EXHIBIT 10.73
[JPMORGAN LOGO]
August 10, 2003
JPMORGAN CHASE BANK
C/O J.P. MORGAN SECURITIES INC.
277 PARK AVENUE, 11TH FLOOR
NEW YORK, NEW YORK 10172
CADENCE DESIGN SYSTEMS, INC.
2655 SEELY AVENUE
SAN JOSE, CA 95134
Ladies and Gentlemen:
Reference is made to the following transactions between Cadence Design
Systems, Inc. (the "COMPANY") and JPMorgan Chase Bank ("JPMORGAN"): (i) the
issuance of up to $350,000,000 principal amount of Senior Convertible Notes due
August 15, 2023 (the "CONVERTIBLE TRANSACTION"), (ii) a convertible bond hedge
transaction to be evidenced by the ISDA confirmation in substantially the form
attached as Exhibit A hereto (the "BOND HEDGE TRANSACTION") and (iii) a call
option transaction to be evidenced by the ISDA confirmation in substantially the
form attached as Exhibit B hereto (the "CALL OPTION TRANSACTION" and together
with the Convertible Transaction and the Bond Hedge Transaction, the
"TRANSACTIONS"). The Company acknowledges that (i) JPMorgan and the Company are
entering into the Bond Hedge Transaction and the Call Option Transaction in
connection with the Convertible Transaction and (ii) prior to the execution of
final documentation for the Transactions, JPMorgan, or one or more of its
affiliates, will enter into certain hedging activities in connection with the
Bond Hedge Transaction (the "ADVANCE HEDGING ACTIVITIES").
Based on the foregoing, the Company and JPMorgan, intending to be
legally bound, hereby acknowledge and agree that in the event that the Company
determines not to enter into the Transactions for any reason within the pricing
parameters of the Convertible Transaction proposed to the Company on August 10,
2003 by 6.00 p.m. in New York on August 11, 2003 (or such later date as agreed
upon by the parties) (August 11, 2003 or such later date as agreed upon being
the "EARLY UNWIND DATE"), JPMorgan or one or more of its affiliates shall
terminate the Advance Hedging Activities (the "EARLY UNWIND") on the Early
Unwind Date and the Company shall purchase from JPMorgan on the Early Unwind
Date all shares of common stock of the Company (the "SHARES") purchased by
JPMorgan or one or more of its affiliates in connection with the Advance Hedging
Activities (the "EARLY UNWIND PURCHASE"). The purchase price paid by the Company
for the Shares purchased in the Early
[JPMORGAN LOGO]
Unwind Purchase shall be JPMorgan's actual out-of-pocket cost of such Shares as
JPMorgan informs the Company in writing and shall be paid in immediately
available funds on the business day immediately following the Early Unwind Date.
JPMorgan and the Company hereby represent and acknowledge to the other that,
upon consummation of the Early Unwind Purchase, all obligations of the parties
with respect to the Advance Hedging Activities shall be deemed fully and finally
discharged.
[JPMORGAN LOGO]
Please indicate your agreement with the terms set forth in this letter
by signing below.
Very truly yours,
J.P. MORGAN SECURITIES INC.,
as agent for JPMorgan Chase Bank
By: /s/ Nicola Mudge
-----------------------------
Name: NICOLA MUDGE
Title: VICE PRESIDENT
ACKNOWLEDGED AND AGREED:
CADENCE DESIGN SYSTEMS, INC.
By: ______________________________________
Name:
Title:
[JPMORGAN LOGO]
Please indicate your agreement with the terms set forth in this letter
by signing below.
Very truly yours,
J.P. MORGAN SECURITIES INC.,
as agent for JPMorgan Chase Bank
By: _______________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
CADENCE DESIGN SYSTEMS, INC.
