EXHIBIT 10.74
[JPMORGAN LOGO]
JPMorgan Xxxxx Xxxx
X.X. Xxx 000
00 Xxxxxxxx Embankment
London EC4Y 0JP
England
To: CADENCE DESIGN SYSTEMS, INC. August 11, 2003
0000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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 such
Transaction between JPMorgan and the Company. In the event of any inconsistency
between provisions
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
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: 22,357,646
Warrant Entitlement: One Share per Warrant
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Maximum Number of Warrants: 22,357,646
Strike Price: USD 23.08
Premium: USD 46,095,000
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
Calculation Agent shall determine the
Reference Price or
A SUBSIDIARY OF X.X. XXXXXX 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX.
XXXX XXXXXX 000 XXXX XXXXXX, XXX XXXX, XXX.
2
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 X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX.
XXXX XXXXXX 000 XXXX XXXXXX, XXX XXXX, XXX.
3
Share Settled" in relation to
any Warrant means that Net
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:
Cadence Design Systems, Inc.
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
A SUBSIDIARY OF X.X. XXXXXX 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX.
XXXX XXXXXX 000 XXXX XXXXXX, XXX XXXX, XXX.
4
Account for delivery of Shares to Counterparty:
Mellon Investor Services
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
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 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
Xxxxxx XX0X 0XX, Xxxxxxx
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Company:
Cadence Design Systems, Inc.
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Address for notices or communications to JPMorgan:
JPMorgan Chase Bank
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
EDG Corporate Marketing
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
A SUBSIDIARY OF X.X. XXXXXX 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
5
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 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 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 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
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
6
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 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) 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.
A SUBSIDIARY OF X.X. XXXXXX 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
7
(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.
(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.
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
8
(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.
(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)
X.X. Xxxxxx 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
adjustments), 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
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
9
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 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
A SUBSIDIARY OF X.X. XXXXXX 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
10
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 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
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
11
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 "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 328,513,388 (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).
A SUBSIDIARY OF X.X. XXXXXX 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
12
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 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
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
13
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).
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 X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
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, X.X. Xxxxxx Securities Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000-0000, or by fax on 000 000 0000 (PLEASE NOTE THIS NEW FAX NUMBER).
Very truly yours,
X.X. XXXXXX SECURITIES INC., AS AGENT( FOR
JPMORGAN CHASE BANK
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Authorized Signatory
Name: Xxxxxx Xxxxx
Accepted and confirmed
as of the Trade Date:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------
Authorized Signatory
Name:
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to EDG Confirmation
Group. X.X. Xxxxxx Securities Inc., 000 Xxxx Xxxxxx. 00xx Xxxxx, Xxx Xxxx, XX
00000-0000, or by fax on 000 000 0000(PLEASE NOTE THIS NEW FAX NUMBER).
Very truly yours,
X.X. XXXXXX 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/ XXXXXXX XXXXXX
---------------------------------------
Authorized Signatory
Name: XXXXXXX XXXXXX
SR. VP & CFO
A SUBSIDIARY OF X.X. XXXXXX XXXXX & 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
Annex A
NUMBER EXPIRATION DATE DAILY NUMBER OF WARRANTS
------ ----------------- ------------------------
1. February 21, 2008 372,627
2. February 22, 2008 372,627
3. February 25, 2008 372,627
4. February 26, 2008 372,627
5. February 27, 2008 372,627
6. February 28, 2008 372,627
7. February 29, 2008 372,627
8. March 3, 2008 372,627
9. March 4, 2008 372,627
10. March 5, 2008 372,627
11. March 6, 2008 372,627
12. March 7, 2008 372,627
13. March 10, 2008 372,627
14. March 11, 2008 372,627
15. March 12, 2008 372,627
16. March 13, 2008 372,627
17. March 14, 2008 372,627
18. March 17, 2008 372,627
19. March 18, 2008 372,627
20. March 19, 2008 372,627
21. March 20, 2008 372,627
22. March 24, 2008 372,627
23. March 25, 2008 372,627
24. March 26, 2008 372,627
25. March 27, 2008 372,627
26. March 28, 2008 372,627
27. March 31, 2008 372,627
28. April 1, 2008 372,627
29. April 2, 2008 372,627
30. April 3, 2008 372,627
31. April 4, 2008 372,627
32. April 7, 2008 372,627
33. April 8, 2008 372,627
34. April 9, 2008 372,627
35. April 10, 2008 372,627
36. April 11, 2008 372,627
37. April 14, 2008 372,627
38. April 15, 2008 372,627
39. April 16, 2008 372,627
40. April 17, 2008 372,627
41. April 18, 2008 372,627
42. April 21, 2008 372,627
43. April 22, 2008 372,627
44. April 23, 2008 372,627
45. April 24, 2008 372,627
46. April 25, 2008 372,627
47. April 28, 2008 372,627
48. April 29, 2008 372,627
49. April 30, 2008 372,627
50. May 1, 2008 372,627
51. May 2, 2008 372,627
52. May 5, 2008 372,627
53. May 6, 2008 372,627
54. May 7, 2008 372,627
55. May 8, 2008 372,627
56. May 9, 2008 372,627
57. May 12, 2008 372,627
58. May 13, 2008 372,627
59. May 14, 2008 372,627
60. May 15, 2008 379,224
A SUBSIDIARY OF X.X. XXXXXX 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 000 XXXXXX XXXX, XXXXXX, XX0X 0XX. XXXX XXXXXX 000
XXXX XXXXXX, XXX XXXX, XXX.
16
