<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 18)
VLSI TECHNOLOGY, INC.
(NAME OF ISSUER)
COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
918270-10-9
(CUSIP NUMBER)
F. THOMAS DUNLAP, JR.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
INTEL CORPORATION
2200 MISSION COLLEGE BOULEVARD
SANTA CLARA, CA 95052
TELEPHONE: (408) 765-8080
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
AUGUST 25, 1995
(DATE OF EVENT WHICH REQUIRES
FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with this statement. [ ]
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act.
(Continued on following pages)
Page 1 of 31 Pages
<PAGE> 2
CUSIP No. 918270-10-9 13D Page 2 of 31 Pages
______________________________________________________________________________
1. NAME OF REPORTING PERSON Intel Corporation
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-1672743
______________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
______________________________________________________________________________
3. SEC USE ONLY
______________________________________________________________________________
4. SOURCE OF FUNDS WC
______________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
______________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
______________________________________________________________________________
<TABLE>
<S> <C> <C>
NUMBER OF 7. SOLE VOTING POWER 2,677,604
SHARES
BENEFICIALLY 8. SHARED VOTING POWER N/A
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 2,677,604
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER N/A
______________________________________________________________________________
</TABLE>
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 2,677,604
______________________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
______________________________________________________________________________
13. PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11) 6.47%
______________________________________________________________________________
14. TYPE OF REPORTING PERSON CO
______________________________________________________________________________
<PAGE> 3
CUSIP No. 918270-10-9 13D Page 3 of 31 Pages
Intel Corporation ("Intel" or the "Reporting Person") hereby amends
its statement on Schedule 13D filed with the Securities and Exchange Commission
on July 8, 1992 (the "Initial Statement") and previously amended on August 25,
1992, August 5, 1994, January 31, 1995, February 3, 1995, February 6, 1995,
February 14, 1995, February 17, 1995, March 2, 1995, March 9, 1995, March 13,
1995, March 20, 1995, April 12, 1995, April 14, 1995, April 18, 1995,
April 28, 1995, May 17, 1995, and May 25, 1995, with respect to the common
stock (the "Common Stock") of VLSI Technology, Inc. ("VLSI" or the "Issuer").
Item 5. Interests in Securities of the Issuer.
<TABLE>
<S> <C>
(a) Number of Shares Beneficially Owned: 2,677,604 shares
Right to Acquire: 0 shares
Percent of Class:
6.47% (based upon 41,403,953 shares
of common stock outstanding as
reported by VLSI in its Form 10-Q for
the quarter ended June 30, 1995)
(b) Sole Power to Vote, Direct the
Vote of, or Dispose of Shares: 2,677,604 shares
(c) Recent Transactions:
Pursuant to the terms of that certain Warrant dated as of August 25, 1992, on
August 25, 1995, Intel exercised its right to purchase 2,677,604 shares of VLSI
Common Stock for an aggregate exercise price of $31,301,190.76. The exercise price
was paid out of the general working capital of Intel.
(d) Rights with Respect to Dividends
or Sales Proceeds: N/A
(e) Date of Cessation of Five Percent
Beneficial Ownership: N/A
Item 7. Material to be Filed as Exhibits.
*Exhibit 1 Intel/VLSI Stock and Warrant Purchase Agreement
*Exhibit 2 Intel/VLSI Joint Press Release Dated July 8, 1992
*Exhibit 3.1 Schedule of Call and Put Options
*Exhibit 3.2.1 Schedule to International Swaps and Derivatives
Association ("ISDA") Form Master Agreement (1992
version) dated as of April 15, 1993 between Union
Bank of Switzerland and Intel Corporation
*Exhibit 3.2.2 Form of Confirmation between Union Bank of
Switzerland and Intel Corporation
*Exhibit 3.3.1 Schedule to ISDA Form Interest Rate and Currency
Exchange Agreement (1987 version), dated as of
February 8, 1993 between Swiss Bank Corporation and
Intel Corporation
*Exhibit 3.3.2 Form of Confirmation between Swiss Bank Corporation
and Intel Corporation
Exhibit 3.4.1 Schedule to ISDA Form Master Agreement (1992 version)
dated as of March 1, 1995 between Lehman Brothers
Finance S.A. ("Lehman") and Intel Corporation
Exhibit 3.4.2 Form of Confirmation between Lehman and Intel
Corporation
*Exhibit 4 Resolution Regarding Signature Authority
</TABLE>
- --------------------
* Previously filed.
<PAGE> 4
CUSIP No. 918270-10-9 13D Page 4 of 31 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated as of August 25, 1995.
INTEL CORPORATION
By /s/ F. THOMAS DUNLAP, JR.
--------------------------------
F. Thomas Dunlap, Jr.
Vice President, General Counsel
and Secretary
<PAGE> 1
CUSIP No. 918270-10-9 13D Page 5 of 31
EXHIBIT 3.4.1
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of March 1, 1995
between LEHMAN BROTHERS FINANCE S.A., a Swiss corporation ("Party A") and INTEL
CORPORATION, a Delaware corporation ("Party B").
PART 1
TERMINATION PROVISIONS
In this Agreement:-
(a) SPECIFIED ENTITY means in relation to Party A for the purpose of:-
Section 5(a)(v), Lehman Brothers Holdings Inc. ("Holdings").
Section 5(a)(vi), Holdings.
Section 5(a)(vii), Holdings.
Section 5(b)(iv), Holdings.
in relation to Party B for the purpose of:-
Section 5(a)(v), Not Applicable.
Section 5(a)(vi), Not Applicable.
Section 5(a)(vii), Not Applicable.
Section 5(b)(iv), Not Applicable.
(b) SPECIFIED TRANSACTION will have the meaning specified in Section 14 of
this Agreement.
(c) The CROSS DEFAULT provisions of Section 5(a)(vi) will apply to Party A
and Party B.
The following provisions apply:-
SPECIFIED INDEBTEDNESS will have the meaning specified in Section 14.
THRESHOLD AMOUNT means two percent (2%) of the Stockholders' Equity of
Holdings, in the case of Party A and Holdings (or its equivalent in any
other currency), and two percent (2%) of the Stockholders' Equity of
Party B, in the case of Party B (or its equivalent in any other
currency).
<PAGE> 2
CUSIP No. 918270-10-9 13D Page 6 of 31
(d) The CREDIT EVENT UPON MERGER provisions of Section 5(b)(iv) will apply
to Party A and Party B.
(e) The AUTOMATIC EARLY TERMINATION provision of Section 6(a) will not
apply to either Party A or Party B, provided that where there is an
Event of Default under Section 5(a)(vii)(1), (3), (4), (5), (6) or, to
the extent analogous thereto, (8), and the Defaulting Party is governed
by a system of law that does not permit termination to take place after
the occurrence of such Event of Default, then the Automatic Early
Termination provisions of Section 6(a) will apply.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement, Market Quotation and the Second Method will apply.
(g) TERMINATION CURRENCY means United States Dollars ("USD").
(h) ADDITIONAL TERMINATION EVENTS will apply. The following shall
constitute an Additional Termination Event:
Party A fails to deliver or to maintain Collateral when and in the
amounts required under the terms of the Pledge Agreement or the
security interest purported to be created in the Collateral received by
Party B thereunder ceases to be, or is not, a valid and perfected first
security intereset in such Collateral, and such failure continues one
New York Business Day after notice is given to Party A by Party B.
