Confirmation re: Swap Transaction - Goldman Sachs Capital Markets LP and Mercury Interactive Corp.
[LETTERHEAD OF GOLDMAN SACHS]
CONFIRMATION
DATE: January 31, 2002 (revised from January 17, 2002 confirmation)
TO: Mercury Interactive Corporation
1325 Borregas Avenue
Sunnyvale, CA 94089
Telephone No.: (408) 822-5591
--------------
Facsimile No.: (408) 822-5320
--------------
Attention : Susan Skaer, General Counsel
FROM: Goldman Sachs Capital Markets, L.P.
SUBJECT: Swap Transaction
REF NO: NUUS201PG 052 000000
--------------------------------------------------------------------------------
The purpose of this revised communication is to set forth the terms and
conditions of the above referenced transaction entered into on the Trade Date
specified below (the "Transaction") between Goldman Sachs Capital Markets, L.P.
("GSCM"), guaranteed by The Goldman Sachs Group, Inc. ("Goldman Group"), and
Mercury Interactive Corporation ("Counterparty"). This communication supersedes
and replaces all prior communications between the parties hereto with respect to
the Transaction described below. This communication constitutes a "Confirmation"
as referred to in the Swap Agreement specified below .
1. The definitions and provisions contained in the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc. are incorporated into this Confirmation.
2. This Confirmation evidences a complete and binding agreement between you and
us as to the terms of the Transaction to which this Confirmation relates and
incorporates by reference the form of the ISDA Master Agreement (Local
Currency-Single Jurisdiction) (the "ISDA Form Master"), including the
modifications set forth in Annex A attached hereto, and the ISDA Credit Support
Annex (the "ISDA Form CSA" and, together with the ISDA Form Master, the "ISDA
Forms"), including the modifications set forth in Annex B attached hereto, as if
we had executed such ISDA Forms effective as of the Trade Date of the first
Transaction between us. In the event of any inconsistency between the
Definitions, the ISDA Forms and this Confirmation, this Confirmation will
govern.
3. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount: USD 300,000,000, subject to reduction in
accordance with paragraph 4 herein.
Bonds: Mercury Interactive Corporation (the "Issuer")
Maturity: July 1, 2007
Coupon: 4.75% Convertible Subordinated
Debentures
CUSIP: 589405AB5
Trade Date: January 17, 2002
1
<PAGE>
Effective Date: January 22, 2002
Termination Date: The earlier of (a) July 1, 2007, subject to
adjustment in accordance with the Modified
Following Business Day Convention or (b)
with respect to any portion of this
Transaction terminated in accordance with
paragraph 4 herein, the Termination Effective
Date.
Fixed Amounts:
--------------
Fixed Rate Payer: GSCM
Fixed Rate Payer Payment Dates: Semi-annually, on each January 1 and July 1,
commencing on July 1, 2002, and ending on the
Termination Date, subject to adjustment in
accordance with the Following Business Day
Convention.
Fixed Rate: 4.75%
Fixed Rate Day Count Fraction: 30/360
Fixed Rate Period End Dates: Not Adjusted
Floating Amounts:
-----------------
Floating Rate Payer: Counterparty
Floating Rate Payer Payment Dates: Semi-annually, on each January 1 and July 1,
commencing on July 1, 2002, and ending on the
Termination Date, subject to adjustment in
accordance with the Following Business Day
Convention.
Floating Rate Option: USD-LIBOR-BBA
Floating Rate Designated Maturity: 6 Months
Initial Floating Rate Setting: 1.84%
Floating Rate Spread: Plus 0.86%
Floating Rate Reset Dates: The first day of each Calculation Period
Floating Rate Day Count Fraction: Actual/360
Floating Rate Period End Dates: Adjusted in accordance with the Following
Business Day Convention.
