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Exhibit 10.1

 

 

Deutsche Bank  

 

 

 

Deutsche Bank AG London

 

Winchester House

 

1 Great Winchester St.

 

London EC2N 2DB

 

Telephone: 44 20 7545 8000

 

 

 

c/o Deutsche Bank AG New York

 

60 Wall Street

 

New York, NY 10005

 

Telephone: 212-250-5977

 

Facsimile: 212-797-8826

 

June 2, 2005

 

Cephalon, Inc. (“ Counterparty ”)

145 Brandywine Parkway

West Chester, PA 19380

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

 

Dear Sir / Madam:

 

The purpose of this facsimile agreement (this “ Confirmation ”) is to confirm the terms and conditions of the transaction entered into between Deutsche Bank AG acting through its London branch (“ Deutsche ”) and Counterparty on the Trade Date specified below (this “ Transaction ”). This Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This Confirmation constitutes the entire agreement and understanding of the parties with respect to the subject matter and terms of this Transaction and supersedes all prior or contemporaneous written and oral communications with respect thereto.

 

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

 

1.              The definitions and provisions contained in the 1996 ISDA Equity Derivatives Definitions (the “ Equity Definitions ”) and in the 2000 ISDA Definitions (the “ Swap Definitions ” and, together with the Equity Definitions, the “ Definitions ”) (in each case 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 the Swap Definitions, the Equity Definitions will govern, and between the Definitions and this Confirmation, this Confirmation will prevail.  References herein to the “Transaction” shall be deemed to be references to a “Share Option Transaction” for purposes of the Equity Definitions and a “Swap Transaction” for the purposes of the Swap Definitions.

 

 

This Confirmation together with all other Confirmations of Share Transactions between Deutsche and Counterparty with respect to Shares of the Issuer contemporaneously or previously entered into between them, notwithstanding anything to the contrary therein, shall supplement, form a part of, and be subject to an ISDA 1992 Master Agreement (Multicurrency – Cross Border) (the “ Agreement ”), as if, on the Trade Date of the first such Transaction between Deutsche and Counterparty, they had executed the Agreement (without any Schedule thereto) and specified that (1) the Automatic Early Termination provisions contained in Section 6(a) of such Agreement would apply, (2) Second Method and Loss would apply and (3) such Agreement would cover only Share Transactions with respect to Shares of the Issuer referred to herein.

 

Obligations under the Transaction shall not be set off against any other obligations of the parties, whether arising under the Agreement, this Confirmation, or any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be set off against obligations under the Transaction, whether arising under the Agreement, this Confirmation, or any other agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of setoff.  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 such Section 6(e) with respect to (i) the Transaction and (ii) all other transactions between the parties hereto, and (2) such separate amounts shall be payable pursuant to Section 6(d)(ii) of the Agreement.  Notwithstanding the foregoing or anything to the contrary herein, the parties hereto agree and acknowledge that Deutsche and its affiliates may set-off payment of the Hedge Purchase Price by Counterparty to Deutsche hereunder against any amount payable by Deutsche or its affiliates to Counterparty with respect to the purchase of the Reference Notes by the Underwriters (as such term is defined in the Underwriting Agreement).

 

The Agreement and each Confirmation thereunder will be governed by and construed in accordance with New York law without reference to choice of law doctrine, and each party hereby submits to the jurisdiction of the Courts of the State of New York.

 

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

 

General Terms:

 

 

 

 

 

Transaction Type:

 

Convertible Note Hedge. Upon the occurrence of a Conversion Event (as defined below), Deutsche shall deliver to Counterparty the number of Shares (as defined below), calculated exclusive of (a) any Make Whole Premium (as defined in the Note Indenture) and (b) any additional Shares paid by Counterparty to holders in connection with an election by the Issuer to increase the Conversion Rate (as such term is defined in the Note Indenture) pursuant to Section 5.08 or Section 5.13 of the Note Indenture, that Counterparty is obligated to deliver to the holders of the Reference Notes (as defined below) with respect to such Conversion Event.

 

 

 

Trade Date:

 

June 2, 2005

 

 

 

Settlement Date:

 

For each Conversion Event, subject to the provisions of Section 6 below, the related Conversion Event Settlement Date.

 

 

 

Seller:

 

Deutsche

 

 

 

Buyer:

 

Counterparty

 

 

 

Calculation Agent:

 

Deutsche, whose determinations and calculations shall be binding in the absence of manifest error. The Calculation Agent will have no responsibility for good faith errors or

 

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omissions in making any determination or calculation as provided herein.

 

 

 

Reference Notes:

 

$800,000,000 original principal amount of Convertible Senior Notes due June 1, 2015 (the “ Maturity Date ”) to be issued by Cephalon, Inc. (the “ Issuer ”) on or about June 7, 2005 pursuant to the Note Indenture (as defined below).

 

 

 

Conversion Event:

 

Each conversion of any Reference Note pursuant to the terms of the Note Indenture (the principal amount of Reference Notes so converted, the “ Conversion Amount ” with respect to such Conversion Event).

 

 

 

 

 

If the Conversion Amount for any Conversion Event is less than the principal amount of Reference Notes then Outstanding (as defined in the Note Indenture), then the terms of this Transaction shall continue to apply, subject to the terms and conditions set forth herein.

 

 

 

Conversion Event

 

 

Settlement Date:

 

In respect of each Conversion Event, so long as the Conversion Notice is timely delivered to Deutsche in accordance with Section 3(d) below, and Counterparty provides Deutsche with at least one Exchange Business Day’s notice of the occurrence of the date that the Company delivers Shares pursuant to the terms of the Note Indenture to the holders of the Reference Notes so converted (each, an “ Indenture Delivery Date ”), the Indenture Delivery Date. If, however, the Conversion Notice is not timely delivered to Deutsche in accordance with Section 3(d) below, or Counterparty does not provide Deutsche with at least one Exchange Business Day’s notice of the occurrence of the relevant Indenture Delivery Date, the Conversion Event Settlement Sate shall be the date twenty-one Trading Days (as such term is defined in the Note Indenture) immediately following the date on which the relevant Conversion Notice is delivered to Deutsche.

 

 

 

Note Indenture:

 

The indenture, to be dated on or about June 7, 2005, between the Issuer and U.S. Bank National Association, as trustee, as the same may be amended, modified or supplemented and in effect from time to time.

 

 

 

Shares:

 

The shares of common stock of the Issuer, par value $0.01 per Share (Bloomberg ticker CEPH, ISIN US1567081096).

 

 

 

Exchange:

 

The Nasdaq National Market

 

 

 

Clearance System:

 

The Depository Trust Company

 

 

 

Convertible Note Hedge Purchase Price:

 

 

 

 

 

Payment of Hedge Purchase Price:

 

On the Hedge Purchase Price Payment Date, Counterparty shall pay to Deutsche, through the Agent, the Hedge Purchase Price.

 

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