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EXHIBIT 10.75
[JPMORGAN LOGO]
JPMorgan Chase Bank
P.O. Box 161
60 Victoria Embankment
London EC4YO JP
England
August 11, 2003
To: CADENCE DESIGN SYSTEMS, INC.
2655 Seely Avenue
San Jose, CA 95134
Attention: Treasurer
Telephone No.: (408) 943-1234
Facsimile No.: (408) 943-0513
Re: Call Option Transaction
Reference:
The purpose of this letter agreement is to confirm the terms
and
conditions of the Transaction entered into
between JPMORGAN CHASE BANK, LONDON
BRANCH ("JPMORGAN") AND CADENCE DESIGN
SYSTEMS, INC. ("COUNTERPARTY") on the
Trade Date specified below (the
"TRANSACTION"). This letter agreement
constitutes a "Confirmation" as referred to
in the ISDA Master Agreement
specified below. This Confirmation shall
replace any previous letter and serve
as the final documentation for this
Transaction.
The definitions and provisions contained in the 1996 ISDA
Equity
Derivatives Definitions (the "EQUITY
DEFINITIONS"), as published by the
International Swaps and Derivatives
Association, Inc., are incorporated into
this Confirmation. In the event of any
inconsistency between the Equity
Definitions and this Confirmation, this
Confirmation shall govern. Certain
defined terms used herein have the meanings
assigned to them in the Offering
Memorandum dated August 11, 2003 (the
"OFFERING MEMORANDUM") relating to the USD
350,000,000 principal amount of Zero Coupon
Zero Yield Senior Convertible Notes
due August 15, 2023, (the "CONVERTIBLE
NOTES") issued by the Counterparty
pursuant to an Indenture to be dated August
15, 2003 between Counterparty and
J.P. Morgan Trust Company, National
Association, as trustee (the "INDENTURE").
In the event of any inconsistency between
the terms defined in the Offering
Memorandum and this Confirmation, the
Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges,
that
the other party has engaged in, or
refrained from engaging in, substantial
financial transactions and has taken other
material actions in reliance upon the
parties' entry into the Transaction to
which this Confirmation relates on the
terms and conditions set forth below.
1. This
Confirmation evidences a complete and binding agreement between
JPMorgan and the Counterparty as to the
terms of the Transaction to which this
Confirmation relates. In addition, JPMorgan
and the Counterparty agree to make
all reasonable efforts to promptly
negotiate, execute, and deliver an agreement
in the form of the 1992 ISDA Master
Agreement (Multicurrency-Cross Border) (the
"AGREEMENT"), with such modifications as
JPMorgan and the Counterparty will in
good faith agree together with related
schedules. Upon the execution by JPMorgan
and the Counterparty of such an agreement,
this Confirmation will supplement,
form a apart of, and be subject to, that
agreement. All provisions contained or
incorporated by reference in that agreement
upon its execution will govern this
Confirmation except as expressly modified
below. Until JPMorgan and the
Counterparty execute such agreement, this
Confirmation, together with all other
documents referring to an Agreement (each a
"CONFIRMATION") confirming
transactions (each a "TRANSACTION") entered
into between JPMorgan and the
Counterparty (notwithstanding
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED
LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED
IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125
LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW
YORK, USA.
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[JPMORGAN LOGO]
anything to the contrary in a
Confirmation), shall supplement, form a part of,
and be subject to an agreement in the form
of the Agreement as if JPMorgan and
the Counterparty had executed an agreement
in such form (but without any
Schedule except for the election of the
laws of the State of New York as the
governing law and United States dollars as
the Termination Currency and Second
Method and Loss as the payments on early
termination) on the Trade Date of the
first such Transaction between JPMorgan and
the Counterparty. In the event of
any inconsistency between provisions of
that agreement and this Confirmation,
this Confirmation will prevail for the
purpose of the Transaction to which this
Confirmation relates. The parties hereby
agree that if they have not executed an
Agreement within 60 days from the Trade
Date it shall constitute an Additional
Termination Event under the Agreement in
respect of which the Counterparty is
the sole Affected Party and this
Transaction is the sole Affected Transaction.
2.
