Exhibit 10.87
V ARIABLE T ERM A CCELERATED S HARE R EPURCHASE T RANSACTION
To:
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320-1799
From:
Lehman Brothers, Inc. acting as Agent
Lehman Brothers OTC Derivatives Inc., acting as
Principal
745 Seventh Avenue
New York, New York 10019
Attention: Andrew Yare - Transaction Management
Group
Facsimile No.: (646) 885-9546 (United
States of America)
Telephone No.: (646) 333-9493
Dear Sirs:
This letter agreement (this “
Confirmation ”) confirms the terms and
conditions of the variable term accelerated share repurchase
transaction (the “ Transaction ”) entered
into between Amgen Inc. (“ Counterparty
”) and Lehman Brothers OTC Derivatives Inc. (“
Bank ”), on the Trade Date specified below.
This Confirmation constitutes a “Confirmation” under
the Agreement specified below. This Confirmation is sent on behalf
both Bank and Lehman Brothers Inc. (“ Agent
”). Bank is not a member of the Securities Investor
Protection Corporation.
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1.
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The definitions
and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “ Definitions ”) (as
published by the International Swaps and Derivatives Association,
Inc.) are incorporated into this Confirmation. References herein to
a “Transaction” shall be deemed to be references to a
“Share Forward Transaction” for purposes of the
Definitions. This Confirmation evidences a complete binding
agreement between Counterparty and Bank as to the terms of the
Transaction.
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This Confirmation shall supplement,
form a part of, and be subject to an agreement (the “
Agreement ”) in the form of the 1992 ISDA
Master Agreement (Multicurrency – Cross Border), as if, on
the Trade Date hereof, Bank and Counterparty had executed that
agreement (but without any Schedule other than the provisions in
Section 16 of this Confirmation). In the event of any
inconsistency between the Definitions and the Agreement, the
Definitions will govern. In the event of any inconsistency between
this Confirmation, on the one hand, and the Definitions or the
Agreement, on the other hand, this Confirmation will govern. For
the avoidance of doubt, the Transaction shall be the only
transaction under the Agreement.
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2.
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The following
terms and conditions shall govern the Transaction:
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1
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General Terms:
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Trade
Date:
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May 28,
2008.
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Buyer:
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Counterparty.
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Seller:
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Bank.
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Shares:
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The common
stock, par value $0.0001 per share, of Counterparty (sometimes also
referred to as the “ Issuer
”).
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Price Adjustment Period Termination
Date:
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The earlier
of:
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(i) the Scheduled
Termination Date; and
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(ii) the Scheduled
Trading Day immediately preceding the Accelerated Termination
Date.
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Scheduled
Termination Date:
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July 29, 2008;
subject to adjustment as provided in “Market Disruption
Event” below.
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Accelerated
Termination Date:
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Any Exchange Business Day after June
30, 2008, and prior to the Scheduled Termination Date that is so
designated by Bank by written notice to Counterparty of its
intention to terminate the Price Adjustment Period (it being
understood that such notice may be given on the Accelerated
Termination Date); Bank shall notify Counterparty of such
designation no later than the close of business on the Exchange on
the Scheduled Trading Day immediately following the Accelerated
Termination Date.
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Price Adjustment Period:
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The period
commencing on, and including, the Scheduled Trading Day immediately
following the Trade Date and ending on, and including, the Price
Adjustment Period Termination Date.
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Initial Settlement:
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Prepayment:
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Applicable.
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Prepayment
Amount:
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USD1,500,000,000
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Prepayment
Date:
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The Initial
Share Delivery Date; on which Counterparty will pay to Bank the
Prepayment Amount.
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Number of
Shares:
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31,527,323
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2
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Initial Share
Delivery:
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Bank shall
deliver a number of Shares equal to the Number of Shares to
Counterparty on the Initial Share Delivery Date in accordance with
Section 9.4 of the Definitions (with the Initial Share Delivery
Date deemed to be a “Settlement Date” for purposes of
such Section 9.4), against payment by Counterparty of the
Prepayment Amount.
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Initial Share Delivery Date:
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The third
Clearance System Business Day after the Trade Date.
