Exhibit 10.77
Confirmation of OTC Convertible
Note Hedge
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Date:
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February 14, 2006
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To:
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Amgen Inc. (“ Counterparty
”)
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Attention:
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Treasurer
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From:
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Morgan Stanley & Co. International
Limited (“ MSIL ”)
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Dear Sir / Madam:
The purpose of this letter agreement
(this “ Confirmation ”) is to confirm the
terms and conditions of the above-referenced transaction entered
into between Counterparty and MSIL on the Trade Date specified
below (the “ Transaction ”). This
Confirmation constitutes a “Confirmation” as referred
to in the Agreement specified below.
The definitions and provisions
contained in the 2000 ISDA Definitions (the “ Swap
Definitions ”) and the 2002 ISDA Equity Derivatives
Definitions (the “ Equity Definitions ”
and, together with the Swap Definitions, the “
Definitions ”), in each case as published by
the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any
inconsistency between the Swap Definitions and the Equity
Definitions, the Equity Definitions will govern, and in the event
of any inconsistency between the Definitions and this Confirmation,
this Confirmation will govern. References herein to a
“Transaction” shall be deemed to be references to a
“Share Option Transaction” for purposes of the Equity
Definitions and a “Swap Transaction” for the purposes
of the Swap Definitions.
This Confirmation evidences a
complete binding agreement between you and us as to the terms of
the Transaction to which this Confirmation relates. This
Confirmation (notwithstanding anything to the contrary herein),
shall be subject to an agreement in the 1992 form of the ISDA
Master Agreement (Multicurrency Cross Border) (the “
Master Agreement ” or “
Agreement ”) as if we had executed an agreement
in such form (but without any Schedule and with elections
specified in the “ISDA Master Agreement”
Section of this Confirmation) on the Trade Date of the first
such Transaction between us. In the event of any
inconsistency between the provisions of that agreement and this
Confirmation, this Confirmation will prevail for the purpose of
this Transaction. The parties hereby agree that the
Transaction evidenced by this Confirmation shall be the only
Transaction subject to and governed by the Agreement.
The terms of the particular
Transaction to which this Confirmation relates are as
follows:
General Terms:
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Trade Date:
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February 14, 2006
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Effective Date:
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The date of issuance of the Reference
Notes.
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Option Style:
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Bermuda
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Seller:
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MSIL
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Buyer:
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Counterparty
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1
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Shares:
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The shares of common stock, $0.0001 par value,
of Counterparty (Security Symbol: “AMGN”) or such other
securities or property into which the Reference Notes are
convertible on the date of determination.
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Initial Payment Amount:
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$315,166,667
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Initial Payment Amount
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Payment Date:
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Effective Date
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Potential Exercise Date:
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Each Valuation Date
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Exchange:
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NASDAQ National Market
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Related Exchange(s):
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All Exchanges
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Knock-in Event:
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Not Applicable
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Knock-out Event:
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Not Applicable
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Reference Notes:
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0.125% Convertible Notes of Counterparty due
2011 in the original principal amount of $2.5 billion.
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Applicable Portion of the
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Reference Notes:
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50%. For the avoidance of doubt, the Calculation
Agent shall, as it deems necessary, take into account the
Applicable Portion of the Reference Notes in determining or
calculating any delivery or payment obligations hereunder, whether
upon a Conversion Event (as defined below) or otherwise.
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Conversion Event:
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Each conversion of any Reference Note pursuant
to the terms of the Note Indenture (the principal amount of
Reference Notes so converted, the “ Conversion
Amount ” with respect to such Conversion Event)
occurring before the Termination Date.
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If the Conversion Amount for any Conversion
Event is less than the aggregate principal amount of Reference
Notes then outstanding, then the terms of this Transaction shall
continue to apply, subject to the terms and conditions set forth
herein, with respect to the remaining outstanding principal amount
of the Reference Notes multiplied by the Applicable Portion of the
Reference Notes.
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Conversion Date:
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With respect to each Conversion Event, the date
on which any conversion of any Reference Note into Shares becomes
effective, as determined by Buyer in accordance with the terms of
the Note Indenture.
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Note Indenture:
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The indenture, dated as of closing of the
issuance of the Reference Notes, between Counterparty and JPMorgan
Chase Bank, N.A., as trustee relating to the Reference Notes, as
the same may be amended, modified or supplemented, subject to the
“Additional Termination Events” provisions of this
Confirmation.
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Termination Date:
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The earlier of (i) the maturity date of the
Reference Notes and (ii) the first day on which none of such
Reference Notes remain outstanding, whether by virtue of
conversion, issuer repurchase or otherwise.
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2
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Valuation:
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Valuation Date:
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The final “trading day” in the
applicable “conversion reference period” (each as
defined in the Note Indenture) in respect of each Conversion
Event.
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Settlement Terms:
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Settlement Method:
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Net Share Settlement or Net Cash Settlement
consistent with Buyer’s election with respect to the
Reference Notes converted in the applicable Conversion Event,
provided that solely Net Share Settlement shall apply in the event
that Buyer elects to deliver any shares in connection with the
applicable Conversion Event.