For the purposes of the foregoing Additional Termination Event, the
Affected Party shall be Party A.
PART 2
TAX REPRESENTATIONS
PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this Agreement,
Party A will make the following representation and Party B will make the
following representation:-
It is not required by any applicable law, as modified by the practice of any
relevant governmental revenue authority, of any Relevant Jurisdiction to make
any deduction or withholding for or on account of any Tax from any payment
(other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement)
to be made by it to the other party under this Agreement. In making this
representation, it may rely on:-
(i) the accuracy of any representation made by the other party
pursuant to Section 3(f) of this Agreement;
(ii) the satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) of this Agreement and the accuracy and
effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement;
and
<PAGE> 3
CUSIP No. 918270-10-9 13D Page 7 of 31
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement, provided that it shall not
be a breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) of this Agreement by reason
of material prejudice to its legal or commercial position.
PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of this Agreement,
Party A represents and warrants as follows:-
Party A is not engaged in a trade or business in the United
States through a permanent establishment (as such term is
defined in The Convention between the United States and the
Swiss Confederation for the avoidance of double taxation with
respect to taxes on income, dated May 24, 1951) situated
therein.
PART 3
DOCUMENTS TO BE DELIVERED
For the purpose of Section 4(a):-
(a) Tax forms, documents or certificates to be delivered are:-
<TABLE>
<CAPTION>
PARTY REQUIRED
TO DELIVER DATE BY WHICH
DOCUMENT FORM/DOCUMENT/CERTIFICATE TO BE DELIVERED
- -------------- ------------------------- --------------------------------
<S> <C> <C>
Party A IRS Form 1001 Upon execution of this Agreement
Party A Other tax forms Promptly upon the earlier of (i)
reasonable demand by Party B or (ii)
learning that the form or document
is required.
Party B Tax Forms Promptly upon the earlier of (i)
reasonable demand by Party A or (ii)
learning that the form or document
is required.
</TABLE>
<PAGE> 4
CUSIP No. 918270-10-9 13D Page 8 of 31
(b) Other documents to be delivered are:-
<TABLE>
<CAPTION>
PARTY REQUIRED DATE BY WHICH COVERED BY
TO DELIVER TO BE DELIVERED SECTION 3(d)
DOCUMENT FORM/DOCUMENT/CERTIFICATE REPRESENTATION
- -------------- ------------------------- -------------------------------- --------------
<S> <C> <C> <C>
Party A The Pledge Agreement listed in Upon execution of this Agreement. Yes
and Party B Part 4, Section (f).
Party A An incumbency certificate with Upon execution of this Agreement. Yes
respect to the signatory of this
Agreement, the Pledge Agreement and
the Guarantee.
Party A A duly executed Guarantee of Lehman Upon execution of this Agreement. No
Brothers Holdings Inc.
Party B An incumbency certificate with Upon execution of this Agreement. Yes
respect to the signatory of this
Agreement and the Pledge Agreement.
</TABLE>
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this
Agreement:
Address for notices or communications to Party A:-
Address: 13 Route de Florissant, P.O. Box 280, 1211 Geneva 12, Switzerland
-----------------------------------------------------------------------
Attention: Financial Controller
---------------------------------------------------------------------
Telex No: 428345 Answerback: LBF CH
--------------------------- ------------------------------
Facsimile No.: 4122-789-1929 Telephone No.: 4122-789-0789
----------------------- ----------------------------
(For all purposes)
Address for notices or communications to Party B:-
Address: 2200 Mission College Boulevard, Mail Stop RN6-26, Santa Clara, CA 95052
-----------------------------------------------------------------------
Attention: Eddie Lee
---------------------------------------------------------------------
Facsimile No.: (408) 765-1611 Telephone No.: (408) 765-1235
-------------- --------------
(For all purposes)
<PAGE> 5
CUSIP No. 918270-10-9 13D Page 9 of 31
(b) PROCESS AGENT. For the purpose of Section 13(c):-
Party A appoints as its Process Agent - Lehman Brothers Inc.
3 World Financial Center
New York, NY 10285
Party B appoints as its Process Agent - Not Applicable.
(c) OFFICES. The provisions of Section 10(a) will not apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document, each
of which are incorporated by reference in, and made part of, this
Agreement and each Confirmation (unless provided otherwise in a
Confirmation) as if set forth in full in this Agreement or such
Confirmation:
(i) In the case of Party A, a Guarantee dated the date hereof
by Lehman Brothers Holdings Inc. in favor of Party B as beneficiary
thereof, as annexed hereto as Exhibit A.
(ii)In the case of Party A, a Pledge Agreement dated as of the
date hereof between Party A and Party B, as annexed hereto as
Exhibit B.
(g) CREDIT SUPPORT PROVIDER.
Credit Support Provider means in relation to Party A: Holdings.
Credit Support Provider means in relation to Party B: Not Applicable.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with New York law.
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply to any Transactions (in each case starting
from the date of this Agreement).
(j) AFFILIATE will have the meaning specified in Section 14 of this
Agreement.
<PAGE> 6
CUSIP No. 918270-10-9 13D Page 10 of 31
PART 5
OTHER PROVISIONS
(a) STOCKHOLDERS' EQUITY. means with respect to an entity, at any time, the
sum at such time of (i) its capital stock (including preferred stock)
outstanding, taken at par value, (ii) its capital surplus and (iii) its
retained earnings, minus (iv) treasury stock, each to be determined in
accordance with generally accepted accounting principles.
(b) TAX FORMS. means any form or document that may be required or
reasonably requested in order to allow the other party to make a
payment under the Transaction without any deduction or withholding for
or on account of any Tax or with such deduction or withholding at a
reduced rate.
(c) RECORD KEEPING. Each party represents and warrants to the other that it
shall maintain this Agreement, this Schedule and all Confirmations
issued pursuant hereto with its records of binding business
transactions.
(d) DEFINITIONS AND ADDENDA. (i) This Agreement, each Confirmation, and
each Transaction are subject to the 1991 ISDA Definitions as amended,
supplemented, updated, restated, and superseded from time to time (the
"1991 Definitions"), Paragraph (4) of the May 1989 Addendum to Schedule
to Interest Rate and Currency Exchange Agreement (the "Cap Addendum"),
and Paragraph (5) of the July 1990 Addendum to Schedule to Interest
Rate and Currency Exchange Agreement (the "Options Addendum"), each as
published by the International Swaps and Derivatives Association, Inc.
(formerly known as the International Swap Dealers Association, Inc.)
("ISDA"), and will be governed in all respects by the 1991 Definitions
and such paragraphs of the Cap Addendum and Options Addendum (except
that references to "Swap Transactions" in the 1991 Definitions and such
paragraphs of the Cap Addendum and Options Addendum will be deemed to
be references to "Transactions"). The 1991 Definitions and such
paragraphs of the Cap Addendum and Options Addendum, as so modified,
are incorporated by reference in, and made part of, this Agreement and
each Confirmation as if set forth in full in this Agreement and such
Confirmations. In the event of any inconsistency between the provisions
of this Agreement, the 1991 Definitions, or such paragraphs of the Cap
Addendum or Options Addendum, this Agreement will prevail. In the event
of any inconsistency between the provisions of any Confirmation and
this Agreement, the 1991 Definitions, or such paragraphs of the Cap
Addendum or Options Addendum, such Confirmation will prevail for the
purpose of the relevant Transaction.