Business Days: New York and London
Calculation Agent: GSCM
Governing Law: New York law
2
<PAGE>
4. Termination:
In the event that (i) Issuer converts, in whole or in part, any of the Bonds
into shares of common stock of Issuer upon the valid exercise by holders of such
Bonds (such holders not to include the Issuer or any of its affiliates) of their
conversion right or (ii) Issuer redeems, in whole or in part, any of the Bonds
at their stated redemption price pursuant to its right of optional redemption
(such redemption not to include Bonds held by the Issuer or any of its
affiliates), the portion of this Transaction equal to the principal amount of
the Bonds that Issuer either converts or redeems as provided in (i) and (ii)
above (the "Termination Amount"), shall terminate as of the actual date of
conversion or redemption (the "Termination Effective Date"). On the Termination
Effective Date, (i) a Termination Date will be deemed to have occurred with
respect to a portion of this Transaction equal to the Termination Amount and all
Fixed Amount and Floating Amount payments with respect to the terminated portion
of this Transaction shall be due and payable on said date and (ii) the Notional
Amount shall be reduced by the related Termination Amount and all payment
calculations will be based on the remaining portion of this Transaction after
giving effect to such partial termination.
Termination in accordance with this paragraph 4 shall be contingent upon
Counterparty providing notice of such conversion or redemption to Goldman not
later than two Business Days following the Termination Effective Date, which
notice shall include written certification acceptable to Goldman confirming the
date such conversion or redemption and the principal amount of the Bonds
converted or redeemed.
5. Credit Support Documents: Standard Guaranty of Goldman Group.
6. Credit Support Providers: With respect to GSCM, Goldman Group.
7. Account Details:
USD Payments to GSCM:
For the Account of: Goldman Sachs Capital Markets, L.P.
Name of Bank: Citibank. N.A. New York
Account No: 40670834
Fed ABA No: 021000089
GSCM Inquiries Goldman Sachs Capital Markets, L.P.
Telephone No.: 212-902-2686
Facsimile No.: 212-902-5692
Payments to Counterparty: In accordance with Counterparty's written
instructions as set forth below or otherwise
delivered to GSCM. GSCM shall make no payments
without having received (i) such written
instructions and (ii) a fully executed
facsimile copy of this Confirmation or other
written acceptance of the terms hereof.
For the Account of:
Name of Bank:
Account No:
Attention:
ABA No.:
8. Offices:
(a) The Office of GSCM for this Transaction is 85 Broad Street, New York,
New York 10004.
(b) The Office of Counterparty for this Transaction is 1325 Borregas
Avenue, Sunnyvale, California 94089.
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<PAGE>
9. Counterparty hereby agrees (a) to check this revised Confirmation (Reference
No.: NUUS201PG) carefully and immediately upon receipt so that errors or
discrepancies can be promptly identified and rectified and (b) to confirm that
the foregoing correctly sets forth the terms of the agreement between GSCM and
Counterparty with respect to the particular Transaction to which this
Confirmation relates, by manually signing this Confirmation and providing the
other information requested herein and immediately returning an executed copy to
Swap Administration, facsimile No. 212-902-5692.
Very truly yours,
GOLDMAN SACHS CAPITAL MARKETS, L.P.
By: Goldman Sachs Capital Markets, Inc.,
General Partner
By: /s/ Daniel A. Ruperto
Name: Daniel A. Ruperto
Title: Vice President
Agreed and Accepted By:
MERCURY INTERACTIVE CORPORATION
By: /s/ Susan J. Skaer
Name: Susan J. Skaer
Title: Vice President, General Counsel and Secretary
Counterparty Reference No.:
----------------------
4
<PAGE>
Annex A
The following provisions shall be in lieu of a Schedule and shall be deemed to
modify and supplement the ISDA Form Master.
(a) "Specified Entity" means, in relation to GSCM, Goldman, Sachs & Co., Goldman
Sachs Capital Markets, L.P., Goldman Sachs International, Goldman Sachs (Asia)
Finance, Goldman Sachs Financial Markets, L.P., and Goldman Sachs Mitsui Marine
Derivative Products, L.P. for the purpose of Section 5(a)(v), and shall not
apply for purposes of Sections 5(a)(vi), 5(a)(vii) and 5(b)(iv); and means, in
relation to Counterparty, any Significant Subsidiary (as defined in the
Indenture between Counterparty and State Street Bank and Trust Company of
California, N.A., dated as of July 3, 2000).