By: /s/ William Porter
------------------
Name: WILLIAM PORTER
Title:
[JPMORGAN LOGO]
EXHIBIT A
BOND HEDGE TRANSACTION CONFIRMATION
[JPMORGAN LOGO]
JPMorgan Chase Bank
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
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
JPMorgan Trust Company, N.A., 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
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]
transactions (each a "TRANSACTION") entered into between JPMorgan and the
Counterparty (notwithstanding 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 13.06(g)
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 [____]
Premium: USD [_________]
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:
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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[JPMORGAN LOGO]
Exercise Period: Notwithstanding the Equity Definitions,
the Exercise Period shall be, in
respect of the Exercise Options, each
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 13.06(g)
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.
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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[JPMORGAN LOGO]
Settlement Date: For any Exercise Options relating to
the conversion of Convertible Notes,
the settlement date for Shares to be
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 5.01 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
13.06(g) 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 13.06(g)
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(c) 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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[JPMORGAN LOGO]
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:
[ ]Bank
ABA#[ ]
Acct: Cadence Design Systems, Inc.
Acct No.: [ ]
Account for delivery of Shares to Counterparty:
[ ]
(b) Account for payments to JPMorgan:
[JPMorgan Chase Bank]
[A/c No. 0010962009]
[Favour: JPMorgan Chase Bank - London]
[Ref. CHASUS33XXX]
Account for delivery of Shares from JPMorgan:
[ ]
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
7.Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
Cadence Design Systems, Inc.
Attention: Treasurer
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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[JPMORGAN LOGO]
Telephone No.: [ ]
Facsimile No.: [ ]
Address for notices or communications to JPMorgan:
[JPMorgan notice information to follow]:
[ ]
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 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 as a 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
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.
6
[JPMORGAN LOGO]
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:
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
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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(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 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
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.
8
[JPMORGAN LOGO]
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".
(1) 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
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."
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.
9
[JPMORGAN LOGO]
(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 JPMorgan
Alternative: 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 A number of Share Termination Delivery
Delivery Property: Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
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 The value to JPMorgan of property
Unit Price: contained in one Share Termination
Delivery Unit on the date such Share
Termination Delivery Units are 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.
10
[JPMORGAN LOGO]
delivered as Share Termination Deliver,
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 One Share or, if a Merger Event has
Delivery Unit: 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 If this Transaction is to be Share
provisions: 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: ____________________________________
Authorized Signatory
Name:
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 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]
EXHIBIT B
CALL OPTION TRANSACTION CONFIRMATION
DRAFT COPY
JPMorgan Chase Bank
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
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: Warrants
Reference: [ ]
The purpose of this letter agreement is to confirm the terms and
conditions of the Warrants issued by CADENCE DESIGN SYSTEMS, INC. ("COMPANY") to
JPMORGAN ENTITY Chase Bank, London Branch ("JPMORGAN") 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. This
Transaction shall be deemed to be a Share Option Transaction within the meaning
set forth in the Equity Definitions.
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 Company as to the terms of the Transaction to which this
Confirmation relates. In addition, JPMorgan and the Company 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 Company will in good
faith agree together with related schedules. Upon the execution by JPMorgan and
the Company 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 Company
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 Company (notwithstanding
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 Company 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
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.
such Transaction between JPMorgan and the Company. 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 Company 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
Warrants: American-style equity call warrants to
be issued by the Company to JPMorgan,
each giving the holder the right to
purchase one Share at the Strike Price.
For the purposes of Equity Definitions,
each Warrant shall be deemed to be a
Call Option.
Buyer: JPMorgan
Seller: Company
Shares: The common stock of Company, par value USD 0.01 per
Share (Exchange symbol "CDN")
Number of Warrants: [________]
Warrant Entitlement: One Share per Warrant
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Maximum Number of Warrants: [___________]
Strike Price: USD [_____]
Premium: USD [_____]
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:
Expiration Time: The Valuation Time
Expiration Date: For any Daily Number of Warrants, each date
specified as such in Annex A hereto. If there is a
Market Disruption Event on any Expiration Date,
then the
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.