The terms of the particular Transaction to which this
Confirmation
relates are as follows:
General Terms:
Trade Date:
August 11, 2003
Option Style:
"Modified American", as set forth
under "Exercise and Valuation"
below
Option Type:
Call
Buyer:
Counterparty
Seller:
JPMorgan
Shares:
The common stock of Counterparty,
par value USD 0.01 per Share
(Exchange symbol "CDN")
Number of Options:
A number equal to the Conversion
Rate
(as defined in the Offering
Memorandum, but without regard to
Section 13.08 and Section 13.13 of
the Indenture), multiplied by the
number of USD 1,000 principal
amount of Convertible Notes (each
such USD 1,000 principal amount, a
"CONVERTIBLE NOTE")
Option Entitlement:
One Share per Option
Strike Price:
USD 15.65
Premium:
USD 110,998,055
Premium Payment Date:
August 15, 2003
Exchange:
The New York Stock Exchange
Related Exchange(s):
The principal exchange(s) for
options contracts or futures
contracts, if any, with respect to
the Shares
Exercise and Valuation:
Exercise Period:
Notwithstanding the Equity
Definitions, the Exercise Period
shall be, in respect of the
Exercise Options, each
A
SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED
LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED
IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125
LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
2
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[JPMORGAN LOGO]
period commencing from the date a
Notice of Conversion is submitted
to the Counterparty by a holder of
Convertible Notes to and including
the third Exchange Business Day
following the Conversion Date for
such Convertible Notes. For the
avoidance of doubt, only a number
of options equal to the Exercise
Options shall be exercisable
hereunder, and only during the
Exercise Period for such Exercise
Options.
Exercise Options:
A number of Options equal to the
Conversion Rate (but without
regard to any adjustment under
Section 13.08 and Section 13.13 of
the Indenture) of Convertible
Notes surrendered to Counterparty
for conversion times the number of
such Convertible Notes.
Expiration Time:
The Valuation Time
Expiration Date:
In respect of any Exercise
Options, the earlier of August 15,
2008 and the final day of the
Exercise Period in respect of such
Exercise Options.
Multiple Exercise:
Applicable; and means that
Counterparty may exercise, with
respect to an Exercise Period and
the Exercise Options relating to
such Period, a number of Options
not less than one (1) and not
greater than such Exercise
Options.
Automatic Exercise:
Applicable; and means that a
number of Options not previously
exercised hereunder equal to the
Exercise Options shall be deemed
to be exercised on the Expiration
Date for the Exercise Period
relating to such Exercise Options;
provided that Counterparty has
notified JPMorgan (in writing or
orally) of the Conversion Date and
the number of such Exercise
Options one Exchange Business Day
prior to such Expiration Date.
Valuation Time:
At the close of trading of the
regular trading session on the
Exchange
Settlement Terms:
Physical Settlement:
Applicable; provided that if and
to the extent Counterparty is
required to deliver cash in lieu
of fractional Shares (or any
fractional Shares) with respect to
the settlement of Convertible
Notes, the Calculation Agent shall
adjust the settlement terms
hereunder to account for delivery
by JPMorgan to Counterparty of
such cash or fractional Shares in
the amount of such required
delivery obligation.
Settlement Date:
For any Exercise Options relating
to the conversion of Convertible
Notes, the settlement date for
Shares to be
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED
LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED
IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125
LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
3
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[JPMORGAN LOGO]
delivered under such Convertible
Notes under the terms of the
Indenture.
Failure to Deliver:
Applicable
3. Additional Terms applicable to the
Transaction:
Adjustments applicable to
the Transaction:
Potential Adjustment
Events:
Notwithstanding Section 9.1(e) of
the Equity Definitions, a
"Potential Adjustment Event" means
any occurrence of any event or
condition, as set forth in Section
13.06 of the Indenture that would
result in an adjustment to the
Conversion Rate of the Convertible
Notes; provided that in no event
shall there be any adjustment
hereunder as a result of an
adjustment to the Conversion Rate
pursuant to Section 13.08 and
Section 13.13 of the Indenture.
