Exhibit 10.1

 

 

Deutsche Bank [g118751kgimage002.gif]

 

 

 

Deutsche Bank AG London

 

Winchester House

 

1 Great Winchester St.

 

London EC2N 2DB

 

Telephone: 44 20 7545 8000

 

 

 

c/o Deutsche Bank AG New York

 

60 Wall Street

 

New York, NY 10005

 

Telephone: 212-250-5977

 

Facsimile: 212-797-8826

 

June 28, 2005

 

Cephalon, Inc. (“Counterparty”)

41 Moores Road

Frazer, PA 19355

Attention: Kevin Buchi, Senior Vice President & Chief Financial Officer

 

 

Dear Sirs / Madam:

 

Reference is made to the Confirmation (the “Confirmation”) dated as of June 2,
2005 between Deutsche Bank AG acting through its London Branch (“Deutsche”) and
Cephalon, Inc. (“Counterparty”), which sets forth the terms and conditions of a
convertible note hedge transaction (the “Transaction”) entered into between
Deutsche and Counterparty.  Terms used herein and not defined herein have the
meanings set forth in the Confirmation.  For purposes of this Amendment and the
Confirmation, unless the context otherwise requires, all references herein and
therein to “the Confirmation”, and “the Transaction”, shall be deemed references
to the Confirmation as amended hereby, and the Transaction as governed by such
amended Confirmation, respectively.

 

DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER DEALER UNDER THE U.S. SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.  DEUTSCHE BANK AG, NEW YORK BRANCH HAS ACTED
SOLELY AS AGENT IN CONNECTION WITH THIS TRANSACTION AND HAS NO OBLIGATION, BY
WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE
PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. DEUTSCHE BANK AG, LONDON
BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

 

In connection with the exercise of the option granted by Counterparty to the
Underwriters (as such term is defined in the Underwriting Agreement) to purchase
additional Reference Notes pursuant to the Underwriting Agreement (the “Option
Exercise”), and as provided for in Section 3(e) of the Confirmation, Deutsche
and the Counterparty intend to enter into this letter agreement (this
“Amendment”) to amend the Confirmation in the manner set forth below.  In
consideration of such premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Deutsche and the
Counterparty hereby agree that:

 

(a)                 In Section 2 of the Confirmation, the provision opposite the
caption “Reference Notes” is deleted and replaced with the following language:

 

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“$920,000,000 principal amount of Convertible Senior Notes due June 1, 2015 (the
“Maturity Date”), $800,000,000 of which were issued by Cephalon, Inc. (the
“Issuer”) on June 7, 2005, and $120,000,000 of which were issued by the Issuer
on July 1, 2005, in each case pursuant to the Note Indenture (as defined
below).”

 

(b)                 In Section 2 of the Confirmation, the following new
provision shall be inserted immediately after the provision opposite the caption
“Share Equivalent Amount”:

 

“Limitation on Delivery Shares:             Notwithstanding anything to the
contrary herein, in the Agreement or in any other agreement between the parties
hereto, in no event shall Deutsche be required to deliver Shares to Counterparty
pursuant to this Confirmation in connection with any Conversion Event to the
extent the aggregate Conversion Amount for such Conversion Event and all prior
Conversion Events is greater than $800,000,000 (such amount subject to reduction
in connection with any Repayment Event by the principal amount of Reference
Notes subject to such Repayment Event).”

 

(c)                 Section 4(b) of the Confirmation is amended and restated in
its entirety to read as follows:

 

“A Repayment Event occurs, in which case this Transaction shall be subject to
termination only in respect of the principal amount of Reference Notes that
cease to be outstanding in connection with or as a result of such Repayment
Event.  For the avoidance of doubt, if the aggregate principal amount of
Reference Notes subject to one or more Repayment Events is less than
$800,000,000, then the terms of this Transaction shall continue to apply,
subject to the terms and conditions set forth herein.  However, if the aggregate
principal amount of Reference Notes subject to one or more Repayment Events
equals or exceeds, at any time, $800,000,000, the entirety of this Transaction
shall terminate automatically.”