(b) "Cross Default" will apply to GSCM and to Counterparty, provided that (i)
the phrase "or becoming capable at such time of being declared" shall be deleted
from clause (1) of such Section 5(a)(vi) so that only Specified Indebtedness
that has actually been accelerated triggers this Event of Default. "Threshold
Amount" means in relation to GSCM, US$50,000,000 (or its equivalent in another
currency) and in relation to Counterparty, US$10,000,000 (or its equivalent in
another currency).
(c) "Credit Event Upon Merger" will apply to GSCM and will apply to
Counterparty.
(d) Payments on Early Termination. For the purpose of Section 6(e): [Loss] will
apply and the Second Method will apply.
(e) The parties agree to amend the following subsections of Section 5(a) as
follows: clause (ii): in the fifth line of this clause, delete the word
"thirtieth" and insert the word "twentieth".
(f) Documents to be delivered upon the execution of this Confirmation for the
purpose of Section 4(a) are: (i) with respect to both GSCM and Counterparty, a
copy of the most recent, publicly available audited annual financial statements
and/or of the unaudited quarterly financial statements of, in the case of GSCM,
Goldman Group, and, in the case of Counterparty, Counterparty, prepared in
accordance with generally accepted accounting principles in the country in which
the party is organized; (ii) with respect to GSCM only, the Standard Guaranty of
Goldman Group; and, (iii) with respect to Counterparty only, certified
resolutions of its board of directors or other governing body authorizing this
Confirmation and the Transactions contemplated hereby.
(g) Jurisdiction. The parties hereby agree to amend Section 13(b) by deleting
"non-" from the second line of clause (i).
(h) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to
Transactions.
(i) Accuracy of Specified Information. Section 3(d) is hereby amended by adding
in the third line thereof after the word "respect" and before the period, the
phrase "or, in the case of audited or unaudited financial statements, a fair
presentation of the financial condition of the relevant person."
(j) Additional Representations. The parties agree to amend Section 3 by adding
new Sections 3(e), (f), (g), and (h) as follows:
5
<PAGE>
(e) Eligible Contract Participant. It is an "eligible contract participant"
as defined in the U.S. Commodity Exchange Act.
(f) Non-Reliance. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers 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 that Transaction; it
being understood that information and explanations related to the terms and
conditions of a Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction. No communication (written or
oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Transaction.
(g) Assessment and Understanding. It is capable of assessing the merits of
and understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
that Transaction. It is also capable of assuming, and assumes, the risks of
that Transaction.
(h) Status of Parties. The other party is not acting as a fiduciary for or
an adviser to it in respect of that Transaction.
(k) Transfer. The following amendments are hereby made to Section 7: (i) in the
third line, insert the words "which consent will not be arbitrarily withheld or
delayed," immediately before the word "except"; and (ii) in clause (a), insert
the words "or reorganization, incorporation, reincorporation, or reconstitution
into or as," immediately before the word "another."
(l) Severability. This Agreement shall be deemed to be invalid and unenforceable
if any provision of Sections 1(c), 2, 5, 6, or 11 (or any definition or
provision in Section 14 to the extent it relates to, or is used in or in
connection with, any such Section) shall be held to be invalid or unenforceable.
(m) Waiver of Trial by Jury. Each party hereby irrevocably waives any and all
right to trial by jury in any Proceeding.
Annex B
The following provisions shall apply with respect to Paragraph 13 to the ISDA
Form CSA.
(a) Credit Support Obligations.
(i) "Credit Support Amount" has the meaning specified in Paragraph 3,
except that the Credit Support Amount for Counterparty shall never be less
than the Independent Amount.
(ii) Eligible Collateral. The following items will qualify as "Eligible
Collateral" for Counterparty.
6
<PAGE>
Valuation
Percentage
----------
(A) Cash 100%
(B) negotiable debt obligations 98.5%
issued by the U.S. Treasury
Department having an original
maturity at issuance of not
more than one year ("Trea-
sury Bills")
(C) negotiable debt obligations 98.5%
issued by the U.S. Treasury
Department having an original
maturity at issuance of more
than one year but not more
than 10 years ("Treasury Notes")
(D) negotiable debt obligations 98.5%
issued by the U.S Treasury
Department having an original
maturity at issuance of more
than 10 years ("Treasury Bonds")
(E) negotiable debt obligations 98.5%
which are issued and/or
guaranteed as to both principal
and Interest by the Federal Home
Loan Mortgage Corporation
("FHLMC"), the Federal National
Mortgage Association ("FNMA"),
or the Government National Mort-
gage Association ("GNMA"),
including mortgage-backed
securities and REMICs (collectively,
"Agency Securities"), but excluding
interest only securities, principal only
securities and residual interests.
