Document:

exv10w03

Exhibit 10.03

	To:  	 	Cadence Design Systems, Inc.

2655 Seely Avenue, Building 5

San Jose, CA 95134

Attention: Office of the General Counsel
	 
	From:  	 	Deutsche Bank AG, London Branch

Winchester House

1 Great Winchester St, London EC2N 2DB
	 
	 	 	c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005
	 
	Re:  	 	Base Convertible Bond Hedge Transaction
	 
	Ref. No:  	 	386879
	 
	Date:  	 	June 9, 2010

Dear Sir(s):

     DEUTSCHE BANK AG, LONDON BRANCH IS NOT REGISTERED AS A BROKER DEALER UNDER THE U.S.
SECURITIES EXCHANGE ACT OF 1934. DEUTSCHE BANK SECURITIES INC. (“DBSI”) HAS ACTED SOLELY AS
AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT,
GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. AS
SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND RELATING TO
THIS TRANSACTION BETWEEN DEUTSCHE BANK AG, LONDON BRANCH, AND COUNTERPARTY SHALL BE TRANSMITTED
EXCLUSIVELY THROUGH DEUTSCHE BANK SECURITIES INC. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A
MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

     The purpose of this communication (this “Confirmation”) is to set forth the terms and
conditions of the above-referenced transaction entered into on the Trade Date specified below
(the “Transaction”) between Deutsche Bank AG, London Branch (“Dealer”) and Cadence Design
Systems, Inc. (“Counterparty”). This communication constitutes a “Confirmation” as referred to
in the ISDA Master Agreement specified below. This Confirmation shall replace any previous
agreements and serve as the final documentation for the Transaction.

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     1. This Confirmation is subject to, and incorporates, the definitions and provisions of
the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the
International Swaps and Derivatives Association, Inc. (“ISDA”). Certain defined terms used herein
have the meanings assigned to them in the Indenture to be dated as of the closing date of the
initial issuance of the Convertible Securities described below between Counterparty and Deutsche
Bank Trust Company Americas, as trustee (the “Indenture”), relating to the USD 300,000,000
principal amount of 2.625% cash convertible senior notes due June 1, 2015 (the “Convertible
Securities”). In the event of any inconsistency between the terms defined in the Indenture and this
Confirmation, this Confirmation shall govern. The parties acknowledge that this Confirmation is
entered into on the date hereof with the understanding that (i) definitions set forth in the
Indenture which are also defined herein by reference to the Indenture and (ii) sections of the
Indenture that are referred to herein will conform to the descriptions thereof in the Offering
Memorandum dated June 9, 2010 (the “Offering Memorandum”). If any such definitions in the Indenture
or any such sections of the Indenture differ from the descriptions thereof in the Offering
Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes of this
Confirmation. The parties further acknowledge that the Indenture section numbers used herein are
based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation,
and if any such section numbers are changed in the Indenture as executed, the parties will amend
this Confirmation in good faith to preserve the intent of the parties. Subject to the foregoing,
references to the Indenture herein are references to the Indenture as in effect on the date of its
execution, and if the Indenture is amended, modified or supplemented following its execution, any
such amendment, modification or supplement will be disregarded for purposes of this Confirmation
(other than for purposes of Section 8(b) below) unless the parties agree otherwise in writing. The
Transaction is subject to early unwind if the closing of the Convertible Securities is not
consummated for any reason, as set forth below in Section 8(h).

     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.

     This Confirmation evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this Confirmation relates. This
Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master
Agreement (Multicurrency—Cross Border) as if Dealer and Counterparty had executed an agreement in
such form on the date hereof (but without any Schedule except for (i) the election of Loss and
Second Method and US Dollars (“USD”) as the Termination Currency, (ii) the replacement of the word
“third” in the last line of Section 5(a)(i) of the Agreement with the word “second” and (iii) such
other elections as set forth in this Confirmation.

     All provisions contained in, or incorporated by reference to, the Agreement will govern
this Confirmation except as expressly modified herein. In the event of any inconsistency between
this Confirmation and either the Equity Definitions or the Agreement, this Confirmation shall
govern.

     The Transaction hereunder shall be the sole Transaction under the Agreement. If there exists
any ISDA Master Agreement between Dealer and Counterparty or any confirmation or other agreement
between Dealer and Counterparty pursuant to which an ISDA Master Agreement is deemed to exist
between Dealer and Counterparty, then notwithstanding anything to the contrary in such ISDA Master
Agreement, such confirmation or agreement or any other agreement to which Dealer and Counterparty
are parties, the Transaction shall not be considered a Transaction under, or otherwise governed by,
such existing or deemed ISDA Master Agreement.

     2. The Transaction constitutes a Share Option Transaction for purposes of the Equity
Definitions. The terms of the particular Transaction to which this Confirmation relates are as
follows:

	 	 	 

	General Terms:
	 	 
	 
	 	 
	Trade Date:

	 	June 9, 2010

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	Effective Date:

	 	The closing date of the initial issuance of the
Convertible Securities.
	 
	 	 
	Option Style:

	 	Modified American, as described under “Procedures
for Exercise” below.
	 
	 	 
	Option Type:

	 	Call
	 
	 	 
	Seller:

	 	Dealer
	 
	 	 
	Buyer:

	 	Counterparty
	 
	 	 
	Shares:

	 	The Common Stock of Counterparty, par value USD
0.01 per share (Ticker Symbol: “CDNS”).
	 
	 	 
	Number of Options:

	 	The number of Convertible Securities in
denominations of USD 1,000 principal amount issued by Counterparty on the closing date for the initial issuance of the
Convertible Securities excluding any Convertible Securities purchased by the Initial Purchasers (as defined in the
Purchase Agreement) at their option pursuant to Section 2 of the Purchase Agreement (as defined below). For the
avoidance of doubt, the Number of Options outstanding shall be reduced by each exercise of Options hereunder.
	 
	 	 
	Applicable Percentage:

	 	30%
	 
	 	 
	Option Entitlement:

	 	As of any date, a number of Shares per Option equal to the “Conversion Rate” (as defined in the Indenture), but
without regard to any adjustments to the Conversion Rate as set forth in Section 13.02 of the Indenture (a
“Make-Whole Fundamental Change Adjustment”) or a discretionary adjustment as set forth in Section 13.04(g) of the
Indenture (a “Discretionary Adjustment”).
	 
	 	 
	Strike Price:

	 	As of any date, an amount in USD, rounded to the
nearest cent (with 0.5 cents being rounded upwards),
equal to USD 1,000 divided by the Option
Entitlement as of such date.
	 
	 	 
	Number of Shares:

	 	As of any date, the product of the Number of
Options, the Option Entitlement and the Applicable
Percentage.
	 
	 	 
	Premium:

	 	USD 19,469,880.00 (Premium per Option USD
64.90).
	 
	 	 
	Premium Payment Date:

	 	The Effective Date
	 
	 	 
	Exchange:

	 	NASDAQ Global Select Market
	 
	 	 
	Related Exchange:

	 	All Exchanges
	 
	 	 
	Procedures for Exercise:
	 	 
	 
	 	 
	 
	 	 
	Exercise Dates:

	 	Each Conversion Date.
	 
	 	 
	Conversion Date:

	 	Each “Conversion Date” (as defined in the Indenture)
occurring during the Exercise Period for Convertible
Securities, excluding Convertible Securities
(“Exchanged Convertible Securities”) (i) with

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	 	respect to which Counterparty has elected the
“Exchange in Lieu of Conversion” option to designate a
financial institution to deliver the consideration due
upon any conversion of any Convertible Securities in
exchange for such Convertible Securities and (ii) that
have been accepted by the designated financial
institution pursuant to Section 13.09 of the Indenture
(such Convertible Securities, the “Relevant Convertible
Securities” for such Conversion Date).
	 
	 	 
	 

	 	If such designated financial institution fails to
deliver the consideration due upon such conversion and,
as a result, Counterparty is required to deliver such
consideration pursuant to Section 13.09(e) of the
Indenture, Counterparty shall, promptly following such
failure, notify Dealer in writing of such failure and the
number of Exchanged Convertible Securities affected by
such failure (such notice, a “Failed Exchange Notice”).
The receipt by Dealer of a Failed Exchange Notice shall
constitute an Additional Termination Event in respect of
which Dealer shall designate an Exchange Business Day
within a commercially reasonable period of time following
receipt of such Failed Exchange Notice (which in no event
shall be earlier than the related settlement date for the
Exchanged Convertible Securities) as an Early Termination
Date with respect to a portion of the Transaction
corresponding to a number of Options (the “Cancelled
Options”) equal to the lesser of (A) the number of such
Exchanged Convertible Securities specified in such Failed
Exchange Notice and (B) the Number of Options as of the
date Dealer designates such Early Termination Date and,
as of such date, the Number of Options shall be reduced
by the number of Cancelled Options. Any payment hereunder
with respect to such termination shall be calculated
pursuant to Section 6 of the Agreement as if (1) 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 number of Cancelled
Options, (2) Counterparty were the sole Affected Party
with respect to such Additional Termination Event and (3)
the terminated portion of the Transaction were the sole
Affected Transaction.
	 
	 	 
	Exercise Period:

	 	The period from and excluding the Effective Date to
and including the Expiration Date.
	 
	 	 
	Expiration Date:

	 	The earlier of (i) the last day on which any
Convertible Securities remain outstanding and (ii) the
“Maturity Date” (as defined in the Indenture).
	 
	 	 
	Automatic Exercise on 

Conversion Dates:

	 	Applicable; and means that on each Conversion Date,

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	 	a number of Options equal to the number of
Relevant
Convertible Securities for such Conversion Date in
 denominations of USD 1,000 principal amount shall
be automatically exercised, subject to “Notice of
Exercise” below.
	 
	 	 
	Notice Deadline:

	 	In respect of any exercise of Options hereunder on
any Conversion Date, 5:00 P.M., New York City
time, on the Exchange Business Day prior to the first
“Scheduled Trading Day” of the “Observation
Period” (each as defined in the Indenture) with
respect to the Relevant Convertible Securities for
such Conversion Date; provided that in the case of
any exercise of Options hereunder in connection with
the conversion of any Relevant Convertible
Securities on any Conversion Date occurring during
the period beginning on, and including, March 1,
2015 and ending on, and including, the
second
“Scheduled Trading Day” (as defined in the
Indenture) immediately preceding the Maturity
Date
(such period, the “Final Convertibility Period”),
the
Notice Deadline shall be 5:30 P.M., New York
City
time, on the second “Scheduled Trading Day”
immediately preceding the Maturity Date.
	 
