EXHIBIT 10.2
April 3, 2002
To: Computer Associates International, Inc.
Address: Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
From: Bank of America, N.A.
c/o Banc of America Securities LLC
Equity Financial Products
0 Xxxx 00xx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Re: Issuer Call Spread Transaction
Reference: NY-8523
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between BANK OF AMERICA, N.A.
(either "BofA" or ""Party A") and COMPUTER ASSOCIATES INTERNATIONAL,
INC. (either "Counterparty" or "Party B") on the Trade Date specified below
(the "Transaction"). This letter agreement constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. This
Confirmation evidences a complete binding agreement between the Counterparty
and BofA as to the terms of the transaction to which this Confirmation
relates. This Transaction shall be deemed to consist of Share Option
Transactions, each within the meaning as set forth in the Equity Definitions
and each referred to sequentially in Annex A.
Each party is hereby advised, and each such party acknowledges, that
the other party has engaged in, or refrained from engaging in, substantial
financial transactions and has taken other material actions in reliance upon the
parties' entry into the Transaction to which this Confirmation relates on the
terms and conditions set forth below.
1. If the Counterparty and BofA have entered into an ISDA Master Agreement
(the "Agreement"), then this Confirmation supplements, forms a part of, and is
subject to, that Agreement, as amended and supplemented from time to time. All
provisions contained in the Agreement govern this Confirmation except as
expressly modified below. If the Counterparty and BofA have not entered into
an ISDA Master Agreement, then they agree to use all reasonable efforts to
promptly negotiate, execute and deliver an agreement in the form of the ISDA
Master Agreement (Multicurrency-Cross Border) (the "ISDA Form"), with such
modifications as the Counterparty and BofA will in good faith agree. Upon
the execution of such an agreement, this Confirmation will supplement, form a
part of, and be subject to, that agreement. All provisions contained or
incorporated by reference in that agreement upon its execution will govern this
Confirmation except as expressly modified below. Until the parties execute and
deliver that agreement, this Confirmation, together with all other documents
relating to the ISDA Form (each a "Confirmation") confirming transactions (each
a "Transaction") entered into between us (notwithstanding anything to the
contrary in a Confirmation), shall supplement, form a part of, and be subject to
an agreement in the form of the ISDA Form as if we had executed an agreement in
such form (but without any Schedule) on the Trade Date of the first such
Transaction between us (such agreement, or the ISDA Form, hereinafter the
"Agreement"). In the event of any inconsistency between the provisions of the
agreement and this Confirmation, this Confirmation will prevail for the purpose
of this Transaction. For purposes of such ISDA Master Agreement and with respect
of all Transactions thereunder in addition to such other modifications to the
ISDA Form as shall be agreed by the parties from time to time and which may be
set forth in any
Confirmation, the parties agree to the following provisions
with respect to the ISDA Master Agreement: Second Method and Loss shall apply.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms applicable to each Share Option Transaction ("SOT"):
Trade Date: March 13, 2002
Option Style: European
Option Type: Call Spread
Buyer: Counterparty
Seller: Citibank
Shares: The common stock of Computer
Associates International, Inc. (the
"Issuer"), par value U.S. $0.10 per
Share (Exchange symbol "CA")
Number of Options: As specified on Annex A
Option Entitlement: One Share per Option
Low Call Strike Price: U.S. $24.83
High Call Strike Price: U.S. $36.60
Premium: $47,520,000.00
Premium Payment Date: March 18, 2002
Exchange: The New York Stock Exchange
Related Exchange(s): The principal exchange(s) for options
contracts or futures contracts, if any,
with respect to the Shares
Dividend Adjustment: Notwithstanding the provisions of
Section 9.1(e) of the Equity
Definitions, if the Shares shall
have gone ex-dividend with respect to
any ordinary cash dividends ("Ordinary
Dividend") on any day from and excluding
the Trade Date, to and including the
Expiration Date and such Ordinary
Dividend is less than U.S. $0.04 per
Share (assuming a semi-annual dividend
with appropriate adjustments to the
terms of this Transaction in the event
that the Issuer pays dividends other
than on a semi-annual basis) (the
"Contractual Dividend"), then the Low
Call Strike Price and the High Call
Strike Price shall each be increased by
an amount as determined by the
Calculation Agent in a commercially
reasonable manner.