(e) CONFIRMATIONS. Confirmations for each Transaction entered into
hereunder shall be sent by Party A to Party B and shall be in a form
mutually agreed to by the parties.
(f) TRANSFER. For the purposes of Section 7, the following phrase "which
consent shall not be unreasonably withheld" shall be inserted on the
third line thereof, after the word "party," and before the word
"except."
<PAGE> 7
CUSIP No. 918270-10-9 13D Page 11 of 31
(g) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by adding the
following additional Subsections:
(i) NO AGENCY. It is entering into this Agreement and
each Transaction as principal (and not as agent or in any other
capacity, fiduciary or otherwise).
(ii) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap
participant" as defined in the Part 35 Regulations of the U.S.
Commodity Futures Trading Commission.
(iii) LINE OF BUSINESS. It has entered into this Agreement
(including each Transaction evidenced hereby) in connection with its
line of business (including financial intermediation services) or the
financing of its business.
The foregoing representations and agreements shall be representation
and agreements for all purposes of this Agreement, including without
limitation Sections 3, 4, 5(a) (ii), and 5(a) (iv) hereof.
(h) Annex I to Schedule to the Master Agreement is incorporated herein and
shall constitute part hereof.
(i) NOTICES. For the purposes of subsections (iii) and (v) of Section
12(a), the date of receipt shall be presumed to be the date sent if
sent on a Local Business Day or, if not sent on a Local business Day,
the date of receipt shall be presumed to be the first Local Business
Day following the date sent.
<PAGE> 8
CUSIP No. 918270-10-9 13D Page 12 of 31
(j) SERVICE OF PROCESS. The penultimate sentence of Section 13(c) shall be
amended by adding the following language at the end thereof: "if
permitted in the jurisdiction where the proceedings are initiated and
in the jurisdiction where service is to be made."
The parties executing this Schedule have executed the Agreement and have agreed
as to the contents of this Schedule.
LEHMAN BROTHERS FINANCE S.A. INTEL CORPORATION
By: /s/Marcelle Corsat By: /s/Arvind Sodhani
------------------------------ ------------------------------
Title: Fonde de Pouvoir Title: Vice President and Treasurer
--------------------------- ----------------------------
Date: Date:
--------------------------- ----------------------------
By: /s/Enrique Rojas
------------------------------
Title: Mandataire Commercial
---------------------------
Date:
---------------------------
<PAGE> 9
CUSIP No. 918270-10-9 13D Page 13 of 31
ANNEX I TO SCHEDULE TO THE MASTER AGREEMENT
With respect to all equity-related Transactions governed by
the Agreement, the following provisions shall apply:
1. EXERCISE OF OVER-THE-COUNTER EQUITY OPTIONS
(1) If "Multiple Exercise" is not specified in a Confirmation as
applicable, the Buyer may on any Seller Business Day during the
Exercise Period give notice exercising all (but not some only) of the
Options comprising the Option Transaction.
(2) If "Multiple Exercise" is specified in a Confirmation as applicable,
the Buyer may on any Seller Business Day during the Exercise Period
give notice exercising some or all of the Options comprising the Option
Transaction which have not been previously exercised, subject to the
following:
(a) if a "Maximum Number of Options" is specified in the
Confirmation, then no more Options than the number specified
may be exercised on any Exercise Date other than pursuant to
paragraph (5) below;
(b) if a "Minimum Number of Options" is specified in the
Confirmation, then no fewer Options than the number specified
may be exercised on any Exercise Date other than pursuant to
paragraph (5) below; and
(3) The Buyer may exercise Options either by notifying the Seller by
telephone of such exercise or by giving notice in writing. If the
Options are exercised by telephone, the Buyer must confirm such
exercise in writing by the end of the Seller Business Day following the
date the Options are exercised. When exercising and/or confirming
exercise, the Buyer must specify (i) the relevant Exercise Date, which
must be an Exchange Business Day during the Exercise Period on or after
the date on which the relevant Options are effectively settled pursuant
to clause 2 below, and (ii) if Multiple Exercise applies, the number of
Options being exercised. If the Confirmation specifies that the Buyer
has the right to elect to apply Cash Settlement or Physical Settlement,
the Buyer must specify at the time of exercise which will apply to the
Options exercised, in the absence of which election Cash Settlement
will apply as provided in clause 2(3). If the Confirmation specifies
that the Seller has the right to elect to apply Cash Settlement or
Physical Settlement, the Seller must confirm in writing which will
apply by the end of the Seller Business Day following the date the
Option is exercised in the absence of which notice Cash Settlement will
apply as provided in clause 2(3).
(4) If the Options are exercised by telephone, exercise must occur between
9:00 a.m. and 2:00 p.m. (local time in the city where the Seller is
located or such other time and/or city specified in the relevant
Confirmation). If the Options are exercised by notice in writing then,
notwithstanding Section 12 of the Agreement, that notice is effective
at the time it is received by the Seller, except that any notice
received after 2:00 p.m. (local time in the city where the Seller is
located or such other time and/or city specified in the relevant
<PAGE> 10
CUSIP No. 918270-10-9 13D Page 14 of 31
Confirmation) will be deemed effective at 9:00 a.m. on the following
Seller Business Day, provided that such day falls within the Exercise
Period.
(5) All Options to which Cash Settlement applies which remain unexercised
on the Expiration Date will be deemed automatically exercised on the
Expiration Date. All Options to which Physical Settlement applies will,
subject to paragraph (6) below, be deemed automatically exercised on
the Expiration Date provided that, in the case of a Put Option, the
Market Value is less than or equal to 99.75 per cent of the Strike
Price and, in the case of a Call Option the Market Value is equal to or
greater than 100.25 per cent of the Strike Price. Otherwise, the
Options will expire unexercised, the Seller having no further
obligation in respect of such Options.
(6) If the Calculation Agent determines in good faith that a Market Value
cannot be determined on the Expiration Date then, in relation to all
Options to which Physical Settlement applies, the Options will not be
automatically exercised and will, unless exercised, expire unexercised,
the Seller having no further obligation in respect of such Options;
provided, however, that if the Calculation Agent can determine that, in
the case of a Put Option, the Market Value is less than or equal to
99.75 per cent of the Strike Price or, in the case of a Call Option,
the Market Value is equal to or greater than 100.25 per cent of the
Strike Price, then the Options will be deemed automatically exercised
on the Expiration Date.
2. SETTLEMENT
(1) With respect to each Option Transaction, the Buyer will pay the
Premium, as specified, to the Seller on the Premium Payment Date(s), as
specified in the Confirmation.
(2) It is a condition precedent to the enforceability of any Option
Transaction, that the Premium shall have been paid in accordance with
clause 2(1).
