Document:

exv10w88

 

Exhibit 10.88

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y39 0JP

England

December 14, 2006

To: Cadence Design
Systems, Inc.
 Bldg. 5, MS 5B1

2655 Seely Avenue
 San Jose,
CA 95134
 Attention: Legal
Department
 Telephone No.:
(408) 943-1234
 Facsimile No.:
(408) 943-0513

Re: Convertible Note Hedge Transaction

Reference: 2696908

The purpose of this letter agreement is to confirm the terms and conditions of the Transaction
entered into between JPMorgan Chase Bank, National Association, London Branch (“Bank”),
represented by J.P. Morgan Securities Inc. (“Agent”), as its agent, and Cadence Design
Systems, Inc., a Delaware corporation (“Counterparty”), on the Trade Date specified below (the
“Transaction”). This letter agreement constitutes a “Confirmation” as referred to in the ISDA
Master Agreement specified below. This Confirmation shall replace any previous letter and
serve as the final documentation for the Transaction.

     The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions
(the “Equity Definitions”), as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency
between the Equity Definitions and this Confirmation, this Confirmation shall govern. Certain
defined terms used herein have the meanings assigned to them in the Offering Memorandum dated
December 14, 2006 (the “Offering Memorandum”) relating to the USD 250,000,000 principal
amount of Convertible Senior Notes due December 15, 2011 (the “Convertible Notes” and each
USD 1,000 principal amount of Convertible Notes, a
“Convertible Note ”) issued by Counterparty
pursuant to an Indenture to be dated on or about December 19, 2006, between Counterparty and
Deutsche Bank Trust Company Americas, as trustee (the “Indenture”). In the event of any
inconsistency between the terms defined in the Offering Memorandum and this Confirmation, the
Confirmation shall govern. For the avoidance of doubt, references herein to sections of the
Indenture are based on the draft of the Indenture most recently reviewed by the parties at
the time of execution of this Confirmation. If any relevant sections of the Indenture are
changed, added or renumbered following execution of this Confirmation, the parties will amend
this Confirmation in good faith to preserve the economic intent of the parties. The
Transaction is subject to early unwind if the closing of the Convertible Notes is not
consummated for any reason, as set forth below in Section 9(g).

     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.

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

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1. This Confirmation evidences a complete and binding agreement between Bank and Counterparty
as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if Bank and Counterparty had executed an agreement in such form (but
without any Schedule except for the election of the laws of the State of New York as the governing
law) on the Trade Date. In the event of any inconsistency between provisions of that Agreement and
this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this
Confirmation relates. The parties hereby agree that no Transaction other than the Transaction to
which this Confirmation relates shall be governed by the Agreement.

2. The terms of the particular Transaction to which this Confirmation relates are as
follows:

General Terms:

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Trade Date:
	 	 
	 	December 14, 2006
	 
	 	 	 	 	 	 
	 

	 	Option Style:
	 	 	 	Modified American, as described in the “Exercise and Valuation” provisions set forth below.
	 
	 	 	 	 	 	 
	 

	 	Option Type:
	 	 	 	Call
	 
	 	 	 	 	 	 
	 

	 	Buyer:
	 	 	 	Counterparty
	 
	 	 	 	 	 	 
	 

	 	Seller:
	 	 	 	Bank
	 
	 	 	 	 	 	 
	 

	 	Shares:
	 	 	 	The common stock of Counterparty, par value USD 0.01 per Share (Exchange symbol “CDNS”)
	 
	 	 	 	 	 	 
	 

	 	Number of Options:
	 	 	 	The number of Convertible Notes
issued by Counterparty on the closing date for the initial issuance of the Convertible Notes.
	 
	 	 	 	 	 	 
	 

	 	Option Entitlement:
	 	 	 	As of any date, a number equal to the Conversion Rate as of such date (as defined in the Indenture, but without regard to any adjustments to the Conversion Rate pursuant to Section 13.01(e) or Section 13.03(g) of the Indenture) for each Convertible Note.
	 
	 	 	 	 	 	 
	 

	 	Number of Shares:
	 	 	 	The product of the Number of Options, the Option Entitlement and the Applicable Percentage.
	 
	 	 	 	 	 	 
	 

	 	Applicable Percentage:
	 	 	 	25%
	 
	 	 	 	 	 	 
	 

	 	Strike Price:
	 	 	 	USD 21. 15
	 
	 	 	 	 	 	 
	 

	 	Premium:
	 	 	 	USD 13,025,000
	 
	 	 	 	 	 	 
	 

	 	Premium Payment Date:
	 	 	 	December 1 9, 2006 or such later date as agreed upon by the parties.
	 
	 	 	 	 	 	 
	 

	 	Exchange:
	 	 	 	NASDAQ Global Select Market.

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	 	Related Exchange(s):
	 	 
	 	The principal exchange(s) for options contracts or futures contracts, if any, with respect to the Shares
	 
	 	 	 	 	 	 
	Exercise and Valuation:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Exercise Period:
	 	 	 	The period from and excluding the Trade Date to and including the Final Expiration Date.
	 
	 	 	 	 	 	 
	 

	 	Exercise Dates:
	 	 	 	Notwithstanding the Equity Definitions, each “Conversion Date” as defined in the Indenture occurring during the Exercise Period for Convertible Notes other than Convertible Notes with respect to which Counterparty makes the direction described in Section 13.10 of the Indenture that are accepted by the financial institution designated by Counterparty in accordance with Section 13.10 of the Indenture (a “Conversion Date”).
	 
	 	 	 	 	 	 
	 

	 	Exercisable Options:
	 	 	 	In respect of each Exercise Date a number of Options equal to the number of Convertible Notes properly surrendered to Counterparty for conversion in respect of the relevant Conversion Date.
	 
	 	 	 	 	 	 
	 

	 	Expiration Time:
	 	 	 	At the close of trading of the regular trading session on the Exchange
	 
	 	 	 	 	 	 
	 

	 	Expiration Date:
	 	 	 	Each Exercise Date.
	 
	 	 	 	 	 	 
	 

	 	Final Expiration Date:
	 	 	 	The earlier of (x) the last day on which any Convertible Notes remain outstanding and (y) December 15, 2011.
	 
	 	 	 	 	 	 
	 

	 	Automatic Exercise:
	 	 	 	Notwithstanding the Equity Definitions, on each Exercise Date, the number of Options related to such Exercise Date shall be automatically exercised at the Expiration Time on such Exercise Date if an effective notice of exercise, if required, is given in accordance with the provision immediately below.
	 
	 	 	 	 	 	 
	 

	 	Notice of Exercise:
	 	 	 	Notwithstanding anything to the
contrary in the Equity Definitions, in order to exercise any Options,
Counterparty must notify Bank in writing prior to 5:00 PM, New York City time, on the Scheduled Trading Day prior to the first Exchange Business Day of the “Observation Period”, as defined in the Indenture, relating to the Convertible Notes converted on the relevant Exercise Date (the “Notice Deadline”) of (i) the number of Options being exercised on such Exercise Date, (ii) the scheduled settlement date under the Indenture for the Convertible Notes converted on such Exercise Date and (iii) the first day of the relevant “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 PM New York City

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	 	time, on the fifth Exchange Business Day of such “Observation Period”, in which event the Calculation Agent shall have the right to adjust the Net Share Settlement 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 Bank 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 Counterparty shall not be required to deliver any such notice of exercise with respect to any Exercise Date occurring on or after the 23rd scheduled “Trading Day”, as defined in the Indenture, prior to December 15, 2011.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Bank’s Contact Details
for purpose of Giving Notice:
	 	 	 	JPMorgan Chase Bank, National Association 

277 Park Avenue, 11 th Floor

New York, NY 10172

Attention: Eric Stefanik

Title: Operations Analyst

EDG Corporate Marketing

Telephone No.: (212) 622-5814

Fax: (212) 622-8534
	 
	 	 	 	 	 	 
	Settlement Terms:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Method of Settlement:
	 	 	 	Net Share Settlement
	 
	 	 	 	 	 	 
	 

	 	Settlement Date:
	 	 	 	In respect of an Exercise Date,
the settlement date for the Shares to
be delivered in respect of the
Convertible Notes converted on such
date pursuant to Section 13.02(a) or
Section 13.02(b) of the Indenture, as
the case may be; provided that the
Settlement Date will not be prior to
the date that is one Settlement Cycle
following the final day of the relevant
“Observation Period.”
	 
	 	 	 	 	 	 
	 

	 	Net Share Settlement:
	 	 
	 	In respect of each Exercise
Date, Bank will deliver to
Counterparty, on the related Settlement
Date, a number of Shares (the “Net
Share Settlement Obligation”)
equal to the product of the (x) the
Applicable Percentage and (y) the
aggregate number of Shares that
Counterparty is obligated to deliver to
the holder(s) of the Convertible
Note(s) converted on such Exercise Date
pursuant to the terms of the Indenture
as of the Trade Date (“Convertible
Obligation”); provided, however, that
such obligation shall be determined
excluding any Shares that Counterparty
is obligated to deliver to holder(s)
of the Convertible Note(s) as a result
of any adjustments to the Conversion
Rate pursuant to Section 13.0 l(e) or
Section 13.03(g) of the Indenture.

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	 	Notice of Convertible Obligation:
	 	 
	 	No later than the Exchange
Business Day immediately following
the last day of any Observation
Period, Counterparty shall give Bank
notice of the final number of
Shares comprising the relevant
Convertible Obligation for the
relevant Exercise Date (or, for the
Exercise Dates occurring on or after
the 23rd scheduled
“Trading Day” prior to December 15,
2011, the aggregate Number of Shares
comprising the relevant Convertible
Obligation for such Exercise
Dates).
	 
	 	 	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	 	 	The provisions of Sections
9.1(c), 9.8, 9.9, 9.10, 9.11 and
9.12 of the Equity Definitions will
be applicable to any Net Share
Settlement, as if “Physical
Settlement” applied to the
Transaction; and provided that the
Representation and Agreement
contained in Section 9. 11 of the
Equity Definitions shall be modified
by excluding any representations
therein relating to restrictions,
obligations, limitations or
requirements under applicable
securities laws as a result of the
fact that Buyer is the issuer of the
Shares.
	 