	 	 
	Notice of Exercise:

	 	Notwithstanding anything to the contrary in the
Equity Definitions, Dealer shall have no
obligation to
make any payment in respect of any exercise of
Options hereunder unless Counterparty
notifies
Dealer in writing prior to the Notice Deadline in
respect of such exercise of (i) the number of
Options
being exercised on such Exercise Date,
(ii) the
scheduled settlement date under the Indenture for
the
Relevant Convertible Securities for the
Conversion
Date corresponding to such Exercise Date, and (iii)
the first “Scheduled Trading Day” (as defined in the
Indenture) of the Observation Period; provided
that,
notwithstanding the foregoing, such notice (and
the
related Automatic Exercise of Options) shall be
effective if given after the Notice Deadline but prior
to 5:00 P.M., New York City time, on the fifth
Exchange Business Day of such Observation Period,
in which event the Calculation Agent shall have
the
right to adjust the Convertible Obligation (as
defined
below) as appropriate to reflect the additional
costs
(including, but not limited to, hedging mismatches
and market losses) and reasonable expenses
incurred
by Dealer in connection with its hedging
activities
(including the unwinding of any hedge position) as
a
result of its not having received such notice
prior to
the Notice Deadline; provided, further, that in
the
case of any exercise of Options hereunder in connection with the conversion of any Relevant
Convertible Securities on any Conversion
Date
occurring during the Final Convertibility Period, the

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	 	contents of such notice shall be as set forth in clause
(i) above. For the avoidance of doubt and subject to the first proviso in the immediately
preceding sentence, if Counterparty fails to give such notice when due in respect of any exercise
of Options hereunder, Dealer’s obligation to make any payment in respect of such exercise shall be
permanently extinguished, and late notice shall not cure such failure.
	 
	 	 
	Dealer’s Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for purpose of Giving Notice:

	 	As specified in Section 6(b) below.
	 
	 	 
	Settlement Terms:
	 	 
	 
	 	 
	Settlement Method:

	 	Cash Settlement.
	 
	 	 
	Settlement Date:

	 	In respect of an Exercise Date occurring on a Conversion Date, the settlement date for
the cash to be paid in respect of the Relevant Convertible Securities converted on such Conversion
Date pursuant to Section 13.03(a) or 13.02(b) of the Indenture, as the case may be; provided that
the Settlement Date will not be prior to the Exchange Business Day immediately following the date
Counterparty provides the Notice of Delivery Obligation prior to 5:00 P.M., New York City time.
	 
	 	 
	Delivery Obligation:

	 	In lieu of the obligations set forth in Section 8.1 of the Equity Definitions, and subject to
“Notice of Exercise” above, in respect of an Exercise Date occurring on a Conversion Date, Dealer
will pay to Counterparty, on the related Settlement Date, an amount of cash in USD equal to the
product of (i) the Applicable Percentage and (ii) the aggregate amount of cash, if any, in excess
of USD 1,000 per Convertible Security (in denominations of USD 1,000) that Counterparty would be
obligated to pay to holder(s) of the Relevant Convertible Securities for such Conversion Date
pursuant to Section 13.03(a) of the Indenture (the “Convertible Obligation”); provided that such
obligation shall be determined excluding any cash that Counterparty is obligated to pay to
holder(s) of the Relevant Convertible Securities as a result of any adjustments to the Conversion
Rate pursuant to a Make-Whole Fundamental Change Adjustment or a Discretionary Adjustment and any
interest payment that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible
Securities for such Conversion Date.
	 
	 	 
	Notice of Delivery Obligation:

	 	No later than 5:00 P.M., New York City time, on the Exchange Business Day immediately following
the last day of the relevant Observation Period,

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	 	Counterparty shall give Dealer notice of
the final amount of cash comprising the
Convertible Obligation; provided that, with
respect to any Exercise Date occurring during the
Final Convertibility Period, Counterparty may
provide Dealer with a single notice of the
aggregate amount of cash comprising the
Convertible Obligations for all Exercise Dates
occurring in such period (it being understood,
for the avoidance of doubt, that the requirement
of Counterparty to deliver such notice shall not
limit Counterparty’s obligations with respect to
Notice of Exercise).
	 
	 	 
	Adjustments:
	 	 
	 
	 	 
	Method of Adjustment:

	 	Notwithstanding Section 11.2 of the Equity
Definitions (and, for the avoidance of doubt, in lieu
of any adjustments pursuant to such section), upon
the occurrence of any event or condition set forth in
Section 13.05 or sub-sections (a) through (e) of
Section 13.04 of the Indenture (each an “Adjustment
Event”) and the Calculation Agent receiving notice
of the adjustments to be made to the terms of the
Indenture and the Convertible Securities in respect of
such Adjustment Event pursuant to the succeeding
sentence, the Calculation Agent shall make a
corresponding adjustment (in respect of any such
adjustment under the Indenture) to the terms relevant
to the exercise, settlement or payment of the
Transaction; provided that, in the case of any
adjustment to the terms of the Indenture and the
Convertible Securities that involves an exercise of
discretion by Counterparty or its board of directors
(including, without limitation, pursuant to Section
13.05 of the Indenture or in connection with any
proportional adjustment or the determination of the
fair value of any securities, property, rights or other
assets), then in each such case, the Counterparty
agrees to exercise such discretion in good faith and in
a commercially reasonable manner and to promptly
provide the Calculation Agent with any additional
information it reasonably requests (in addition to any
information required to be provided pursuant to the
succeeding sentence) about the Counterparty’s
calculations and methodology for such adjustment.
Promptly upon the occurrence of any Adjustment
Event, Counterparty shall notify the Calculation
Agent of such Adjustment Event; and once the
adjustments to be made to the terms of the Indenture
and the Convertible Securities in respect of such
Adjustment Event have been determined,
Counterparty shall promptly (and in any event within
five Exchange Business Days after such
determination) notify the Calculation Agent in
writing of the details of such adjustments.

7

 

	 	 	 

	Extraordinary Events:
	 	 
	 
	 	 
	Merger Events:

	 	Notwithstanding Section 12.1(b) of the Equity
Definitions, a “Merger Event” means the occurrence
of any event or condition set forth in Section 10.01 or
13.06 of the Indenture.
	 
	 	 
	Consequences of Merger Events:

	 	Notwithstanding Section 12.2 of the Equity
Definitions (and, for the avoidance of doubt, in lieu
of any adjustments or other consequences pursuant to
such section), upon the occurrence of a Merger
Event, the Calculation Agent shall make a
corresponding adjustment (in respect of any
adjustment on account of such Merger Event under
the Indenture) to the terms relevant to the exercise,
settlement or payment of the Transaction; provided
that such adjustment shall be made without regard to
any adjustment to the Conversion Rate pursuant to a
Make-Whole Fundamental Change Adjustment or a
Discretionary Adjustment; and provided further that
if, with respect to a Merger Event, the consideration
for the Shares includes (or, at the option of a holder
of Shares, may include) shares (or depositary receipts
with respect to shares) of an entity or person not
organized under the laws of the United States, any
State thereof or the District of
Columbia,
Cancellation and Payment (Calculation Agent
Determination) shall apply.
	 
	 	 
	Notice of Merger
Consideration and
Consequences:

	 	Upon the occurrence of a Merger Event that causes
the Shares to be converted into the right to receive
more than a single type of consideration (determined
based in part upon any form of stockholder election),
Counterparty shall reasonably promptly (but in any
event on or prior to the relevant merger date) notify
the Calculation Agent of (i) the type and amount of
consideration that a holder of Shares would have
been entitled to in the case of reclassifications,
consolidations, mergers, sales or transfers of assets or
other transactions that cause Shares to be converted
into the right to receive more than a single type of
consideration, (ii) the weighted average of the types
and amounts of consideration to be received by the
holders of Shares that affirmatively make such an
election, and (iii) the details of the adjustment to be
made under the Indenture in respect of such Merger
Event.
	 
	 	 
	Nationalization, Insolvency
or Delisting:

	 	Cancellation and Payment (Calculation Agent
Determination); provided that (i) Section
12.6(a)(iii)
of the Equity Definitions shall be amended to
delete,
in the definition of the term
“Delisting” the
parenthetical “(or will cease)” and (ii) in
addition to
the provisions of Section 12.6(a)(iii) of
the Equity
Definitions, it will also constitute a Delisting
if the

8

 

	 	 	 

	 

	 	Exchange is located in the United States and the
Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective successors); if the
Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system,
such exchange or quotation system shall thereafter be
deemed to be the Exchange.
	 
	 	 
	Additional Disruption Events:
	 	 
	 
	 	 
	(a) Change in Law:

	 	Applicable; provided that Section 12.9(a)(ii) of the
Equity Definitions is hereby amended by (i) replacing
the phrase “the interpretation” in the third line thereof
with the phrase “or announcement or statement of the
interpretation” and (ii) replacing the word “Shares”
with the phrase “Hedge Positions” in clause (X)
thereof.
	 
	 	 
	(b) Failure to Deliver:

	 	Applicable
	 
	 	 
	(c) Insolvency Filing:

	 	Applicable
	 
	 	 
	(d) Hedging Disruption:

	 	Applicable; provided that Section 12.9(a)(v) of the
Equity Definitions is hereby amended by inserting
the following proviso at the end thereof: “provided
that such inability described in clause (A) or (B) shall
not constitute a “Hedging Disruption” unless (x) such
inability does not result from factors particular to
Hedging Party (such as Hedging Party’s
creditworthiness or financial position, or particular
actions or transactions undertaken by the Hedging
Party unrelated to the hedging of the Transaction)
and (y) such inability will result in continued
performance by the Hedging Party under the
Transaction being commercially unreasonable or
commercially impracticable”.
	 
	 	 
	Hedging Party:

	 	Dealer
	 
	 	 
	Determining Party:

	 	Dealer for all applicable Additional Disruption
Events
	 
	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable

9

 

	 	 	 

	 
	 	 
	3. Calculation Agent:

	 	Dealer. All determinations made by the Calculation
Agent shall be made in good faith and in a
commercially reasonable manner. Following any
determination or calculation by the Calculation Agent
hereunder, upon a written request by Counterparty,
the Calculation Agent will provide to Counterparty
by e-mail to the e-mail address provided by
Counterparty in such written request a report (in a
commonly used file format for the storage and
manipulation of financial data) displaying in
reasonable detail the basis for such determination or
calculation, including, where applicable, a
description of the methodology and data applied, it
being understood that the Calculation Agent shall not
be obligated to disclose any proprietary models used
by it for such determination or calculation.

     4. Account Details:

Dealer Payment Instructions:

Deutsche Bank AG, London Branch

The Bank of New York

Account Name: Deutsche Bank Securities, Inc.

Counterparty Payment Instructions:

To be provided by Counterparty.

     5. Offices:

The Office of Dealer for the Transaction is: London

Deutsche Bank AG, London Branch

Winchester house

1 Great Winchester St, London

EC2N 2DB

The Office of Counterparty for the Transaction is:

Inapplicable. Counterparty is not a Multibranch Party.

     6. Notices: For purposes of this Confirmation:

     (a) Address for notices or communications to Counterparty:

	 	To: 	 	 Cadence Design Systems, Inc.

2655 Seely Avenue, Building 5

San Jose, California 95134
	 	Attn:  	 	Office of the General Counsel
	 	Facsimile:  	 	(408) 904-6946

     (b) Address for notices or communications to Dealer:

	 	To:  	 	Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005
	 	Attn:  	 	Peter Barna

10

 

	 	With a copy to:  	 	Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005
	 	Attn:  	 	Lars Kestner

     7. Representations, Warranties and Agreements:

     (a) In addition to the representations and warranties in the Agreement and those contained
elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with,
Dealer as follows:

     (i) On the Trade Date, none of Counterparty and its officers and directors is
aware of any material nonpublic information regarding Counterparty or the Shares. On the
Trade Date, all reports and other documents filed by Counterparty with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) when considered as a whole (with the more recent such reports and documents
deemed to amend inconsistent statements contained in any earlier such reports and
documents), do not contain any untrue statement of a material fact or any omission of a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading.