(iii) Thresholds.
(A) "Independent Amount" means with respect to Counterparty:
2% of the initial Notional Amount.
(B) "Threshold" means with respect to GSCM: Not applicable,
it being understood that GSCM shall be only a Secured Party
hereunder and not a Pledgor and shall be under no obligation
to Transfer Collateral hereunder; and with respect to
Counterparty: zero.
(C) "Minimum Transfer Amount" means with respect to a party,
$1,000,000; provided, however, that if an Event of Default
-------- -------
has occurred and is continuing with respect to a party, the
Minimum Transfer Amount with respect to such party shall be
zero.
(D) Rounding. The Delivery Amount and Return Amount will be
rounded up and down, respectively, to the nearest integral
multiple of $100,000.
(b) Valuation and Timing.
(i) "Valuation Agent" means GSCM.
7
<PAGE>
(ii) "Valuation Date" means each New York Banking Day.
(iii) "Valuation Time" means the close of business in the city of the
Valuation Agent on the Local Business Day before the Valuation Date or date
of calculation, as applicable; provided that the calculations of Value and
Exposure will be made as of approximately the same time on the same date.
(iv) "Notification Time" means no later than 1:00 p.m., New York time, on a
Local Business Day; provided, however, that the Valuation Agent will only
give notice of its calculations to a party upon request by such party.
(c) Conditions Precedent. The following Termination Events will be a "Specified
Condition" for the party specified (that party being the Affected Party if the
Termination Event occurs with respect to that party): With respect to
Counterparty only, Credit Event Upon Merger and Illegality.
(d) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m., New York time, on the Local Business
Day following the date on which the notice is given that gives rise to a
dispute under Paragraph 5.
(ii) "Value". For the purpose of Paragraph 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows:
(A) The Value of Cash will be the face amount thereof,
multiplied by the applicable Valuation Percentage.
(B) With respect to any Treasury Bills, Treasury Notes,
Treasury Bonds, or Agency Securities (referred to herein as
"Securities"), the sum of (I) (x) the mean of the high bid
and low asked prices quoted on such date by any principal
market maker for such Securities chosen by the Disputing
Party, or (y) if no quotations are available from a principal
market maker on such date, the mean of such high bid and low
asked prices as of the day, next preceding such date, on
which such quotations were available, plus (II) the accrued
interest on such Securities (except to the extent Transferred
to a party pursuant to any applicable provision of this
Agreement or included in the applicable price referred to in
(I) of this clause (B)) as of such date, multiplied by the
applicable Valuation Percentage.
(e) Distributions and Interest Amount.
(i) Interest Rate. The "Interest Rate" will be the overnight Federal
-------------------------------------------------
Funds (Effective) rate, as advised by Telerate p. 120, minus 25 basis
---------------------------------------------------------------------
points.
-------
(ii) Transfer of Interest Amount. The Transfer of the Interest Amount will
be made on the last Local Business Day of each calendar month and on any
Local Business Day that Posted Collateral in the form of Cash is
Transferred to the Pledgor pursuant to Paragraph 3(b).
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<PAGE>
[LETTERHEAD OF GOLDMAN SACHS]
CONFIRMATION
DATE: February 26, 2002
TO: Mercury Interactive Corporation
1325 Borregas Avenue
Sunnyvale, CA 94089
Telephone No.: (408) 822-5591
--------------
Facsimile No.: (408) 822-5320
--------------
Attention : Susan Skaer, General Counsel
FROM: Goldman Sachs Capital Markets, L.P.
SUBJECT: Swap Transaction
REF NO: NUUS202P0
--------------------------------------------------------------------------------
The purpose of this communication is to set forth the terms and conditions of
the above referenced transaction entered into on the Trade Date specified below
(the "Transaction") between Goldman Sachs Capital Markets, L.P. ("GSCM"),
guaranteed by The Goldman Sachs Group, L.P. ("Goldman Group"), and Mercury
Interactive Corporation ("Counterparty"). This communication constitutes a
"Confirmation" as referred to in the Swap Agreement specified below.
