and acknowledges that (i)
J.P. Morgan Securities Inc., an affiliate of JPMorgan
("JPMSI"), has acted solely as agent and not as principal with
respect to this Transaction and (ii) JPMSI has no obligation
or liability, by way of guaranty, endorsement or otherwise, in
any manner in respect of this Transaction (including, if
applicable, in respect of the settlement thereof). Each party
agrees it will
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
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look solely to the other party (or any guarantor in respect
thereof) for performance of such other party's obligations
under this Transaction.
(o) Additional Provisions.
(i) Section 9.6(a)(ii) of the Equity Definitions is hereby
amended by (1) deleting from the third line thereof the word
"or" after the word "official" and inserting a comma therefor,
and (2) deleting the period at the end of subsection (ii)
thereof and inserting the following words therefor " or (C) at
JPMorgan's option, the occurrence of any of the events
specified in Section 5(a)(vii) (1) through (9) of the ISDA
Master Agreement with respect to that Issuer."
(ii) Notwithstanding Section 9.7 of the Equity Definitions,
everything in the first paragraph of Section 9.7(b) of the
Equity Definitions after the words "Calculation Agent" in the
third line through the remainder of such Section 9.7 shall be
deleted and replaced with the following:
"based on an amount representing the Calculation Agent's
determination of the fair value to Buyer of an option with
terms that would preserve for Buyer the economic equivalent of
any payment or delivery (assuming satisfaction of each
applicable condition precedent) by the parties in respect of
the relevant Transaction that would have been required after
that date but for the occurrence of the Nationalization or
De-Listing Event, as the case may be."
(p) Alternative Calculations and Payment on Early Termination and
on Certain Extraordinary Events. If JPMorgan shall owe
Counterparty any amount pursuant to Sections 9.3, 9.6 or 9.7
of the Equity Definitions or pursuant to any early termination
hereunder or under the Agreement or pursuant to Section
6(d)(ii) of the Agreement or otherwise (a "PAYMENT
OBLIGATION"), JPMorgan may, in its sole discretion, satisfy
any such Payment Obligation by the Share Termination
Alternative (as defined below) by giving irrevocable
telephonic notice to Counterparty, confirmed in writing within
one Currency Business Day, between the hours of 9:00 a.m. and
4:00 p.m. New York local time on the Announcement Date or
Early Termination Date, as applicable ("NOTICE OF SHARE
TERMINATION"). Upon Notice of Share Termination no later than
8:00 a.m. on the Exchange Business Day immediately following
the Announcement Date or Early Termination Date, as
applicable, the following provisions shall apply:
Share Termination Applicable and means that
Alternative: JPMorgan shall deliver to
Counterparty the Share
Termination Delivery Property
on the date when the Payment
Obligation would otherwise be
due pursuant to Section 9.7 of
the Equity Definitions or
Section 6(d)(ii) of the
Agreement, as applicable (the
"SHARE TERMINATION PAYMENT
DATE"), in satisfaction of the
Payment Obligation in the
manner reasonably requested by
Counterparty free of payment.
Share Termination Delivery A number of Share Termination
Property: Delivery Units, as calculated
by the Calculation Agent,
equal to the Payment
Obligation divided by the
Share Termination Unit
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
10
[JPMORGAN LOGO]
Price. The Calculation Agent shall
adjust the Share Termination
Delivery Property by replacing any
fractional portion of a security
therein with an amount of cash
equal to the value of such
fractional security based on the
values used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to JPMorgan of property
contained in one Share Termination
Delivery Unit on the date such
Share Termination Delivery Units
are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation
Agent in its discretion by
commercially reasonable means and
notified by the Calculation Agent
to JPMorgan at the time of
notification of the Payment
Obligation.
Share Termination Delivery Unit: One Share or, if a Merger Event
has occurred and a corresponding
adjustment to this Transaction has
been made, a unit consisting of
the number or amount of each type
of property received by a holder
of one Share (without
consideration of any requirement
to pay cash or other consideration
in lieu of fractional amounts of
any securities) in such Merger
Event, as determined by the
Calculation Agent.
Failure to Deliver: Applicable
Other applicable provisions: If this Transaction is to be Share
Termination Settled, the
provisions of Sections 6.6, 6.7,
6.8 and 6.10 (as modified above)
of the Equity Definitions will be
applicable, except that all
references in such provisions to
"Physically-Settled" shall be read
as references to "Share
Termination Settled" and all
references to "Shares" shall be
read as references to "Share
Termination Delivery Units".
"Share Termination Settled" in
relation to this Transaction means
that Share Termination Settlement
is applicable to this Transaction.
(q) Governing Law. New York law (without reference to choice of law
doctrine).
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
11
[JPMORGAN LOGO]
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to EDG Confirmation
Group, J.P. Morgan Securities Inc., 277 Park Avenue, 11th Floor, New York, NY
10172-3401, or by fax on 212 622 8519 (PLEASE NOTE THIS NEW FAX NUMBER).
Very truly yours,
J.P. Morgan Securities Inc., as agent for
JPMorgan Chase Bank
By: /s/ Nicola Mudge
--------------------
Authorized Signatory
Name: NICOLA MUDGE
Accepted and confirmed
as of the Trade Date:
CADENCE DESIGN SYSTEMS, INC.
By:___________________
Authorized Signatory
Name:
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS ON NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y5N HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
[JPMORGAN LOGO]
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to EDG Confirmation
Group, J.P. Morgan Securities Inc., 277 Park Avenue. 11th Floor, New York, NY
10172-3401, or by fax on 212 622 8519 (PLEASE NOTE THIS NEW FAX NUMBER).
Very truly yours,
J.P. MORGAN SECURITIES INC., AS AGENT FOR
JPMORGAN CHASE BANK
By:_______________________
Authorized Signatory
Name:
Accepted and confirmed
as of the Trade Date:
CADENCE DESIGN SYSTEMS, INC.
By: /s/ William Porter
-----------------------
Authorized Signatory
Name:
WILLIAM PORTER
SR. VP &CFO
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, LISA.