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EX-10.77 12 f93607exv10w77.txt EXHIBIT 10.77 EXHIBIT 10.77 [JPMORGAN LOGO] JPMorgan Chase Bank P.O. Box 161 60 Victoria Embankment London EC4Y 0JP England August 27, 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 "INITIAL CONVERTIBLE NOTES") and an additional USD 70,000,000 principal amount of Zero Coupon Zero Yield Senior Convertible Notes due August 15, 2023 (the "ADDITIONAL CONVERTIBLE NOTES" and together with the Initial Convertible Notes, the "CONVERTIBLE NOTES") issued by Counterparty to the initial purchasers as a result of their exercise of the right granted with respect to such Additional Convertible Notes and issued by the Counterparty pursuant to an Indenture dated as of 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 Indenture 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 part of, and be subject to, that agreement. All provisions contained 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. [JPMORGAN LOGO] 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 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 27, 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 Additional 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 23,639,000 Premium Payment Date: August 29, 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 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 [JPMORGAN LOGO] Exercise and Valuation: 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 Additional Convertible Notes to and including the third Exchange Business Day following the Conversion Date for such Additional 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 Additional Convertible Notes surrendered to Counterparty for conversion times the number of such Additional 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 Additional Convertible Notes, the Calculation Agent shall adjust the settlement terms hereunder to account for delivery by JPMorgan to 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 (JPMORGAN LOGO) 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 Additional Convertible Notes, the settlement date for Shares to be delivered under such Additional 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 Definitions, a "Merger Event" means the occurrence of any event or condition set forth in Section 8.01 of the Indenture. Consequence of Merger Notwithstanding Section 9.3 of the Events: Equity Definitions, 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 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 (JPMORGAN LOGO) 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. 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 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 (JPMORGAN LOGO) 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 Telephone No.: (408) 943-1234 Telecopy No.: (408 ###-###-#### Address for notices or communications to JPMorgan: JPMorgan Chase Bank 277 Park Avenue, 11th Floor New York, NY 10172 Attention: Kevin J. Moran EDG Corporate Marketing Telephone No.: (212) 622-6707 Telecopy No.: (212) 622-8534 8. Other Provisions: (a) No Reliance, etc. Each party represents that (i) it is entering into the Transaction evidenced hereby as principal (and not as agent or in any other capacity); (ii) neither the other party nor any of its agents are acting as a fiduciary for it; (iii) it is not relying upon any representations except those expressly set forth in the Agreement or this Confirmation; (iv) it has not relied on the other party for any legal, regulatory, tax, business, investment, financial, and accounting advice, and it has made its own investment, hedging, and trading decisions based upon its own judgment and upon any view expressed by the other party or any of its agents; and (v) it is entering into this Transaction with a full understanding of the terms, conditions and risks thereof and it is capable of and willing to assume those risks. (b) Share De-listing Event. If at any time during the period from and including the Trade Date, to and including August 15, 2008, the Shares cease to be listed on the Exchange for any reason (other than a Merger Event) and are not immediately re-listed as of the date of such de-listing on The New York Stock Exchange, The American Stock Exchange or the Nasdaq National Market System (or their respective successors) (the "SUCCESSOR EXCHANGE"), then Cancellation and Payment shall apply, and the date of the de-listing shall be deemed the date of termination for purposes of calculating any payment due from one party to the other in connection with the cancellation of this Transaction. If the Shares are immediately re-listed on a Successor Exchange upon their de-listing from the Exchange, this Transaction shall continue in full force and effect, provided that the Successor Exchange shall be deemed to be the Exchange for all purposes hereunder. In addition, the Calculation Agent shall make any adjustments it deems necessary to the terms of the Transaction in accordance with Calculation Agent Adjustment method as defined under Section 9.1(c) of the Equity Definitions. 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] (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 sum of (1) the product of the Number of Options and the Option Entitlement and (2) the product of the Number of Options as defined in the Confirmation dated August 11, 2003 between Counterparty and JPMorgan in respect of the Initial Convertible Notes (the "INITIAL TRANSACTION") and the Option Entitlement as defined in the Initial Transaction, and (B) the denominator of which is the number of Shares outstanding on such day. Counterparty agrees to indemnify and hold harmless JPMorgan and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an "INDEMNIFIED PERSON") from and against any and all losses (including losses relating to JPMorgan's hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 "insider", including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to this Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney's fees), joint or several, 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. 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 [JPMORGAN LOGO] (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 (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. 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] (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" with respect to the Initial Transaction and this Transaction (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 or the Initial Transaction, such that its "beneficial ownership" following such partial termination will be equal to or less than 8%. In the event that JPMorgan so designates an Early Termination Date with respect to a portion of this Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a Number of Options equal to the Terminated Portion, (ii) the Counterparty and JPMorgan shall both be Affected Parties with respect to such partial termination and (iii) such Transaction shall be the only Terminated Transaction. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing JPMorgan to purchase, sell, receive or deliver any shares or other securities to or from Counterparty, JPMorgan may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform JPMorgan's obligations in respect of this Transaction and any such designee may assume such obligations. JPMorgan shall be discharged of its obligations to Counterparty to the extent of any such performance. (k) Amendment. Paragraph (i) of Section 9.7(b) of the Equity Definitions is hereby amended for purposes of this Transaction by replacing "two-year" with "90 calendar day". (l) Damages. Neither party shall be liable under Section 6.10 of the Equity Definitions for special, indirect or consequential damages, even if informed of the possibility thereof. (m) 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. (n) 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 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] events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer." (ii) Notwithstanding Section 9.7 of the Equity Definitions, everything in the first paragraph of Section 9.7(b) of the Equity Definitions after the words "Calculation Agent" in the third line through the remainder of such Section 9.7 shall be deleted and replaced with the following: "based on an amount representing the Calculation Agent's determination of the fair value to Buyer of an option with terms that would preserve for Buyer the economic equivalent of any payment or delivery (assuming satisfaction of each applicable condition precedent) by the parties in respect of the relevant Transaction that would have been required after that date but for the occurrence of the Nationalization or De-Listing Event, as the case may be." (o) 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 Property: 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. 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] Share Termination Unit The value to JPMorgan of property Price: contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to JPMorgan at the time of notification of the Payment Obligation. Share Termination 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. (p) 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 ###-###-#### (PLEASE NOTE THIS NEW FAX NUMBER). Very truly yours, J.P. MORGAN SECURITIES INC., AS AGENT FOR JPMORGAN CHASE BANK BY: /s/ Nicola Mudge ------------------------------- Authorized Signatory Name: Nicola Mudge Accepted and confirmed as of the Trade Date: CADENCE DESIGN SYSTEMS, INC. By: /s/ William Porter ----------------------------- Authorized Signatory Name: William Porter Senior Vice President and Chief Financial Officer 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 PSA. REGISTERED BRANCH ADDRESS 125 LONDON WALL, LONDON, EC2Y 5AJ. HEAD OFFICE 270 PARK AVENUE, NEW YORK, USA.