	 	 	 	 	 	 
	 

	 	Failure to Deliver:
	 	 	 	Applicable
	 
	 	 	 	 	 	 
	3. Additional Terms applicable to the Transaction:	 	 	 	 
	 
	 	 	 	 	 	 
	Adjustments applicable to the Transaction:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Method of Adjustment:
	 	 	 	Notwithstanding Section 11.2
of the Equity Definitions, upon the
occurrence of any “Adjustment Event”
set forth in Sections 13.03(a), (b),
(c), (d), (e) and (f) of the
Indenture, the Calculation Agent
shall make a corresponding
adjustment, if necessary, to the
terms relevant to the exercise,
settlement or payment of the
Transaction, to the extent an
analogous adjustment is made under
the Indenture. Immediately 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 Notes
in respect of such Adjustment Event
have been determined, Counterparty
shall immediately notify the
Calculation Agent in writing of the
details of such adjustments.
	 
	 	 	 	 	 	 
	Extraordinary Events applicable to the Transaction:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Merger Events:
	 	 	 	Notwithstanding Section
12.1(b) of the Equity Definitions, a
“Merger Event” means the occurrence
of any event or condition defined as
a “Merger Event” in Section 13.05 of
the Indenture.
	 
	 	 	 	 	 	 
	 

	 	 
	 	 	 	Immediately upon the occurrence of
any Merger Event, Counterparty shall
notify the Calculation Agent of such
Merger Event; and once the
adjustments to be made to the terms
of the Indenture and the Convertible
Notes in respect

5

 

	 	 	 	 	 	 	 
	 

	 	 	 	 
	 	of such Merger Event
have been determined,
Counterparty shall
immediately notify the
Calculation Agent in
writing of the details
of such adjustments.
	 
	 	 	 	 	 	 
	 

	 	Notice of Merger Consideration:
	 	 	 	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 prior
to the Merger Date)
notify the Calculation
Agent of the weighted
average of the types
and amounts of
consideration received
by the holders of
Shares entitled to
receive cash,
securities or other
property or assets with
respect to or in
exchange for such
Shares in any Merger
Event who affirmatively
make such an election.
	 
	 	 	 	 	 	 
	 

	 	Consequence of Merger Events:
	 	 	 	Notwithstanding Section
12.2 of the Equity
Definitions, upon the
occurrence of a Merger
Event, the Calculation
Agent shall make a
corresponding
adjustment in respect
of any adjustment under
the Indenture to any
one or more of the
nature of the Shares,
the Number of Options,
the Option Entitlement
and any other variable
relevant to the
exercise, settlement or
payment for the
Transaction; provided,
however, that such
adjustment shall be
made without regard to
any adjustment to the
Conversion Rate for the
issuance of additional
shares as set forth in
Section 13.01(e) or
Section 13.03(g) of the
Indenture.
	 
	 	 	 	 	 	 
	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
shall 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
American 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 and the
Calculation Agent shall
make any adjustments it
deems necessary to the
terms of the
Transaction, as if
Modified Calculation
Agent Adjustment were
applicable to such
event.
	 
	 	 	 	 	 	 
	Additional Disruption Events:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	(a) Change in Law:
	 	 	 	Applicable

6

 

	 	 	 	 	 	 	 
	 

	 	(b) Insolvency Filing:
	 	 	 	Applicable; provided that Section 12.9(b)(i) of the
Equity Definitions shall be amended by adding,
immediately following the word “party” in the third line
thereof, the phrase “(or, upon the occurrence of an
Insolvency Filing, Bank)”
	 
	 	 	 	 	 	 
	 

	 	Determining Party:
	 	 	 	For all applicable Additional Disruption Events, Bank
	 
	 	 	 	 	 	 
	 

	 	Non-Reliance:
	 	 	 	Applicable
	 
	 	 	 	 	 	 
	 

	 	Agreements and
Acknowledgments Regarding
Hedging Activities:
	 	 	 	Applicable
	 
	 	 	 	 	 	 
	 

	 	Additional

Acknowledgments :
	 	 	 	Applicable
	 
	 	 	 	 	 	 
	Additional Termination Events:	 	 	 	If any event of default under the terms of the
Convertible Notes, as set forth in Section 5.01 of the
Indenture, shall occur with respect to Counterparty,
then such event shall constitute an Additional
Termination Event applicable to the Transaction with
respect to which Counterparty shall be deemed to be the
sole Affected Party and the Transaction shall be the
sole Affected Transaction.

If any provision of the Indenture or the Convertible
Notes is amended, modified, supplemented or waived
without the written consent of Bank, Counterparty shall
provide Bank and the Calculation Agent with notice
thereof on or prior to the effective date thereof and,
if the Calculation Agent determines that such amendment,
modification, supplement or waiver has a material effect
on the Transaction or Bank’s ability to hedge all or a
portion (“Affected Portion”) of the Transaction, then
such event (an “Amendment Event”) shall constitute an
Additional Termination Event with respect to which
Counterparty shall be deemed to be the sole Affected
Party and the Transaction (or the Affected Portion
thereof) shall be the sole Affected Transaction. For the
avoidance of doubt, an election by Counterparty to
increase the conversion rate pursuant to Section
13.01(e) or Section 13.03(g) of the Indenture shall not
constitute an Amendment Event.

If any Convertible Notes are repurchased (whether
in connection with a put of Convertible Notes by holders
thereof pursuant to the terms of the Indenture as a
result of a fundamental change, howsoever defined, or
for any other reason) by Counterparty or any of its
subsidiaries, or if Counterparty gives notice to
Bank that it intends to repurchase any Convertible
Notes, then Counterparty may notify Bank that it wishes
to designate an Early Termination Date with respect to
the portion of the Transaction relating

7

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	to the number of Convertible
Notes that cease to be
outstanding in connection
with or as a result of such
repurchase and the parties
shall negotiate in good faith
and in a commercially
reasonable manner the timing,
pricing and other terms of such
designation. For the avoidance
of doubt, no such designation
shall be made if, after such
negotiation, the parties cannot
agree on the terms of such
designation.
	 
	 	 	 	 	 	 
	 

	 	Credit Support Provider:
	 	 	 	Inapplicable
	 
	 	 	 	 	 	 
	 

	 	Credit Support Document:
	 	 	 	Inapplicable
	 
	 	 	 	 	 	 
	4. Calculation Agent:	 	 	 	Bank. The Calculation Agent
shall, upon request by either
party, provide a written
explanation of any calculation
or adjustment made by it
hereunder, including, where
applicable, a description of
the methodology and data
applied.
	 
	 	 	 	 	 	 

5. Account Details:

	 	(a)	 	Account for payments to Counterparty:

Cadence Design Systems, Inc.

Account                           

Wells Fargo Bank

550 California Street — 10th Floor

San Francisco CA 94104

ABA#                           

Account for delivery of Shares to Counterparty:

Mellon Investor Services

235 Montgomery Street, 23rd Floor

San Francisco, CA 94104

Cadence Design Systems Book Memo Treasury Reserve Account

Comment: When you are ready to deliver Shares contact Cadence FIRST.

	 	(b)	 	Account for payments to Bank:

JPMorgan Chase Bank, National Association, New York

ABA:                           

Favour: JPMorgan Chase Bank, National Association — London

A/C:                           

Account for delivery of Shares from Bank:

                          

6. Offices:

     The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch Party.

8

 

     The Office of Bank for the Transaction is: New York, Bank is a Multibranch Party.

7. Notices: For purposes of this Confirmation:

	 	 	 	 	 
	 

	 	(a)
	 	Address for notices or communications to Counterparty:
	 

	 	 
	 	 
	 

	 	 	 	Cadence Design Systems, Inc.
	 

	 	 	 	2655 Seely Avenue, Building 5
	 

	 	 	 	San Jose, California 95134
	 

	 	 	 	Fax; (408) 944-6855
	 

	 	 	 	Attention: General Counsel
	 
	 	 	 	 
	 

	 	(b)
	 	Address for notices or communications to Bank:
	 

	 	 
	 	 
	 

	 	 	 	JPMorgan Chase Bank, National Association
	 

	 	 	 	277 Park Avenue, 11th Floor
	 

	 	 	 	New York, NY 10172
	 

	 	 	 	Attention: Eric Stefanik
	 

	 	 	 	Title: Operations Analyst
	 

	 	 	 	EDG Corporate Marketing
	 

	 	 	 	Telephone No.: (212) 622-5814
	 

	 	 	 	Fax: (212) 622-8534

8. Representations and Warranties of Counterparty

The representations and warranties of Counterparty set forth in Section 1 of the Purchase
Agreement dated as of the Trade Date among Counterparty, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated, J.P. Morgan Securities Inc. and Deutsche Bank
Securities Inc. (the “Purchase Agreement”) are true and correct and are hereby deemed to be
repeated to Bank as if set forth herein. Counterparty hereby further represents and warrants to
Bank that:

	 	(a)	 	Counterparty has all necessary corporate power and authority to
execute, deliver and perform its obligations in respect of the Transaction; such
execution, delivery and performance have been duly authorized by all necessary
corporate action on Counterparty’s part; and this Confirmation has been duly and
validly executed and delivered by Counterparty and constitutes its valid and
binding obligation, enforceable against Counterparty in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or in
equity) and except that rights to indemnification and contribution hereunder may be
limited by federal or state securities laws or public policy relating thereto.
	 
	 	(b)	 	Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Counterparty hereunder will conflict
with or result in a breach of the certificate of incorporation or by-laws (or any
equivalent documents) of Counterparty, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or agency
or any agreement or instrument to which Counterparty or any of its subsidiaries is
a party or by which Counterparty or any of its subsidiaries is bound or to which
Counterparty or any of its subsidiaries is subject, or constitute a default under,
or result in the creation of any lien under, any such agreement or instrument, or
breach or constitute a default under any agreements and contracts of Counterparty
or its significant subsidiaries filed as exhibits to Counterparty’s

9

 

Annual Report on Form 10-K for the year ended December 31, 2005, incorporated by
reference in the Offering Memorandum, as updated by any subsequent filings.

	 	(c)	 	No consent, approval, authorization, or order of, or filing with, any governmental agency or
body or any court is required in connection with the execution, delivery or performance
by Counterparty of this Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933, as amended (the “Securities Act”) or state
securities laws.
	 