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Exchange:
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NASDAQ Global
Select Market
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Related
Exchange(s):
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All
Exchanges
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Final Settlement:
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Settlement
Currency:
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USD
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Net Share
Settlement:
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Subject to the
“Cash Settlement” provisions hereof, and
notwithstanding anything to the contrary in the Definitions, (i) if
the Average Reference Price is less than USD47.577779 per Share,
Bank shall deliver to Counterparty the Bank Share Delivery Amount,
and (ii) if the Average Reference Price is greater than or equal to
USD47.577779 per Share, Counterparty shall deliver to Bank the
Counterparty Share Delivery Amount, in either case on the
Settlement Date.
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Bank Share
Delivery Amount:
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A number of Shares, rounded down to
the nearest whole Share, equal to (a) the Prepayment Amount
divided by the Average Reference Price minus
(b) the Number of Shares.
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Counterparty
Share Delivery Amount:
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A number of Shares, rounded down to
the nearest whole Share, equal to (a) the Number of Shares
minus (b) the Prepayment Amount divided by the
Average Reference Price; provided that if Counterparty
delivers Unregistered Shares and Bank and its affiliates
(collectively, “ Bank Group ”) do not
elect pursuant to the last paragraph of Section 3.3 for Annex A to
apply to such delivery of Unregistered Shares, Counterparty shall
deliver a number of Shares, rounded down to the nearest whole
Share, equal to the product of the Counterparty Share Delivery
Amount and 1.0075; provided, further, in no event shall
Counterparty be required to deliver more than 52,545,539 Shares (as
such number may be adjusted for stock splits or similar events, the
“ Maximum Number of Shares ”) or as
otherwise agreed by the parties.
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Settlement
Date:
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The third
Exchange Business Day following the Price Adjustment Period
Termination Date.
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3
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Daily Share
Reference Price:
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For each Valuation Date, (a) the
10b-18 volume-weighted average price per Share on the Exchange on
such day as published on Bloomberg Page “AMGN.Q
<Equity> AQR SEC” (the “ Daily 10b-18 VWAP
Price ”) or any successor page thereto, or if such
price is not so reported on such Valuation Date for any reason, as
reasonably determined by the Calculation Agent in consultation with
the Counterparty, minus (b) the Daily Reference Price
Adjustment specified in Schedule I.
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Average
Reference Price:
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The arithmetic
average of the Daily Share Reference Prices for each Valuation Date
during the Price Adjustment Period.
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Valuation
Date:
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Any Scheduled
Trading Day in the Price Adjustment Period or the Cash Settlement
Pricing Period, as the case may be, that is not a Valuation
Disruption Day.
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Valuation Disruption Day:
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Any Scheduled
Trading Day during the period beginning on, and including, the
Trade Date, and ending on, and including the later of the last day
of (x) the Price Adjustment Period and (y) any Cash Settlement
Pricing Period (i) that is a Disrupted Day or a day designated by
Bank as a Valuation Disruption Day pursuant to Section 5.6(b) or
Section 7 hereof or (ii) on which Bank Group reasonably determines
that it would be appropriate, in light of any legal, regulatory or
self-regulatory requirements or related policies and procedures
(whether or not such requirements, policies or procedures are
imposed by law or have been voluntarily adopted by Bank Group) for
Bank Group to refrain from purchasing Shares in connection with the
Transaction.
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For each
Valuation Disruption Day, Bank may, by written notice to
Counterparty on or prior to the Price Adjustment Period Termination
Date or the final Valuation Date of the Cash Settlement Pricing
Period, as the case may be, in good faith, extend the Price
Adjustment Period or the Cash Settlement Pricing Period, as the
case may be, by an additional Valuation Date; provided,
however, if the extension relates to clause (ii) in the
paragraph immediately above, Bank shall not communicate to
Counterparty the reason for such extension in the written
notice.
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Market
Disruption Event:
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Section 6.3(a)
of the Definitions is hereby amended by replacing clause (ii)
thereof in its entirety with the following: “(ii) an Exchange
Disruption, which in either case occurs at any time prior to the
relevant Valuation Time on the relevant Valuation Date, or”
and inserting immediately following clause (iii) thereof the
following: “; in each case that the Calculation Agent
determines is material.”
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Cash
Settlement:
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Counterparty
may, in lieu of its obligation to deliver Shares in accordance with
the “Net Share Settlement” provisions hereof, by
written notice to Bank at any time no later than 5:30 p.m. (New
York City time) on the Scheduled Trading Day immediately preceding
the Scheduled Termination Date (or, in the case of an Accelerated
Termination Date, reasonably promptly following receipt of notice
from Bank of the designation of such Accelerated Termination Date),
elect to pay to Bank on the Cash Settlement Date an amount in cash
equal to the Cash Settlement Amount.