Method of Adjustment:
Calculation Agent Adjustment, and
means that, notwithstanding
Section 9.1(c) of the Equity
Definitions, upon any adjustment
to the Conversion Rate of the
Convertible Notes pursuant to the
Indenture (other than Section
13.08 and Section 13.13 of the
Indenture), the Calculation Agent
will make a corresponding
adjustment to any one or more of
the Strike Price, Number of
Options, the Option Entitlement
and any other variable relevant to
the exercise, settlement or
payment for the Transaction.
Extraordinary Events applicable to the
Transaction:
Merger Events:
Notwithstanding Section 9.2(a) of
the Equity Definition, a "Merger
Event" means the occurrence of any
event or condition set forth in
Section 8.01 of the Indenture.
Consequence of Merger Events:
Notwithstanding Section 9.3 of the
Equity Definition, upon the
occurrence of a Merger Event, the
Calculation Agent shall make a
corresponding adjustment in
respect of any adjustment under
the Indenture to any one or more
of the nature of the Shares,
Strike Price, Number of Options,
the Option Entitlement and any
other variable relevant to the
exercise, settlement or payment
for the Transaction.
Additional Termination Events:
If an event of default with respect to
Counterparty
shall occur under the
terms of the Convertible Notes as set
forth in Section 5.01 of the
Indenture, then such event shall
constitute an Additional Termination
Event applicable to this Transaction
and, with respect to such event (i)
Counterparty shall be deemed to be
Affected Party and JPMorgan shall be
deemed to be the party that is not the
Affected Party and (ii) JPMorgan shall
be the party entitled to designate an
Early Termination Date pursuant to
Section 6(b) of the Agreement.
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED
LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED
IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125
LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
4
<PAGE>
[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:
Cadence Design Systems, Inc.
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
Account for delivery of Shares to Counterparty:
Mellon Investor Services
235 Montgomery Street, 23rd Floor
San Francisco, CA 94104
Cadence Design Systems Book Memo Treasury Reserve Account
Comment: When you are ready to deliver shares contact Cadence
FIRST.
(b) Account
for payments to JPMorgan:
JPMorgan Chase Bank, New York
_________________________________
_________________________________
_________________________________
_________________________________
Account for delivery of Shares from JPMorgan:
DTC 060
6. Offices:
The Office of Counterparty for the
Transaction is: Inapplicable, Counterparty is
not a Multibranch Party.
The Office of JPMorgan for the Transaction
is: New York
JP Morgan Chase Bank
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP, England
A SUBSIDIARY OF J.P. MORGAN CHASE & CO.
INCORPORATED WITH LIMITED
LIABILITY AS A NEW YORK STATE CHARTERED COMMERCIAL
BANK.
REGISTERED
IN ENGLAND BRANCH NUMBER BR000746. AUTHORISED BY THE FSA.
REGISTERED BRANCH ADDRESS 125
LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270
PARK AVENUE, NEW YORK, USA.
5
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[JPMORGAN LOGO]
7. Notices: For purposes of this
Confirmation:
(a) Address
for notices or communications to Counterparty:
Cadence Design Systems, Inc.
Attention: Treasurer
Telephone No.: (408) 943-1234
Telecopy No.: (408) 943-0513
Address for notices or communications to JPMorgan:
JPMorgan Chase Bank
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Kevin J. Moran
EDG Corporate Marketing
Telephone No.: (212)622-6707
Telecopy No.:
(212)622- 8534
8. Other Provisions:
(a) No
Reliance, etc. Each party represents that (i) it is
entering into the Transaction evidenced hereby as principal
(and not as agent or in any other capacity); (ii) neither the
other party nor any of its agents are acting as a fiduciary
for it; (iii) it is not relying upon any representations
except those expressly set forth in the Agreement or this
Confirmation; (iv) it has not relied on the other party for
any legal, regulatory, tax, business, investment, financial,
and accounting advice, and it has made its own investment,
hedging, and trading decisions based upon its own judgment and
upon any view expressed by the other party or any of its
agents; and (v) it is entering into this Transaction with a
full understanding of the terms, conditions and risks thereof
and it is capable of and willing to assume those risks.
(b) Share
De-listing Event. If at any time during the period from
and including the Trade Date, to and including August 15,
2008, the Shares cease to be listed on the Exchange for any
reason (other than a Merger Event) and are not immediately
re-listed as of the date of such de-listing on The New York
Stock Ex