Procedure for Exercise applicable to each Share Option Transaction:
Exercise Date: The Expiration Date, if on such date a
SOT is or is deemed to be exercised,
unless there is a Market Disruption
Event on that date. If there is a Market
Disruption Event on that day, then the
Exercise Date shall be the first
succeeding Exchange Business Day on
which there is no Market Disruption
Event, unless there
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is a Market Disruption Event on each
of the five Exchange Business Days
immediately following the
original date that, but for the Market
Disruption Event, would have been the
Exercise Date. In that case, (a) that
fifth Exchange Business Day shall be
deemed to be the Exercise Date,
notwithstanding the Market Disruption
Event, and (b) the Calculation Agent
shall determine the Reference Price, or
Settlement Price, as the case may be, on
the basis of its good faith estimate of
the trading value for the relevant
Shares and each following Expiration
Date for the remaining SOTs shall be
postponed the minimum number of Exchange
Business Days so that each Expiration
Date for the remaining SOTs falls on a
separate Exchange Business Day; provided
however, that if an Expiration Date for
any SOT shall occur on or after April
29, 2005, an Additional Termination
Event shall be deemed to have occurred,
the Early Termination Date shall be
April 29, 2005, this Transaction shall
be the sole Affected Transaction and
BofA and Counterparty shall be the
Affected Parties.
Expiration Time: The Valuation Time
Expiration Date: See Annex A
Automatic Exercise: Applicable; provided that,
notwithstanding the Equity Definitions,
each Option will be deemed to be
automatically exercised (i) where Cash
Settlement or Net Share Settlement is
applicable, at the Expiration Time on
the Expiration Date, unless Counterparty
notifies BofA (by phone or in
writing) prior to the Expiration Time on
the Expiration Date that it does not
wish Automatic Exercise to occur, and
(ii) where Physical Settlement is
applicable, at the Expiration Time on
the Expiration Date if at such time the
Option is In-the-Money. "In-the-Money"
means that the Reference Price exceeds
the Low Call Strike Price.
Valuation applicable to each Share Option Transaction:
Valuation Time: At the close of trading of the regular
trading session on the Exchange
Valuation Date: The Exercise Date
Settlement Terms applicable to each Share Option Transaction:
Physical Settlement: Applicable, where each SOT shall be
deemed "Physically-Settled"; provided,
however, that the Counterparty may elect
the method of settlement with respect to
all or a portion of such SOT to be Cash
Settlement, subject to the Additional
Terms set forth in Section 3(a) herein,
or Net Share Settlement, subject to the
Additional Terms set forth in Section
3(b) herein. Notwithstanding any
election by the Counterparty to cash
settle or net share settle all or a
portion of any SOT in accordance with
the terms hereof, BofA may impose
additional requirements or
modifications, including, without
limitation, the registration of the
Shares held
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by BofA as part of its hedge, the
entering into of a registration rights
agreement in a form acceptable to both
parties, due diligence requirements of
BofA, and effectiveness of a
registration statement if in its good
faith determination registration of
additional shares held as its hedge is
legally required for sale in the public
Market. For the avoidance of doubt, if
Counterparty elects to settle all or a
portion of any SOT pursuant to the Cash
Settlement Terms or Net Share Settlement
Terms as set forth below, the provisions
relating to Physical Settlement will
apply with respect to the remaining
Number of Options not subject to Cash
Settlement or Net Share Settlement.
PHYSICAL SETTLEMENT TERMS: Physical Settlement means that BofA
shall to deliver to the Counterparty the
Number of Shares to be Delivered (as
defined below) through the Clearance
System against payment of the Settlement
Price by the Counterparty to BofA.
Number of Shares to be Delivered: (a) If the Reference Price is
greater than the High Call Strike Price,
the difference between (A) the Number of
Options less (B) the product of (x) the
Number of Options times (y) the quotient
of (i) the Reference Price minus the
High Call Strike Price, divided by (ii)
the Reference Price.
(b) If the Reference Price is greater
than or equal to the Low Call Strike
Price and less than or equal to the High
Call Strike Price, the Number of
Options.
(c) If the Reference Price is less than
the Low Call Strike Price, zero.