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Cash Settlement
Date:
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The Exchange
Business Day immediately following the last day of the Cash
Settlement Pricing Period.
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Cash Settlement
Amount:
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The
Counterparty Share Delivery Amount multiplied by the
arithmetic average of the Daily 10b-18 VWAP Prices for each
Valuation Date during the Cash Settlement Pricing
Period.
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Cash Settlement
Pricing Period:
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The number of Valuation Dates (which
number of Valuations Dates shall in no event be greater than five)
so specified by Bank in good faith following receipt by Bank of the
notice described in the “Cash Settlement” provision
hereof (or, for purposes of determining the Cash Settlement Date
under Paragraph 1 of Annex A, the date on which Bank Group elects
pursuant to the last paragraph of Section 3.3 for Annex A to
apply), commencing on the first Valuation Date immediately
following the later of the date on which Counterparty notifies Bank
that Cash Settlement is applicable (or, for purposes of determining
the Cash Settlement Date under Paragraph 1 of Annex A, the date on
which Bank Group elects pursuant to the last paragraph of Section
3.3 for Annex A to apply) and the Price Adjustment Period
Termination Date.
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Calculation
Agent:
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Bank.
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Credit Support Documents:
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None
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Share
Adjustments:
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Method of Adjustment:
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Calculation
Agent Adjustment
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Extraordinary
Dividend:
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Any dividend or
distribution, other than a dividend or distribution of the type
described in Section 11.2(e)(i), Section 11.2(e)(ii)(A) or Section
11.2(e)(ii)(B) of the Definitions, that has an ex-dividend date
occurring on or after the Trade Date and on or prior to the later
of (x) the Settlement Date and (y) any Cash Settlement
Date.
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Extraordinary Events:
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New
Shares:
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In the
definition of New Shares in Section 12.1(i) of the Definitions, the
text in clause (i) shall be deleted in its entirety and replaced
with “publicly quoted, traded or listed on any of the New
York Stock Exchange, the American Stock Exchange, the NASDAQ Global
Select Market or the NASDAQ Global Market (or their respective
successors)”.
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Consequences of
Merger Events:
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(a) Share-for-Share:
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Modified
Calculation Agent Adjustment; provided, however, no
adjustment shall be made to account for changes in stock loan rate,
liquidity or hedging costs.
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(b) Share-for-Other:
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Cancellation
and Payment (Calculation Agent Determination); provided,
however, no adjustment shall be made to account for changes in
stock loan rate, liquidity or hedging costs.
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(c) Share-for-Combined:
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Component
Adjustment
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Determining Party:
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Bank
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Tender
Offer:
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Applicable
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Consequences of Tender Offer:
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(a) Share-for-Share:
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Modified
Calculation Agent Adjustment; provided, however, no
adjustment shall be made to account for changes in stock loan rate,
liquidity or hedging costs.
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(b) Share-for-Other:
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Cancellation
and Payment (Calculation Agent Determination); provided,
however, no adjustment shall be made to account for changes in
stock loan rate, liquidity or hedging costs.
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(c) Share-for-Combined:
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Component
Adjustment
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Determining Party:
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Bank
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Nationalization, Insolvency or
Delisting:
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Cancellation and Payment
(Calculation Agent Determination); provided that in addition
to the provisions of Section 12.6(a)(iii) of the Definitions, it
shall also constitute a Delisting if the Shares are not immediately
re-listed, re-traded or re-quoted on any of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ Global Market or
the NASDAQ Global Select Market (or their respective successors);
if the Shares are immediately re-listed, re-traded or re-quoted on
any such exchange or quotation system, such exchange or quotation
system shall be deemed to be the Exchange.
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Determining
Party:
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Bank
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Additional
Disruption Events:
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(a) Change-in-Law:
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Applicable;
provided that, Section 12.9(a)(ii) of the Definitions is
hereby amended by deleting clause (Y) in its entirety.
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(b) Insolvency
Filing:
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Applicable
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(c) Hedging
Disruption:
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Applicable;
provided that, Section 12.9(a)(v) of the Definitions is
hereby amended by adding the phrase “for five or more
successive Scheduled Trading Days” immediately following the
word “efforts” in the second line thereof.