(3) If "Cash Settlement" and not "Physical Settlement" is specified in a
Confirmation, Cash Settlement will apply to all Options exercised under
the relevant Option Transaction. If "Physical Settlement" and not "Cash
Settlement" is specified, Physical Settlement will apply to all Options
exercised under the relevant Option Transaction. If both are specified
in a Confirmation, the Buyer or, as the case may be, the Seller as
specified in the Confirmation will have the right to elect whether Cash
Settlement or Physical Settlement will apply to the relevant Options
exercised, provided that if (a) the Buyer or, as the case may be, the
Seller fails to elect which will apply or (b) if the relevant Options
remain unexercised on the Expiration Date, then Cash Settlement will
apply to those Options. If neither "Cash Settlement" nor "Physical
Settlement" is specified in a Confirmation, Cash Settlement will apply.
(4) With respect to each exercised Option to which Cash Settlement applies,
the Seller will pay the Cash Settlement Amount to the Buyer on the
relevant Cash Settlement Payment Date.
<PAGE> 11
CUSIP No. 918270-10-9 13D Page 15 of 31
(5) With respect to each exercised Put Option to which Physical Settlement
applies, the Buyer will deliver to the Seller the Underlying Shares in
the case of a Share Option, or Underlying Basket, in the case of a
Basket Option, represented by that Put Option. The Buyer will make such
delivery on the relevant Physical Settlement Delivery Date against
payment by the Seller to the Buyer of the relevant Physical Settlement
Purchase Amount.
(6) With respect to each exercised Call Option to which Physical Settlement
applies, the Seller will deliver to the Buyer the Underlying Shares, in
the case of a Share Option, or Underlying Basket, in the case of a
Basket Option, represented by that Call Option. The Seller will make
such delivery on the relevant Physical Settlement Delivery Date against
payment by the Buyer to the Seller of the relevant Physical Settlement
Purchase Amount.
(7) The obligations of each party to make payments or deliver or accept
delivery of Underlying Shares or the Underlying Basket in respect of
any equity-related Transaction are subject to the condition precedent
that no Event of Default or Potential Event of Default with respect to
the other party has occurred and is continuing. Notwithstanding the
foregoing sentence, if at any time and so long as one of the parties
hereto shall have satisfied in full all its payment obligations to the
other party in respect of any Transactions or otherwise, and shall at
the time have no future payment obligations, whether absolute or
contingent, to such other party, then the obligation of such other
party to make payments or delivery to, or to accept delivery from, such
party shall not be subject to such condition precedent.
(8) Delivery of any Underlying Shares or Underlying Basket will be made not
later than the due date to the relevant account notified to the
delivering party for that purpose and/or in the manner, and after
payment by the party accepting delivery of the securities of all stamp,
stamp duty reserve, registration or documentary tax, customary for
delivery of such securities in the market where the Quotation Exchange
is situated, together with appropriate instruments of transfer and any
such other instruments as may be required to vest title in the party
accepting delivery of the Underlying Shares or Underlying Basket.
3. MARKET DISRUPTION
(1) With respect to any equity-related Transaction, except for an Option to
which Physical Settlement applies, if the Calculation Agent determines
in good faith that a Market Disruption Event has occurred on any
relevant Valuation Date, then the Valuation Date will be postponed to
the first succeeding Exchange Business Day on which there is no Market
Disruption Event. If there is a Market Disruption Event on each of the
five Exchange Business Days immediately following the original
Valuation Date, then the fifth Exchange Business Day will be the
Valuation Date, notwithstanding the Market Disruption Event. In that
case the Calculation Agent will calculate the payment amount in respect
of the Valuation Date as follows:
(a) In the case of an Index-related Transaction, the Calculation
Agent will determine the relevant Index Value on that day in
accordance with the formula for and method of calculating the
Underlying Index last in effect prior to the
<PAGE> 12
CUSIP No. 918270-10-9 13D Page 16 of 31
commencement of the event or condition constituting or giving
rise to the Market Disruption Event by using its estimate in
good faith of the Market Value on that day of each equity
security comprising the Underlying Index; and
(b) In the case of a Transaction based upon Underlying shares or
Selected Securities, the Calculation Agent will use its
estimate in good faith of the Market Value on that day of the
relevant Underlying Shares or Selected Securities, as
applicable.
(2) With respect to any exercised Option to which Physical Settlement
applies, if the Calculation Agent determines in good faith that a
Market Disruption Event has occurred on the Valuation Date, then the
Physical Settlement Delivery Date will be postponed to the next
succeeding Exchange Business Days on which there is no Market
Disruption Event.
(3) The Calculation Agent will as soon as practicable (and in any event no
later than the next Exchange Business Day) notify the parties or the
other party, as the case may be, of the existence or occurrence of a
Market Disruption Event on any Valuation Date.
4. DISCONTINUANCE OR MODIFICATION OF UNDERLYING INDEX
(1) With respect to an Index-related Transaction, if the relevant
Underlying Index is (a) not calculated and announced by the agreed
sponsor but is calculated and announced by a successor sponsor or third
party acceptable to the Calculation Agent or (b) replaced by a
successor index using, in the determination of the Calculation Agent,
the same or a substantially similar formula for and method of
calculation as used in the calculation of the Underlying Index, and
which, in the determination of the Calculation Agent, is substantially
similar to the Underlying Index, then the Underlying Index will be
deemed to be the index so calculated and announced by that successor
sponsor or third party or that successor index, as the case may be.
(2) With respect to an Index-related Transaction, if (a) on or prior to any
Valuation Date the Underlying Index sponsor or third party makes a
material change in the formula for or method of calculating the
relevant Underlying Index or in any other way materially modifies the
Underlying Index (other than a modification prescribed in that formula
or method to maintain the Underlying Index in the event of changes in
constituent shares and capitalization and other routine events) or (b)
on any Valuation Date the Underlying Index sponsor or third party fails
to calculate and announce the Underlying Index, then the Calculation
Agent will calculate the payment amount using, in lieu of a published
level for the Underlying Index, the level for that Underlying Index as
at that Valuation Date as determined by the Calculation Agent in
accordance with the formula for and method of calculating the
Underlying Index last in effect prior to that change or failure, but
using only those equity securities that comprised the Underlying Index
immediately prior to that change or failure (other than those equity
securities that have since ceased to be listed on the relevant Market
Disruption Exchange).
<PAGE> 13
CUSIP No. 918270-10-9 13D Page 17 of 31
5. CORRECTIONS
With respect to any equity-related Transaction, except for an Option to
which Physical Settlement applies, if the level of the relevant
Underlying Index or the price quoted on the Quotation Exchange and used
or to be used by the Calculation Agent to determine the payment amount
is subsequently corrected and the correction published by the
Underlying Index sponsor (or a successor sponsor or third party) or, as
the case may be, the Quotation Exchange, and that correction is
published within 30 days of the original publication and the difference
between the amount payable under the relevant Underlying Index in the
original publication and the amount payable under the Underlying Index
in the corrected publication is at least $500, either party may notify
the other party of (a) that correction and (b) the amount that is
payable as a result of that correction. In respect of that Transaction,
the failure to pay the correct amount, in good faith and without actual
notice of a relevant correction will not constitute an Event of
Default. If a party gives notice no later than 30 days after
publication of a correction that an additional amount is payable, the
party that incorrectly either received or retained such additional
amount will pay to the other party that amount, together with interest
on that amount at the Non-default Rate from the period from and
including the day on which a payment incorrectly was (or was not) made
to but excluding the day of payment of the refund or payment resulting
from that correction.