2
Calculation Agent shall determine
the Reference Price or Settlement
Price for such Expiration Date,
as the case may be, on the basis
of its good faith estimate of the
trading value for the relevant
Shares.
Automatic Exercise: Applicable
Valuation applicable to each Warrant:
Valuation Time: At the close of trading of the regular trading
session on the Exchange
Valuation Date: The Exercise Date
Settlement Terms applicable to the
Transaction:
Method of Settlement: Net Share Settlement; and means
that, on each Settlement Date, Company
shall deliver to JPMorgan, the
Share Delivery Quantity of Shares
for such Settlement Date to the
account specified hereto free of
payment through the Clearance
System.
Share Delivery Quantity: For any Settlement Date, a number of
Shares, as Calculated by the
Calculation Agent, equal to the
Net Share Settlement Amount for
such Settlement Date divided by
the Settlement Price for such
Settlement Date, plus cash in
lieu of any fractional shares.
Net Share Settlement Amount: For any Settlement Date, the Daily
Number of Warrants specified in
Annex A with respect to the
Expiration Date corresponding to
such Settlement Date multiplied
by the Strike Price Differential
for such Settlement Date.
Strike Price Differential: (a) If the Settlement Price for any Expiration Date
is greater than the Strike Price, an amount equal
to the excess of such Settlement Price over the
Strike Price; or
(b) If such Settlement Price is less than or equal
to the Strike Price, zero.
Settlement Price: For any Expiration Date, the closing price per
Share on the Exchange at the Valuation Time on the
Valuation Date.
Settlement Date: For any Expiration Date, the date defined as such
in Section 6.2 of the Equity Definitions, subject
to Section 8(r)(i) hereof.
Failure to Deliver: Applicable
Other Applicable Provisions: The provisions of Sections 6.6, 6.7, 6.8 and 6.10
of the Equity Definitions will be applicable,
except that all references in such provisions to
"Physically-Settled" shall be read as references to
"Net Share Settled". "Net
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.
3
Share Settled" in relation to
any Warrant means that Met Share
Settlement is applicable to that
Warrant.
3. Additional Terms applicable to the
Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment
Extraordinary Events applicable to the
Transaction:
Consequence of Merger Events
(a) Share-for-Share: Alternative Obligation; provided that the Calculation
Agent will determine if the Merger Event affects the
theoretical value of the Transaction and if so
JPMorgan in its sole discretion may elect to make
adjustments to the Strike Price and any other term
necessary to reflect the characteristics (including
volatility, dividend practice and policy and
liquidity) of the New Shares. Notwithstanding the
foregoing, Cancellation and Payment shall apply in the
event the New Shares are not publicly traded on a
United States national securities exchange or quoted
on the Nasdaq National Market System.
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Cancellation and Payment
Nationalization or Insolvency: Cancellation and Payment
Nationalization or Insolvency: Cancellation and Payment
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 Company:
[ ]Bank
ABA#[ ]
Acct: Cadence Design Systems, Inc.
Acct No.: [ ]
Account for delivery of Shares to
Company:
[ ]
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.
4
(b) Account for payments to JPMorgan:
[JPMorgan Chase Bank]
[A/c No. 0010962009]
[Favour: JPMorgan Chase Bank - London]
[Ref. CHASUS33XXX]
Account for delivery of Shares from JPMorgan:
[ ]
6. Offices:
The Office of Company for the Transaction is: Inapplicable, Company is not a
Multibranch Party.
The Office of JPMorgan for the Transaction is: New York
JPMorgan Chase Bank
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Company:
Cadence Design Systems, Inc.
Attention: Treasurer
Telephone No.: [ ]
Facsimile No.: [ ]
Address for notices or communications to JPMorgan:
[JPMorgan notice information to follow]:
[ ]
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.
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.