	 	(d)	 	Counterparty is not and after giving effect to the transactions contemplated hereby will not
be, an “investment company” as such term is defined in the Investment Company Act of 1940, as
amended.
	 
	 	(e)	 	Counterparty is an “eligible contract participant”
(as such term is defined in Section 1a(12)
of the Commodity Exchange Act, as amended (the “CEA”) because one or more of the following is
true:

Counterparty is a corporation, partnership, proprietorship, organization, trust or other
entity and:

	 	(A)	 	Counterparty has total assets in excess of USD 10,000,000;
	 
	 	(B)	 	the obligations of Counterparty hereunder are guaranteed, or otherwise
supported by a letter of credit or keepwell, support or other agreement, by an entity
of the type described in Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I),
1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
	 
	 	(C)	 	Counterparty has a net worth in excess of USD 1,000,000 and has entered into
this Agreement in connection with the conduct of Counterparty’s business or to manage
the risk associated with an asset or liability owned or incurred or reasonably likely
to be owned or incurred by Counterparty in the conduct of Counterparty’s business.

	 	(f)	 	On the Trade Date, (A) none of Counterparty and its officers and directors is aware of any
material nonpublic information regarding Counterparty or the Shares and (B) all reports and
other documents filed by Counterparty with the Securities and Exchange Commission pursuant to
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.
	 
	 	(g)	 	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.
	 
	 	(h)	 	Counterparty is an “accredited investor” (as such term is defined in Section 2(a)(15)(ii)
of the Securities Act).
	 
	 	(i)	 	Counterparty’s 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.

10

 

	 	(j)	 	On the Trade Date (A) the assets of Counterparty at their fair valuation exceed
the liabilities of Counterparty, including contingent liabilities, (B) the capital of
Counterparty is adequate to conduct the business of Counterparty and (C)
Counterparty has the ability to pay its debts and obligations as such debts mature
and does not intend to, or does not believe that it will, incur debt beyond its
ability to pay as such debts mature.
	 
	 	(k)	 	Counterparty’s 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.
	 
	 	(l)	 	Counterparty hereby agrees and acknowledges that the Transaction has not been
registered with the Securities and Exchange Commission or any state securities
commission and that the Options are being written by Bank to Counterparty in
reliance upon exemptions from any such registration requirements. Counterparty
acknowledges that all Options acquired from Bank will be acquired for investment
purposes only and not for the purpose of resale or other transfer except in
compliance with the requirements of the Securities Act. Counterparty will not sell
or otherwise transfer any Option or any interest therein except in compliance with
the requirements of the Securities Act and any subsequent offer or sale of the
Options will be solely for Counterparty’s account and not as part of a distribution
that would be in violation of the Securities Act.
	 
	 	(m)	 	Counterparty understands no obligations of Bank to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not be
guaranteed by any affiliate of Bank or any governmental agency.
	 
	 	(n)	 	Counterparty 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.
	 
	 	(o)	 	Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that Bank is not making any representations or warranties
with respect to the treatment of the Transaction under FASB Statements 128, 133, as
amended, 149 or 150, EITF Issue No. 00-19, Issue No. 01-6 or Issue No. 03-6 (or any
successor issue statements) or under FASB’s Liabilities & Equity Project.
	 
	 	(p)	 	Counterparty is not on the date hereof engaged in a distribution, as such term
is used in Regulation M under the Exchange Act such distribution, a Regulation M
Distribution, of any securities of Counterparty, other than distributions meeting the
requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of
Regulation M. Counterparty shall not, until the second Exchange Business Day
immediately following the Trade Date, engage in any Regulation M Distribution.

9. Other Provisions:

	 	(a)	 	Opinions. Counterparty shall deliver to Bank an opinion of counsel,
dated as of the Closing Date (as defined in the Purchase Agreement), with respect to
the matters set forth in Sections 8(a) through (d) of this Confirmation.
	 
	 	(b)	 	Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give Bank a written notice of
such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the
Options Equity Percentage as determined on such day is (i) greater than 6% and (ii)
greater by 0.5% than

11

 

	 	 	 	the Options Equity Percentage included in the immediately preceding Repurchase
Notice (or, in the case of the first such Repurchase Notice, greater than the Options
Equity Percentage as of the date hereof). The “Options Equity Percentage” as of any day is
the fraction (A) the numerator of which is the sum of (A) the Number of Shares hereunder
and (B) the Number of Shares for the Convertible Note Hedge Transaction between
Counterparty and Bank relating to the USD 250,000,000 principal amount of Convertible
Senior Notes due December 15, 2013 (the “Aggregate Transaction Amount”) and (B) the
denominator of which is the number of Shares outstanding on such day. Counterparty agrees
to indemnify and hold harmless Bank and its affiliates and their respective officers,
directors, employees, affiliates, advisors, agents and controlling persons (each, an
“Indemnified Person”) from and against any and all losses (including losses relating to
Bank’s hedging activities as a consequence of becoming, or of the risk of becoming, a
Section 16 “insider”, including without limitation, any forbearance from hedging activities
or cessation of hedging activities and any losses in connection therewith with respect to
the Transaction), claims, damages, judgments, liabilities and expenses (including
reasonable attorney’s fees), joint or several, which an Indemnified Person may become
subject to, as a result of Counterparty’s failure to provide Bank with a Repurchase Notice
on the day and in the manner specified in this Section 9(b), and to reimburse, within 30
days, upon written request, each of such Indemnified Persons for any reasonable legal or
other expenses incurred in connection with investigating, preparing for, providing
testimony or other evidence in connection with or defending any of the foregoing. If any
suit, action, proceeding (including any governmental or regulatory investigation), claim or
demand shall be brought or asserted against the Indemnified Person, such Indemnified Person
shall promptly notify Counterparty in writing, and Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person
to represent the Indemnified Person and any others Counterparty may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such proceeding.
Counterparty shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final judgment for the
plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any
loss or liability by reason of such settlement or judgment. Counterparty shall not, without
the prior written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person, unless
such settlement includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding. If the indemnification
provided for in this paragraph (b) is unavailable to an Indemnified Person or insufficient
in respect of any losses, claims, damages or liabilities referred to therein, then
Counterparty under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities. The remedies provided for in this
paragraph (b) are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity. The indemnity and
contribution agreements contained in this paragraph (b) shall remain operative and in full
force and effect regardless of the termination of the Transaction.

	 	(c)	 	No Manipulation. Counterparty is not entering into the Transaction to create actual
or apparent trading activity in the Shares (or any security convertible into or exchangeable
for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or
any security convertible into or exchangeable for the Shares) or otherwise to violate the
Exchange Act.

12

 

	 	(d)	 	Board Authorization. Each of the Transaction and the issuance of the Convertible
Notes was approved by its board of directors and publicly announced, solely for the
purposes stated in such board resolution and public disclosure and, prior to any exercise
of Options hereunder, Counterparty’s board of directors will have duly authorized any
repurchase of Shares pursuant to the Transaction. Counterparty further represents that
there is no internal policy, whether written or oral, of Counterparty that would prohibit
Counterparty from entering into any aspect of the Transaction, including, but not limited
to, the purchase of Shares to be made pursuant hereto.
	 
	 	(e)	 	Transfer or Assignment. Neither party may transfer any of its rights or obligations
under the Transaction without the prior written consent of the non-transferring party;
provided that if, as determined at Bank’s sole discretion, (x) its “beneficial ownership”
(within the meaning of Section 13 of the Exchange Act and rules promulgated thereunder) with
respect to the Shares exceeds 8.5% of Counterparty’s outstanding Shares or (y) the Aggregate
Transaction Amount exceeds 8.5% of Counterparty’s outstanding Shares or (z) the sum of the
Aggregate Transaction Amount, the Number of Shares for the convertible bond hedge transaction
evidenced by the Confirmation dated August 11, 2003 between Counterparty and Bank and the
Number of Shares for the convertible bond hedge transaction evidenced by the Confirmation
dated August 29, 2003 between Counterparty and Bank (such sum, the “Related Transaction
Amount”) exceeds 15% of Counterparty’s outstanding Shares, Bank may transfer or assign a
number of Options sufficient to reduce such “beneficial ownership” to 8.0% or the Aggregate
Transaction Amount to 8.0%, or the Related Transaction Amount to 14.5% as applicable, to any
third party with a rating (or whose guarantor has a rating) for its long term, unsecured and
unsubordinated indebtedness of A- or better by Standard & Poor’s Ratings Services or its
successor (“S&P”), or a3 or better by Moody’s Investors Service (“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 Bank, If, in the sole discretion of Bank,
Bank is unable after its commercially reasonable efforts to effect such transfer or assignment
on pricing terms reasonably acceptable to Bank and within a time period reasonably acceptable
to Bank, Bank may designate any Exchange Business Day as an Early Termination Date with
respect to a portion (the “Terminated Portion”) of the Transaction, such that its “beneficial
ownership” following such partial termination will be equal to or less than 8.5% or the
Aggregate Transaction Amount will be equal to or less than 8.5%, or the Related Transaction
Amount will be equal to or less than 15% as the case may be. In the event that Bank 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 Transaction and a
Number of Options equal to the Terminated Portion, (ii) Counterparty shall be the sole
Affected Party with respect to such partial termination and (iii) such Transaction shall be
the only Terminated Transaction. Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing the Bank to purchase, sell, receive or deliver any Shares
or other securities to or from Counterparty, the Bank may designate any of its affiliates to
purchase, sell, receive or deliver such Shares or other securities and otherwise to perform
Bank’s obligations in respect of this Transaction and any such designee may assume such
obligations. The Bank shall be discharged of its obligations to Counterparty to the extent of
any such performance.
	 
	 	(f)	 	Staggered Settlement. Bank may, by notice to Counterparty prior to any Settlement Date (a
“Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a
“Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as
follows:

13

 

	 	(a)	 	in such notice, Bank will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement
Date) and how it will allocate the Shares it is required to deliver under “
Net Share Settlement” (above) among the Staggered Settlement Dates; and
	 
	 	(b)	 	the aggregate number of Shares that Bank will deliver to Counterparty
hereunder on all such Staggered Settlement Dates and delivery times will equal the
number of Shares that Bank would otherwise be required to deliver on such Nominal
Settlement Date.