6. ADJUSTMENTS
(1) If, on or prior to an Exercise Date, a company whose equity share is an
Underlying Share or Selected Security in respect of any equity-related
Transaction:
(a) effects any reorganization, consolidation, sub-division or any
other alteration of its share capital; or
(b) offers for subscription to existing shareholders on a
preferential basis new shares or securities convertible into
new shares or rights, options or warrants to subscribe for or
purchase new shares; or
(c) issues new shares credited as fully paid (or equivalent) to
existing shareholders on the basis of capitalized profits or
reserves or distributes other assets, excluding a cash
dividend or a distribution of assets in lieu of a cash
dividend which, in either case, would have been made to
existing shareholders out of profits available for
distribution or otherwise in the normal course of business of
the company; or
(d) consolidates or merges with any other company (other than a
wholly-owned subsidiary of the company); or
(e) effects or allows to be effected any event having an analogous
effect to those described above, or there occurs any event of
a type for which adjustments are customarily made in respect
of traded options on equity shares of the company or,
<PAGE> 14
CUSIP No. 918270-10-9 13D Page 18 of 31
if none, traded options on the equity shares of other
companies in the same jurisdiction;
then the Calculation Agent will, as soon as reasonably practicable
after it becomes aware of the relevant action by the company, make
whatever adjustments to the economic terms of the Transaction as it
determines in good faith are necessary to preserve the economic
equivalent of the obligations the Seller, in the case of an Option
Transaction, or otherwise the relevant party would have had under that
Transaction had the relevant event occurred immediately prior to the
date the parties entered into that Transaction.
(2) The Calculation Agent will as soon as practicable after its
determination of the relevant adjustments to be made under paragraph
(1) above (and in any event no later than the next Exchange Business
Day) notify the parties or the other party, as the case may be, of the
adjustments to be made.
7. TAKEOVERS
If, on any date on or prior to an Exercise Date, in the case of an
Option, or the Termination Date, in the case of an equity-related swap
or other equity-related Transaction, a Takeover Offer becomes or is
declared wholly unconditional or otherwise becomes effective (such date
being referred to as the "Takeover Date") with respect to (i) any of
the Underlying Shares or Selected Securities, as the case may be, or
(ii) equity shares of the same class as the Underlying Shares or
Selected Securities, as the case may be (in each case, the "Takeover
Shares"), then:
(a) with respect to an equity-related swap where the consideration
for the Takeover Shares consists solely of other than equity
shares, the Exchange Business Day immediately after the
Takover Date will be deemed to have been designated an Early
Termination Date (with both parties as Affected Parties) with
respect to that portion of the affected Transaction
attributable to the Takeover Shares.
(b) with respect to an American style Share Option where the
consideration for the Takeover Shares consists solely of other
than equity shares, (i) all unexercised Options comprising the
Option Transaction will be deemed automatically exercised on
the Exchange Business Day immediately after the Takeover Date
and (ii) the Strike Price Differential thereunder will be
calculated by setting the price of the Underlying Shares at
the USD equivalent of the consideration for which the Takeover
Shares are tendered, as determined by the Calculation Agent on
the Takeover Date, (the "Takeover Price") (i.e., the excess of
(A) the Strike Price over the Takeover Price, in the case of a
Put Option, and (B) the Takeover Price over the Strike Price,
in the case of a Call Option).
(c) with respect to a European style Share Option where the
consideration for the Takeover Shares consists solely of other
than equity shares, (i) all unexercised Options comprising the
Option Transaction will be deemed automatically exercised on
the Expiration Date thereunder and (ii) the Strike Price
Differential thereunder
<PAGE> 15
CUSIP No. 918270-10-9 13D Page 19 of 31
will be calculated by setting the price of the Underlying
Shares at the USD equivalent of the consideration for which
the Takeover Shares are tendered, as determined by the
Calculation Agent on the Takeover Date, (the "Takeover Price")
( (i.e., the excess of (A) the Strike Price over the Takeover
Price, in the case of a Put Option, and (B) the Takeover Price
over the Strike Price, in the case of a Call Option).
(d) with respect to either an American style or a European style
Basket Option where the consideration for the Takeover Shares
consists solely of other than equity shares, (i) the Option
Transaction shall be adjusted such that the Takeover Shares
are no longer included within the Underlying Basket and (ii)
the Strike Price for that Option Transaction shall be reduced
by the product of (A) the Takeover Price and (B) the number of
Takeover Shares included within the Underlying Basket. The
Market Value of the Underlying Basket, after the Takeover
Date, shall be calculated without regard to the Takeover
Shares, which shares shall no longer be Selected Securities,
and no cash payment shall be paid in respect of the Selected
Securities removed from the Underlying Basket. In addition,
the Calculation Agent will make whatever further adjustments
to the Option Transaction as it determines in good faith are
necessary to preserve for the parties the economic equivalent
of the Option Transaction.
(e) with respect to an equity-related swap where the consideration
for the Takeover Shares consists, in whole or in part, of
other equity shares (the "New Shares"), the Confirmation for
the Swap Transaction will specify that either (i) the Swap
Transaction will continue with the New Shares constituting
Selected Securities only if agreeable to both parties, or (ii)
the Swap Transaction will continue on the New Shares only if
it is economically feasible for Lehman Brothers Finance S.A.
to maintain its hedge with respect to the New Shares, and, in
either case, the Calculation Agent will make whatever further
adjustments to the Swap Transaction as it determines in good
faith are necessary to preserve for the parties the economic
equivalent of the Swap Transaction.
(f) with respect to either an American style or a European style
Share Option where the consideration for the Takeover Shares
consists, in whole or in part, of other equity shares (the
"New Shares"), the New Shares will be substituted for the
Takeover Shares to the extent that the New Shares are
substantially similar in yield, volatility and liquidity to
the Takeover Shares; in addition, the Calculation Agent will
make whatever adjustments to the Option Transaction as it
determines in good faith are necessary to preserve for the
parties the economic equivalent of such Option Transaction.
(g) with respect to either an American style or a European style
Basket Option where the consideration for the Takeover Shares
consists, in whole or in part, of other equity shares (the
"New Shares"), the New Shares will be substituted for the
Takeover Shares in the Underlying Basket, provided that the
New Shares are substantially similar in yield, volatility and
liquidity to the Takeover Shares. To the
<PAGE> 16
CUSIP No. 918270-10-9 13D Page 20 of 31
extent that the New Shares are not substantially similar in
yield, volatility and liquidity to the Takeover Shares, then
the Option Transaction will be adjusted in accordance with the
provisions of subparagraph (d) above.
8. ADDITIONAL REPRESENTATIONS
Each party represents (which representation will be deemed to be
repeated by that party on each date that a Transaction is entered into)
to the other party that:
(a) it is entering into such Transaction as principal and not as
agent of any person; and
(b) it has sufficient knowledge and experience as to be able to
evaluate the merits and risks of entering into each
Transaction, is acting in reliance upon its own judgment or
upon professional advice obtained independently of the other
party as to those merits and risks (including, where relevant,
its judgment of the correct tax and accounting treatment of
each Transaction) and is not relying upon the views or advice
of the other party.