     (ii) (A) On the Trade Date, the Shares or securities that are convertible into, or
exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted
period,”
as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and
(B) Counterparty shall not engage in any “distribution,” as such term is defined in
Regulation M, other than a distribution meeting the requirements of the exceptions set
forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange
Business Day immediately following the Trade Date.

     (iii) Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that neither Dealer nor any of its affiliates is making any
representations or warranties or taking a position or expressing any view with respect to
the treatment of the Transaction under any accounting standards, including ASC Topic 260,
Earnings Per Share, ASC Topic 815, Derivatives and Hedging, ASC Topic 480, Distinguishing
Liabilities from Equity and ASC Topic 815-40, Derivatives and Hedging — Contracts in
Entity’s Own Equity
(or any successor issue statements).

     (iv) Without limiting the generality of Section 3(a)(iii) of the Agreement, the
Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

     (v) Counterparty is not entering into this Confirmation to create actual or
apparent trading activity in the Shares (or any security convertible into or exchangeable
for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for Shares) or to otherwise violate the Exchange
Act.

     (vi) Counterparty is not, and after giving effect to the transactions
contemplated hereby will not be, required to register as, an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended.

     (vii) On each of the Trade Date and the Premium Payment Date, Counterparty is not
“insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code
(Title 11

11

 

of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase
a number of Shares equal to the Number of Shares in compliance with the laws of the jurisdiction of
Counterparty’s incorporation.

     (viii) Counterparty understands no obligations of Dealer to it hereunder will be entitled to
the benefit of deposit insurance and that such obligations will not be guaranteed by any
governmental agency.

     (ix) No state or local (including non-U.S. jurisdictions) law, rule, regulation or
regulatory order applicable to the Shares would give rise to any reporting, consent, registration
or other requirement (including without limitation a requirement to obtain prior approval from any
person or entity) as a result of Dealer or its affiliates owning or holding (however defined)
Shares.

     (x) The representations and warranties of Counterparty set forth in Section 3 of the
Agreement and Section 1 of the Purchase Agreement, dated as of June 9, 2010, between J.P. Morgan
Securities Inc. and Morgan Stanley & Co. Incorporated, as representatives of the Initial Purchasers
party thereto, and Counterparty (the “Purchase Agreement”) are true and correct as of the Trade
Date and the Effective Date and are hereby deemed to be repeated to Dealer as if set forth herein.

     (b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract
participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended, and is
entering into the Transaction as principal (and not as agent or in any other capacity, fiduciary or
otherwise) and not for the benefit of any third party.

     (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as
amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty
represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk
of its investment in the Transaction and is able to bear a total loss of its investment and its
investments in and liabilities in respect of the Transaction, which it understands are not readily
marketable, are not disproportionate to its net worth, and it is able to bear any loss in
connection with the Transaction, including the loss of its entire investment in the Transaction,
(ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under
the Securities Act, (iii) it is entering into the Transaction for its own account and without a
view to the distribution or resale thereof, (iv) the assignment, transfer or other disposition of
the Transaction has not been and will not be registered under the Securities Act or any state
securities laws and is restricted under this Confirmation, the Securities Act and state securities
laws, and (v) its financial condition is such that it has no need for liquidity with respect to its
investment in the Transaction and no need to dispose of any portion thereof to satisfy any existing
or contemplated undertaking or indebtedness and is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of the Transaction.

     (d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial
institution,” “swap participant” and “financial participant” within the meaning of Sections
101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and
acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in
Section 741(7) of the Bankruptcy Code, with respect to which each payment hereunder or in
connection herewith is a “termination value,” “payment amount” or “other transfer obligation”
within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the
meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined
in Section 101(53B) of the Bankruptcy Code, with respect to which each payment hereunder or in
connection herewith is a “termination value,” “payment amount” or “other transfer obligation”
within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of
Section 546 of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by,
among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j),
548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

     (e) As a condition to the effectiveness of the Transaction, Counterparty shall deliver to
Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in
form and

12

 

substance, with respect to the matters set forth in Section 3(a) of the Agreement, subject to
customary assumptions, qualifications and exceptions.

     8. Other Provisions:

     (a) Right to Extend. Dealer may postpone any Exercise Date or Settlement Date or any
other date of valuation or payment by Dealer, with respect to some or all of the relevant Options
(in which event the Calculation Agent shall make appropriate adjustments to the Delivery
Obligation), if Dealer determines, in its reasonable discretion and based on advice of counsel,
that such extension is reasonably necessary or appropriate to preserve Dealer’s ability to conduct
its related hedging or hedge unwind activity hereunder in light of existing liquidity conditions in
the cash market, the stock borrow market or other relevant market or to enable Dealer to effect
purchases of Shares in connection with its related hedging, hedge unwind or settlement activity
hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of
Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements,
or with generally applicable related policies and procedures applicable to Dealer and applied to
this Transaction in a non-discriminatory manner.

     (b) Additional Termination Events. The occurrence of (i) an “Event of Default” with respect to
Counterparty under the terms of the Convertible Securities as set forth in the Indenture, as a
result of which the Convertible Securities are declared immediately due and payable under the terms
of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect
to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected
Party, and Dealer shall be the party entitled to designate an Early Termination Date pursuant to
Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of the
Agreement.

     “Amendment Event” means that Counterparty amends, modifies, supplements or obtains a
waiver in respect of any term of the Indenture or the Convertible Securities governing the
principal amount, coupon, maturity, a repurchase obligation of Counterparty, a redemption right of
Counterparty, any term relating to conversion of the Convertible Securities (including changes to
the conversion price, conversion settlement dates or conversion conditions), or any term that would
require consent of each holder of the Convertible Securities affected thereby to amend, in each
case without the prior consent of Dealer.

     Counterparty shall promptly notify Dealer in writing of any repurchase and cancellation
of Convertible Securities and the number of Convertible Securities so repurchased and cancelled
(any such notice, a “Convertible Securities Repurchase Notice”). Notwithstanding anything to the
contrary in this Confirmation, the receipt by Dealer from Counterparty of any Convertible
Securities Repurchase Notice shall constitute an Additional Termination Event as provided in this
paragraph. Upon receipt of any such Convertible Securities Repurchase Notice, Dealer shall
designate in good faith a Scheduled Trading Day that is within a commercially reasonable period of
time following such Additional Termination Event as an Early Termination Date with respect to the
portion of the Transaction corresponding to a number of Options (the “Repurchase Options”) equal to
the lesser of (A) the number of Convertible Securities specified in such Convertible Securities
Repurchase Notice and (B) the Number of Options as of the date Dealer designates such Early
Termination Date and, as of such date, the Number of Options shall be reduced by the number of
Repurchase Options. Any payment hereunder with respect to such termination shall be calculated
pursuant to Section 6 of the Agreement as if (1) 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 number of Repurchase Options, (2) Counterparty were the sole Affected Party with respect to
such Additional Termination Event and (3) the terminated portion of the Transaction were the sole
Affected Transaction.

     (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Dealer, the Shares (the “Hedge Shares”) acquired by Dealer for the purpose
of hedging its obligations pursuant to the Transaction cannot be sold in the U.S. public market by
Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in
order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer
an effective registration statement under the Securities Act to cover the resale of such Hedge
Shares and (A) enter into an

13

 

agreement, in form and substance reasonably satisfactory to Dealer, substantially in the form of an
underwriting agreement for underwritten follow-on offerings of equity securities of companies of
comparable size, maturity and lines of business, (B) provide accountant’s “comfort” letters in
customary form for underwritten follow-on offerings of equity securities, (C) provide disclosure
opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer,
(D) provide other customary opinions, certificates and closing documents customary in form for
underwritten follow-on offerings of equity securities of companies of comparable size, maturity and
lines of business and (E) afford Dealer a reasonable opportunity to conduct a “due diligence”
investigation with respect to Counterparty customary in scope for underwritten follow-on offerings
of equity securities of companies of comparable size, maturity and lines of business; provided,
however, that if Dealer, in its sole commercially reasonable discretion, is not satisfied with
access to due diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above, then clause (ii) or
clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to
allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement
agreement substantially similar to private placement purchase agreements customary for private
placements of equity securities, in form and substance satisfactory to Dealer, including customary
representations, covenants, blue sky and other governmental filings and/or registrations,
indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares
from Dealer), opinions and certificates and such other documentation as is customary for private
placement agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent
shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable
judgment, to compensate Dealer for any discount from the public market price of the Shares incurred
on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer
at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “VWAP
Price” means, on any Exchange Business Day, the per Share volume-weighted average price as
displayed under the heading “Bloomberg VWAP” on Bloomberg Screen CDNS.Q <equity> AQR (or any
successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on
such Exchange Business Day (or if such volume-weighted average price is unavailable, the market
value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a
volume-weighted method).

     (d) Repurchase and Conversion Rate Adjustment Notices. Counterparty shall, on (or prior to)
any day on which Counterparty effects any repurchase of Shares or consummates or otherwise engages
in any transaction or event (a “Conversion Rate Adjustment Event”) that would lead to an increase
in the Conversion Rate, give Dealer a written notice of such repurchase or Conversion Rate
Adjustment Event (a “Repurchase Notice”) on such day if, the number of outstanding Shares as
determined on such day is
(i) less than 246,360,000 (in the case of first such notice) or (ii) thereafter more than
20,035,000 less than the number of Shares included in the immediately preceding Repurchase Notice.
In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in
the manner specified in this Section 8(d) then, to the extent permitted by applicable law,
Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective
directors, officers, employees, agents and controlling persons (Dealer and each such person being
an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities (or
actions in respect thereof), joint or several, to which such Indemnified Party is subject under
applicable securities laws, including without limitation, Section 16 of the Exchange Act or under
any state or federal law, regulation or regulatory order, as a result of such failure. Counterparty
shall be relieved from liability to the extent that the Indemnified Party fails promptly to notify
Counterparty of any action commenced against it in respect of which indemnity may be sought
hereunder to the extent Counterparty is materially prejudiced as a result thereof. If for any
reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient in
respect of any losses, claims, damages or liabilities referred to in this paragraph, then
Counterparty, in lieu of indemnifying such Indemnified Party hereunder, shall contribute, to the
maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result
of such loss, claim, damage or liability. In addition, Counterparty will reimburse, within 30
days, upon written request, any Indemnified Party for all reasonable expenses (including reasonable
counsel fees and expenses) in connection with the investigation of, preparation for or defense or
settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom,
whether or not such Indemnified Party is a party thereto and whether or not such claim, action,
suit or proceeding is initiated or brought by or on behalf of Counterparty. This

14

 

indemnity shall survive the completion of the Transaction contemplated by this Confirmation
and any assignment and delegation of the Transaction made pursuant to this Confirmation or the
Agreement shall inure to the benefit of any permitted assignee of Dealer.