	 	(g)	 	Early Unwind. In the event the sale of Convertible Notes is not consummated with the
underwriters for any reason by the close of business in New York on December 19, 2006 or such
later date as agreed upon by the parties (December 19, 2006 or such later date as agreed upon
being the “Early Unwind Date”), the Transaction
shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and all of the respective rights
and obligations of Bank and Counterparty under the Transaction shall be cancelled and
terminated and (ii) 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 the other party arising out of and to be performed in connection with the
Transaction either prior to or after the Early Unwind Date; provided that, other than to the
extent the Early Unwind Date occurred as a result of a breach of the Purchase Agreement by
Bank or an affiliate thereof, Counterparty shall reimburse Bank for any costs or expenses
(including market losses) relating to the unwinding of its hedging activities in connection
with the Transaction (including any loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position). The amount of
any such reimbursement shall be determined by Bank in its sole good faith and commercially
reasonable discretion. Bank shall notify Counterparty of such amount and Counterparty shall
pay such amount in immediately available funds on the Early Unwind Date. Bank and Counterparty
represent and acknowledge to the other that, subject to the proviso included in this Section,
upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully
and finally discharged.
	 
	 	(h)	 	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.
	 
	 	(i)	 	Setoff. 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.
	 
	 	(j)	 	Alternative Calculations and Payment on Early Termination and on Certain Extraordinary
Events. If, in respect of the Transaction, an amount is payable by Bank to
Counterparty upon an early termination or cancellation of the Transaction (i) pursuant to
Section 12.2, 12.6, 12.7 or 12.9 of the Equity Definitions or “Consequences of Merger
Events” above (except in the event of an Extraordinary Event in which the consideration
to be paid to holders of Shares consists solely of cash) or (ii) pursuant to Section
6(d)(ii) of the

14

 

	 	 	 	Agreement (except in the event of an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected Party,
other than an Event of Default of the type described in
Section 5(a)(iii), (v), (vi),
(vii) or (viii) of the Agreement or a Termination Event of the type described in
Section 5(b)(i), (ii), (iii), (iv), (v) or (vi) of the Agreement, in each case
resulting from an event or events outside Counterparty’s control) (a “Payment
Obligation”), Counterparty may, in its sole discretion, request that Bank satisfy such
Payment Obligation by the Share Termination Alternative (as defined below) and shall
give irrevocable telephonic notice to Bank, confirmed in writing within one Currency
Business Day, no later than 12:00 p.m. New York local time on the Merger Date, the
Announcement Date or the Early Termination Date, as applicable; provided that if
Counterparty does not validly request that Bank satisfy such Payment Obligation by the
Share Termination Alternative, Bank shall nevertheless have the right, in its sole
discretion, to satisfy its Payment Obligation by the Share Termination Alternative,
notwithstanding Counterparty’s lack of election. In calculating any amounts under
Section 6(e) of the Agreement, notwithstanding anything to the contrary in the
Agreement, (1) separate amounts shall be calculated as set forth
in Section 6(e) with
respect to (i) the Transaction and (ii) all other Transactions, and (2) such separate
amounts shall be payable pursuant to Section 6(d)(ii) of the Agreement, subject to, in
the case of clause (l)(i), the Share Termination Alternative right
hereunder.

	 	 	 	 	 
	 

	 	Share Termination Alternative:
	 	If applicable, Bank shall
deliver to Counterparty the
Share Termination Delivery
Property on the date when the
Payment Obligation would
otherwise be due pursuant to
Section 12.7 or 12.9 of the
Equity Definitions, this
Confirmation or Section
6(d)(ii) and 6(e) of the
Agreement, as applicable (the
“Share Termination Payment
Date”), in satisfaction of the
Payment Obligation in the
manner reasonably requested by
Counterparty free of payment.
	 
	 	 	 	 
	 

	 	Share Termination Delivery Property:
	 	A number of Share Termination
Delivery Units, as calculated by
the Calculation Agent, equal to
the Payment Obligation divided
by the Share Termination Unit
Price. The Calculation Agent
shall adjust the Share
Termination Delivery Property by
replacing any fractional portion
of a security therein with an
amount of cash equal to the
value of such fractional
security based on the values
used to calculate the Share
Termination Unit Price.
	 
	 	 	 	 
	 

	 	Share Termination Unit Price:
	 	The value to Bank of property
contained in one Share
Termination Delivery Unit on the
date such Share Termination
Delivery Units are to be
delivered as Share Termination
Delivery Property, as
determined by the Calculation
Agent in its discretion by
commercially reasonable means
and notified

15

 

	 	 	 	 	 
	 

	 	 	 	by the Calculation Agent to Bank
at the time of notification of
the Payment Obligation.
	 
	 	 	 	 
	 

	 	Share Termination Delivery Unit:
	 	In the case of a Termination
Event, Event of Default or
Delisting, one Share or, in the
case of an Insolvency,
Nationalization or Merger Event,
one Share or a unit consisting
of the number or amount of each
type of property received by a
holder of one Share (without
consideration of any requirement
to pay cash or other
consideration in lieu of
fractional amounts of any
securities) in such Insolvency,
Nationalization or Merger
Event, as the case may be. If
such Insolvency, Nationalization
or Merger Event involves a
choice of consideration to be
received by holders, such holder
shall be deemed to have elected
to receive the maximum possible
amount of cash.
	 
	 	 	 	 
	 

	 	Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	 

	 	Other applicable provisions:
	 	If Share Termination
Alternative is applicable, the
provisions of Sections 9.8, 9.9,
9.10, 9.11 and 9.12 of the
Equity Definitions will be
applicable, as if “Physical
Settlement” applied to such
cancellation or termination
of the Transaction, except
that all references therein to
“Shares” shall be read as
references to “Share Termination
Delivery Units”; and provided
that the Representation and
Agreement contained in Section
9.11 of the Equity Definitions
shall be modified by excluding
any representations therein
relating to restrictions,
obligations, limitations or
requirements under applicable
securities laws as a result of
the fact that Buyer is the
issuer of any Share Termination
Delivery Units (or any part
thereof).

	 	(k)	 	Securities Contract; Swap Agreement. The parties hereto intend for: (a) the
Transaction to be a “securities contract” and a “swap agreement” as defined in the
Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the
parties hereto to be entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 555 and 560 of the Bankruptcy Code; (b) a party’s right to liquidate
the Transaction and to exercise any other remedies upon the occurrence of any Event of
Default under the Agreement with respect to the other party to constitute a “contractual
right” as described in the Bankruptcy Code; (c) any cash, securities or other property
provided as performance assurance, credit support or collateral with respect to the
Transaction to constitute “margin payments” and “transfers” under a “swap agreement” as
defined in the Bankruptcy Code; and (d) all payments for, under or in connection with the
Transaction,

16

 

all payments for the Shares and the transfer of such Shares to constitute
“settlement payments” and “transfers” under a “swap agreement” as defined in the
Bankruptcy Code.

	 	(l)	 	Governing Law. New York law (without reference to choice
of law doctrine).
	 
	 	(m)	 	Waiver of Jury Trial. 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 the Transaction. Each party (i) certifies that no representative, agent or
attorney of the other 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 the
Transaction, as applicable, by, among other things, the mutual waivers and certifications
provided herein.
	 
	 	(n)	 	Registration. Counterparty hereby agrees that if, in the good faith reasonable
judgment of Bank, the Shares (the “Hedge Shares”) acquired by Bank for the purpose of hedging
its obligations pursuant to the Transaction cannot be sold in the U.S. public market by Bank
without registration under the Securities Act, Counterparty shall, at its election: (i) in
order to allow Bank to sell the Hedge Shares in a registered offering, make available to Bank
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 satisfactory to Bank,
substantially in the form of an underwriting agreement for a registered secondary offering,
(B) provide accountant’s “comfort” letters in customary form for registered offerings of
equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to
Counterparty reasonably acceptable to Bank, (D) provide other customary opinions, certificates
and closing documents customary in form for registered offerings of equity securities and (E)
afford Bank a reasonable opportunity to conduct a “due diligence” investigation with respect
to Counterparty customary in scope for underwritten offerings of equity securities; provided,
however, that if Bank, in its sole 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 9(n) shall apply at the election of Counterparty; (ii) in order to allow Bank
to sell the Hedge Shares in a private placement, enter into a private placement agreement
substantially similar to private placement Underwriting Agreements customary for private
placements of equity securities, in form and substance satisfactory to Bank, including
customary representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to Bank, due diligence rights (for Bank or any designated buyer of
the Hedge Shares from Bank), opinions and certificates and such other documentation as is
customary for private placements agreements, all reasonably acceptable to Bank (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 Bank 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 Bank at the “VWAP Price” (as defined herein) on the
relevant Exchange Business Days, and in the amounts, requested by Bank. “VWAP Price” means, on
any Exchange Business Day, the per Share volume-weighted average price as displayed under the
heading “Bloomberg VWAP” on Bloomberg page <CDNS>.UQ <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).

17

 

	 	(o)	 	Quarterly Valuations. Bank hereby agrees, upon request by Counterparty,
to cause its affiliate to provide to the Counterparty, within 5 Exchange Business Days
after the end of the fiscal quarter of the Counterparty during which Counterparty made such
request, a valuation estimate of the fair value of the Transaction as of the Counterparty’s
fiscal quarter end.
	 
	 	(p)	 	Equity Rights. Bank acknowledges and agrees that this Confirmation is not intended to
convey to it rights with respect to the Transaction that are senior to the claims of common
stockholders in the event of Counterparty’s bankruptcy.
	 
	 	(q)	 	Role of Agent. Each party agrees and acknowledges that (i) Agent has acted solely as
agent and not as principal with respect to this Transaction and (ii) Agent 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.

18

 

     Please confirm that the foregoing correctly sets forth the terms of our agreement
by executing this Confirmation and returning it to EDG Confirmation
Group, J.P. Morgan
Securities Inc., 277 Park Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622
8519.

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 
	 

	 	 	 	J.P. Morgan Securities Inc., as agent for 
	 

	 	 	 	JPMorgan Chase Bank, National
	 

	 	 	 	Association
	 	 	 
	 

	 	 	 	By: /s/ David Seaman                                        
	 

	 	 	 	Authorized Signatory
	 

	 	 	 	Name: David Seaman

Accepted
and confirmed

as of the Trade Date:

Cadence
Design Systems, Inc.