5
(b) Share De-listing Event. If at any time during the period from
and including the Trade Date, to and including the final
Valuation Date, 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. Company shall, on any day on which Company
effects any repurchase of Shares, promptly give JPMorgan a
written notice of such repurchase (a "REPURCHASE NOTICE") if
following such repurchase, the Warrants Equity Percentage as
determined on such day is (i) greater than 5% and (ii) greater
by 0.5% than the Warrants Equity Percentage included in the
immediately preceding Repurchase Notice (or, in the case of
the first such Repurchase Notice, greater than the Warrants
Equity Percentage as of the date hereof). The "WARRANTS EQUITY
PERCENTAGE" as of any day is the fraction (A) the numerator of
which is the product of the Number of Warrants and the Warrant
Entitlement and (B) the denominator of which is the number of
Shares outstanding on such day. Company 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 as a 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 Company'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 Company in writing, and the
Company, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Company
may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. Company
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,
Company agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or
judgment. Company 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
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.
6
paragraph (c) is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then Company 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. Company 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 Company.
(e) Eligible Contract Participant. Company 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:
Company is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) Company has total assets in excess of USD
10,000,000;
(B) the obligations of Company 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) Company has a net worth in excess of USD
1,000,000 and has entered into this
Agreement in connection with the conduct of
Company'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 Company in the conduct of
Company's business.
(f) Regulation M. The Company 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
Company, 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 Company shall not, until the fifth
Exchange Business Day immediately following the Trade Date,
engage in any such distribution.
(g) No Manipulation. The Company 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) Board Authorization. Company represents that it is entering
into the Transaction, solely for the purposes stated in the
board resolution authorizing this Transaction and in its
public disclosure. Company further represents that there is no
internal policy, whether written or oral, of Company that
would prohibit Company from entering into any aspect of this
Transaction, including, but not limited to, the purchases of
Shares to be made pursuant hereto.
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.
7
(i) Transfer or Assignment. Company may not transfer any of its
rights or obligations under this Transaction without the prior
written consent of JPMorgan. JPMorgan may transfer or assign
all or any portion of its rights or obligations under this
Transaction without consent of the Company. If JPMorgan, in
its sole discretion, determines that its "beneficial
ownership" (within the meaning of Section 16 of the Exchange
Act and rules promulgated thereunder) exceeds 8% or more of
the Company's outstanding Shares and, in its sole discretion,
JPMorgan is unable after its commercially reasonable efforts
to effect a transfer or assignment on pricing terms and in a
time period reasonably acceptable to JPMorgan that would
reduce its "beneficial ownership" to 7.5%, 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 the 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 Warrants equal to the
Terminated Portion, (ii) the Company and JPMorgan shall both
be Affected Parties with respect to such partial termination
and (iii) such Transaction shall be the only Terminated
Transaction. For the avoidance of doubt, if JPMorgan assigns
or terminates any Warrants hereunder, each Daily Number of
Warrants not previously settled as set forth in Annex A hereto
shall be reduced proportionally, as calculated by the
Calculation Agent. 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 Company, 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 Company to the extent of any
such performance.
(j) 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".
(k) 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.
(l) Early Unwind. If, on or prior to August 15, 2003 (the "EARLY
UNWIND DATE"), JPMorgan, in its sole discretion, seeks to
effect short sales of Shares or enter into equivalent
derivatives transactions in respect to of this Transaction and
such short sales or equivalent derivatives transactions, in
the sole opinion of JPMorgan, would require registration under
the Securities Act or be subject to any other restrictions
under the Securities Act then this Transaction shall be
automatically terminated, as if the Early Unwind Date were an
Early Termination Date and Counterparty were the sole Affected
Party and this Transaction were the sole Affected Transaction.