     (e) Transfer and Assignment. Either party may transfer any of its rights or obligations
under the Transaction with the prior written consent of the non-transferring party; provided that
(i) Dealer may transfer or assign without any consent of Counterparty its rights and obligations
hereunder, with respect to a number of Options corresponding to its Excess Ownership Position (as
defined below) plus 1% of the number of Shares then outstanding, to any person, or any person whose
obligations would be guaranteed by a person, in either case, with a rating for its long term,
unsecured and unsubordinated indebtedness of A- or better by S&P, or A3 or better by 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 Dealer, (ii) Dealer may transfer or
assign without any consent of Counterparty its rights and obligations hereunder in whole or in part
to any parent of Dealer or any subsidiary of such parent (A) the obligations of which are
guaranteed by Dealer or any parent of Dealer or (B) with a rating by Moody’s or S&P for its
long-term, unsecured and unsubordinated debt that is equal to or greater than Dealer’s at the time
of such transfer or assignment and (iii) Counterparty may assign its rights and obligations
hereunder to the extent permitted in the next paragraph of this Section 8(e). If at any time at
which (1) the Equity Percentage exceeds 8.5%,
(2) the Option Equity Percentage exceeds 14.5% or (3) Dealer, Dealer Group (as defined below) or
any person whose ownership position would be aggregated with that of Dealer or Dealer Group
(Dealer, Dealer Group or any such person, a “Dealer Person”) under Section 203 of the Delaware
General Corporation Law (the “DGCL Takeover Statute”), or any state or federal bank holding company
or banking laws, or other federal, state or local regulations, regulatory orders or organizational
documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares
(“Applicable Laws”), owns, beneficially owns, constructively owns, controls, holds the power to
vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to
(x) the number of Shares that would give rise to reporting or registration obligations or other
requirements (including obtaining prior approval by a state or federal regulator) of a Dealer
Person under Applicable Laws (including, without limitation, “interested stockholder” or “acquiring
person” status under the DGCL Takeover Statute) and with respect to which such requirements have
not been met or the relevant approval has not been received minus (y) 1% of the number of Shares
outstanding on the date of determination (any such condition described in clause (1), (2) or (3),
an “Excess Ownership Position”), Dealer, in its commercially reasonable discretion, is unable to
effect a transfer or assignment to a third party after its commercially reasonable efforts on
pricing terms and within a time period reasonably acceptable to Dealer (the “Transfer Time Period”)
(it being understood that a period of at least one Exchange Business Day shall be considered
reasonable for this purpose (without prejudice to whether a shorter period of time would be
considered reasonable)) such that an Excess Ownership Position no longer exists, Dealer may
designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the
“Terminated Portion”) of the Transaction, such that an Excess Ownership Position no longer exists
following such partial termination; provided that, unless such Excess Ownership Position is the
result of a Conversion Rate Adjustment Event or a repurchase of Shares by Counterparty, Dealer
shall promptly notify Counterparty of its Excess Ownership Position and shall use its commercially
reasonable efforts to consult with Counterparty during the Transfer Time Period regarding potential
transfers or assignments to third parties prior to so designating an Early Termination Date. In
the event that Dealer so designates an Early Termination Date with respect to a portion of the
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 the
Terminated Portion of the Transaction, (ii) Counterparty were the sole Affected Party with respect
to such partial termination, (iii) such portion of the Transaction were the only Terminated
Transaction and (iv) Dealer were the party entitled to designate an Early Termination Date pursuant
to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of
the Agreement. The “Equity Percentage” as of any day is the fraction, expressed as a percentage,
(A) the numerator of which is the number of Shares that Dealer and any of its affiliates subject to
aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the
Exchange Act and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under
the Exchange Act) with Dealer (collectively, “Dealer Group”) “beneficially own” (within the meaning
of Section 13 of the Exchange Act) without duplication on such day and (B) the denominator of which
is the number of Shares outstanding on such day. The “Option Equity Percentage” as of any

15

 

day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1)
the product of the Applicable Percentage, the Number of Options and the Option Entitlement and (2)
the aggregate number of Shares underlying any other call option transaction sold by Dealer to
Counterparty and (B) the denominator of which is the number of Shares outstanding on such day.

     In addition, notwithstanding Section 10(c) of the Agreement, Dealer may change the Office
through which it books the Transaction or through which it receives or makes payments or deliveries
with respect to the Transaction without the consent of Counterparty.

     Counterparty may assign its rights and obligations hereunder and under the Agreement, in
whole or in part (any such Options so transferred or assigned, the “Transfer Options”), subject to
meeting any reasonable conditions that Dealer may impose including, but not limited to, the
following conditions:

     (A) With respect to any Transfer Options, Counterparty shall not be released
from its notice and indemnification obligations pursuant to Section 8(d) of this
Confirmation or any obligations under Section 2 (regarding Extraordinary Events) or 8(c)
of this Confirmation;

     (B) Any Transfer Options shall only be transferred or assigned to a third party that
is a U.S. person (as defined in the Internal Revenue Code of 1986, as amended);

     (C) Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to, undertakings
with respect to compliance with applicable securities laws in a manner that, in the
reasonable judgment of Dealer, will not expose Dealer to material risks under applicable
securities laws) and execution of any documentation and delivery of legal opinions with
respect to securities laws and other matters by such third party and Counterparty as are
requested and reasonably satisfactory to Dealer;

     (D) Dealer will not, as a result of such transfer and assignment, be required to pay
the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement
greater than an amount that Dealer would have been required to pay to Counterparty in the
absence of such transfer and assignment;

     (E) An Event of Default, Potential Event of Default or Termination Event will not
occur as a result of such transfer and assignment;

     (F) Without limiting the generality of clause (B), Counterparty shall have caused
the transferee to make such Payee Tax Representations and to provide such tax
documentation as may be reasonably requested by Dealer to permit Dealer to determine that
results described in clauses (D) and (E) will not occur upon or after such transfer and
assignment; and

     (G) Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Dealer in connection with such transfer or
assignment.

     (f) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Counterparty and each of its employees, representatives, or other agents may disclose
to any and all persons, without limitation of any kind, the tax treatment and tax structure of the
Transaction and all materials of any kind (including opinions or other tax analyses) that are
provided to Counterparty relating to such tax treatment and tax structure.

     (g) No Netting and Set-off. The provisions of Section 2(c) of the Agreement shall not apply to
the Transaction. Each party waives any and all rights it may have to set-off delivery or payment
obligations it owes to the other party under the Transaction against any delivery or payment
obligations owed to it by the other party, whether arising under the Agreement, under any other
agreement between parties hereto, by operation of law or otherwise.

     (h) Early Unwind. In the event the sale by Counterparty of the Convertible Securities is
not consummated pursuant to the Purchase Agreement for any reason by the close of business in New
York on the Premium Payment Date (or such later date as agreed upon by the parties, which in no
event shall be later than June 21, 2010) (the Premium Payment Date or such later date being the
“Early Unwind Date”),

16

 

the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and the
Transaction and all of the respective rights and obligations of Dealer and Counterparty hereunder
shall be cancelled and terminated and Counterparty shall pay to Dealer, other than in cases
involving a breach of the Purchase Agreement by Dealer or any affiliate of Dealer, an amount in
cash equal to the aggregate amount of costs and expenses relating to the unwinding of Dealer’s
hedging activities in respect of the Transaction (including market losses incurred in reselling any
Shares purchased by Dealer or its affiliates in connection with such hedging activities, unless
Counterparty agrees to purchase any such Shares at the cost at which Dealer purchased such Shares).
Following such termination, cancellation and payment, each party shall be released and discharged
by the other party from, and agrees not to make any claim against the other party with respect to,
any obligations or liabilities of either party arising out of, and to be performed in connection
with, the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty
represent and acknowledge to the other that upon an Early Unwind and following the payment referred
to above, all obligations with respect to the Transaction shall be deemed fully and finally
discharged.

     (i) Waiver of Trial by Jury. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING RELATING TO THIS TRANSACTION. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF EITHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS TRANSACTION,
AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.

     (j) Governing Law; Jurisdiction. THE AGREEMENT, THIS CONFIRMATION AND ALL
MATTERS ARISING IN CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
ITS CHOICE OF LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THE
PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH
ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF
INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

     (k) Amendment. This Confirmation and the Agreement may not be modified, amended or
supplemented, except in a written instrument signed by Counterparty and Dealer.

     (l) Counterparts. This Confirmation may be executed in several counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

     (m) Designation by Dealer. Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing Dealer to make or receive any payment to or from Counterparty,
Dealer may designate any of its affiliates to make or receive any payment and otherwise to perform
Dealer’s obligations in respect of the Transaction and any such designee may assume such
obligations. Dealer shall be discharged of its obligations to Counterparty only to the extent of
any such performance by such affiliate.

     (n) Quarterly Valuations. Dealer hereby agrees, upon request by Counterparty, to provide or
cause its affiliate to provide to Counterparty, within five Exchange Business Days after the end of
the fiscal quarter of Counterparty during which Counterparty made such request, a valuation
estimate of the fair value of the Transaction as of Counterparty’s fiscal quarter end.

     (p) Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or
to Counterparty, such delivery shall be effected through DBSI. In addition, all notices, demands
and communications of any kind relating to the Transaction between Deutsche and Counterparty shall
be transmitted exclusively through DBSI.

17

 

     Please confirm that the foregoing correctly sets forth the terms of our
agreement by sending to us a letter or telex substantially similar to this
facsimile, which letter or telex sets forth the material terms of the Transaction
to which this Confirmation relates and indicates your agreement to those terms.
Dealer will make the time of execution of the Transaction available upon request.

     Dealer is regulated by the Financial Services Authority.

	 	 	 	 	 
	 	Yours faithfully,

DEUTSCHE BANK AG, LONDON BRANCH

 	 
	 	By:  	/s/ Lars Kestner
 	 
	 	 	Name:  	LARS KESTNER 	 
	 	 	Title:  	MANAGING DIRECTOR 	 
	 	 	 
	 	By:  	                                      /s/ Michael Sanderson
 	 
	 	 	Name:  	MICHAEL SANDERSON 	 
	 	 	Title:  	MANAGING DIRECTOR 	 
	 
	 	DEUTSCHE BANK SECURITIES INC.,

acting solely as Agent in connection with the Transaction

 	 
	 	By:  	/s/ Lars Kestner
 	 
	 	 	Name:  	LARS KESTNER 	 
	 	 	Title:  	MANAGING DIRECTOR 	 
	 	 	 
	 	By:  	                                      /s/ Michael Sanderson
 	 
	 	 	Name:  	MICHAEL SANDERSON 	 
	 	 	Title:  	MANAGING DIRECTOR 	 
	 

	 	 	 	 	 
	Confirmed and Acknowledged as of the date first above written: 

CADENCE DESIGN SYSTEMS, INC.