	 	 	 
	 

	 	By: /s/ William Porter                                        
	 

	 	Authorized Signatory
	 

	 	Name: William Porter

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

19exv10w89

 

Exhibit 10.89

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

December 14, 2006

To: Cadence Design Systems, Inc.

Bldg. 5, MS 5B1

2655 Seely Avenue

San Jose, CA 95134

Attention: Legal Department

Telephone No.: (408) 943-1234

Facsimile No.: (408) 943-0513

Re: Convertible Note Hedge Transaction

Reference:      2696918

The purpose of this letter agreement is to confirm the terms and conditions of the Transaction
entered into between JPMorgan Chase Bank, National Association, London Branch (“Bank”), represented
by J.P. Morgan Securities Inc. (“Agent”), as its agent, and Cadence Design Systems, Inc., a
Delaware corporation (“Counterparty”), on the Trade Date specified below (the “Transaction”). This
letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified
below. This Confirmation shall replace any previous letter and serve as the final documentation for
the Transaction.

     The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.,
are incorporated into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. Certain defined terms used
herein have the meanings assigned to them in the Offering Memorandum dated December 14, 2006, (the
“Offering Memorandum”) relating to the USD 250,000,000 principal amount of Convertible Senior Notes
due December 15, 2013 (the “Convertible Notes” and each USD 1,000 principal amount of Convertible
Notes, a “Convertible Note”) issued by Counterparty pursuant to an Indenture to be dated on or
about December 19, 2006, between Counterparty and Deutsche Bank Trust Company Americas, as trustee
(the “Indenture”). In the event of any inconsistency between the terms defined in the Offering
Memorandum and this Confirmation, the Confirmation shall govern. For the avoidance of doubt,
references herein to sections of the Indenture are based on the draft of the Indenture most
recently reviewed by the parties at the time of execution of this Confirmation. If any relevant
sections of the Indenture are changed, added or renumbered following execution of this
Confirmation, the parties will amend this Confirmation in good faith to preserve the economic
intent of the parties. The Transaction is subject to early unwind if the closing of the Convertible
Notes is not consummated for any reason, as set forth below in Section 9(g).

     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.

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

 

1. This Confirmation evidences a complete and binding agreement between Bank and Counterparty
as
to the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form
a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the
“Agreement”)
as if Bank and Counterparty had executed an agreement in such form (but without any Schedule except
for
the election of the laws of the State of New York as the governing law) on the Trade Date, In the
event of
any inconsistency between provisions of that Agreement and this Confirmation, this Confirmation
will
prevail for the purpose of the Transaction to which this Confirmation relates. The parties hereby
agree that
no Transaction other than the Transaction to which this Confirmation relates shall be governed by
the
Agreement.

2. The terms of the particular Transaction to which this Confirmation relates are as
follows:

	 	 	 	 	 
	General Terms:	 	 
	 
	 	 	 	 
	 

	 	Trade Date:
	 	December 14, 2006
	 
	 	 	 	 
	 

	 	Option Style:
	 	Modified American, as described in the “Exercise and
Valuation” provisions set forth below.
	 
	 	 	 	 
	 

	 	Option Type:
	 	Call
	 
	 	 	 	 
	 

	 	Buyer:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Seller:
	 	Bank
	 
	 	 	 	 
	 

	 	Shares:
	 	The common stock of Counterparty, par value USD 0.01
per Share (Exchange symbol “CDNS”)
	 
	 	 	 	 
	 

	 	Number of Options:
	 	The number of Convertible Notes issued by
Counterparty on the closing date for the initial
issuance of the Convertible Notes.
	 
	 	 	 	 
	 

	 	Option Entitlement:
	 	As of any date, a number equal to the Conversion Rate as
of such date (as defined in the Indenture, but
without regard to any adjustments to the Conversion
Rate pursuant to Section 13.01(e) or Section 13.03(g)
of the Indenture) for each Convertible Note.
	 
	 	 	 	 
	 

	 	Number of Shares:
	 	The product of the Number of Options, the Option
Entitlement and the Applicable Percentage.
	 
	 	 	 	 
	 

	 	Applicable Percentage:
	 	 25%
	 
	 	 	 	 
	 

	 	Strike Price:
	 	USD 21.15
	 
	 	 	 	 
	 

	 	Premium:
	 	USD 16,912,500
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	December 19, 2006 or such later date as agreed upon by
the parties.
	 
	 	 	 	 
	 

	 	Exchange:
	 	NASDAQ Global Select Market.

2

 

	 	 	 	 	 
	 

	 	Related Exchange(s):
	 	The principal exchange(s) for options contracts or futures
contracts, if any, with respect to the Shares
	 
	 	 	 	 
	Exercise and Valuation:	 	 
	 
	 	 	 	 
	 

	 	Exercise Period:
	 	The period from and excluding the Trade Date to and
including the Final Expiration Date.
	 
	 	 	 	 
	 

	 	Exercise Dates:
	 	Notwithstanding the Equity Definitions, each “Conversion
Date” as defined in the Indenture occurring during the
Exercise Period for Convertible Notes other than
Convertible Notes with respect to which Counterparty
makes the direction described in Section 13.10 of the
Indenture that are accepted by the financial
institution designated by Counterparty in accordance
with Section 13.10 of the Indenture
 (a “Conversion
Date”).
	 
	 	 	 	 
	 

	 	Exercisable Options:
	 	In respect of each Exercise Date a number of Options equal
to the number of Convertible Notes properly
surrendered to Counterparty for conversion in respect
of the relevant Conversion Date.
	 
	 	 	 	 
	 

	 	Expiration Time:
	 	At the close of trading of the regular trading session on
the Exchange
	 
	 	 	 	 
	 

	 	Expiration Date:
	 	Each Exercise Date.
	 
	 	 	 	 
	 

	 	Final Expiration Date:
	 	The earlier of (x) the last day on which any Convertible
Notes remain outstanding and (y) December 15, 2013.
	 
	 	 	 	 
	 

	 	Automatic Exercise:
	 	Notwithstanding the Equity Definitions, on each
Exercise Date, the number of Options related to
such Exercise Date shall be automatically
exercised at the Expiration Time on such Exercise
Date if an effective notice of exercise, if
required, is given in accordance with the
provision immediately below.
	 
	 	 	 	 
	 

	 	Notice of Exercise:
	 	Notwithstanding anything to the contrary in the Equity
Definitions, in order to exercise any Options,
Counterparty must notify Bank in writing prior to
5:00 PM, New York City time, on the Scheduled
Trading Day prior to the first Exchange Business
Day of the “Observation Period”, as defined in the
Indenture, relating to the Convertible Notes
converted on the relevant Exercise Date (the
“Notice Deadline”) of (i) the number of Options
being exercised on such Exercise Date, (ii) the
scheduled settlement date under the Indenture for
the Convertible Notes converted on such Exercise
Date and (iii) the first day of the relevant
“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 PM New York City

3

 

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	time, on the fifth Exchange Business Day of
such “Observation Period”, in which event the
Calculation Agent shall have the right to adjust the
Net Share Settlement 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 Bank 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
Counterparty shall not be required to deliver any
such notice of exercise with respect to any Exercise
Date occurring on or after the 23rd scheduled
“Trading Day”, as defined in the Indenture, prior to
December 15, 2013.
	 
	 	 	 	 
	 

	 	Bank’s Contact Details for	 	 
	 

	 	purpose of Giving Notice:
	 	JPMorgan Chase Batik, National Association
	 

	 	 	 	277 Park Avenue, 11th Floor
	 

	 	 	 	New York, NY 10172
	 

	 	 	 	Attention: Eric Stefanik
	 

	 	 	 	Title: Operations Analyst
	 

	 	 	 	EDG Corporate Marketing
	 

	 	 	 	Telephone No.:     (212) 622-5814
	 

	 	 	 	Fax:                       (212) 622-8534
	 
	 	 	 	 
	Settlement Terms:	 	 
	 
	 	 	 	 
	 

	 	Method of Settlement:
	 	Net Share Settlement
	 
	 	 	 	 
	 

	 	Settlement Date:
	 	In respect of an Exercise Date, the settlement date for the
Shares to be delivered in respect of the Convertible
Notes converted on such date pursuant to Section
13.02(a) or Section 13.02(b) of the Indenture, as
the case may be; provided that the Settlement Date
will not be prior to the date that is one Settlement
Cycle following the final day of the relevant
“Observation Period.”
	 
	 	 	 	 
	 

	 	Net Share Settlement:
	 	In respect of each Exercise Date, Bank will deliver to
Counterparty, on the related Settlement Date, a
number of Shares (the “Net Share Settlement
Obligation”) equal to the product of the (x) the
Applicable Percentage and (y) the aggregate number of
Shares that Counterparty is obligated to deliver to
the holder(s) of the Convertible Note(s) converted on
such Exercise Date pursuant to the terms of the
Indenture as of the Trade Date (“Convertible
Obligation”); provided, however, that such obligation
shall be determined excluding any Shares that
Counterparty is obligated to deliver to holder(s) of
the Convertible Note(s) as a result of any
adjustments to the Conversion Rate pursuant to
Section 13.01(e) or Section 13.03(g) of the
Indenture.

4

 

	 	 	 	 	 
	 

	 	Notice of Convertible Obligation:
	 	No later than the Exchange Business Day immediately
following the last day of any Observation Period,
Counterparty shall give Bank notice of the final
number of Shares comprising the relevant
Convertible Obligation for the relevant Exercise
Date for, for the Exercise Dates occurring on or
after the 23rd scheduled “Trading Day”
prior to December 15, 2013, the aggregate Number
of Shares comprising the relevant Convertible
Obligation for such Exercise Dates).
	 
	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10,
and 9.12 of the Equity Definitions will be
applicable to any Net Share Settlement, as if
“Physical Settlement” applied to the Transaction;
and provided that the Representation and Agreement
contained in Section 9.11 of the Equity
Definitions shall be modified by excluding any
representations therein relating to restrictions,
obligations, limitations or requirements under
applicable securities laws as a result of the fact
that Buyer is the issuer of the Shares.
	 