1. The definitions and provisions contained in the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc. are incorporated into this Confirmation.
2. This Confirmation evidences a complete and binding agreement between you and
us as to the terms of the Transaction to which this Confirmation relates and
incorporates by reference the form of the ISDA Master Agreement (Local
Currency-Single Jurisdiction) (the "ISDA Form Master"), including the
modifications set forth in Annex A attached hereto, and the ISDA Credit Support
Annex (the "ISDA Form CSA" and, together with the ISDA Form Master, the "ISDA
Forms"), including the modifications set forth in Annex B attached hereto, as if
we had executed such ISDA Forms effective as of the Trade Date of the first
Transaction between us. In the event of any inconsistency between the
Definitions, the ISDA Forms and this Confirmation, this Confirmation will
govern.
3. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Bonds: Mercury Interactive Corporation (the "Issuer")
Maturity: July 1, 2007
Coupon: 4.75% Convertible Subordinated Debentures
CUSIP: 589405AB5
Trade Date: February 19, 2002
Effective Date: February 23, 2002
Termination Date: July 1, 2007
<PAGE>
Swap I:
-------
Notional Amount I: Zero, subject to increase in accordance
------------------ with paragraph 4 herein.
Fixed Amount I:
---------------
Fixed Rate Payer I: Counterparty
Fixed Rate Payer Payment Dates I: Semi-annually, on each January 1 and
July 1, commencing on July 1, 2002, and
ending on the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Fixed Rate I: 4.75%
Fixed Rate Day Count Fraction I: 30/360
Fixed Rate Period End Dates I: Not Adjusted
Floating Amount I:
------------------
Floating Rate Payer I: GSCM
Floating Rate Payer Payment Dates I: Semi-annually, on each January 1 and
July 1, commencing on July 1, 2002, and
ending on the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Floating Rate Option I: USD-LIBOR-BBA
Floating Rate Designated Maturity I: 6 Months
Floating Rate Spread I: 0.86%
Floating Rate Reset Dates I: The first day of each Calculation Period
Floating Rate Day Count Fraction I: Actual/360
Floating Rate Period End Dates I: Adjusted in accordance with the Following
Business Day Convention.
Supplementary Amount:
---------------------
Supplementary Amount Payer: GSCM
---------------------------
Supplementary Amount Payment Semi-annually, on each January 1 and
---------------------------- July 1, commencing on July 1, 2002, and
Dates: ending on the Termination Date, subject to
------ adjustment in accordance with the Following
Business Day Convention.
Supplementary Amount: (i) For so long as Notional Amount I is
--------------------- equal to zero, USD 608,333 and (ii) if on
any date Notional Amount I exceeds zero
(the "Supplementary Amount End Date"),
-------------
zero, provided, however, that the
Supplementary Amount Payer shall be
-------------
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responsible for all accrued but yet unpaid
amounts calculated to but excluding the
Supplementary Amount End Date.
-------------
Notwithstanding anything to the contrary
herein, for the first Supplementary Amount
Payment Date only, the Supplementary Amount
shall be USD 432,593.
Swap II:
--------
Notional Amount II: Zero, subject to increase in accordance
------------------- with paragraph 4 herein.
Fixed Amount II:
----------------
Fixed Rate Payer II: GSCM
Fixed Rate Payer Payment Dates II: Semi-annually, on each January 1 and
July 1, commencing on July 1, 2002, and
ending on the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Fixed Rate II: 4.75%
Fixed Rate Day Count Fraction II: 30/360
Fixed Rate Period End Dates II: Not Adjusted
Floating Amount II:
Floating Rate Payer II: Counterparty
Floating Rate Payer Payment Semi-annually, on each January 1 and
Dates II: July 1, commencing on July 1, 2002, and
ending on the Termination Date, subject to
adjustment in accordance with the Following
Business Day Convention.
Floating Rate Option II: USD-LIBOR-BBA
Floating Rate Designated
Maturity II: 6 Months
Floating Rate Spread II: 0.86%
Floating Rate Reset Dates II: The first day of each Calculation Period
Floating Rate Day Count Fraction II: Actual/360
Floating Rate Period End Dates II: Adjusted in accordance with the Following
Business Day Convention.