(c) At the time of each delivery of Underlying Shares or
Underlying Basket made under this Agreement, the party
required to deliver those Underlying Shares or Underlying
Basket will be deemed to represent to the other party that (i)
it is the legal and beneficial owner of those Underlying
Shares or Selected Securities comprising such Underlying
Basket free from all liens, charges, equities, rights of
pre-emption or other security interests or encumbrances
whatsoever and (ii) it has the right to transfer those
Underlying Shares or Selected Securities comprising such
Underlying Basket on the terms of this Agreement.
9. ADDITIONAL EVENT OF DEFAULT
In addition to the Events of Default set forth in Section 5 of the
Agreement, the occurrence at any time with respect to a party of the
following event shall constitute an Event of Default: failure by the
party to deliver or accept delivery of, when due, any Underlying Shares
or Underlying Basket (or any part thereof) which it is required to
deliver or accept delivery of under this Agreement if such failure is
not remedied on or before the next Exchange Business Day after notice
of such failure to deliver or accept delivery is given to the party.
10. DEFINITIONS
Notwithstanding anything contained in the Definitions or Section 14 of
the Agreement, the following terms shall have the meanings specified
below with respect to all equity-related Transactions:
"American Option" means an Option Transaction specified as such in the
relevant Confirmation.
"Automatic Exercise" has the meaning set forth in the relevant
Confirmation.
<PAGE> 17
CUSIP No. 918270-10-9 13D Page 21 of 31
"Basket Option" means an Option relating to an Underlying Basket of
Selected Securities, one Basket Option representing the aggregate of
the Underlying Basket (the relevant number of Selected Securities being
specified in the relevant Confirmation as Component Shares).
"Buyer" means the party buying or holding the Option Transaction.
"Call Option" means an Option specified as such in the relevant
Confirmation.
"Cash Settlement" means, in relation to an Option, that the Option will
be settled by payment of the Cash Settlement Amount (if any), in
accordance with the provisions of clause 2.
"Cash Settlement Amount" means, the Settlement Currency Equivalent of
the amount determined by the Calculation Agent equal to the product of
(a) the number of Options exercised and (b) the Strike Price
Differential or the Strike Level Differential, as the case may be.
"Cash Settlement Payment Date" means the day specified as such in the
relevant Confirmation or, if none is specified, the fifth Exchange
Business Day (which also must be a Currency Business Day or, if not,
the first following Currency Business Day) after the relevant Valuation
Date.
"Component Shares" means the number of shares of Selected Securities
comprising an Underlying Basket.
"Confirmation" means a letter agreement or telex relating to a
Transaction in such form as the parties may agree, issued by LBF to the
other party confirming the terms and conditions of the Transaction.
"Conversion Rate" means the rate of exchange determined in accordance
with the relevant Confirmation.
"Currency Business Day" means, unless otherwise specified in the
relevant Confirmation, any day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency
deposits) in the principal financial center(s) specified in the
relevant Confirmation or, if none is specified, in the principal
financial center(s) for the currency in which such payment is required
to be made under this Agreement.
"European Option" means an Option Transaction specified as such in the
relevant Confirmation.
"Exchange Business Day" means, unless otherwise specified in the
relevant Confirmation, a day that is (or but for the occurrence of a
Market Disruption Event would have been) a trading day on the relevant
Market Disruption Exchange(s) other than a day on which trading on any
Market Disruption Exchange is scheduled to close prior to its regular
weekday closing time.
<PAGE> 18
CUSIP No. 918270-10-9 13D Page 22 of 31
"Exercise Date" means the Seller Business Day during the Exercise
Period on which the Option is exercised or deemed to be exercised
pursuant to clause 1.
"Exercise Period" means, in relation to a European Option, the
Expiration Date and, in relation to an American Option, any Seller
Business Day from, and including, the Trade Date to, and including, the
Expiration Date.
"Expiration Date" means the date specified in the relevant Confirmation
or, if that date is not both a Seller Business Day and an Exchange
Business Day, the next following day that is both a Seller Business Day
and an Exchange Business Day.
"Index Option" means an Option relating to the Underlying Index
specified in the relevant Confirmation.
"Index Value" means at any time of any day, the level of the Underlying
Index at that time on that day as determined by the Calculation Agent
in accordance with the provisions of this Agreement.
"Integral Multiple" means the number (if any) specified in the relevant
Confirmation.
"Market Disruption Event" means:
(a) with respect to any equity-related Transaction, except for an
Option to which Physical Settlement applies, the suspension
of, or material limitation (as determined by the Calculation
Agent) imposed on, trading on any Market Disruption Exchange
during the Market Disruption Period, in:
(i) in the case of an Index-related Transaction, (1)
equity securities included in the Underlying Index
the value of which comprises 20 percent or more of
the value of the equity securities comprising the
Underlying Index (determined immediately before the
suspension or material limitation) or (2) any futures
or options contract on the Underlying Index; or
(ii) in the case of a Transaction based upon Selected
Securities, (1) any of the Selected Securities or (2)
any options contract on any of the Selected
Securities or (3) any futures or options contract on
the Related Index; or
(iii) in the case of a Transaction based upon Underlying
Shares, (1) the Underlying Shares or (2) any options
contract on the Underlying Shares, and
(b) with respect to an Option Transaction to which Physical
Settlement applies, the existence or occurrence on the
Exercise Date as determined by the party due to deliver the
Underlying Shares or Underlying Basket, such existence or
occurrence to be confirmed by the Calculation Agent, of the
suspension of or material limitation imposed on trading in (i)
in the case of a Share Option, the Underlying Shares or (ii)
in the case of a Basket Option, any of the Selected
Securities.
<PAGE> 19
CUSIP No. 918270-10-9 13D Page 23 of 31
For the purpose of determining whether a Market Disruption Event exists
at any time, with respect to an Index-related Transaction, if trading
in a security included in the Underlying Index is suspended or
materially limited at that time, then the relevant percentage
contribution of that security to the level of the Underlying Index
shall be based on a comparison of (i) the portion of the level of the
Underlying Index attributable to that security relative to (ii) the
overall level of the Underlying Index, in each case immediately before
that suspension or material limitation. The Calculation Agent shall as
soon as practicable (and in no event later than the next Exchange
Business Day) notify the parties of the existence or occurrence of a
Market Disruption Event on any day that but for the occurrence or
existence of a Market Disruption Event would have been a Valuation
Date.
"Market Disruption Exchange(s)" means the stock exchange(s) and/or
options exchange(s) and/or futures exchange(s) specified in the
relevant Confirmation.
"Market Disruption Period" means the period specified in the relevant
Confirmation ending at the Valuation Time during which there occurs or
exists any of the Market Disruption Events specified in the relevant
Confirmation.