Settlement Price: (a) If the Reference Price is greater
than or equal to the Low Call Strike
Price, an amount equal to the product of
the (x) the Low Call Strike Price times
(y) the Number of Options;
(b) If the Reference Price is less than
the Low Call Strike Price, zero.
Reference Price: The closing price per Share on the
Exchange at the Valuation Time on the
Valuation Date
Settlement Date: As defined in Section 6.2 of the Equity
Definitions.
Failure to Deliver: Applicable
3. Additional Terms applicable to each Share Option Transaction:
(a) Option to Cash Settle: Counterparty shall have the right, but
not the obligation, to cash settle any
SOT, in whole or in part. If the
Counterparty elects such right, it will
execute and deliver written notice to
BofA on any Currency Business Day
but no later than 12:00 p.m. noon (or
3:30 p.m. with respect to Option A under
Schedule A) New York City time on the
Currency Business Day prior to the
Expiration Date for such SOT, specifying
that Cash Settlement applies to such SOT
and specifying the
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Number of Options subject to Cash
Settlement. Once Cash Settlement is
elected with respect to such SOT, such
election shall be irrevocable. Such
notice shall be given by facsimile and
telephone.
CASH SETTLEMENT TERMS:
Cash Settlement: Applicable, provided that Counterparty
properly elects cash settlement in
accordance with the "Option to Cash
Settle" provision above. BofA shall
pay to the Counterparty the Cash
Settlement Amount, if any, on the Cash
Settlement Payment Date for all Options
exercised or deemed exercised. For the
avoidance of doubt, the Number of
Options subject to Cash Settlement shall
be the Number of Options so specified by
Counterparty in the written notice
delivered to BofA.
Cash Settlement Amount: An amount, as calculated by the
Calculation Agent, equal to the Number
of Options exercised on the Exercise
Date multiplied by the Option
Entitlement multiplied by the Strike
Price Differential.
Strike Price Differential: (a) If the Settlement Price is greater
than or equal to the Low Call Strike
Price and less than or equal to the High
Call Strike Price, an amount equal to
the excess of the Settlement Price over
the Low Call Strike Price; or
(b) If the Settlement Price is greater
than the High Call Strike Price, an
amount equal to the excess of the High
Call Strike Price over the Low Strike
Price; or
(c) If the Settlement Price is less than
the Low Call Strike Price, zero.
Cash Settlement Payment Date: Three (3) Currency Business Days
following the Exercise Date for a SOT
Settlement Price: The closing price per Share on the
Exchange at the Valuation Time on the
Valuation Date.
Settlement Currency: USD
(b) Option to Net Share Settle: The Counterparty shall have the right,
but not the obligation, to net share
settle any SOT, in whole, or in part. If
the Counterparty elects such right,
Counterparty will execute and deliver
written notice to BofA on any
Currency Business Day but no later than
12:00 p.m. noon (or 3:30 p.m. with
respect to Option A under Schedule A)
New York City time on the Currency
Business Day prior to the Expiration
Date for such SOT specifying that Net
Share Settlement applies to such SOT and
specifying the Number of Options subject
to Net Share Settlement. Once Net Share
Settlement is elected with respect to
such SOT, such election shall be
irrevocable. Such notice shall be given
by facsimile and telephone.
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NET SHARE SETTLEMENT TERMS:
Net Share Settlement: Applicable, provided that Counterparty
properly elects net share settlement in
accordance with the "Option to Net Share
Settle" provision above. "Net Share
Settlement" shall mean, BofA shall
deliver to the Counterparty, the Share
Delivery Quantity of Shares on the
Settlement Date to the account specified
hereto free of payment through the
Clearance System. For the avoidance of
doubt, the Number of Options subject to
Net Share Settlement with respect to a
SOT shall be the Number of Options so
specified by Counterparty in the written
notice delivered to BofA.
Share Delivery Quantity: A number of Shares, as calculated by the
Calculation Agent, equal to the Net
Share Settlement Amount divided by the
Settlement Price, plus cash in lieu of
any fractional shares.
Net Share Settlement Amount: The product of the Number of Options
multiplied by the Option Entitlement,
multiplied by the Strike Price
Differential.