 

(d)                 The first paragraph of Section 6 of the Confirmation is
amended and restated in its entirety to read as follows:

 

“If Deutsche determines reasonably and in good faith that the number of Shares
required to be delivered to Counterparty hereunder on any Settlement Date
pursuant to this Confirmation, the Confirmation dated as of June 28, 2005
between Deutsche and Counterparty (the ‘New Confirmation’), which sets forth the
terms and conditions of a convertible note hedge transaction entered into
between Deutsche and Counterparty, or the combination thereof would exceed 9.0%
of all outstanding Shares, then Deutsche may, by notice to Counterparty on or
prior to such Settlement Date (a ‘Nominal Settlement Date’), elect to deliver
the Shares comprising the Share Equivalent Amount required to be delivered
pursuant to this Confirmation on two or more dates (each, a ‘Staggered
Settlement Date’) as follows:”

 

(e)                The definition of “Hedge Equity Percentage” in Section 8 of
the Confirmation is amended and restated in its entirety to read as follows:

 

“‘Hedge Equity Percentage’ as of any day is the fraction (A) the numerator of
which is the sum of the number of Shares underlying this Transaction and the
number of Shares underlying the transaction entered into pursuant to the New
Confirmation on such day and (B) the denominator of which is the number of
Shares outstanding on such day.”

 

(f)                  In addition, by executing and delivering this Amendment,
Counterparty, or Counterparty and Deutsche, as the case may be, shall be deemed
to have made, on the date hereof, the representations and warranties set forth
in Section 3(c) of the Confirmation, in clauses (i) through (v) under the
heading “Mutual Representations” of Section 8 of the Confirmation and in clauses
(i) and (ii) under the heading “Additional Counterparty Representations” of
Section 8 of the

 

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Confirmation; provided that (w) each reference in each such Section or clause to
“the Confirmation” shall be deemed to be a reference to the Confirmation as
amended by this Amendment, (x) each reference in each such Section or clause to
“the Transaction” shall be deemed to be a reference to the Transaction as
governed by such amended Confirmation, (y) each reference in each such
Section or clause to “the Trade Date” shall be deemed to be a reference to the
date hereof and (z) each reference in each such Section or clause to “hereof”,
“hereunder”, “herein”, “hereby” or any other similar reference shall be deemed
to be a reference to the Confirmation as amended by this Amendment.

 

If the Option Exercise fails to close for any reason, then the entirety of this
Amendment shall terminate automatically and no payments or deliveries shall be
required in connection herewith.

 

This Amendment may be executed by the parties hereto in counterparts, each of
which shall be deemed to be an original and all of which, taken together, shall
constitute one and the same instrument.

 

This Amendment shall be governed by and construed in accordance with New York
law without reference to choice of law doctrine and each party hereby submits to
the jurisdiction of the Courts of the State of New York.

 

[Remainder of page intentionally left blank]

 

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Please confirm that the foregoing correctly sets forth the terms of your
agreement by signing and returning this Amendment.

 

 

 

 

Yours faithfully,

 

 

 

 

 

DEUTSCHE BANK AG, acting through its New York branch and solely in its capacity
as Agent

 

 

 

 

By:

/s/ David Dirvin

 

 

 

 

 

 

Name:

David Dirvin

 

 

Title:

Managing Director

 

 

 

 

 

 

By:

/s/ Mark Haas

 

 

 

 

 

Name:

Mark Haas

 

Title:

Managing Director

 

 

 

Confirmed as of the date first written above:

 

 

 

 

 

CEPHALON, INC. (“Counterparty”)

 

 

 

 

 By:

/s/ John E. Osborn

 

 

 

 

 

 

 

 

Name:

John E. Osborn

 

Title:

Senior Vice President, General Counsel and Secretary

 

 

 entered into on this 30th day of June, 2005

 

 

 

 

DEUTSCHE BANK AG, LONDON

 

 

 

 

 

 By:

/s/ Noreddine Sebti

 

 

 

 

 

 

 

 

Name:

Noreddine Sebti

 

Title:

Attorney-in-Fact

 

 

 

 

 

 

 

 By:

/s/ Jill Rathjen

 

 

 

 

 

 

 

 

Name:

Jill Rathjen

 

Title:

Attorney-in-Fact

 

 

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