 	 
	By:  	/s/ Kevin S. Palatnik
 	 
	 	Name:  	Kevin S. Palatnik	 
	 	Title:  	Sr.  Vice President & Chief Financial Officer 	 
	 

	 	 	 

	Chairman of the Supervisory
Board: Clemens Börsig Management
Board: Josef Ackermann
(Chairman), Hugo Bänziger,
Michael Cohrs, Jürgen Fitschen,
Anshuman Jain, Stefan Krause,
Hermann-Josef Lamberti, Rainer
Neske

	 	Deutsche Bank AG is authorised under
German Banking Law (competent
authority: BaFin — Federal Financial
Supervising Authority) and regulated
by the Financial Services Authority
for the conduct of UK business; a
member of the London Stock Exchange.
Deutsche Bank AG is a joint stock
corporation with limited liability
incorporated in the Federal Republic
of Germany HRB No. 30 000 District
Court of Frankfurt am Main; Branch
Registration in England and Wales
BR000005; Registered address:
	 

	 	Winchester House, 1 Great Winchester
Street, London EC2N 2DB. Deutsche
Bank Group online:
	 

	 	http://www.deutsche-bank.com

Signature Page to Base Bond Hedge

Confirmationexv10w04

Exhibit 10.04

	To: 	 	Cadence Design Systems, Inc.

2655 Seely Avenue, Building 5

San Jose, CA 95134

Attention: Office of the General Counsel
	 
	From: 	 	JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England
	 
	Re: 	 	Additional Convertible Bond Hedge Transaction
	 
	Date: 	 	June 18, 2010

Dear Sir(s):

     The purpose of this communication (this “Confirmation”) is to set forth the terms and
conditions of the above-referenced transaction entered into on the Trade Date specified below (the
“Transaction”) between JPMorgan Chase Bank, National Association, London Branch (“Dealer”) and
Cadence Design Systems, Inc. (“Counterparty”). This communication constitutes a “Confirmation” as
referred to in the ISDA Master Agreement specified below. This Confirmation shall replace any
previous agreements and serve as the final documentation for the Transaction.

     1. This Confirmation is subject to, and incorporates, the definitions and provisions of the
2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the
International Swaps and Derivatives Association, Inc. (“ISDA”). Certain defined terms used herein
have the meanings assigned to them in the Indenture dated as of the closing date of the initial
issuance of the Convertible Securities described below between Counterparty and Deutsche Bank
Trust Company Americas, as trustee (the “Indenture”), relating to the USD 300,000,000 principal
amount of 2.625% cash convertible senior notes due June 1, 2015 and the additional USD 50,000,000
principal amount of 2.625% cash convertible senior notes due June 1, 2015 issued pursuant to the
over-allotment option exercised on the date hereof (the “Convertible Securities”). In the event of
any inconsistency between the terms defined in the Indenture and this Confirmation, this
Confirmation shall govern. The parties acknowledge that this Confirmation is entered into on the
date hereof with the understanding that (i) definitions set forth in the Indenture which are also
defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred
to herein will conform to the descriptions thereof in the Offering Memorandum dated June 9, 2010
(the “Offering Memorandum”). If any such definitions in the Indenture or any such sections of the
Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions
thereof in the Offering Memorandum will govern for purposes of this Confirmation. Subject to the
foregoing, references to the Indenture herein are references to the Indenture as in effect on the
date of its execution, and if the Indenture is amended, modified or supplemented following its
execution, any such amendment, modification or supplement will be disregarded for purposes of this
Confirmation (other than for purposes of Section 8(b) below) unless the parties agree otherwise in
writing. The Transaction is subject to early unwind if the

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

1

 

closing of the Convertible Securities is not consummated for any reason, as set forth below in
Section 8(h).

     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.

     This Confirmation evidences a complete and binding agreement between Dealer and Counterparty
as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be
subject to
an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement
(Multicurrency—Cross Border) as if Dealer and Counterparty had executed an agreement in such form
on the date hereof (but without any Schedule except for (i) the election of Loss and Second Method
and US Dollars (“USD”) as the Termination Currency, (ii) the replacement of the word “third” in
the last line of Section 5(a)(i) of the Agreement with the word “second” and (iii) such other
elections as set forth in this Confirmation.

     All provisions contained in, or incorporated by reference to, the Agreement will govern this
Confirmation except as expressly modified herein. In the event of any inconsistency between this
Confirmation and either the Equity Definitions or the Agreement, this Confirmation shall govern.

     The Transaction hereunder shall be the sole Transaction under the Agreement. If there exists
any ISDA Master Agreement between Dealer and Counterparty or any confirmation or other agreement
between Dealer and Counterparty pursuant to which an ISDA Master Agreement is deemed to exist
between Dealer and Counterparty, then notwithstanding anything to the contrary in such ISDA Master
Agreement, such confirmation or agreement or any other agreement to which Dealer and Counterparty
are parties, the Transaction shall not be considered a Transaction under, or otherwise governed
by, such existing or deemed ISDA Master Agreement.

     2. The Transaction constitutes a Share Option Transaction for purposes of the Equity
Definitions. The terms of the particular Transaction to which this Confirmation relates are as
follows:

	 	 	 

	General Terms:
	 	 
	 
	 	 
	Trade Date:

	 	June 18, 2010
	 
	 	 
	Effective Date:

	 	The closing date of the Convertible Securities issued
pursuant to the over-allotment option exercised on
the date hereof.
	 
	 	 
	Option Style:

	 	Modified American, as described under “Procedures
for Exercise” below.
	 
	 	 
	Option Type:

	 	Call
	 
	 	 
	Seller:

	 	Dealer
	 
	 	 
	Buyer:

	 	Counterparty
	 
	 	 
	Shares:

	 	The Common Stock of Counterparty, par value USD
0.01 per share (Ticker Symbol: “CDNS”).
	 
	 	 
	Number of Options:

	 	The number of Convertible Securities in
denominations of USD 1,000 principal amount
purchased by the Initial Purchasers (as defined in the
Purchase Agreement) at their option exercised on the
date hereof pursuant to the second paragraph of
Section 2 of the Purchase Agreement (as defined
below). For the avoidance of doubt, the Number of
Options outstanding shall be reduced by each

2

 

	 	 	 

	 

	 	exercise of Options hereunder.
	 
	 	 
	Applicable Percentage:

	 	60%
	 
	 	 
	Option Entitlement:

	 	As of any date, a number of Shares per Option equal
to the “Conversion Rate” (as defined in the
Indenture), but without regard to any adjustments to
the Conversion Rate as set forth in Section 13.02 of
the Indenture (a “Make-Whole Fundamental
Change Adjustment”) or a discretionary adjustment
as set forth in Section 13.04(g) of the Indenture (a
“Discretionary Adjustment”).
	 
	 	 
	Strike Price:

	 	As of any date, an amount in USD, rounded to the
nearest cent (with 0.5 cents being rounded upwards),
equal to USD 1,000 divided by the Option
Entitlement as of such date.
	 
	 	 
	Number of Shares:

	 	As of any date, the product of the Number of
Options, the Option Entitlement and the Applicable
Percentage.
	 
	 	 
	Premium:

	 	USD 7,041,000.00.
	 
	 	 
	Premium Payment Date:

	 	The Effective Date
	 
	 	 
	Exchange:

	 	NASDAQ Global Select Market
	 
	 	 
	Related Exchange:

	 	All Exchanges
	 
	 	 
	Procedures for Exercise:
	 	 
	 
	 	 
	Exercise Dates:

	 	Each Conversion Date.
	 
	 	 
	Conversion Date:

	 	Each “Conversion Date” (as defined in the Indenture)
occurring during the Exercise Period for Convertible
Securities, excluding (A) Convertible Securities
(“Exchanged Convertible Securities”) (i) with
respect to which Counterparty has elected the
“Exchange in Lieu of Conversion” option to
designate a financial institution to deliver the
consideration due upon any conversion of any
Convertible Securities in exchange for such
Convertible Securities and (ii) that have been
accepted by the designated financial institution
pursuant to Section 13.09 of the Indenture and (B)
Convertible Securities that are “Relevant Convertible
Securities” under (and as defined in) the Base
Convertible Bond Hedge Transaction dated June 9,
2010 between Dealer and Counterparty (the “Base
Convertible Bond Hedge Transaction
Confirmation”) (such Convertible Securities, the
“Relevant Convertible Securities” for such
Conversion Date). For the purpose of determining
whether any Convertible Securities will be Relevant
Convertible Securities hereunder or “Relevant
Convertible Securities” under the Base Convertible
Bond Hedge Transaction Confirmation, Convertible
Securities that are converted pursuant to the
Indenture shall be allocated first to the Base

3

 

	 	 	 

	 

	 	Convertible Bond Hedge Transaction Confirmation until
all Options thereunder are exercised or terminated.
	 
	 	 
	 

	 	If such designated financial institution fails to
deliver the consideration due upon such conversion and,
as a result, Counterparty is required to deliver such
consideration pursuant to Section 13.09(e) of the
Indenture, Counterparty shall, promptly following such
failure, notify Dealer in writing of such failure and
the number of Exchanged Convertible Securities affected
by such failure (such notice, a “Failed Exchange
Notice”). The receipt by Dealer of a Failed Exchange
Notice shall constitute an Additional Termination Event
in respect of which Dealer shall designate an Exchange
Business Day within a commercially reasonable period of
time following receipt of such Failed Exchange Notice
(which in no event shall be earlier than the related
settlement date for the Exchanged Convertible
Securities) as an Early Termination Date with respect to
a portion of the Transaction corresponding to a number
of Options (the “Cancelled Options”) equal to the lesser
of (A) the number of such Exchanged Convertible
Securities specified in such Failed Exchange Notice
minus the number of Cancelled Options (as defined in the
Base Convertible Bond Hedge Transaction Confirmation),
if any, that relate to such Exchanged Convertible
Securities and (B) the Number of Options as of the date
Dealer designates such Early Termination Date and, as of
such date, the Number of Options shall be reduced by the
number of Cancelled Options. Any payment hereunder with
respect to such termination shall be calculated pursuant
to Section 6 of the Agreement as if (1) 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 number of Cancelled
Options, (2) Counterparty were the sole Affected Party
with respect to such Additional Termination Event and
(3) the terminated portion of the Transaction were the
sole Affected Transaction.
	 
	 	 
	Exercise Period:

	 	The period from and excluding the Effective Date to
and including the Expiration Date.
	 
	 	 
	Expiration Date:

	 	The earlier of (i) the last day on which any
Convertible Securities remain outstanding and (ii) the
“Maturity Date” (as defined in the Indenture).
	 
	 	 
	Automatic Exercise on Conversion Dates:

	 	Applicable; and means that on each Conversion Date,
a number of Options equal to the number of Relevant
Convertible Securities for such Conversion Date in

4

 

	 	 	 

	 

	 	denominations of USD1,000 principal amount shall
be automatically exercised, subject to “Notice of
Exercise” below.
	 
	 	 
	Notice Deadline:

	 	In respect of any exercise of Options hereunder on
any Conversion Date, 5:00 P.M., New York City
time, on the Exchange Business Day prior to the first
“Scheduled Trading Day” of the “Observation
Period” (each as defined in the Indenture) with
respect to the Relevant Convertible Securities for
such Conversion Date; provided that in the case of
any exercise of Options hereunder in connection with
the conversion of any Relevant Convertible
Securities on any Conversion Date occurring during
the period beginning on, and including, March 1,
2015 and ending on, and including, the second
“Scheduled Trading Day” (as defined in the
Indenture) immediately preceding the Maturity Date
(such period, the “Final Convertibility Period”), the
Notice Deadline shall be 5:30 P.M., New York City
time, on the second “Scheduled Trading Day”
immediately preceding the Maturity Date.
	 