Strike Price Differential: (a) If the Settlement Price is greater
than or equal to the Low Call Strike
Price and less than or equal to the High
Call Strike Price, an amount equal to
the excess of the Settlement Price over
the Low Call Strike Price; or
(b) If the Settlement Price is greater
than the High Call Strike Price, an
amount equal to the excess of the High
Call Strike Price over the Low Strike
Price; or
(c) If the Settlement Price is less than
the Low Call Strike Price, zero.
Settlement Price: The closing price per Share on the
Exchange at the Valuation Time on the
Valuation Date.
Settlement Date: As defined in Section 6.2 of the Equity
Definitions.
Failure to Deliver: Applicable
Other Applicable Provisions: If any portion of any SOT is to be Net
Share Settled, the provisions of
Sections 6.6, 6.7, 6.8 and 6.10 of the
Equity Definitions will be applicable,
except that all references in such
provisions to "Physically-Settled" shall
be read as references to "Net Share
Settled". "Net Share Settled" in
relation to any SOT means that Net Share
Settlement is applicable to that SOT.
Adjustments applicable to each Share Option Transaction:
Method of Adjustment: Calculation Agent Adjustment (including
with respect to the terms of Annex A
hereto)
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Extraordinary Events applicable to each Share Option Transaction:
Consequence of Merger Events
(a) Share-for-Share: Cancellation and Payment
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Cancellation and Payment
Nationalization, Insolvency or
De-Listing Event: Cancellation and Payment
"De-Listing Event" means that the Shares cease to be listed on, or quoted
by, any of the New York Stock Exchange, the American Stock Exchange or
the Nasdaq Stock Market (or their respective successors) for any reason
(other than a Merger Event, Nationalization or Insolvency). Upon the
occurrence of a De-Listing Event, the provisions of Section 9.7 of the
Equity Definitions will apply, with the Announcement Date deemed to be
the date that the De-Listing Event first occurs (as determined by the
Calculation Agent).
4. Calculation Agent: BofA, whose calculations and
determinations shall be made in good
faith and in a commercially reasonable
manner, including with respect to
calculations and determinations that are
made in its sole discretion. In making
determinations hereunder, the
Calculation Agent agrees to consult with
the calculation agent (the "Other
Agent") under the Issuer call spread
transaction dated as of the date hereof
between the Counterparty and Citibank
N.A. (the "Other Transaction")
so long as Citibank N.A. or an
affiliate thereof is the Other Agent
and a similar provision is in the
Other Transaction.
5. Account Details:
(a) Account for payments to Counterparty:
Mellon Bank N.A., Pittsburgh
ABA#000000000
Acct: Computer Associates International, Inc.
Acct No.: 178-1540
Account for delivery of Shares to Counterparty:
Mellon Investor Services LLP, Overpeck House
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Contact : Xxxxxx Xxxxx
Telephone: (000) 000-0000
(b) Account for payments to BofA:
Bank of America, NA
San Francisco, CA
SWIFT: XXXXXX0X
Bank Routing: 000-000-000
Account Name: Bank of America
Account Number: 12333-34172
Account for delivery of Shares from BofA: Will advise.
7
6. Offices:
The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is
not a Multibranch Party.
The Office of BofA for the Transaction is: Charlotte
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Address for notices or communications to BofA:
Bank of America, N.A.
c/o Banc of America Securities LLC
Equity Financial Products
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
8. Other Provisions
(a) Each party represents that:
(i) NON-RELIANCE. It is acting for its own account, and it has
made its own independent decision to enter into this
Transaction and as to whether this Transaction is appropriate
or proper for it based upon its own judgement and upon advice
from such advisors as it has deemed necessary. It is not
relying on any communication (written or oral) of the other
party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information
and explanations related to the terms and conditions of this
Transaction shall not be considered investment advice or a
recommendation to enter into this Transaction. It has not
received from the other party any assurance or guarantee as to
the expected results of this Transaction.
(ii) EVALUATION AND UNDERSTANDING. It is capable of
evaluating and understanding (on its own behalf or through
independent professional advice), and understands and accepts,
the terms, conditions and risks (economic and otherwise) of
this Transaction. It has adequate expertise in financial
matters to evaluate those terms and risks and is also capable
of assuming (financially and otherwise), and assumes, the
financial and other risks of this Transaction.