(m) Dividends. If at any time during the period from and including
the Trade Date, but excluding the Expiration Date, an
ex-dividend date for a cash dividend occurs with respect to
the Shares (an "EX-DIVIDEND DATE"), and that dividend is
greater than the Regular Dividend on a per share basis then
the forward value of the difference between the Regular
Dividend and the per share cash dividend corresponding to that
Ex-Dividend Date shall be subtracted from the Strike Price.
"REGULAR DIVIDEND" shall mean USD 0.00 per Share per quarter.
The forward value of any such amount shall be calculated from
the Ex-Dividend Date through and including the Settlement
Date. The interest rate used for the calculation of such
forward values shall be the mid-market interpolated Eurodollar
zero coupon swap rate with a maturity corresponding to the
Settlement Date, as determined by JPMorgan.
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.
8
(n) Netting and Setoff. Notwithstanding Section 2(c) of the
Agreement, Company waives its rights to net and offset against
its obligations hereunder any rights Company might have
against JPMorgan under any other transactions.
(o) 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 look solely to the other party (or any
guarantor in respect thereof) for performance of such other
party's obligations under this Transaction.
(p) Additional Provisions.
(i) The first paragraph of Section 9.1(c) of the Equity
Definitions is hereby amended to read as follows: (c) 'If
"Calculation Agent Adjustment" is specified as the method of
adjustment in the Confirmation of a Share Option Transaction,
then following the declaration by the Issuer of the terms of
any Potential Adjustment Event, the Calculation Agent will
determine whether such Potential Adjustment Event has a
material effect on the theoretical value of the relevant
Shares or Warrants and, if so, will (i) make appropriate
adjustment(s), if any, to any one or more of:' and, the
sentence immediately preceding Section 9.1(c)(ii) is hereby
amended by deleting the words "diluting or concentrative".
(ii) Section 9.1(e)(vi) of the Equity Definitions is hereby
amended by deleting the words "other similar" between "any"
and "event"; deleting the words "diluting or concentrative"
and replacing them with "material"; and adding the following
words at the end of the sentence "or Warrants".
(iii) 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."
(iv) 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 Merger Event,
Nationalization, Insolvency or De-Listing Event, as the case
may be."
(q) Alternative Calculations and Payment on Early Termination and
on Certain Extraordinary Events. If Company shall owe JPMorgan
any amount pursuant to Sections 9.3, 9.6 or 9.7 of the Equity
Definitions (except in the event of a Nationalization or a
Merger Event in which the merger consideration to be paid to
holders of Shares consists solely of cash) or pursuant to
Section 6(d)(ii) of the Agreement (except in the event of an
Event of Default in which Company is the Defaulting Party or a
Termination Event in
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.
9
which Company is the Affected Party, other than an Event of
Default of the type described in Section 5(a)(iii), (v), (vi) or
(vii) of the Agreement or a Termination Event of the type
described in Section 5(b)(i), (ii), (iii), (iv), or (v) of the
Agreement that resulted from an event or events outside
Company's control) (a "PAYMENT OBLIGATION"), Company may, in its
sole discretion, satisfy any such Payment Obligation by the
Share Termination Alternative (as defined below) and shall give
irrevocable telephonic notice to JPMorgan, 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
Merger Date, Announcement Date or Early Termination Date, as
applicable, the following provisions shall apply:
Share Termination Alternative: Applicable and means that Company shall
deliver to JPMorgan the Share Termination
Delivery Property on the date (the "SHARE
TERMINATION PAYMENT DATE") when the
Payment Obligation would otherwise be
due, subject to paragraph (r)(i) below,
in satisfaction, subject to paragraph
(r)(ii) below, of the Payment Obligation
in the manner reasonably requested by
JPMorgan free of payment.
Share Termination Delivery Property: A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
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
Company at the time of notification of
the Payment Obligation. In the case of a
Private Placement of Share Termination
Delivery Units that are Restricted Shares
(as defined below) as set for in
paragraph (r)(i) below, the Share
Termination Unit Price shall be
determined by the discounted price
applicable to such Share Termination
Delivery Units. In the case of a
Registered Settlement of Share
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
Termination Delivery Units that are
Restricted Shares (as defined below) as set
forth in paragraph (r)(ii) below, the
Share Termination Unit Price shall be the
Settlement Price.