Business Days: New York and London
Calculation Agent: GSCM
Governing Law: New York law
3
<PAGE>
4. Additional Amounts:
In the event that the price of 8.9888 shares (or the prevailing conversion rate
under the Indenture (as defined below)) (subject to the appropriate adjustment
in the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares) of the common stock of the Issuer (or
the securities received in exchange for the common stock of the Issuer in any
consolidation or merger of the Issuer with or into another entity, or any merger
of another entity into the Issuer) exceeds the Redemption Price for the
corresponding Redemption Period, as stated in Annex C, then the Notional Amount
I shall equal $300,000,000, effective as of such date to and including the
Termination Date.
In the event that (i) Issuer converts, in whole or in part, any of the Bonds
into shares of common stock of Issuer upon the valid exercise by holders of such
Bonds (such holders not to include the Issuer or any of its affiliates) of their
conversion right or (ii) Issuer redeems, in whole or in part, any of the Bonds
at their stated redemption price pursuant to its right of optional redemption
(such redemption not to include Bonds held by the Issuer or any of its
affiliates), the portion of this Transaction equal to the principal amount of
the Bonds that Issuer either converts or redeems as provided in (i) and (ii)
above (the "Additional Amount"), shall be added to the Notional Amount II as of
the actual date of conversion or redemption (the "Additional Amount Effective
Date").
The increases to the Notional Amount II in accordance with this paragraph 4
shall be contingent upon Counterparty providing notice of such conversion or
redemption to Goldman not later than two Business Days following the Additional
Amount Effective Date, which notice shall include written certification
acceptable to Goldman confirming the date such conversion or redemption and the
principal amount of the Bonds converted or redeemed.
5. Credit Support Documents: Standard Guaranty of The Goldman Sachs
Group, L.P.
6. Credit Support Providers: With respect to GSCM, Goldman Group.
7. Account Details:
USD Payments to GSCM:
For the Account of: Goldman Sachs Capital Markets, L.P.
Name of Bank: Citibank. N.A. New York
Account No: 40670834
Fed ABA No: 021000089
GSCM Inquiries Goldman Sachs Capital Markets, L.P.
Telephone No.: 212-902-2686
Facsimile No.: 212-902-5692
Payments to Counterparty: In accordance with Counterparty's written
instructions as set forth below or
otherwise delivered to GSCM. GSCM shall
make no payments without having received
(i) such written instructions and (ii) a
fully executed facsimile copy of this
Confirmation or other written acceptance of
the terms hereof.
For the Account of:
Name of Bank:
Account No:
Attention:
ABA No.:
4
<PAGE>
8. Offices:
(a) The Office of GSCM for this Transaction is 85 Broad Street, New York,
New York 10004.
(b) The Office of Counterparty for this Transaction is 1325 Borregas
Avenue, Sunnyvale, California 94089.
5
<PAGE>
8. Counterparty hereby agrees (a) to check this Confirmation (Reference No.: [
]) carefully and immediately upon receipt so that errors or discrepancies can be
promptly identified and rectified and (b) to confirm that the foregoing
correctly sets forth the terms of the agreement between GSCM and Counterparty
with respect to the particular Transaction to which this Confirmation relates,
by manually signing this Confirmation and providing the other information
requested herein and immediately returning an executed copy to Swap
Administration, facsimile No. 212-902-5692.
Very truly yours,
GOLDMAN SACHS CAPITAL MARKETS, L.P.
By: Goldman Sachs Capital Markets, Inc.,
General Partner
By: /s/ Daniel A. Ruperto
Name: Daniel A. Ruperto
Title: Vice President
Agreed and Accepted By:
MERCURY INTERACTIVE CORPORATION
By: /s/ Susan J. Skaer
Name: Susan J. Skaer
Title: Vice President, General Counsel and Secretary
Counterparty Reference No.:
----------------------
6
<PAGE>
Annex A
The following provisions shall be in lieu of a Schedule and shall be deemed to
modify and supplement the ISDA Form Master.