(iii) STATUS OF PARTIES. The other party or any affiliate of
such party is not acting as a fiduciary or an advisor for it
in respect of this Transaction.
(iv) Counterparty is an "eligible contract participant"
(as such term is defined in Section 1(a)(12) of the Commodity
Exchange Act, as amended (the "CEA")) because one or more
of the following is true:
(i) Counterparty is an individual who:
(A) has total assets in excess of U.S. $10,000,000; or
(B) has total assets in excess of U.S. $5,000,000 and has
entered into this Agreement in order to manage the risk
associated with an asset owned or liability incurred, or
reasonably likely to be owned or incurred, by Counterparty;
8
or,
(ii) Counterparty is a corporation, partnership,
proprietorship, organization, trust or other
entity and:
(A) Counterparty has total assets in excess of U.S.
$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 U.S. $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.
(b) NO INFORMATION. The Counterparty represents and warrants that
it and its affiliates are not entering into the Transaction on
the basis of any material non-public information with respect
to the Shares.
(c) PRIVATE PLACEMENT. The Counterparty represents and warrants to
BofA that it (A) is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act, (B) is acquiring
the instruments described in the Transaction for its own account,
and not with a view to distribution and (C) understands and
acknowledges that the Transaction has not and will not be
registered under the Securities Act.
(d) CONSISTENT WITH PUBLIC DISCLOSURES. Counterparty represents and
agrees that the Transaction and any repurchase of the Shares by
Counterparty in connection with the Transaction has been approved
by its board of directors and that any such repurchase has been or
will be publicly disclosed.
(e) GOVERNING LAW/JURISDICTION. This Confirmation shall be governed by
the laws of the State of New York without reference to the
conflict of laws provisions thereof. The parties hereto
irrevocably submit to the exclusive jurisdiction of the courts of
the State of New York and the United States Court for the Southern
District of New York in connection with all matters relating
hereto and waive any objection to the laying of venue in, and any
claim of inconvenient forum with respect to, these courts.
(f) DESIGNATION BY BofA. Notwithstanding any other provision in
this Confirmation to the contrary requiring or allowing BofA
to purchase, sell, receive or deliver any shares or other
securities to or from the Counterparty, BofA may designate any
of its US affiliates to purchase, sell, receive or deliver such
shares or other securities and otherwise to perform BofA's
obligations in respect of this Transaction and any such designee
may assume such obligations. BofA shall be discharged of its
obligations to the Counterparty to the extent of any such
performance.
(g) DISCLOSURE. Counterparty and BofA hereby acknowledge and agree
that BofA has authorized Counterparty to disclose this
Transaction to any and all persons, and there are no express or
implied agreements, arrangements or understandings to the
contrary, and BofA hereby waives any and all claims to any
proprietary rights with respect to this Transaction, and
authorizes Counterparty to use any information which Counterparty
receives or has received with respect to this Transaction in any
manner.
(h) UNDERSTANDING. Counterparty acknowledges and agrees that it is not
relying, and has not relied, upon BofA or any affiliate of
BofA, with respect to the legal, accounting, tax or other
implications of this Transaction and that it has conducted its own
analyses of the legal, accounting, tax and other implications
hereof.
(I) CERTAIN AUTHORIZED TRANSFERS. BofA may transfer or assign
its rights and obligations in whole or in part to (i) any of its
affiliates or (ii) any entities sponsored or organized by, or on
behalf of or for the benefit of, BofA.
9
(J) MARKET DISRUPTION EVENT. (i) The first two lines of Section 4.3(a)
of the Equity Definitions are amended to read: `Section 4.3 Market
Disruption Event. (a) "Market Disruption Event" in relation to a
Cash-Settled Option Transaction, Physically-Settled Option
Transaction or Net Share Settled Transaction means:', (ii) the
second and third line of Section 4.3(a)(ii) are hereby amended by
deleting the words "during the one-half hour period that ends at
the relevant Valuation Time" and replacing them with "at any time
prior to the relevant Valuation Time" and (iii) the period at the
end of Section 4.3(b) of the Equity Definitions shall be deleted
and replaced with "or, for the purposes of Physical Settlement, an
Expiration Date".
(k) WAIVER OF TRIAL BY JURY. EACH OF COUNTERPARTY AND BOFA HEREBY
IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING
TO THIS TRANSACTION OR THE ACTIONS OF BOFA OR ITS AFFILIATES
IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(l) ADDITIONAL PROVISIONS.