"Market Value" as of any date, means a price determined by the
Calculation Agent as follows: (i) if the Underlying Shares or Selected
Securities are quoted on a Quotation Exchange, the price per share of
such Underlying Shares or Selected Securities (having regard to the
number of shares of each equity security being valued for purposes of
this Agreement) quoted by the Quotation Exchange as of the Valuation
Time on such date and (ii) if the Underlying Shares or Selected
Securities are not so quoted as of the Valuation Time on such date, the
price per share estimated in good faith by the Calculation Agent that
could be obtained for such Underlying Shares or Selected Securities
(having regard to the number of shares of each equity security being
valued for purposes of this Agreement); and any reference in this
Agreement to Market Value will, in the case of an Underlying Basket, be
a reference to the sum of the Market Values for the Component Shares of
each of the Selected Securities comprising the Underlying Basket.
"Maximum Number of Options" means the number specified in the relevant
Confirmation.
"Minimum Number of Options" means the number specified in the relevant
Confirmation.
"Multiple Exercise" has the meaning set out in clause 1(2).
"Notice of Exercise and Written Confirmation" has the meaning set forth
in the relevant Confirmation.
"Option" means one unit of exercise of an Option Transaction.
"Option Transaction" means any one or more over-the-counter equity
option transactions.
"Physical Settlement" means the Option will be settled by delivery of
the Underlying Shares or Underlying Basket, in accordance with the
provisions of clause 2.
<PAGE> 20
CUSIP No. 918270-10-9 13D Page 24 of 31
"Physical Settlement Delivery Date" means, subject to clause 2, the day
specified in the relevant Confirmation or, if none is specified, the
fifth Exchange Business Day (which also must be a Currency Business Day
or, if not, the first following Currency Business Day) after the
relevant Valuation Date.
"Physical Settlement Purchase Amount" means the Settlement Currency
Equivalent of the amount equal to the Strike Price multiplied by the
product of the number of Options exercised and the Share Entitlement
per Option (as defined in the relevant Confirmation), provided that if
on the relevant Exercise Date (a) the Underlying Shares or Selected
Securities are quoted cum-dividend but the party delivering the
Underlying Shares or Selected Securities receives the relevant dividend
or (b) the Underlying Shares or Selected Securities are quoted
ex-dividend but the party accepting delivery of the Underlying Shares
or Selected Securities receives the relevant dividend, then in either
case the party which receives the dividend shall within two Currency
Business Days of receiving the dividend account to the other party for
the dividend amount received by paying such dividend amount (net of any
withholding tax, stamp tax, or any other tax, duties, fees or
commissions payable in respect of such dividend amount), to the account
specified for payment by the other party in the relevant Confirmation.
"Premium Payment Date(s)" means the date or dates specified in the
relevant Confirmation, provided that if any such date is not a Currency
Business Day it will be the Currency Business Day next following such
date.
"Put Option" means an Option specified as such in the relevant
Confirmation.
"Quotation Exchange" means the stock exchange or recognized securities
market specified in the relevant Confirmation or, if none is specified,
the stock exchange or recognized securities market on which the
relevant equity security is principally traded.
"Related Index" means the index specified in the relevant Confirmation.
"Selected Securities" means the securities comprising an Underlying
Basket.
"Seller" means the party selling or writing an Option Transaction.
"Seller Business Day" means, unless otherwise specified in the relevant
Confirmation, any day on which the Seller is open for equities
business.
"Settlement Currency" means the currency (if any) specified in the
relevant Confirmation.
"Settlement Currency Equivalent" means, in respect of any amount
denominated in the Settlement Currency, such amount and, in respect of
any amount denominated in any other currency, the amount in the
Settlement Currency determined by the Calculation Agent by converting
the other currency amount into the Settlement Currency at the
Conversion Rate.
<PAGE> 21
CUSIP No. 918270-10-9 13D Page 25 of 31
"Share Entitlement per Option" means the number of equity shares
allocated to each Option, as specified in the relevant Confirmation.
"Share Option" means an Option relating to the Underlying Shares
specified in the relevant Confirmation.
"Strike Level" means, in relation to an Index Option, the level of the
Underlying Index specified in the relevant Confirmation.
"Strike Level Differential" means, in the case of an Index Option, a
number determined by the Calculation Agent equal to the greater of:
(i) the excess at the Valuation Time on the relevant Valuation
Date of (a) in the case of a Put Option, the Strike Level over the
Index Value or (b) in the case of a Call Option, the Index Value
over the Strike Level and, in each case, multiplied by one unit of
the Underlying Currency; and
(ii) zero.
"Strike Price" means, in relation to a Basket Option or a Share Option,
the price per Option specified in the relevant Confirmation.
"Strike Price Differential" means, in the case of a Basket Option or a
Share Option, a price determined by the Calculation Agent equal to the
greater of:
(i) the excess at the Valuation Time on the relevant Valuation
Date of (a) in the case of a Put Option, the Strike Price over the
Market Value or (b) in the case of a Call Option, the Market Value
over the Strike Price and, in each case, multiplied by the Share
Entitlement per Option; and
(ii) zero.
"Takeover Offer" means any acquisition or offer as a result of which
any person (including any Government or any agency, authority or other
entity controlled by any Government) acquires or offers to acquire,
whether by a series of transactions over a period of time or not,
shares of the class of shares comprising the Underlying Shares or
Selected Securities or interests in such shares and which (either alone
or taken together with shares or interests in shares held or acquired
by persons acting in concert with such person) amount to 50 per cent or
more of the nominal value of the outstanding shares of that class.
"Trade Date" means the day specified as such in the relevant
Confirmation.
"Underlying Currency" means the currency specified in the relevant
Confirmation or, if none is specified, the currency (i) in the case of
an Index Option or Basket Option, in which the underlying equity share
values comprising the relevant index or basket are normally expressed
or to which they are converted for the purposes of compiling the index
<PAGE> 22
CUSIP No. 918270-10-9 13D Page 26 of 31
or valuing the basket or (ii) in the case of a Share Option, in which
the relevant share is normally quoted on the principal market on which
it is traded.
"Underlying Basket" means the aggregate Component Shares of Selected
Securities specified as such in the relevant Confirmation.
"Underlying Index" means the index of equity shares specified as such
in the relevant Confirmation.
"Underlying Shares" means the equity shares specified as such in the
relevant Confirmation.
"Valuation Date" means the day specified as such in the relevant
Confirmation.
"Valuation Time" means the time on the Valuation Date, as specified in
the relevant Confirmation.
<PAGE> 1
CUSIP No. 918270-10-9 13D Page 27 of 31
- --------------------------------------------------------------------------------
EXHIBIT 3.4.2
FORM OF CONFIRMATION
Intel Corporation
2200 Mission College Blvd.
Mail Stop RN6-26
Santa Clara, CA 95052-8119
Attn: Eddie Lee
Telecopier No.: 408-765-1611
Telephone No.: 408-765-1235
- --------------------------------------------------------------------------------
Master No.: INTL0126
LBF Reference No.: [omitted]
Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to
confirm the terms and conditions of the Transaction entered into between us on
the Trade Date specified below (the "Option Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA
Definitions as published by the International Swaps and Derivatives Association,
Inc. (formerly known as the International Swap Dealers Association, Inc.)