Share Termination Delivery Unit: In the case of a Termination Event or Event
of Default, one Share or, in the case of a
Merger Event, 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. If a Share Termination
Delivery Unit consists of property other
than cash or New Shares, the Calculation
Agent will replace such property with
cash, New Shares or a combination thereof as
components of a Share Termination Delivery
Unit in such amounts, as determined by the
Calculation Agent in its discretion by
commercially reasonable means, as shall have
a value equal to the value of the property
so replaced. If such Merger Event involves
a choice of consideration to be received
by holders, such holder shall be deemed to
have elected to receive the maximum
possible amount of cash.
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.
(r) Registration/Private Placement Procedures. If, in the
reasonable opinion of JPMorgan, following any delivery of
Shares or Share Termination Delivery Property to JPMorgan
hereunder, such Shares or Share Termination Delivery Property
would be in the hands of JPMorgan subject to any applicable
restrictions with respect to any registration or qualification
requirement or prospectus delivery requirement for such Shares
or Share Termination Delivery Property pursuant to any
applicable federal or state securities law (including, without
limitation, any such requirement arising under Section 5 of
the Securities Act as a result of such Shares or Share
Termination Delivery Property being a
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
"restricted securities", as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such
Shares or Share Termination Delivery Property being subject to
paragraph (c) of Rule 145 under the Securities Act) (such
Shares or Share Termination Delivery Property, "RESTRICTED
SHARES"), then delivery of such Restricted Shares shall be
effected pursuant to either clause (i) or (ii) below at the
election of Company, unless waived by JPMorgan.
Notwithstanding the foregoing, the Company shall elect, prior
to the first Settlement Date under Section 2 above, a Private
Placement Settlement or Registered Settlement for all
deliveries of Restricted Shares pursuant to Section 2 above
which election shall be applicable to all Settlement Dates and
the procedures in clause (i) or clause (ii) below shall apply
for all such delivered Restricted Shares on aggregate basis
commencing after the first Settlement Date. The Calculation
Agent shall make reasonable adjustments to settlement terms
and provisions under this Confirmation to reflect a single
Private Placement or Registered Settlement for such aggregate
Restricted Shares delivered hereunder.
(i) If the Company elects to settle the Transaction
pursuant to this clause (i) (a "PRIVATE PLACEMENT
SETTLEMENT"), then deliveries of Restricted Shares by
the Company shall be effected in customary private
placement procedures with respect to such Restricted
Shares reasonably acceptable to JPMorgan; provided
that the Company may not elect a Private Placement
Settlement if, on the date of its election, it has
taken, or caused to be taken, any action that would
make unavailable either the exemption pursuant to
Section 4(2) of the Securities Act for the sale by
the Company to JPMorgan (or any affiliate designated
by JPMorgan) of the Restricted Shares or the
exemption pursuant to Section 4(1) or Section 4(3) of
the Securities Act for resales of the Restricted
Shares by JPMorgan (or any such affiliate of
JPMorgan). The Private Placement Settlement of such
Registered Shares shall include customary
representations, covenants, blue sky and other
governmental filings and/or registrations,
indemnities to JPMorgan, due diligence rights (for
JPMorgan or any designated buyer of the Restricted
Shares by JPMorgan), opinions and certificates, and
such other documentation as is customary for private
placement agreements, all reasonably acceptable to
JPMorgan. In the case of a Private Placement
Settlement, JPMorgan shall determine the appropriate
discount to the Share Termination Unit Price (in the
case of settlement of Share Termination Delivery
Units pursuant to paragraph (q) above) or any
Settlement Price (in the case of settlement of Shares
pursuant to Section 2 above) applicable to such
Restricted Shares in a commercially reasonable manner
and appropriately adjust the amount of such
Restricted Shares to be delivered to JPMorgan
hereunder; provided that in no event such number
shall be greater than [________ ] (the "MAXIMUM
AMOUNT"). Notwithstanding the Agreement or this
Confirmation, the date of delivery of such Restricted
Shares shall be the Exchange Business Day following
notice by JPMorgan to the Company, of such applicable
discount and the number of Restricted Shares to be
delivered pursuant to this clause (i). For the
avoidance of doubt, delivery of Restricted Shares
shall be due as set forth in the previous sentence
and not be due on the Share Termination Payment Date
(in the case of settlement of Share Termination
Delivery Units pursuant to paragraph (q) above) or on
the Settlement Date for such Restricted Shares (in
the case of settlement of Shares pursuant to Section
2 above).