	 	 
	Notice of Exercise:

	 	Notwithstanding anything to the contrary in the
Equity Definitions, Dealer shall have no obligation to
make any payment in respect of any exercise of
Options hereunder unless Counterparty notifies
Dealer in writing prior to the Notice Deadline in
respect of such exercise of (i) the number of Options
being exercised on such Exercise Date, (ii) the
scheduled settlement date under the Indenture for the
Relevant Convertible Securities for the Conversion
Date corresponding to such Exercise Date, and (iii)
the first “Scheduled Trading Day” (as defined in the
Indenture) of the Observation Period; provided that,
notwithstanding the foregoing, such notice (and the
related Automatic Exercise of Options) shall be
effective if given after the Notice Deadline but prior
to 5:00 P.M., New York City time, on the fifth
Exchange Business Day of such Observation Period,
in which event the Calculation Agent shall have the
right to adjust the Convertible Obligation (as defined
below) as appropriate to reflect the additional costs
(including, but not limited to, hedging mismatches
and market losses) and reasonable expenses incurred
by Dealer in connection with its hedging activities
(including the unwinding of any hedge position) as a
result of its not having received such notice prior to
the Notice Deadline; provided, further, that in the
case of any exercise of Options hereunder in
connection with the conversion of any Relevant
Convertible Securities on any Conversion Date
occurring during the Final Convertibility Period, the
contents of such notice shall be as set forth in clause
(i) above; and provided, further, that any “Notice of

5

 

	 	 	 

	 

	 	Exercise” delivered to Dealer pursuant to the Base
Convertible Bond Hedge Transaction Confirmation shall be
deemed to be a Notice of Exercise pursuant to this
Confirmation and the terms of such Notice of Exercise
shall apply, mutatis mutandis, to this Confirmation. For
the avoidance of doubt and subject to the first proviso
in the immediately preceding sentence, if Counterparty
fails to give such notice when due in respect of any
exercise of Options hereunder, Dealer’s obligation to
make any payment in respect of such exercise shall be
permanently extinguished, and late notice shall not cure
such failure.
	 
	 	 
	Dealer’s Telephone Number and Telex and/or
Facsimile Number and Contact Details for
purpose of Giving Notice:

	 	As specified in Section 6(b) below.
	 
	 	 
	Settlement Terms:
	 	 
	 
	 	 
	Settlement Method:

	 	Cash Settlement.
	 
	 	 
	Settlement Date:

	 	In respect of an Exercise Date occurring on a Conversion
Date, the settlement date for the cash to be paid in
respect of the Relevant Convertible Securities converted
on such Conversion Date pursuant to Section 13.03(a) or
13.02(b) of the Indenture, as the case may be; provided
that the Settlement Date will not be prior to the
Exchange Business Day immediately following the date
Counterparty provides the Notice of Delivery Obligation
prior to 5:00 P.M., New York City time.
	 
	 	 
	Delivery Obligation:

	 	In lieu of the obligations set forth in Section 8.1 of
the Equity Definitions, and subject to “Notice of
Exercise” above, in respect of an Exercise Date
occurring on a Conversion Date, Dealer will pay to
Counterparty, on the related Settlement Date, an amount
of cash in USD equal to the product of (i) the
Applicable Percentage and (ii) the aggregate amount of
cash, if any, in excess of USD1,000 per Convertible
Security (in denominations of USD1,000) that
Counterparty would be obligated to pay to holder(s) of
the Relevant Convertible Securities for such Conversion
Date pursuant to Section 13.03(a) of the Indenture (the
“Convertible Obligation”); provided that such obligation
shall be determined excluding any cash that Counterparty
is obligated to pay to holder(s) of the Relevant
Convertible Securities as a result of any adjustments to
the Conversion Rate pursuant to a Make-Whole Fundamental
Change Adjustment or a Discretionary Adjustment and any
interest payment that Counterparty is obligated to
deliver to holder(s) of
the Relevant Convertible Securities for such

6

 

	 	 	 

	 

	 	Conversion Date.
	 
	 	 
	Notice of Delivery Obligation:

	 	No later than 5:00 P.M., New York City time, on the
Exchange Business Day immediately following the
last day of the relevant Observation Period,
Counterparty shall give Dealer notice of the final
amount of cash comprising the Convertible
Obligation; provided that, with respect to any
Exercise Date occurring during the Final
Convertibility Period, Counterparty may provide
Dealer with a single notice of the aggregate amount
of cash comprising the Convertible Obligations for
all Exercise Dates occurring in such period (it being
understood, for the avoidance of doubt, that the
requirement of Counterparty to deliver such notice
shall not limit Counterparty’s obligations with
respect to Notice of Exercise).
	 
	 	 
	Adjustments:
	 	 
	 
	 	 
	Method of Adjustment:

	 	Notwithstanding Section 11.2 of the Equity
Definitions (and, for the avoidance of doubt, in lieu
of any adjustments pursuant to such section), upon
the occurrence of any event or condition set forth in
Section 13.05 or sub-sections (a) through (e) of
Section 13.04 of the Indenture (each an “Adjustment
Event”) and the Calculation Agent receiving notice
of the adjustments to be made to the terms of the
Indenture and the Convertible Securities in respect of
such Adjustment Event pursuant to the succeeding
sentence, the Calculation Agent shall make a
corresponding adjustment (in respect of any such
adjustment under the Indenture) to the terms relevant
to the exercise, settlement or payment of the
Transaction; provided that, in the case of any
adjustment to the terms of the Indenture and the
Convertible Securities that involves an exercise of
discretion by Counterparty or its board of directors
(including, without limitation, pursuant to Section
13.05 of the Indenture or in connection with any
proportional adjustment or the determination of the
fair value of any securities, property, rights or other
assets), then in each such case, the Counterparty
agrees to exercise such discretion in good faith and in
a commercially reasonable manner and to promptly
provide the Calculation Agent with any additional
information it reasonably requests (in addition to any
information required to be provided pursuant to the
succeeding sentence) about the Counterparty’s
calculations and methodology for such adjustment.
Promptly upon the occurrence of any Adjustment
Event, Counterparty shall notify the Calculation
Agent of such Adjustment Event; and once the
adjustments to be made to the terms of the Indenture
and the Convertible Securities in respect of such
Adjustment Event have been determined,

7

 

	 	 	 

	 

	 	Counterparty shall promptly (and in any event within
five Exchange Business Days after such
determination) notify the Calculation Agent in
writing of the details of such adjustments.
	 
	 	 
	Extraordinary Events:
	 	 
	 
	 	 
	Merger Events:

	 	Notwithstanding Section 12.1(b) of the Equity
Definitions, a “Merger Event” means the occurrence
of any event or condition set forth in Section 10.01 or 13.06
of the Indenture.
	 
	Consequences of Merger Events:

	 	Notwithstanding Section 12.2 of the Equity
Definitions (and, for the avoidance of doubt, in lieu
of any adjustments or other consequences pursuant to
such section), upon the occurrence of a Merger
Event, the Calculation Agent shall make a
corresponding adjustment (in respect of any
adjustment on account of such Merger Event under
the Indenture) to the terms relevant to the exercise,
settlement or payment of the Transaction; provided
that such adjustment shall be made without regard to
any adjustment to the Conversion Rate pursuant to a
Make-Whole Fundamental Change Adjustment or a
Discretionary Adjustment; and provided further that
if, with respect to a Merger Event, the consideration
for the Shares includes (or, at the option of a holder
of Shares, may include) shares (or depositary receipts
with respect to shares) of an entity or person not
organized under the laws of the United States, any
State thereof or the District of Columbia,
Cancellation and Payment (Calculation Agent
Determination) shall apply.
	 
	 	 
	Notice of Merger Consideration and Consequences:

	 	Upon the occurrence of a Merger Event that causes
the Shares to be converted into the right to receive
more than a single type of consideration (determined
based in part upon any form of stockholder election),
Counterparty shall reasonably promptly (but in any
event on or prior to the relevant merger date) notify
the Calculation Agent of (i) the type and amount of
consideration that a holder of Shares would have
been entitled to in the case of reclassifications,
consolidations, mergers, sales or transfers of assets or
other transactions that cause Shares to be converted
into the right to receive more than a single type of
consideration, (ii) the weighted average of the types
and amounts of consideration to be received by the
holders of Shares that affirmatively make such an
election, and (iii) the details of the adjustment to be
made under the Indenture in respect of such Merger
Event.
	 
	 	 
	Nationalization, Insolvency or Delisting:

	 	Cancellation and Payment (Calculation Agent
Determination); provided that (i) Section 12.6(a)(iii)

8

 

	 	 	 

	 

	 	of the Equity Definitions shall be amended to delete,
in the definition of the term “Delisting” the
parenthetical “(or will cease)” and (ii) in addition to
the provisions of Section 12.6(a)(iii) of the Equity
Definitions, it will also constitute a Delisting if the
Exchange is located in the United States and the
Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective successors); if the
Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system,
such exchange or quotation system shall thereafter be
deemed to be the Exchange.
	 
	 	 
	Additional Disruption Events:
	 	 
	 
	 	 
	(a) Change in Law:

	 	Applicable; provided that Section 12.9(a)(ii) of the
Equity Definitions is hereby amended by (i) replacing
the phrase “the interpretation” in the third line thereof
with the phrase “or announcement or statement of the
interpretation” and (ii) replacing the word “Shares”
with the phrase “Hedge Positions” in clause (X)
thereof.
	 
	 	 
	(b) Failure to Deliver:

	 	Applicable
	 
	 	 
	(c) Insolvency Filing:

	 	Applicable
	 
	 	 
	(d) Hedging Disruption:

	 	Applicable; provided that Section 12.9(a)(v) of the
Equity Definitions is hereby amended by inserting
the following proviso at the end thereof: “provided
that such inability described in clause (A) or (B) shall
not constitute a “Hedging Disruption” unless (x) such
inability does not result from factors particular to
Hedging Party (such as Hedging Party”s
creditworthiness or financial position, or particular
actions or transactions undertaken by the Hedging
Party unrelated to the hedging of the Transaction)
and (y) such inability will result in continued
performance by the Hedging Party under the
Transaction being commercially unreasonable or
commercially impracticable”.
	 
	 	 
	Hedging Party:

	 	Dealer
	 
	 	 
	Determining Party:

	 	Dealer for all applicable Additional Disruption
Events
	 
	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable

9

 

	 	 	 

	3. Calculation Agent:

	 	Dealer. All determinations made by the Calculation Agent shall
be made in good faith and in a commercially reasonable manner. Following any determination or
calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the
Calculation Agent will provide to Counterparty by e-mail to the e-mail address provided by
Counterparty in such written request a report (in a commonly used file format for the storage and
manipulation of financial data) displaying in reasonable detail the basis for such determination or
calculation, including, where applicable, a description of the methodology and data applied, it
being understood that the Calculation Agent shall not be obligated to disclose any proprietary
models used by it for such determination or calculation.

     4. Account Details:

Dealer Payment Instructions:

JPMORGAN CHASE BANK, N.A.