	 	 	 	 
	 

	 	Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	3. Additional Terms applicable to the Transaction:
	 
	 	 	 	 
	   Adjustments applicable to the Transaction:

	 	 	 	 	 
	 

	 	Method of Adjustment:
	 	Notwithstanding Section 11.2 of the Equity Definitions,
upon the occurrence of any “Adjustment Event” set
forth in Sections 13.03(a), (b), (c), (d), (e) and
(f) of the Indenture, the Calculation Agent shall
make a corresponding adjustment, if necessary, to the
terms relevant to the exercise, settlement or payment
of the Transaction, to the extent an analogous
adjustment is made under the Indenture. Immediately
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 Notes in respect of such Adjustment Event
have been determined, Counterparty shall immediately
notify the Calculation Agent in writing of the
details of such adjustments.
	 
	 	 	 	 
	Extraordinary Events applicable to the Transaction:
	 
	 	 	 	 
	 

	 	Merger Events:
	 	Notwithstanding Section 12.1(b) of the Equity Definitions,
a “Merger Event” means the occurrence of any event or
condition defined as a “Merger Event” in Section 13.05
of the Indenture.
	 
	 	 	 	 
	 

	 	 	 	Immediately upon the occurrence of any Merger Event,
Counterparty shall notify the Calculation Agent of
such Merger Event; and once the adjustments to be
made to the terms of the Indenture and the
Convertible Notes in respect

5

 

	 	 	 	 	 
	 

	 	 	 	of such Merger Event have been determined,
Counterparty shall immediately notify the Calculation
Agent in writing of the details of such adjustments.
	 
	 	 	 	 
	 

	 	Notice of Merger
Consideration:
	 	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 prior to the Merger Date) notify the
Calculation Agent of the weighted average of the
types and amounts of consideration received by the
holders of Shares entitled to receive cash,
securities or other property or assets with respect
to or in exchange for such Shares in any Merger Event
who affirmatively make such an election.
	 
	 	 	 	 
	 

	 	Consequence of Merger Events:
	 	Notwithstanding Section 12.2 of the Equity Definitions,
upon the occurrence of a Merger Event, the Calculation
Agent shall make a corresponding adjustment in respect
of any adjustment under the Indenture to any one or
more of the nature of the Shares, the Number of
Options, the Option Entitlement and any other variable
relevant to the exercise, settlement or payment for
the Transaction; provided, however, that such
adjustment shall be made without regard to any
adjustment to the Conversion Rate for the issuance of
additional shares as set forth in Section 13.01(e) or
Section 13.03(g) of the Indenture.
	 
	 	 	 	 
	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 shall 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 American 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 and the Calculation Agent
shall make any adjustments it deems necessary to the
terms of the Transaction, as if Modified Calculation
Agent Adjustment were applicable to such event.
	 
	 	 	 	 
	Additional Disruption Events:	 	 
	 
	 	 	 	 
	(a)

	 	Change in Law:
	 	Applicable

6

 

	 	 	 	 	 
	 

	 	(b) Insolvency Filing:
	 	Applicable; provided that Section 12.9(b)(i) of the Equity
Definitions shall be amended by adding, immediately
following the word “party” in the third line thereof,
the phrase “(or, upon the occurrence of an Insolvency
Filing, Bank)”
	 
	 	 	 	 
	 

	 	Determining Party:
	 	For all applicable Additional Disruption Events, Bank
	 
	 	 	 	 
	 

	 	Non-Reliance:
	 	Applicable
	 
	 	 	 	 
	 

	 	Agreements and
Acknowledgments Regarding
Hedging Activities:
	 	Applicable
	 
	 	 	 	 
	 

	 	Additional

Acknowledgments:
	 	Applicable
	 
	 	 	 	 
	Additional Termination
Events:
	 	If any event of default under the terms of the Convertible
Notes, as set forth in Section 5.01 of the Indenture,
shall occur with respect to Counterparty, then such
event shall constitute an Additional Termination
Event applicable to the Transaction with respect to
which Counterparty shall be deemed to be the sole
Affected Party and the Transaction shall be the sole
Affected Transaction.
	 
	 	 	 	 
	 

	 	 	 	If any provision of the Indenture or the Convertible
Notes is amended, modified, supplemented or waived
without the written consent of Bank, Counterparty
shall provide Bank and the Calculation Agent with
notice thereof on or prior to the effective date
thereof and, if the Calculation Agent determines that
such amendment, modification, supplement or waiver
has a material effect on the Transaction or Bank’s
ability to hedge all or a portion (“Affected
Portion”) of the Transaction, then such event (an
“Amendment Event”) shall constitute an Additional
Termination Event with respect to which Counterparty
shall be deemed to be the sole Affected Party and the
Transaction (or the Affected Portion thereof) shall
be the sole Affected Transaction. For the avoidance
of doubt, an election by Counterparty to increase the
conversion rate pursuant to Section 13.01(e) or
Section 13.03(g) of the Indenture shall not
constitute an Amendment Event.
	 
	 	 	 	 
	 

	 	 	 	If any Convertible Notes are repurchased (whether in
connection with a put of Convertible Notes by holders
thereof pursuant to the terms of the Indenture as a
result of a fundamental change, howsoever defined, or
for any other reason) by Counterparty or any of its
subsidiaries, or if Counterparty gives notice to Bank
that it intends to repurchase any Convertible Notes,
then Counterparty may notify Bank that it wishes to
designate an Early Termination Date with respect to
the portion of the Transaction relating

7

 

	 	 	 	 	 
	 

	 	 	 	to the number of Convertible Notes that cease
to be outstanding in connection with or as a result of
such repurchase and the parties shall negotiate in
good faith and in a commercially reasonable manner the
timing, pricing and other terms of such designation.
For the avoidance of doubt, no such designation shall
be made if, after such negotiation, the parties cannot
agree on the terms of such designation.
	 
	 	 	 	 
	 

	 	Credit Support Provider:
	 	Inapplicable
	 
	 	 	 	 
	 

	 	Credit Support Document:
	 	Inapplicable
	 
	 	 	 	 
	4. Calculation Agent:	 	Bank. The Calculation Agent shall, upon request by
either party, provide a written explanation of any
calculation or adjustment made by it hereunder,
including, where applicable, a description of the
methodology and data applied.

5. Account Details:

     (a) Account for payments to Counterparty:

     Account for payments to Counterparty:

Cadence Design Systems, Inc.

Account __________

Wells Fargo Bank

550 California Street — 10th Floor

San Francisco CA 94104

ABA# __________

Account for delivery of Shares to Counterparty:

Mellon Investor Services 

235 Montgomery Street, 23rd Floor

San Francisco, CA 94104

Cadence Design Systems Book Memo Treasury Reserve Account

  Comment: When you are ready to deliver Shares contact Cadence FIRST.

     (b) Account for payments to Bank:

JPMorgan Chase Bank, National Association, New York

ABA: __________

Favour: JPMorgan Chase Bank, National Association - London

A/C: __________

Account for delivery of Shares from Bank:

  __________

6. Offices:

8

 

The Office of Counterparty for the Transaction is: Inapplicable. Counterparty is not a
Multibranch Parry.

The Office of Bank for the Transaction is: New York, Bank is a Multibranch Party.

7. Notices: For purposes of this Confirmation:

	 	(a)	 	Address for notices or communications to Counterparty:

Cadence Design Systems, Inc.

2655 Seely Avenue, Building 5

San Jose, California 95134

Fax: (408) 944-6855

Attention: General Counsel

	 	(b)	 	Address for notices or communications to Bank:

JPMorgan Chase Bank, National Association

277 Park Avenue, 11th Floor

New York, NY 10172

Attention: Eric Stefanik

Title: Operations Analyst

EDG Corporate Marketing

Telephone No.:       (212) 622-5814

Fax:                         (212) 622-8534

8. Representations and Warranties of Counterparty

The representations and warranties of Counterparty set forth in Section 1 of the Purchase
Agreement dated as of the Trade Date among Counterparty, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated, J.P. Morgan Securities Inc. and Deutsche Bank
Securities Inc. (the “Purchase Agreement”) are true and correct and are hereby deemed to be
repeated to Bank as if set forth herein. Counterparty hereby further represents and warrants to
Bank that:

	 	(a)	 	Counterparty has all necessary corporate power and authority to execute,
deliver and
perform its obligations in respect of the Transaction; such execution, delivery and
performance have been duly authorized by all necessary corporate
action on
Counterparty’s part; and this Confirmation has been duly and validly executed and
delivered by Counterparty and constitutes its valid and binding obligation,
enforceable
against Counterparty in accordance with its terms, subject to applicable
bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws
affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to
general principles of equity, including principles of commercial reasonableness,
good
faith and fair dealing (regardless of whether enforcement is sought in a proceeding
at law
or in equity) and except that rights to indemnification and contribution hereunder
may be
limited by federal or state securities laws or public policy relating thereto.
	 
	 	(b)	 	Neither the execution and delivery of this Confirmation nor the
incurrence or
performance of obligations of Counterparty hereunder will conflict with or result
in a
breach of the certificate of incorporation or by-laws (or any equivalent documents)
of
Counterparty, or any applicable law or regulation, or any order, writ, injunction
or decree
of any court or governmental authority or agency or any agreement or instrument to
which Counterparty or any of its subsidiaries is a party or by which Counterparty
or any
of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is
subject.

9

 

	 	 	 	or constitute a default under, or result in the creation of any lien under, any such
agreement or instrument, or breach or constitute a default under any agreements and
contracts of Counterparty or its significant subsidiaries filed as exhibits to
Counterparty’s Annual Report on Form 10-K for the year ended December 31, 2005,
incorporated by reference in the Offering Memorandum, as updated by any subsequent
filings.
	 
	 	(c)	 	No consent, approval, authorization, or order of, or filing with, any governmental agency
or body or any court is required in connection with the execution, delivery or
performance by Counterparty of this Confirmation, except such as have been obtained or
made and such as may be required under the Securities Act of 1933, as amended (the
“Securities Act”) or state securities laws.
	 
	 	(d)	 	Counterparty is not, and after giving effect to the transactions contemplated hereby will
not be, an “investment company” as such term is defined in the Investment Company Act
of 1940, as amended.
	 