(ii) If the Company elects to settle the Transaction
pursuant to this clause (ii) (a "REGISTRATION
SETTLEMENT"), then the Company shall file and use its
reasonable best efforts to make effective under the
Securities Act a registration statement or supplement
or amend an outstanding registration statement in
form and substance reasonably satisfactory to
JPMorgan, to cover the resale of such
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.
12
Restricted Shares in accordance with customary resale
registration procedures, including covenants,
conditions, representations, underwriting discounts
(if applicable), commissions (if applicable),
indemnities due diligence rights, opinions and
certificates, and such other documentation as is
customary for equity resale underwriting agreements,
all reasonably acceptable to JPMorgan. If JPMorgan is
satisfied with such procedures and documentation, it
shall sell the Restricted Shares pursuant to such
registration statement during a period (the "RESALE
PERIOD") commencing on the Exchange Business Day
following delivery of such Restricted Shares (which,
for the avoidance of doubt, shall be any Settlement
Date in the case of settlement of Shares pursuant to
Section 2 above or the Share Termination Payment Date
in case of settlement of Share Termination Delivery
Units pursuant to paragraph (q) above) and ending on
the earliest of (i) the Exchange Business Day on
which JPMorgan completes the sale of all Restricted
Shares or, in the case of settlement of Share
Termination Delivery Units, a sufficient number of
Restricted Shares so that the realized net proceeds
of such sales exceed the Payment Obligation (as
defined above), (ii) the date upon which all
Restricted Shares have been sold or transferred
pursuant to Rule 144 (or similar provisions then in
force) or Rule 145(d)(l) or (2) (or any similar
provision then in force) under the Securities Act and
(iii) the date upon which all Restricted Shares may
be sold or transferred by a non-affiliate pursuant to
Rule 144(k) (or any similar provision then in force)
or Rule 145(d)(3) (or any similar provision then in
force under the Securities Act. If the Payment
Obligation exceeds the realized net proceeds from
such resale, Company shall transfer to JPMorgan by
the open of the regular trading session on the
Exchange on the Exchange Trading Day immediately
following the last day of the Resale Period the
amount of such excess (the "ADDITIONAL AMOUNT") in
cash or in a number of Shares ("MAKE-WHOLE SHARES")
in an amount that, based on the Settlement Price on
the last day of the Resale Period (as if such day was
the "Valuation Date" for purposes of computing such
Settlement Price), has a dollar value equal to the
Additional Amount. The Resale Period shall continue
to enable the sale of the Make-whole Shares. If
Company elects to pay the Additional Amount in
Shares, the requirements and provisions for
Registration Settlement shall apply. This provision
shall be applied successively until the Additional
Amount is equal to zero. In no even shall the Company
deliver a number of Restricted Shares greater than
the Maximum Amount.