Beneficiary JPMorgan Chase Bank, N.A. New York

Ref: Derivatives

Counterparty Payment Instructions:

To be provided by Counterparty.

     5. Offices:

The Office of Dealer for the Transaction is: London

JPMorgan Chase Bank, National Association

London Branch

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

The Office of Counterparty for the Transaction is:

Inapplicable. Counterparty is not a Multibranch Party.

     6. Notices: For purposes of this Confirmation:

	 	(a)	 	Address for notices or communications to Counterparty:

	 	To:	 	 Cadence Design Systems, Inc.

2655 Seely Avenue, Building 5

San Jose, California 95134
	 
	 	Attn:	 	 Office of the General Counsel
	 
	 	Facsimile:	 	 (408) 904-6946

	 	(b)	 	Address for notices or communications to Dealer:

	 	To: 	 	JPMorgan Chase Bank, National Association

4 New York Plaza, Floor 18

New York, NY 10004-2413

10

 

	 	Attn:	 	 Mariusz Kwasnik

Operations Analyst, EDG Corporate Marketing

     7. Representations, Warranties and Agreements:

     (a) In addition to the representations and warranties in the Agreement and those contained
elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with,
Dealer as follows:

     (i) On the Trade Date, none of Counterparty and its officers and directors is aware
of any material nonpublic information regarding Counterparty or the Shares. On the Trade
Date, all reports and other documents filed by Counterparty with the Securities and
Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) when considered as a whole (with the more recent such reports and documents deemed
to amend inconsistent statements contained in any earlier such reports and documents), do
not contain any untrue statement of a material fact or any omission of a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading.

     (ii) (A) On the Trade Date, the Shares or securities that are
convertible into, or
exchangeable or exercisable for Shares, are not, and shall not be, subject to a
“restricted period,” as such term is defined in Regulation M under the Exchange Act
(“Regulation M”) and
(B) Counterparty shall not engage in any “distribution,” as such term is defined in
Regulation M, other than a distribution meeting the requirements of the exceptions set
forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange
Business Day immediately following the Trade Date.

     (iii) Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that neither Dealer nor any of its affiliates is making any
representations or warranties or taking a position or expressing any view with respect to
the treatment of the Transaction under any accounting standards, including ASC Topic 260,
Earnings Per Share, ASC Topic 815, Derivatives and Hedging, ASC Topic 480, Distinguishing
Liabilities from Equity and ASC Topic 815-40, Derivatives and Hedging — Contracts in
Entity’s Own Equity
(or any successor issue statements).

     (iv) Without limiting the generality of Section 3(a)(iii) of the Agreement, the
Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

     (v) Counterparty is not entering into this Confirmation to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable for
Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for Shares) or to otherwise violate the Exchange
Act.

     (vi) Counterparty is not, and after giving effect to the transactions contemplated
hereby will not be, required to register as, an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.

     (vii) On each of the Trade Date and the Premium Payment Date, Counterparty is not
“insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code
(Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be
able to purchase a number of Shares equal to the Number of Shares plus the “Number of
Shares” under the Base Bond Hedge Transaction Confirmation in compliance with the laws of
the jurisdiction of Counterparty’s incorporation.

     (viii) Counterparty understands no obligations of Dealer to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not be
guaranteed by any governmental agency.

11

 

     (ix) No state or local (including non-U.S. jurisdictions) law, rule, regulation or
regulatory order applicable to the Shares would give rise to any reporting, consent,
registration or other requirement (including without limitation a requirement to obtain
prior approval from any person or entity) as a result of Dealer or its affiliates owning
or holding (however defined) Shares.

     (x) The representations and warranties of Counterparty set forth in Section 3 of the
Agreement and Section 1 of the Purchase Agreement, dated as of June 9, 2010, between J.P.
Morgan Securities Inc. and Morgan Stanley & Co. Incorporated, as representatives of the
Initial Purchasers party thereto, and Counterparty (the “Purchase Agreement”) are true and
correct as of the Trade Date and the Effective Date and are hereby deemed to be repeated
to Dealer as if set forth herein.

     (b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract
participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended, and is
entering into the Transaction as principal (and not as agent or in any other capacity, fiduciary
or otherwise) and not for the benefit of any third party.

     (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction
to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the
“Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and
warrants to Dealer that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment and its
investments in and liabilities in respect of the Transaction, which it understands are not readily
marketable, are not disproportionate to its net worth, and it is able to bear any loss in
connection with the Transaction, including the loss of its entire investment in the Transaction,
(ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under
the Securities Act, (iii) it is entering into the Transaction for its own account and without a
view to the distribution or resale thereof, (iv) the assignment, transfer or other disposition of
the Transaction has not been and will not be registered under the Securities Act or any state securities laws and
is restricted under this Confirmation, the Securities Act and state securities laws, and (v) its
financial condition is such that it has no need for liquidity with respect to its investment in
the Transaction and no need to dispose of any portion thereof to satisfy any existing or
contemplated undertaking or indebtedness and is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of the Transaction.

     (d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial
institution,” “swap participant” and “financial participant” within the meaning of Sections
101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and
acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in
Section 741(7) of the Bankruptcy Code, with respect to which each payment hereunder or in
connection herewith is a “termination value,” “payment amount” or “other transfer obligation”
within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the
meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is
defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment hereunder
or in connection herewith is a “termination value,” “payment amount” or “other transfer
obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the
meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer is entitled to the protections
afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e),
546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

     (e) As a condition to the effectiveness of the Transaction, Counterparty shall deliver to
Dealer an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Dealer in
form and substance, with respect to the matters set forth in Section 3(a) of the Agreement,
subject to customary assumptions, qualifications and exceptions.

     8. Other Provisions:

     (a) Right to Extend. Dealer may postpone any Exercise Date or Settlement Date or any other
date of valuation or payment by Dealer, with respect to some or all of the relevant Options (in
which event

12

 

the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer
determines, in its reasonable discretion and based on advice of counsel, that such extension is
reasonably necessary or appropriate to preserve Dealer’s ability to conduct its related hedging or
hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the
stock borrow market or other relevant market or to enable Dealer to effect purchases of Shares in
connection with its related hedging, hedge unwind or settlement activity hereunder in a manner
that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in
compliance with applicable legal, regulatory or self-regulatory requirements, or with generally
applicable related policies and procedures applicable to Dealer and applied to this Transaction in
a non-discriminatory manner.

     (b) Additional Termination Events. The occurrence of (i) an “Event of Default” with respect
to Counterparty under the terms of the Convertible Securities as set forth in the Indenture, as a
result of which the Convertible Securities are declared immediately due and payable under the
terms of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with
respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole
Affected Party, and Dealer shall be the party entitled to designate an Early Termination Date
pursuant to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section
6(e) of the Agreement.

     “Amendment Event” means that Counterparty amends, modifies, supplements or obtains a waiver
in respect of any term of the Indenture or the Convertible Securities governing the principal
amount, coupon, maturity, a repurchase obligation of Counterparty, a redemption right of
Counterparty, any term relating to conversion of the Convertible Securities (including changes to
the conversion price, conversion settlement dates or conversion conditions), or any term that
would require consent of each holder of the Convertible Securities affected thereby to amend, in
each case without the prior consent of Dealer.

     Counterparty shall promptly notify Dealer in writing of any repurchase and cancellation of
Convertible Securities and the number of Convertible Securities so repurchased and cancelled (any
such notice, a “Convertible Securities Repurchase Notice”). Notwithstanding anything to the
contrary in this Confirmation, the receipt by Dealer from Counterparty of any Convertible
Securities Repurchase Notice shall constitute an Additional Termination Event as provided in this
paragraph. Upon receipt of any such Convertible Securities Repurchase Notice, Dealer shall
designate in good faith a Scheduled Trading Day that is within a commercially reasonable period of
time following such Additional Termination Event as an Early Termination Date with respect to the
portion of the Transaction corresponding to a number of Options (the “Repurchase Options”) equal
to the lesser of (A) the number of Convertible Securities specified in such Convertible Securities
Repurchase Notice minus the number of Repurchase Options (as defined in the Base Convertible Bond
Hedge Transaction Confirmation), if any, that relate to such Convertible Securities and (B) the
Number of Options as of the date Dealer designates such Early Termination Date and, as of such
date, the Number of Options shall be reduced by the number of Repurchase Options. Any payment
hereunder with respect to such termination shall be calculated pursuant to Section 6 of the
Agreement as if (1) 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
number of Repurchase Options, (2) Counterparty were the sole Affected Party with respect to such
Additional Termination Event and (3) the terminated portion of the Transaction were the sole
Affected Transaction.

     (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Dealer, the Shares (the “Hedge Shares”) acquired by Dealer for the purpose
of hedging its obligations pursuant to the Transaction cannot be sold in the U.S. public market by
Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in
order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer
an effective registration statement under the Securities Act to cover the resale of such Hedge
Shares and (A) enter into an agreement, in form and substance reasonably satisfactory to Dealer,
substantially in the form of an underwriting agreement for underwritten follow-on offerings of
equity securities of companies of comparable size, maturity and lines of business, (B) provide
accountant’s “comfort” letters in customary form for underwritten follow-on offerings of equity
securities, (C) provide disclosure opinions of nationally recognized outside counsel to
Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates
and closing documents customary in form for underwritten follow-on offerings of

13

 

equity securities of companies of comparable size, maturity and lines of business and (E) afford
Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to
Counterparty customary in scope for underwritten follow-on offerings of equity securities of
companies of comparable size, maturity and lines of business; provided, however, that if Dealer,
in its sole commercially reasonable discretion, is not satisfied with access to due diligence
materials, the results of its due diligence investigation, or the procedures and documentation for
the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c)
shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge
Shares in a private placement, enter into a private placement agreement substantially similar to
private placement purchase agreements customary for private placements of equity securities, in
form and substance satisfactory to Dealer, including customary representations, covenants, blue
sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence
rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and
certificates and such other documentation as is customary for private placement agreements, all
reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments
to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate
Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge
Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price
on such Exchange Business Days, and in the amounts, requested by Dealer. “VWAP Price” means, on
any Exchange Business Day, the per Share volume-weighted average price as displayed under the
heading “Bloomberg VWAP” on Bloomberg Screen CDNS.Q <equity> AQR (or any successor thereto)
in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange
Business Day (or if such volume-weighted average price is unavailable, the market value of one
Share on such Exchange Business Day, as determined by the Calculation Agent using a
volume-weighted method).