	 	(e)	 	Counterparty is an “eligible contract participant” (as such term is defined in Section
1a(12) of the Commodity Exchange Act, as amended (the “CEA”) because one or more
of the following is true:
	 
	 	 	 	Counterparty is a corporation, partnership, proprietorship, organization, trust or other
entity and:

	 	(A)	 	Counterparty has total assets in excess of USD 10,000,000;
	 
	 	(B)	 	the obligations of Counterparty hereunder are guaranteed, or
otherwise
supported by a letter of credit or keepwell, support or other agreement, by an
entity of the type described in Section 1a(12)(A)(i) through (iv),
1a(12)(A)(v)(I),
1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
	 
	 	(C)	 	Counterparty has a net worth in excess of USD 1,000,000 and has entered into
this Agreement in connection with the conduct of Counterparty’s business or to
manage the risk associated with an asset or liability owned or incurred or
reasonably likely to be owned or incurred by Counterparty in the conduct of
Counterparty’s business.

	 	(f)	 	On the Trade Date, (A) none of Counterparty and its officers and directors is aware of
any material nonpublic information regarding Counterparty or the Shares and (B) all
reports and other documents filed by Counterparty with the Securities and Exchange
Commission pursuant to 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.
	 
	 	(g)	 	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.
	 
	 	(h)	 	Counterparty is an “accredited investor” (as such term is defined in Section
2(a)(15)(ii) of the Securities Act).

10

 

	 	(i)	 	Counterparty’s 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.
	 
	 	(j)	 	On the Trade Date (A) the assets of Counterparty at their fair valuation exceed the
liabilities of Counterparty, including contingent liabilities, (B) the capital of
Counterparty is adequate to conduct the business of Counterparty and (C)
Counterparty has the ability to pay its debts and obligations as such debts mature
and does not intend to, or does not believe that it will, incur debt beyond its
ability to pay as such debts mature.
	 
	 	(k)	 	Counterparty’s 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.
	 
	 	(l)	 	Counterparty hereby agrees and acknowledges that the Transaction has not been
registered with the Securities and Exchange Commission or any state securities
commission and that the Options are being written by Bank to Counterparty in
reliance upon exemptions from any such registration requirements. Counterparty
acknowledges that all Options acquired from Bank will be acquired for investment
purposes only and not for the purpose of resale or other transfer except in
compliance with the requirements of the Securities Act. Counterparty will not sell
or otherwise transfer any Option or any interest therein except in compliance with
the requirements of the Securities Act and any subsequent offer or sale of the
Options will be solely for Counterparty’s account and not as part of a
distribution that would be in violation of the Securities Act.
	 
	 	(m)	 	Counterparty understands no obligations of Bank to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not be
guaranteed by any affiliate of Bank or any governmental agency.
	 
	 	(n)	 	Counterparty 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.
	 
	 	(o)	 	Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that Bank is not making any representations or warranties
with respect to the treatment of the Transaction under FASB Statements 128, 133, as
amended, 149 or 150, EITF Issue No. 00-19, Issue No. 01-6 or Issue No. 03-6 (or any
successor issue statements) or under FASB’s Liabilities & Equity Project.
	 
	 	(p)	 	Counterparty is not on the date hereof engaged in a distribution, as such
term is used in Regulation M under the Exchange Act such distribution, a Regulation M
Distribution, of any securities of Counterparty, other than distributions meeting the
requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of
Regulation M. Counterparty shall not, until the second Exchange Business Day
immediately following the Trade Date, engage in any Regulation M Distribution.

9. Other Provisions:

	 	(a)	 	Opinions. Counterparty shall deliver to Bank an opinion of counsel, dated
as of the Closing Date (as defined in the Purchase Agreement), with respect to the
matters set forth in Sections 8(a) through (d) of this Confirmation.

11

 

	 	(b)	 	Repurchase Notices. Counterparty shall, on any day on which Counterparty
effects any
repurchase of Shares, promptly give Bank a written notice of such repurchase (a
“Repurchase Notice”) on such day if, following such repurchase, the Options Equity
Percentage as determined on such day is (i) greater than 6% and (ii) greater by 0.5% than
the Options Equity Percentage included in the immediately preceding Repurchase Notice
(or, in the case of the first such Repurchase Notice, greater than the Options Equity
Percentage as of the date hereof). The “Options Equity Percentage” as of any day is the
fraction (A) the numerator of which is the sum of (A) the Number of Shares hereunder
and (B) the Number of Shares for the Convertible Note Hedge Transaction between
Counterparty and Bank relating to the USD 250,000,000 principal amount of Convertible
Senior Notes due December 15, 2011 (the “Aggregate Transaction Amount”) and (B)
the denominator of which is the number of Shares outstanding on such day. Counterparty
agrees to indemnify and hold harmless Bank and its affiliates and their respective
officers, directors, employees, affiliates, advisors, agents and controlling persons (each,
an “Indemnified Person”) from and against any and all losses (including losses relating
to Bank’s hedging activities as a consequence of becoming, or of the risk of becoming, a
Section 16 “insider”, including without limitation, any forbearance from
hedging
activities or cessation of hedging activities and any losses in connection therewith with
respect to the Transaction), claims, damages, judgments, liabilities and
expenses
(including reasonable attorney’s fees), joint or several, which an Indemnified Person may
become subject to, as a result of Counterparty’s failure to provide Bank with a
Repurchase Notice on the day and in the manner specified in this Section 9(b), and to
reimburse, within 30 days, upon written request, each of such Indemnified Persons for
any reasonable legal or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection with or defending any
of the foregoing. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against the
Indemnified Person, such Indemnified Person shall promptly notify Counterparty in
writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified Person
and any others Counterparty may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. Counterparty shall not be liable for
any settlement of any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, Counterparty agrees to
indemnify any Indemnified Person from and against any loss or liability by reason of
such settlement or judgment. Counterparty shall not, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding. If the indemnification provided for in this
paragraph (b) is unavailable to an Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then Counterparty under such
paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute
to the amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities. The remedies provided for in this paragraph (b) are not
exclusive and shall not limit any rights or remedies which may otherwise be available to
any Indemnified Person at law or in equity. The indemnity and contribution agreements
contained in this paragraph (b) shall remain operative and in full force and effect
regardless of the termination of the Transaction.
	 
	 	(c)	 	No Manipulation. Counterparty is not entering into the Transaction to create actual
or
apparent trading activity in the Shares (or any security convertible into or exchangeable

12

 

	 	 	 	for the Shares) or to raise or depress or otherwise manipulate the price of the Shares
(or any security convertible into or exchangeable for the Shares) or otherwise to violate
the Exchange Act.
	 
	 	(d)	 	Board Authorization. Each of the Transaction and the issuance of the Convertible
Notes
was approved by its board of directors and publicly announced, solely for the purposes
stated in such board resolution and public disclosure and, prior to any exercise of Options
hereunder, Counterparty’s board of directors will have duly authorized any repurchase of
Shares pursuant to the Transaction. Counterparty further represents that there is no
internal policy, whether written or oral, of Counterparty that would prohibit Counterparty
from entering into any aspect of the Transaction, including, but not limited to, the
purchase of Shares to be made pursuant hereto.
	 
	 	(e)	 	Transfer or Assignment. Neither party may transfer any of its rights or obligations
under
the Transaction without the prior written consent of the non-transferring party; provided
that if, as determined at Bank’s sole discretion, (x) its “beneficial ownership” (within
the
meaning of Section 13 of the Exchange Act and rules promulgated thereunder) with
respect to the Shares exceeds 8.5% of Counterparty’s outstanding Shares or (y) the
Aggregate Transaction Amount exceeds 8.5% of Counterparty’s outstanding Shares or
(z) the sum of the Aggregate Transaction Amount, the Number of Shares for the
convertible bond hedge transaction evidenced by the Confirmation dated August 11, 2003
between Counterparty and Bank and the Number of Shares for the convertible bond
hedge transaction evidenced by the Confirmation dated August 29, 2003 between
Counterparty and Bank (such sum, the “Related Transaction Amount”) exceeds 15% of
Counterparty’s outstanding Shares Bank may transfer or assign a number of Options
sufficient to reduce such “beneficial ownership” to 8.0% or the Aggregate Transaction
Amount to 8.0%, or the Related Transaction Amount to 14.5% as applicable, to any third
party with a rating (or whose guarantor has a rating) for its long term, unsecured and
unsubordinated indebtedness of A- or better by Standard & Poor’s Ratings Services or its
successor (“S&P”), or a3 or better by Moody’s Investors Service (“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 Bank. If, in the sole
discretion of Bank, Bank is unable after its commercially reasonable efforts to effect such
transfer or assignment on pricing terms reasonably acceptable to Bank and within a time
period reasonably acceptable to Bank, Bank may designate any Exchange Business Day
as an Early Termination Date with respect to a portion (the “Terminated Portion”) of
the Transaction, such that its “beneficial ownership” following such partial termination
will be equal to or less than 8.5% or the Aggregate Transaction Amount will be equal to
or less than 8.5%, or the Related Transaction Amount will be equal to or less than 15% as
the case may be. In the event that Bank 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 Transaction and a Number of Options equal to
the Terminated Portion, (ii) Counterparty shall be the sole Affected Party with respect to
such partial termination and (iii) such Transaction shall be the only Terminated
Transaction. Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing the Bank to purchase, sell, receive or deliver any Shares or other
securities to or from Counterparty, the Bank may designate any of its affiliates to
purchase, sell, receive or deliver such Shares or other securities and otherwise to perform
Bank’s obligations in respect of this Transaction and any such designee may assume such
obligations. The Bank shall be discharged of its obligations to Counterparty to the extent
of any such performance.

13

 

	 	(f)	 	Staggered Settlement. Bank may, by notice to Counterparty prior to any Settlement Date
(a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a
“Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date
as follows:

	 	(a)	 	in such notice, Bank will specify to Counterparty the related
Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement
Date) and how it will allocate the Shares it is required to deliver under “Net
Share Settlement” (above) among the Staggered Settlement Dates; and
	 
	 	(b)	 	the aggregate number of Shares that Bank will deliver to Counterparty
hereunder
on all such Staggered Settlement Dates and delivery times will equal the number
of Shares that Bank would otherwise be required to deliver on such Nominal
Settlement Date.