(i) The first paragraph of Section 9.1(c) of the Equity
Definitions is hereby amended to read as follows: (c) `If
"Calculation Agent Adjustment" is specified as the method of
adjustment in the Confirmation of a Share Option Transaction, then
following the declaration by the Issuer of the terms of any
Potential Adjustment Event, the Calculation Agent will determine
whether such Potential Adjustment Event has a material effect on
the theoretical value of the relevant Shares or Options and, if
so, will (i) make appropriate adjustment(s), if any, to any one or
more of:' and, the sentence immediately preceding Section
9.1(c)(ii) is hereby amended by deleting the words "diluting or
concentrative".
(ii) Section 9.1(e)(vi) of the Equity Definitions is hereby
amended by deleting the words "other similar" between "any" and
"event"; deleting the words "diluting or concentrative" and
replacing them with "material"; and adding the following words at
the end of the sentence "or Options".
(iii) Section 9.6(a)(ii) of the Equity Definitions is hereby
amended by (1) deleting from the third line thereof the word "or"
after the word "official" and inserting a comma therefor, and (2)
deleting the period at the end of subsection (ii) thereof and
inserting the following words therefor " or (C) at BofA's
option, the occurrence of any of the events specified in Section
5(a)(vii) (1) through (9) of the ISDA Master Agreement with
respect to that Issuer."
(iv) Notwithstanding Section 9.7 of the Equity Definitions,
everything in the first paragraph of Section 9.7(b) of the
Equity Definitions after the words "Calculation Agent" in the
third line through the remainder of such Section 9.7 shall be
deleted and replaced with the following:
"based on an amount representing the Calculation Agent's
determination of the fair value to Buyer of an option with terms
that would preserve for Buyer the economic equivalent of any
payment or delivery (assuming satisfaction of each applicable
condition precedent) by the parties in respect of the relevant
Transaction that would have been required after that date but for
the occurrence of the Merger Event, Nationalization, Insolvency or
De-Listing Event, as the case may be."
(v) Solely for purposes of applying the Equity Definitions and for
purposes of this Confirmation, any reference to a Strike Price
shall be deemed to be a reference to any of the Low Call Strike
Price or the High Call Strike Price, or both, as appropriate.
(M) ALTERNATIVE CALCULATIONS AND PAYMENT ON EARLY TERMINATION AND ON
CERTAIN EXTRAORDINARY EVENTS. If BofA shall owe Counterparty
any amount pursuant to Sections 9.3, 9.6 or 9.7 of the Equity
Definitions (except in the event of a Nationalization or a
Merger Event in which the merger consideration to be paid to
holders of Shares consists solely of cash) or pursuant to
Section 6(d)(ii) of the Agreement (except in the event of an
Event of Default in which
10
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) or (vii) of the Agreement or a Termination Event of the
type described in Section 5(b)(i), (ii), (iii), (iv), or (v) of
the Agreement that resulted from an event or events outside
Counterparty's control) (a "Payment Obligation"), Counterparty
shall have the right, in its sole discretion, to require BofA
to satisfy any such Payment Obligation by the Share Termination
Alternative (as defined below) by giving irrevocable telephonic
notice to BofA, confirmed in writing within one Currency
Business Day, between the hours of 9:00 a.m. and 4:00 p.m. New
York local time on the Merger Date, Announcement Date or Early
Termination Date, as applicable ("Notice of Share
Termination"). Upon Notice of Share Termination no later than
8:00 a.m. on the Exchange Business Day immediately following
the Merger Date, Announcement Date or Early Termination Date,
as applicable, the following provisions shall apply:
Share Termination Alternative: Applicable and means that
BofA shall deliver to
Counterparty the Share
Termination Delivery
Property on the date when
the Payment Obligation would
otherwise be due pursuant to
Section 9.7 of the Equity
Definitions or Section
6(d)(ii) of the Agreement,
as applicable (the "Share
Termination Payment Date"),
in satisfaction of the
Payment Obligation in the
manner reasonably requested
by Counterparty free of
payment.
Share Termination 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 BofA 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 by the Calculation
Agent to BofA at the
time of notification of the
Payment Obligation.