("ISDA"), are incorporated into this Confirmation. In the event of any
inconsistency between those definitions and provisions and this Confirmation,
this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement dated as of March 1, 1995 (the "Agreement"), between
Lehman Brothers Finance S.A. ("LBF") and Intel Corporation ("Counterparty"). All
provisions contained in the Agreement govern this Confirmation except as
expressly modified below. In addition, this Confirmation shall itself evidence a
complete and binding agreement between you and us as to the terms and conditions
of the Option Transaction to which this Confirmation relates.
2. The terms of the Option Transaction to which this Confirmation
relates are as follows:
<TABLE>
<S> <C>
GENERAL TERMS:
Agent: Lehman Brothers Inc. is confirming as agent for
both Buyer and Seller
Trade Date: __________
Option Style: European Option
Option Type: [Put/Call] Option
Seller: LBF
Buyer: Counterparty
Underlying Shares: VLSI Technology, Inc.
Underlying Currency: USD
Quotation Exchange: The Nadaq NMS
Number of Options: __________
Share Entitlement per Option: 1 Underlying Share
</TABLE>
<PAGE> 2
CUSIP No. 918270-10-9 13D Page 28 of 31
<TABLE>
<S> <C>
Strike Price: USD _____
Premium: USD _____
Premium Payment Date: __________
Exchange Business Day: A day that is (or, but for the occurrence of a Market
Disruption Event, would have been) a trading day on the
relevant Market Disruption Exchange(s) other than a day on
which trading on any Market Disruption Exchange(s) is
scheduled to close prior to its regular weekday closing
time.
Seller Business Day: Any day on which commercial banks are open for business
(including dealings in foreign exchange and foreign
currency deposits) in New York and Geneva.
Currency Business Day: Any day on which commercial banks are open for
business (including dealings in foreign exchange and foreign
currency deposits) in the principal financial center(s) for the
Settlement Currency.
Calculation Agent: Lehman Brothers Inc., whose determinations and
calculations shall be binding in the absence of manifest
error.
EXERCISE:
Exercise Period: The Expiration Date
Expiration Date: __________
Exercise Date: The Seller Business Day during the Exercise Period on
which that Option is or is deemed to be exercised.
Automatic Exercise: If, at the Valuation Time on the Expiration Date, the
Option is in-the-money, then the Option shall be deemed
automatically exercised unless the Buyer notifies the
Seller to the contrary.
Multiple Exercise: Inapplicable
Seller's telephone or [omitted]
facsimile number and
contact details for
purposes of giving notice:
VALUATION:
Valuation Time: At 4:00 p.m. (local time in New York)
</TABLE>
<PAGE> 3
CUSIP No. 918270-10-9 13D Page 29 of 31
<TABLE>
<S> <C>
Valuation Date: The Exercise Date, provided that such day is also an
Exchange Business Day; otherwise, the Valuation Date shall
be the first following day that is an Exchange Business
Day. If there is a Market Disruption Event on that day,
then the Valuation Date will be postponed to the first
succeeding Exchange Business Day on which there is no
Market Disruption Event. If there is a Market Disruption
Event on each of the five Exchange Business Days
immediately following the original Valuation Date, then
the fifth Exchange Business Day will be the Valuation
Date, notwithstanding the Market Disruption Event. In
that case the Calculation Agent will use its estimate in
good faith of the market value on that day of the
Underlying Shares.
Market Disruption Event: The occurrence or existence during the
Market Disruption Period that ends at the close of the Market
Disruption Exchange(s) on the Valuation Date of any of the
following events, in the determination of the Calculation
Agent:
The suspension of or material limitation imposed on trading in
(1) the Underlying Shares or (2) any options contracts on the
Underlying Shares.
Market Disruption Period: One-half hour
Market Disruption Exchange(s): The Quotation Exchange
SETTLEMENT:
Method of Settlement: Cash Settlement
Settlement Currency: The Underlying Currency
Cash Settlement: Seller shall pay to Buyer the Cash Settlement Amount, if
any, on the Cash Settlement Payment Date for all Options
exercised or deemed exercised.
Cash Settlement Amount: An amount, as calculated by the Calculation Agent, equal to
the Number of Options multiplied by the Strike Price
Differential multiplied by the Share Entitlement per Option.
Strike Price Differential: An amount equal to the greater of (i) the excess of the
Strike Price over the price of the Underlying Shares, as
quoted by the Quotation Exchange, at the Valuation Time on
the Valuation Date, and (ii) zero.
The price of an Underlying Share shall be the average of the
best bid and ask prices for an Underlying Share on the
Quotation Exchange, as published by Reuters (or another
similar service mutually agreed upon by the parties, if
Reuters is then unavailable) at the Valuation Time.
Cash Settlement Payment Date: Five (5) Exchange Business Days (the last one of which must
be a Currency Business Day, or if not, the next Currency
Business Day) after the Valuation Date.
</TABLE>
<PAGE> 4
CUSIP No. 918270-10-9 13D Page 30 of 31
<TABLE>
<S> <C>
OTHER PROVISIONS:
Counterparty Representation: Counterparty represents that (i) it is not entering into
the Option Transaction on behalf of or for the accounts of
any other person or entity, and will not transfer or assign
its obligations under the Option Transaction or any portion
of such obligations to any other person or entity except in
compliance with applicable laws and the terms of the Option
Transaction; (ii) it is authorized to enter into the Option
Transaction and such action does not violate any laws of
its jurisdiction of organization or residence or the terms
of any agreement to which it is a party; and (iii) it has
reached its own conclusions about the Option Transaction,
and any legal, regulatory, tax, accounting or economic
consequences arising from the Option Transaction, and has
concluded that the Option Transaction is suitable in light
of its own investment objectives, financial capabilities
and expertise.
Settlement Provision: a) Seller's obligations to Buyer under this Option
Transaction, if any, shall not accrue until Buyer has paid
the Premium in full.
b) All payments under this Option Transaction will be made
without any deduction or withholding for or on account of any
withholding tax, stamp tax, or any other tax, duties, fees or
commissions required by any applicable law.
Offices: Inapplicable.
Governing Law: New York.
Transfer: Neither party may transfer any Option, in whole or in part,
without the prior written consent of the non-transferring
party, which consent shall not be unreasonably withheld.
Guarantee: Lehman Brothers Holdings Inc. shall unconditionally
guarantee to Counterparty the due and punctual payment of
all amounts payable by LBF under this Option Transaction as
such payments become due and payable.
Collateralized Transaction: This Option Transaction shall be a "Collateralized
Transaction" for purposes of the Pledge Agreement dated as
of April 11, 1994, between LBF and Counterparty.
Takeover Offer: For purposes of this Option Transaction, the term
"Takeover Offer" shall have the meaning given thereto in
Annex I to the Schedule to the Master Agreement, except that
the words "50 percent or more" in the second to last line of
such definition shall be replaced with "100 percent or more".
ACCOUNT DETAILS:
[omitted]
LBF's payment instructions:
Counterparty's payment instructions: [omitted]
</TABLE>
<PAGE> 5
CUSIP No. 918270-10-9 13D Page 31 of 31
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us or by sending to us a letter substantially
similar to this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:____________________
Name:
Title:
By:____________________
Name:
Title:
Confirmed as of the date
first above written:
INTEL CORPORATION
By:_______________________
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