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Settlement Notice:
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Buyer shall provide Seller with notice of its
Settlement Method provided that in the event Buyer shall not
deliver the Settlement Notice, the Settlement Method shall be Net
Share Settlement but without regard to section (b) of the
definition of Net Share Settlement. The Settlement Notice will
include (to the extent not previously provided in the Conversion
Notice with respect to the applicable Conversion Event)
(i) the number of Reference Notes being converted,
(ii) the first “trading day” in the relevant
“conversion reference period” (each as defined in the
Note Indenture) for the Reference Notes and (iii) if any, the
applicable Cash Percentage.
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Settlement Date:
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Subject to the delivery of a Settlement Notice
or Conversion Notice to the Seller, the third (3rd) “trading
day” (as defined in the Note Indenture) following the
applicable Valuation Date.
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Conversion Notice:
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Counterparty agrees to provide Seller with
notice of any Conversion Event within two (2) “trading
days” after Counterparty’s receipt of notice of any
Conversion Event from the Trustee (as defined in the Note
Indenture) (such Conversion Notice can be provided by such
Trustee). The Conversion Notice will include (i) the number
of Reference Notes being converted and (ii) the first
“trading day” in the relevant “conversion
reference period. “
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Net Share Settlement:
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On the Settlement Date, Seller shall deliver to
Counterparty (a) a number of Shares equal to the related Net
Share Settlement Amount and (b) (x) an amount in cash equal to
the cash amount, if any, paid by Buyer in excess of the principal
amount of the applicable Reference Notes for such Conversion Event
under the Note Indenture multiplied by (y) the Applicable Portion
of the Reference Notes.
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Net Cash Settlement:
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On the Settlement Date, Seller shall deliver to
Counterparty an amount in cash equal to the related Net Cash
Settlement Amount.
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Net Share Settlement Amount:
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For each Conversion Event, the number of Shares
equal to the shares delivered by Buyer for such Conversion Event
under the Note Indenture multiplied by the Applicable Portion of
the Reference Notes, provided that with respect to such Conversion
Event if neither a Settlement Notice nor a Conversion Notice shall
be delivered to the Seller prior to the start of the
“conversion reference period” (as defined in the Note
Indenture) applicable to such Conversion Event, the Net Share
Settlement Amount for such Conversion Event shall be reduced by an
amount determined by the parties, in a commercially reasonable
manner each acting in good faith, representing the additional cost
and expenses of Seller in “unwinding” its hedge with
respect to such Conversion Event during the period from the
delivery of such notice to the end of the applicable
“conversion reference period” rather than over the
entire “conversion reference period” (as defined in the
Note Indenture). No reduction of the Net Share Settlement Amount
shall reduce the Net Share Settlement Amount below zero.
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3
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Net Cash Settlement Amount:
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For each Conversion Event, an amount equal to
the cash delivered by the Buyer in excess of the principal amount
of the applicable Reference Notes for such Conversion Event under
the Note Indenture multiplied by the Applicable Portion of the
Reference Notes, provided that with respect to such Conversion
Event if the Settlement Notice shall not be delivered to the Seller
prior to the start of the “conversion reference period”
(as defined in the Note Indenture) applicable to such Conversion
Event, the Net Cash Settlement Amount for such Conversion Event
shall be reduced by an amount determined by the parties, in a
commercially reasonable manner each acting in good faith,
representing the additional cost and expenses of Seller in
“unwinding” its hedge with respect to such Conversion
Event during the period from the delivery of such notice to the end
of the applicable “conversion reference period” rather
than over the entire “conversion reference period” (as
defined in the Note Indenture). No reduction of the Net Cash
Settlement Amount shall reduce the Net Cash Settlement Amount below
zero.
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Share Adjustments:
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Merger Event:
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The Transaction will be adjusted consistent with
the Reference Notes as provided in the Note Indenture.
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Consequences for Merger Events:
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Share-for-Share:
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The Transaction will be adjusted
consistent with the Reference Notes as provided in the Note
Indenture.
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Share-for-Other:
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The Transaction will be adjusted
consistent with the Reference Notes as provided in the Note
Indenture.
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Share-for-Combined:
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The Transaction will be adjusted
consistent with the Reference Notes as provided in the Note
Indenture.
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Tender Offer:
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The Transaction will be adjusted
consistent with the Reference Notes as provided in the Note
Indenture.
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Nationalization, Insolvency or
Delisting:
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Cancellation and Payment
(Calculation Agent Determination), provided Buyer shall determine
whether payment shall be settled in cash or Shares.
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Additional Disruption Events:
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Change in Law:
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Not Applicable
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Failure to Deliver:
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Applicable. If there is inability in
the market to deliver Shares due to illiquidity on a day that would
have been a Settlement Date, then the Settlement Date shall be the
first succeeding Exchange Business Day on which there is no such
inability to deliver, but in no such event shall the Settlement
Date be later than the date that is two (2) Exchange Business
Days immediately following what would have been the Settlement Date
but for such inability to deliver.
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Insolvency Filing:
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Applicable
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Hedging Disruption Event:
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Not Applicable
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Increased Cost of
Hedging:
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Not Applicable
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Hedging Party:
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Seller
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Loss of Stock Borrow:
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Not Applicable
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Increased Cost of Stock
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