Share Termination Delivery Unit: In the case of a Termination
Event or Event of Default,
one Share or, in the case of
a Merger Event, a unit
consisting of the number or
amount of each type of
property received by a
holder of one Share (without
consideration of any
requirement to pay cash or
other consideration in lieu
of fractional amounts of any
securities) in such Merger
Event. If a Share
Termination Delivery Unit
consists of property other
than cash or New Shares and
if Counterparty provides
irrevocable written notice
to the Calculation Agent on
or prior to the Merger Date
that it elects to
have BofA deliver cash,
New Shares or a combination
thereof (in such proportion
as Counterparty designates)
in lieu of such other
property, the Calculation
Agent will replace such
property with cash, New
Shares or a combination
thereof as components of a
Share Termination
11
Delivery Unit in such
amounts, as determined by
the Calculation Agent in
its discretion by
commercially reasonable
means, as shall have a
value equal to the value
of the property so
replaced. If such 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 this Transaction is to be
Share Termination Settled,
the provisions of Sections
6.6, 6.7, 6.8 and 6.10 of
the Equity Definitions will
be applicable, except that
all references in such
provisions to
"Physically-Settled" shall
be read as references to
"Share Termination Settled"
and all references to
"Shares" shall be read as
references to "Share
Termination Delivery Units".
"Share Termination Settled"
in relation to this
Transaction means that Share
Termination Settlement is
applicable to this
Transaction.
(n) EARLY UNWIND. In event the sale, as of March 13, 2002, of
Convertible Senior Notes due 2007 of the Counterparty is not
consummated with the initial purchasers pursuant to the Purchase
Agreement dated March 13, 2002 among the Counterparty and Banc of
America Securities LLC and Xxxxxxx Xxxxx Xxxxxx Inc., as
representatives of the initial purchasers, for any reason by the close
of business in New York on March 18, 2002 (or such later date as agreed
upon by the parties which in no event shall be later than April 17,
2002)(March 18, 2002 or such later date as agreed upon being the "Early
Unwind Date"), this 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 BofA and
Counterparty thereunder 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. BofA and Counterparty represent and
acknowledge to the other that upon an Early Unwind, all obligations
with respect to the Transaction shall be deemed fully and finally
discharged.
12
Please confirm your acceptance and agreement with the foregoing by
immediately executing the copy of this Confirmation enclosed for that
purpose and returning it Bank of America, N.A. by facsimile at
212-230-8610.
Very truly yours,
Bank of America, N.A.
By: _________________________
Authorized Signatory
Name:
Accepted and confirmed
as of the Trade Date:
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By:____________________________
Authorized Signatory
Name:
13
ANNEX A
SCHEDULE A
SOT EXPIRATION DATE # OF OPTIONS
--- --------------- ------------
Option A March 17, 2005 1,355,793
Option B March 18, 2005 1,355,793
Option C March 21, 2005 1,355,793
Option D March 22, 2005 1,355,793
Option E March 23, 2005 1,355,793
Option F March 24, 2005 1,355,793
Option G March 28, 2005 1,355,793
Option H March 29, 2005 1,355,793
Option I March 30, 2005 1,355,793
Option O March 31, 2005 1,355,792
provided, however, that if on March 10, 2005 ("Determination Date") the
closing price per Share on the Exchange at the close of trading is $31.00 per
Share or less, then Schedule A will be replaced for all purposes hereof by
Schedule B below. In the event there is a Market Disruption Event on March 10,
2005, then the Determination Date shall be the first succeeding Exchange
Business Day on which there is no Market Disruption Event, unless there is a
Market Disruption Event on each of the two Exchange Business Days immediately
following the original date that, but for the Market Disruption Event, would
have been the Determination Date. In that case, that second Exchange
Business Day shall be deemed to be the Determination Date, notwithstanding the
Market Disruption Event, and (b) the Calculation Agent shall determine whether
Schedule A or Schedule B shall be applicable.
SCHEDULE B
SOT EXPIRATION DATE # OF OPTIONS
--- --------------- ------------
Option A March 18, 2005 2,711,586
Option B March 21, 2005 2,711,586
Option C March 22, 2005 2,711,586
Option D March 23, 2005 2,711,586
Option O March 24, 2005 2,711,585