(iii) Without limiting the generality of the foregoing,
Company agrees that any Restricted Shares delivered
to JPMorgan, as purchaser of such Restricted Shares,
(i) may be transferred by and among JPMorgan Chase
Bank and its affiliates and Company shall effect such
transfer without any further action by JPMorgan and
(ii) after the minimum "holding period" within the
meaning of Rule 144(d) under the Securities Act has
elapsed after any Settlement Date for such Restricted
Shares, Company shall promptly remove, or cause the
transfer agent for such Restricted Shares to remove,
any legends referring to any such restrictions or
requirements from such Restricted Shares upon
delivery by JPMorgan (or such affiliate of JPMorgan)
to Company or such transfer agent of seller's and
broker's representation letters and an opinion of
counsel customarily delivered by JPMorgan in
connection with resales of restricted securities
pursuant to Rule 144 under the Securities Act,
without any further requirement for the delivery of
any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer
tax stamps or payment of any other amount or any
other action by JPMorgan (or such affiliate of
JPMorgan).
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.
13
If the Private Placement Settlement or the
Registration Settlement shall not be effected as set
forth in clauses (i) or (ii), as applicable, then
failure to effect such Private Placement Settlement
or such Registration Settlement shall constitute an
Event of Default with respect to which Company shall
be the Defaulting Party.
(s) DTC-Eligible Deliveries. Notwithstanding anything to
the contrary herein, the Company agrees that any
delivery of Shares or Share Termination Delivery
Property shall be effected by book-entry transfer
through the facilities of DTC, or any successor
depositary, if at the time of delivery, such class of
Shares or class of Share Termination Delivery
Property is eligible to be in book-entry form at DTC
or such successor depositary.
(t) 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.
14
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: _________________________
Authorized Signatory
Name:
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.
Annex A
NUMBER EXPIRATION DATE DAILY NUMBER OF WARRANTS
- ------ --------------- ------------------------
1 February 21, 2008 [________]
2. February 22, 2008 [________]
3. February 25, 2008 [________]
4. February 26, 2008 [________]
5. February 27, 2008 [________]
6. February 28, 2008 [________]
7. February 29, 2008 [________]
8. March 3, 2008 [________]
9. March 4, 2008 [________]
10. March 5, 2008 [________]
11. March 6, 2008 [________]
12. March 7, 2008 [________]
13. March 10, 2008 [________]
14. March 11, 2008 [________]
15. March 12, 2008 [________]
16. March 13, 2008 [________]
17. March 14, 2008 [________]
18. March 17, 2008 [________]
19. March 18, 2008 [________]
20. March 19, 2008 [________]
21. March 20, 2008 [________]
22. March 24, 2008 [________]
23. March 25, 2008 [________]
24. March 26, 2008 [________]
25. March 27, 2008 [________]
26. March 28, 2008 [________]
27. March 31, 2008 [________]
28. April 1, 2008 [________]
29. April 2, 2008 [________]
30. April 3, 2008 [________]
31. April 4, 2008 [________]
32. April 7, 2008 [________]
33. April 8, 2008 [________]
34. April 9, 2008 [________]
35. April 10, 2008 [________]
36. April 11, 2008 [________]
37. April 14, 2008 [________]
38. April 15, 2008 [________]
39. April 16, 2008 [________]
40. April 17, 2008 [________]
41. April 18, 2008 [________]
42. April 21, 2008 [________]
43. April 22, 2008 [________]
44. April 23, 2008 [________]
45. April 24, 2008 [________]
46. April 25, 2008 [________]
47. April 28, 2008 [________]
48. April 29, 2008 [________]
49. April 30, 2008 [________]
50. May 1, 2008 [________]
51. May 2, 2008 [________]
52. May 5, 2008 [________]
53. May 6, 2008 [________]
54. May 7, 2008 [________]
55. May 8, 2008 [________]
56. May 9, 2008 [________]
57. May 12, 2008 [________]
58. May 13, 2008 [________]
59. May 14, 2008 [________]
60. May 15, 2008 [________]
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. AUTHORIZED BY THE FSA.
REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
16