(a) "Specified Entity" means, in relation to GSCM, Goldman, Sachs & Co., Goldman
Sachs Capital Markets, L.P., Goldman Sachs International, Goldman Sachs (Asia)
Finance, Goldman Sachs Financial Markets, L.P., and Goldman Sachs Mitsui Marine
Derivative Products, L.P. for the purpose of Section 5(a)(v), and shall not
apply for purposes of Sections 5(a)(vi), 5(a)(vii) and 5(b)(iv); and means, in
relation to Counterparty, any Significant Subsidiary (as defined in the
Indenture between Counterparty and State Street Bank and Trust Company of
California, N.A., dated as of July 3, 2000 (the "Indenture")).
(b) "Cross Default" will apply to GSCM and to Counterparty, provided that (i)
the phrase "or becoming capable at such time of being declared" shall be deleted
from clause (1) of such Section 5(a)(vi) so that only Specified Indebtedness
that has actually been accelerated triggers this Event of Default. "Threshold
Amount" means in relation to GSCM, US$50,000,000 (or its equivalent in another
currency) and in relation to Counterparty, US$10,000,000 (or its equivalent in
another currency).
(c) "Credit Event Upon Merger" will apply to GSCM and will apply to
Counterparty.
(d) Payments on Early Termination. For the purpose of Section 6(e): Loss will
apply and the Second Method will apply.
(e) The parties agree to amend the following subsections of Section 5(a) as
follows: clause (ii): in the fifth line of this clause, delete the word
"thirtieth" and insert the word "twentieth".
(f) Documents to be delivered upon the execution of this Confirmation for the
purpose of Section 4(a) are: (i) with respect to both GSCM and Counterparty, a
copy of the most recent, publicly available audited annual financial statements
and/or of the unaudited quarterly financial statements of, in the case of GSCM,
Goldman Group, and, in the case of Counterparty, Counterparty, prepared in
accordance with generally accepted accounting principles in the country in which
the party is organized; (ii) with respect to GSCM only, the Standard Guaranty of
Goldman Group; and, (iii) with respect to Counterparty only, certified
resolutions of its board of directors or other governing body authorizing this
Confirmation and the Transactions contemplated hereby.
(g) Jurisdiction. The parties hereby agree to amend Section 13(b) by deleting
"non-" from the second line of clause (i).
(h) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to
Transactions.
(i) Accuracy of Specified Information. Section 3(d) is hereby amended by adding
in the third line thereof after the word "respect" and before the period, the
phrase "or, in the case of audited or unaudited financial statements, a fair
presentation of the financial condition of the relevant person."
(j) Additional Representations. The parties agree to amend Section 3 by adding
new Sections 3(e), (f), (g), and (h) as follows:
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(e) Eligible Contract Participant. It is an "eligible contract participant"
as defined in the U.S. Commodity Exchange Act.
(f) Non-Reliance. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers 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 that Transaction; it
being understood that information and explanations related to the terms and
conditions of a Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction. No communication (written or
oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Transaction.
(g) Assessment and Understanding. It is capable of assessing the merits of
and understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
that Transaction. It is also capable of assuming, and assumes, the risks of
that Transaction.
(h) Status of Parties. The other party is not acting as a fiduciary for or
an adviser to it in respect of that Transaction.
(k) Transfer. The following amendments are hereby made to Section 7: (i) in the
third line, insert the words "which consent will not be arbitrarily withheld or
delayed," immediately before the word "except"; and (ii) in clause (a), insert
the words "or reorganization, incorporation, reincorporation, or reconstitution
into or as," immediately before the word "another."
(l) Severability. This Agreement shall be deemed to be invalid and unenforceable
if any provision of Sections 1(c), 2, 5, 6, or 11 (or any definition or
provision in Section 14 to the extent it relates to, or is used in or in
connection with, any such Section) shall be held to be invalid or unenforceable.
(m) Waiver of Trial by Jury. Each party hereby irrevocably waives any and all
right to trial by jury in any Proceeding.
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Annex B
The following provisions shall apply with respect to Paragraph 13 to the ISDA
Form CSA.
(a) Credit Support Obligations.
(i) "Credit Support Amount" has the meaning specified in Paragraph 3,
except that the Credit Support Amount for Counterparty shall never be less
than the Independent Amount.
(ii) Eligible Collateral. The following items will qualify as "Eligible
Collateral" for Counterparty.