     (d) Repurchase and Conversion Rate Adjustment Notices. Counterparty shall, on (or prior to)
any day on which Counterparty effects any repurchase of Shares or consummates or otherwise engages
in any transaction or event (a “Conversion Rate Adjustment Event”) that would lead to an increase
in the Conversion Rate, give Dealer a written notice of such repurchase or Conversion Rate
Adjustment Event (a “Repurchase Notice”) on such day if, the number of outstanding Shares as
determined on such day is
(i) less than 257,769,000 (in the case of first such notice) or (ii) thereafter more than
11,410,000 less than the number of Shares included in the immediately preceding Repurchase Notice.
In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in
the manner specified in this Section 8(d) then, to the extent permitted by applicable law,
Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective
directors, officers, employees, agents and controlling persons (Dealer and each such person being
an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities (or
actions in respect thereof), joint or several, to which such Indemnified Party is subject under
applicable securities laws, including without limitation, Section 16 of the Exchange Act or under
any state or federal law, regulation or regulatory order, as a result of such failure.
Counterparty shall be relieved from liability to the extent that the Indemnified Party fails
promptly to notify Counterparty of any action commenced against it in respect of which indemnity
may be sought hereunder to the extent Counterparty is materially prejudiced as a result thereof.
If for any reason the foregoing indemnification is unavailable to any Indemnified Party or
insufficient in respect of any losses, claims, damages or liabilities referred to in this
paragraph, then Counterparty, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute, to the maximum extent permitted by law, to the amount paid or payable by the
Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty
will reimburse, within 30 days, upon written request, any Indemnified Party for all reasonable
expenses (including reasonable counsel fees and expenses) in connection with the investigation of,
preparation for or defense or settlement of any pending or threatened claim or any action, suit or
proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether
or not such claim, action, suit or proceeding is initiated or brought by or on behalf of
Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this
Confirmation and any
assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement
shall inure to the benefit of any permitted assignee of Dealer.

     (e) Transfer and Assignment. Either party may transfer any of its rights or obligations under
the Transaction with the prior written consent of the non-transferring party; provided that (i)
Dealer may

14

 

transfer or assign without any consent of Counterparty its rights and obligations hereunder, with
respect to a number of Options corresponding to its Excess Ownership Position (as defined below)
plus 1% of the number of Shares then outstanding, to any person, or any person whose obligations
would be guaranteed by a person, in either case, with a rating for its long term, unsecured and
unsubordinated indebtedness of A- or better by S&P, or A3 or better by 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 Dealer, (ii) Dealer may transfer or assign
without any consent of Counterparty its rights and obligations hereunder in whole or in part to
any parent of Dealer or any subsidiary of such parent (A) the obligations of which are guaranteed
by Dealer or any parent of Dealer or (B) with a rating by Moody’s or S&P for its long-term,
unsecured and unsubordinated debt that is equal to or greater than Dealer’s at the time of such
transfer or assignment and (iii) Counterparty may assign its rights and obligations hereunder to
the extent permitted in the next paragraph of this Section 8(e). If at any time at which (1) the
Equity Percentage exceeds 8.5%,
(2) the Option Equity Percentage exceeds 14.5% or (3) Dealer, Dealer Group (as defined below) or
any person whose ownership position would be aggregated with that of Dealer or Dealer Group
(Dealer, Dealer Group or any such person, a “Dealer Person”) under Section 203 of the Delaware
General Corporation Law (the “DGCL Takeover Statute”), or any state or federal bank holding
company or banking laws, or other federal, state or local regulations, regulatory orders or
organizational documents or contracts of Counterparty that are, in each case, applicable to
ownership of Shares (“Applicable Laws”), owns, beneficially owns, constructively owns, controls,
holds the power to vote or otherwise meets a relevant definition of ownership in excess of a
number of Shares equal to (x) the number of Shares that would give rise to reporting or
registration obligations or other requirements (including obtaining prior approval by a state or
federal regulator) of a Dealer Person under Applicable Laws (including, without limitation,
“interested stockholder” or “acquiring person” status under the DGCL Takeover Statute) and with
respect to which such requirements have not been met or the relevant approval has not been
received minus (y) 1% of the number of Shares outstanding on the date of determination (any such
condition described in clause (1), (2) or (3), an “Excess Ownership Position”), Dealer, in its
commercially reasonable discretion, is unable to effect a transfer or assignment to a third party
after its commercially reasonable efforts on pricing terms and within a time period reasonably
acceptable to Dealer (the “Transfer Time Period”) (it being understood that a period of at least
one Exchange Business Day shall be considered reasonable for this purpose (without prejudice to
whether a shorter period of time would be considered reasonable)) such that an Excess Ownership
Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination
Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that an Excess
Ownership Position no longer exists following such partial termination; provided that, unless such
Excess Ownership Position is the result of a Conversion Rate Adjustment Event or a repurchase of
Shares by Counterparty, Dealer shall promptly notify Counterparty of its Excess Ownership Position
and shall use its commercially reasonable efforts to consult with Counterparty during the Transfer
Time Period regarding potential transfers or assignments to third parties prior to so designating
an Early Termination Date. In the event that Dealer so designates an Early Termination Date with
respect to a portion of the 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 the Terminated Portion of the Transaction, (ii) Counterparty were the
sole Affected Party with respect to such partial termination, (iii) such portion of the
Transaction were the only Terminated Transaction and (iv) Dealer were the party entitled to
designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the
amount payable pursuant to Section 6(e) of the Agreement. The “Equity Percentage” as of any day is
the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that
Dealer and any of its affiliates subject to aggregation with Dealer for purposes of the
“beneficial ownership” test under Section 13 of the Exchange Act and all persons who may form a
“group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer (collectively,
“Dealer Group”) “beneficially own” (within the meaning of Section 13 of the Exchange Act) without
duplication on such day and (B) the denominator of which is the number of Shares outstanding on
such day. The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage,
(A) the numerator of which is the sum of (1) the product of the Applicable Percentage, the Number
of Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other
call option transaction sold by Dealer to Counterparty and (B) the denominator of which is the
number of Shares outstanding on such day.

15

 

     In addition, notwithstanding Section 10(c) of the Agreement, Dealer may change the Office
through which it books the Transaction or through which it receives or makes payments or
deliveries with respect to the Transaction without the consent of Counterparty.

     Counterparty may assign its rights and obligations hereunder and under the Agreement, in
whole or in part (any such Options so transferred or assigned, the “Transfer Options”), subject to
meeting any reasonable conditions that Dealer may impose including, but not limited to, the
following conditions:

     (A) With respect to any Transfer Options, Counterparty shall not be released from its
notice and indemnification obligations pursuant to Section 8(d) of this Confirmation or
any obligations under Section 2 (regarding Extraordinary Events) or 8(c) of this
Confirmation;

     (B) Any Transfer Options shall only be transferred or assigned to a third party that
is a U.S. person (as defined in the Internal Revenue Code of 1986, as amended);

     (C) Such transfer or assignment shall be effected on terms, including any reasonable
undertakings by such third party (including, but not limited to, undertakings with respect
to compliance with applicable securities laws in a manner that, in the reasonable judgment
of Dealer, will not expose Dealer to material risks under applicable securities laws) and
execution of any documentation and delivery of legal opinions with respect to securities
laws and other matters by such third party and Counterparty as are requested and
reasonably satisfactory to Dealer;

     (D) Dealer will not, as a result of such transfer and assignment, be required to pay
the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement
greater than an amount that Dealer would have been required to pay to Counterparty in the
absence of such transfer and assignment;

     (E) An Event of Default, Potential Event of Default or Termination Event will not
occur as a result of such transfer and assignment;

     (F) Without limiting the generality of clause (B), Counterparty shall have caused the
transferee to make such Payee Tax Representations and to provide such tax documentation as
may be reasonably requested by Dealer to permit Dealer to determine that results described
in clauses (D) and (E) will not occur upon or after such transfer and assignment; and

     (G) Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Dealer in connection with such transfer or
assignment.

     (f) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Counterparty and each of its employees, representatives, or other agents may disclose
to any and all persons, without limitation of any kind, the tax treatment and tax structure of the
Transaction and all materials of any kind (including opinions or other tax analyses) that are
provided to Counterparty relating to such tax treatment and tax structure.

     (g) No Netting and Set-off. The provisions of Section 2(c) of the Agreement shall not apply
to the Transaction. Each party waives any and all rights it may have to set-off delivery or
payment obligations it owes to the other party under the Transaction against any delivery or
payment obligations owed to it by the other party, whether arising under the Agreement, under any
other agreement between parties hereto, by operation of law or otherwise.

     (h) Early Unwind. In the event the sale by Counterparty of the Convertible Securities issued
pursuant to the over-allotment option exercised on the date hereof is not consummated pursuant to
the Purchase Agreement for any reason by the close of business in New York on the Premium Payment
Date (or such later date as agreed upon by the parties, which in no event shall be later than June
29, 2010) (the Premium Payment Date or such later date being the “Early Unwind Date”), the
Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and the
Transaction and all of the respective rights and obligations of Dealer and Counterparty hereunder
shall be cancelled and terminated and Counterparty shall pay to Dealer, other than in cases
involving a breach of the Purchase Agreement by

16

 

Dealer or any affiliate of Dealer, an amount in cash equal to the aggregate amount of costs and
expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction
(including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in
connection with such hedging activities, unless Counterparty agrees to purchase any such Shares at
the cost at which Dealer purchased such Shares). Following such termination, cancellation and
payment, each party shall be released and discharged by the other party from, and agrees not to
make any claim against the other party with respect to, any obligations or liabilities of either
party arising out of, and to be performed in connection with, the Transaction either prior to or
after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that
upon an Early Unwind and following the payment referred to above, all obligations with respect to
the Transaction shall be deemed fully and finally discharged.

     (i) Waiver of Trial by Jury. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING RELATING TO THIS TRANSACTION. EACH PARTY (I) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF EITHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO
THIS TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
PROVIDED HEREIN.

     (j) Governing Law; Jurisdiction. THE AGREEMENT, THIS CONFIRMATION AND ALL
MATTERS ARISING IN CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
ITS CHOICE OF LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THE
PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH
ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF
INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

     (k) Amendment. This Confirmation and the Agreement may not be modified, amended or
supplemented, except in a written instrument signed by Counterparty and Dealer.

     (l) Counterparts. This Confirmation may be executed in several counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same
instrument.

     (m) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing Dealer to make or receive any payment to or from Counterparty,
Dealer may designate any of its affiliates to make or receive any payment and otherwise to perform
Dealer’s obligations in respect of the Transaction and any such designee may assume such
obligations. Dealer shall be discharged of its obligations to Counterparty only to the extent of
any such performance by such affiliate.

     (n) Quarterly Valuations. Dealer hereby agrees, upon request by Counterparty, to provide or
cause its affiliate to provide to Counterparty, within five Exchange Business Days after the end
of the fiscal quarter of Counterparty during which Counterparty made such request, a valuation
estimate of the fair value of the Transaction as of Counterparty’s fiscal quarter end.

     (o) Role of Agent. Each party agrees and acknowledges that (i) J.P. Morgan Securities Inc.,
an affiliate of Dealer (“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.

17

 

     Please confirm that the foregoing correctly sets forth the terms of the agreement between
Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or
this page hereof as evidence of agreement to such terms and providing the other information
requested herein and returning an executed copy to us.

	 	 	 	 	 
	 	Yours faithfully,

J.P. MORGAN SECURITIES INC., as agent for

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ James Rothschild
 	 
	 	 	Name:  	James Rothschild 	 
	 	 	Title:  	Managing Director 	 
	 

	 	 	 	 	 
	Agreed and Accepted By:

CADENCE DESIGN SYSTEMS, INC.

 	 
	By:  	/s/
Kevin S. Palatnik
 	 
	 	Name:  	Kevin S. Palatnik	 
	 	Title:  	Sr. Vice President & Chief Financial Officer	 
	 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

Signature Page to Additional Bond Hedge

Confirmation

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