	 	(g)	 	Early Unwind. In the event the sale of Convertible Notes is not consummated with the
underwriters for any reason by the close of business in New York on December 19, 2006
or such later date as agreed upon by the parties (December 19, 2006 or such later date as
agreed upon being the “Early Unwind Date”), the Transaction shall automatically
terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and
all of the respective rights and obligations of Bank and Counterparty under the
Transaction shall be cancelled and terminated and (ii) 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 the other party arising out of and
to
be performed in connection with the Transaction either prior to or after the Early Unwind
Date; provided that, other than to the extent the Early Unwind Date occurred as a result
of a breach of the Purchase Agreement by Bank or an affiliate thereof, Counterparty shall
reimburse Bank for any costs or expenses (including market losses) relating to the
unwinding of its hedging activities in connection with the Transaction (including any loss
or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing
any
hedge or related trading position). The amount of any such reimbursement shall be
determined by Bank in its sole good faith and commercially reasonable discretion. Bank
shall notify Counterparty of such amount and Counterparty shall pay such amount in
immediately available funds on the Early Unwind Date. Bank and Counterparty
represent and acknowledge to the other that, subject to the proviso included in this
Section, upon an Early Unwind, all obligations with respect to the Transaction shall be
deemed fully and finally discharged.
	 
	 	(h)	 	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.
	 
	 	(i)	 	Setoff. 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.

14

 

	 	(j)	 	Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If, in respect of the Transaction, an amount is payable by Bank to
Counterparty upon an early termination or cancellation of the Transaction (i) pursuant to
Section 12.2, 12.6, 12.7 or 12.9 of the Equity Definitions or “Consequences of Merger
Events” above (except in the event of an Extraordinary Event in which the consideration to
be paid to holders of Shares consists solely of cash) or (ii) pursuant to Section 6(d)(ii)
of the Agreement (except in the event of an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected Party, other
than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or
(viii) of the Agreement or a Termination Event of the type described in Section 5(b)(i),
(ii), (iii), (iv), (v) or (vi) of the Agreement, in each case resulting from an event or
events outside Counterparty’s control) (a “Payment Obligation”), Counterparty may, in its
sole discretion, request that Bank satisfy such Payment Obligation by the Share Termination
Alternative (as defined below) and shall give irrevocable telephonic notice to Bank,
confirmed in writing within one Currency Business Day, no later than 12:00 p.m. New York
local time on the Merger Date, the Announcement Date or the Early Termination Date, as
applicable; provided that if Counterparty does not validly request that Bank satisfy such
Payment Obligation by the Share Termination Alternative, Bank shall nevertheless have the
right, in its sole discretion, to satisfy its Payment Obligation by the Share Termination
Alternative, notwithstanding Counterparty’s lack of election. In calculating any amounts
under Section 6(e) of the Agreement, notwithstanding anything to the contrary in die
Agreement, (1) separate amounts shall be calculated as set forth in Section 6(e) with
respect to (i) the Transaction and (ii) all other Transactions, and (2) such separate
amounts shall be payable pursuant to Section 6(d)(ii) of the Agreement, subject to, in the
case of clause (1)(i), the Share Termination Alternative right hereunder.

	 	 	 	 	 
	 

	 	Share Termination Alternative:
	 	If applicable, Bank shall deliver to
Counterparty the Share Termination Delivery
Property on the date when the Payment
Obligation would otherwise be due pursuant to
Section 12.7 or 12.9 of the Equity
Definitions, this Confirmation or Section
6(d)(ii) and 6(e) of the Agreement, as
applicable (the “Share Termination Payment
Date”), in satisfaction of the Payment
Obligation in the manner reasonably requested
by Counterparty free of payment.
	 
	 	 	 	 
	 

	 	Share Termination

Delivery Property:
	 	

A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit Price.
The Calculation Agent shall adjust the Share
Termination Delivery Property by replacing
any fractional portion of a security therein
with an amount of cash equal to the value of
such fractional security based on the values
used to calculate the Share Termination Unit
Price.
	 
	 	 	 	 
	 

	 	Share Termination Unit Price:
	 	The value to Bank of property contained in
one Share Termination Delivery Unit on the

15

 

	 	 	 	 	 
	 

	 	 	 	date such Share Termination Delivery Units
are to be delivered as Share Termination
Delivery Property, as determined by the
Calculation Agent in its discretion by
commercially reasonable means and notified by
the Calculation Agent to Bank at the time of
notification of the Payment Obligation.
	 
	 	 	 	 
	 

	 	Share Termination

Delivery Unit:
	 	

In the case of a Termination Event, Event of
Default or Delisting, one Share or, in the
case of an Insolvency, Nationalization or
Merger Event, one Share or a unit consisting
of the number or amount of each type of
property received by a holder of one Share
(without consideration of any requirement to
pay cash or other consideration in lieu of
fractional amounts of any securities) in such
Insolvency, Nationalization or Merger Event,
as the case may be. If such Insolvency,
Nationalization or Merger Event involves a
choice of consideration to be received by
holders, such holder shall be deemed to have
elected to receive the maximum possible
amount of cash.
	 
	 	 	 	 
	 

	 	Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	 

	 	Other applicable

provisions:
	 	

If Share Termination Alternative is
applicable, the provisions of Sections 9.8,
9.9, 9.10, 9.11 and 9.12 of the Equity
Definitions will be applicable, as if
“Physical Settlement” applied to such
cancellation or termination of the
Transaction, except that all references
therein to “Shares” shall be read as
references to “Share Termination Delivery
Units”; and provided that the Representation
and Agreement contained in Section 9.11 of
the Equity Definitions shall be modified by
excluding any representations therein
relating to restrictions, obligations,
limitations or requirements under applicable
securities laws as a result of the fact that
Buyer is the issuer of any Share Termination
Delivery Units (or any part thereof).

	 	(k)	 	Securities Contract: Swap Agreement. The parties hereto intend for: (a) the Transaction
to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title
11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be
entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 555 and
560 of the Bankruptcy Code; (b) a party’s right to liquidate the Transaction and to
exercise any other remedies upon the occurrence of any Event of Default under the
Agreement with respect to the other party to constitute a “contractual right” as described

16

 

	 	 	 	in the Bankruptcy Code; (c) any cash, securities or other property provided as
performance assurance, credit support or collateral with respect to the Transaction to
constitute “margin payments” and “transfers” under a “swap agreement” as defined in the
Bankruptcy Code; and (d) all payments for, under or in connection with the Transaction,
all payments for the Shares and the transfer of such Shares to constitute “settlement
payments” and “transfers” under a “swap agreement” as defined in the Bankruptcy Code.
	 
	 	(l)	 	Governing Law. New York law (without reference to choice of law doctrine).
	 
	 	(m)	 	Waiver of Jury Trial. 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 the Transaction. Each party (i) certifies that no representative, agent or
attorney of the other 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 the
Transaction, as applicable, by, among other things, the mutual waivers and certifications
provided herein.
	 
	 	(n)	 	Registration. Counterparty hereby agrees that if, in the good faith reasonable
judgment of Bank, the Shares (the “Hedge Shares”) acquired by Bank for the purpose of hedging
its obligations pursuant to the Transaction cannot be sold in the U.S. public market by Bank
without registration under the Securities Act, Counterparty shall, at its election: (i) in
order to allow Bank to sell the Hedge Shares in a registered offering, make available to Bank
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 satisfactory to Bank,
substantially in the form of an underwriting agreement for a registered secondary offering,
(B) provide accountant’s “comfort” letters in customary form for registered offerings of
equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to
Counterparty reasonably acceptable to Bank, (D) provide other customary opinions, certificates
and closing documents customary in form for registered offerings of equity securities and (E)
afford Bank a reasonable opportunity to conduct a “due diligence” investigation with respect
to Counterparty customary in scope for underwritten offerings of equity securities; provided,
however, that if Bank, in its sole 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 9(n) shall apply at the election of Counterparty; (ii) in order to allow Bank
to sell the Hedge Shares in a private placement, enter into a private placement agreement
substantially similar to private placement Underwriting Agreements customary for private
placements of equity securities, in form and substance satisfactory to Bank, including
customary representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to Bank, due diligence rights (for Bank or any designated buyer of
the Hedge Shares from Bank), opinions and certificates and such other documentation as is
customary for private placements agreements, all reasonably acceptable to Bank (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 Bank 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 Bank at the “VWAP Price” (as defined herein) on the
relevant Exchange Business Days, and in the amounts, requested by Bank.
“VWAP Price” means, on any Exchange Business Day, the per Share volume-weighted average
price as displayed under the heading “Bloomberg VWAP” on Bloomberg page <CDNS>.UQ
<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

17

 

	 	 	 	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).
	 
	 	(o)	 	Quarterly Valuations. Bank hereby agrees, upon request by Counterparty, to cause its
affiliate to provide to the Counterparty, within 5 Exchange Business Days after the end of
the fiscal quarter of the Counterparty during which Counterparty made such request, a
valuation estimate of the fair value of the Transaction as of the Counterparty’s fiscal
quarter end.
	 
	 	(p)	 	Equity Rights. Bank acknowledges and agrees that this Confirmation is not intended to convey
to it rights with respect to the Transaction that are senior to the claims of common
stockholders in the event of Counterparty’s bankruptcy.
	 
	 	(q)	 	Role of Agent. Each party agrees and acknowledges that (i) Agent has acted solely as
agent and not as principal with respect to this Transaction and (ii) Agent 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.

18

 

     Please confirm that the foregoing correctly sets forth the terms of our agreement by executing this
Confirmation and returning it to EDG Confirmation Group, J.P. Morgan Securities Inc., 277 Park
Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622 8519.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	J.P. Morgan Securities Inc., as
agent for JPMorgan Chase Bank, National
Association	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	David Seaman
	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Authorized Signatory	 	 
	 	 	 	 	Name: David Seaman	 	 

Accepted and confirmed

as of the Trade Date:

Cadence Design Systems, Inc.

	 	 	 	 	 
	By:

	 	William Porter
	 	 
	 

	 	 	 	 
	Authorized Signatory	 	 
	Name: William Porter	 	 

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

19

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