Valuation
Percentage
----------
(A) Cash 100%
(B) negotiable debt obligations 98.5%
issued by the U.S. Treasury
Department having an original
maturity at issuance of not
more than one year ("Trea-
sury Bills")
(C) negotiable debt obligations 98.5%
issued by the U.S. Treasury
Department having an original
maturity at issuance of more
than one year but not more
than 10 years ("Treasury Notes")
(D) negotiable debt obligations 98.5%
issued by the U.S Treasury
Department having an original
maturity at issuance of more
than 10 years ("Treasury Bonds")
(E) negotiable debt obligations 98.5%
which are issued and/or
guaranteed as to both principal
and Interest by the Federal Home
Loan Mortgage Corporation
("FHLMC"), the Federal National
Mortgage Association ("FNMA"),
or the Government National Mort-
gage Association ("GNMA"),
including mortgage-backed
securities and REMICs (collectively,
"Agency Securities"), but excluding
interest only securities, principal only
securities and residual interests.
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(iii) Thresholds.
(A) "Independent Amount" means with respect to Counterparty: 2% of
the initial Notional Amount.
(B) "Threshold" means with respect to GSCM: Not applicable, it being
understood that GSCM shall be only a Secured Party hereunder and not
a Pledgor and shall be under no obligation to Transfer Collateral
hereunder; and with respect to Counterparty: zero.
(C) "Minimum Transfer Amount" means with respect to a party,
$1,000,000; provided, however, that if an Event of Default has
occurred and is continuing with respect to a party, the Minimum
Transfer Amount with respect to such party shall be zero.
(D) Rounding. The Delivery Amount and Return Amount will be rounded
up and down, respectively, to the nearest integral multiple of
$100,000.
(b) Valuation and Timing.
(i) "Valuation Agent" means GSCM.
(ii) "Valuation Date" means each New York Banking Day.
(iii) "Valuation Time" means the close of business in the city of the
Valuation Agent on the Local Business Day before the Valuation Date or date
of calculation, as applicable; provided that the calculations of Value and
Exposure will be made as of approximately the same time on the same date.
(iv) "Notification Time" means no later than 1:00 p.m., New York time, on
a Local Business Day; provided, however, that the Valuation Agent will only
give notice of its calculations to a party upon request by such party.
(c) Conditions Precedent. The following Termination Events will be a "Specified
Condition" for the party specified (that party being the Affected Party if the
Termination Event occurs with respect to that party): With respect to
Counterparty only, Credit Event Upon Merger and Illegality.
(d) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m., New York time, on the Local Business
Day following the date on which the notice is given that gives rise to a
dispute under Paragraph 5.
(ii) "Value". For the purpose of Paragraph 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows:
(A) The Value of Cash will be the face amount thereof, multiplied by
the applicable Valuation Percentage.
(B) With respect to any Treasury Bills, Treasury Notes, Treasury
Bonds, or Agency Securities (referred to herein as "Securities"), the
sum of (I) (x) the mean of the high bid and low asked prices quoted
on such date by any principal market maker for such Securities chosen
by the Disputing Party, or (y) if no quotations are available from a
principal market maker on such date, the mean of such high bid and
low asked prices as of the day, next preceding such date, on which
such
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quotations were available, plus (II) the accrued interest on such
Securities (except to the extent Transferred to a party pursuant to
any applicable provision of this Agreement or included in the
applicable price referred to in (I) of this clause (B)) as of such
date, multiplied by the applicable Valuation Percentage.
(e) Distributions and Interest Amount.
(i) Interest Rate. The "Interest Rate" will be the overnight Federal
Funds (Effective) rate, as advised by Telerate p. 120, minus 25 basis
points.
(ii) Transfer of Interest Amount. The Transfer of the Interest Amount will
be made on the last Local Business Day of each calendar month and on any
Local Business Day that Posted Collateral in the form of Cash is
Transferred to the Pledgor pursuant to Paragraph 3(b).
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Annex C
Redemption Period Redemption Price
--------------------------------------------------------------------------------
From July 1, 2003 through June 30, 2004 $114.27
From July 1, 2004 through June 30, 2005 $113.51
From July 1, 2005 through June 30, 2006 $112.76
From July 1, 2006 through June 30, 2007 $112.00
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