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Determining
Party:
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Bank
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Additional
Termination Event:
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Bank may
designate any Scheduled Trading Day as an Early Termination Date
with respect to the Transaction if at any time the Counterparty
declares an Extraordinary Dividend. In such case, the Transaction
shall be the sole Affected Transaction and Counterparty shall be
the sole Affected Party.
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Non-Reliance/
Agreements and Acknowledgments Regarding Hedging Activities/
Additional Acknowledgments:
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Applicable
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3.1
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Upon (x) the occurrence or
effective designation of an Early Termination Date in respect of
the Transaction or (y) the occurrence of an Extraordinary
Event that results in the cancellation or termination of the
Transaction pursuant to Section 12.2, 12.3, 12.6 or 12.9 of
the Definitions (any such event as described in clause (x) or
(y) above, an “ Early Termination Event
”) (except, in the case of clause (y), an Extraordinary Event
that is a Nationalization, Insolvency, a Merger Event or a Tender
Offer, in each case, in which the consideration or proceeds to be
paid to holders of Shares consists solely of cash), if one party
would owe any amount to the other party pursuant to
Section 6(d)(ii) and 6(e) of the Agreement or any Cancellation
Amount pursuant to Section 12.2, 12.3, 12.6 or 12.9 of the
Definitions (any such amount, a “ Payment
Amount ”), then on the date on which any
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Payment Amount is due, in lieu of
any payment or delivery of such Payment Amount, Counterparty may
elect, by prior written notice to Bank, that the party owing such
amount shall deliver to the other party a number of Shares (or, in
the case of a Merger Event, Tender Offer, Nationalization or
Insolvency, a number of units, each comprising the number or amount
of the securities or property that a hypothetical holder of one
Share would receive in such Extraordinary Event (each such unit, an
“ Alternative Termination Delivery Unit ”
and, the securities or property comprising such unit, “
Alternative Termination Property ”)) with a
value equal to the Payment Amount based on the market value of the
Shares (or such Alternative Termination Property) as of the Early
Termination Date or the date as of which the Cancellation Amount is
determined, as the case may be, as determined by the Calculation
Agent; provided that , notwithstanding anything to the
contrary in the Definitions or the Agreement, any Payment Amount
shall be determined without regard to any stock loan rate, hedging
costs or liquidity relevant to the Shares; provided further
that in determining the composition of any Alternative Termination
Delivery Unit, if the relevant Extraordinary Event involves a
choice of consideration to be received by holders, such holder
shall be deemed to have elected to receive the maximum possible
amount of common stock. In no event, however, shall the number of
Shares required to be delivered by the Counterparty hereunder
exceed the Maximum Number of Shares.
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3.2
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Notwithstanding
anything to the contrary in this Confirmation, Counterparty
acknowledges and agrees that, on any day, to the extent (but only
to the extent) that transactions in Shares (or any other class of
voting securities of Counterparty) would result in the ultimate
parent entity of Bank directly or indirectly beneficially owning
(as such term is defined for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “
Exchange Act ”)) at any time on such day in
excess of 9.0% of the outstanding Shares or any other class of
voting securities of Counterparty, (a) Bank shall not be
obligated to deliver or receive any Shares to or from Counterparty,
(b) Counterparty shall not be entitled to receive any Shares
from Bank on such day, and (c) any purported receipt or
delivery of Shares shall be void and have no effect.
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If, on any day, any delivery or
receipt of Shares by Bank is not made, in whole or in part, as a
result of this provision, the respective obligations of
Counterparty and Bank to make or accept such receipt or delivery
shall not be extinguished and such receipt or delivery shall be
effected over time as promptly as practicable after Bank
determines, in a commercially reasonable manner, that such receipt
or delivery would not result in its ultimate parent entity directly
or indirectly beneficially owning in excess of 9.0% of the
outstanding Shares or any other class of voting securities of
Counterparty.
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3.3
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Notwithstanding
Section 9.11 of the Definitions, but subject to the last
paragraph of this Section 3.3, the parties acknowledge that
Shares delivered as part of Counterparty Share Delivery Amount or
pursuant to this Section 3 may be Unregistered Shares. For the
purposes hereof, “ Unregistered Shares ”
means Shares that have not been registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(the “ Securities Act ”) or any state
securities laws (“ Blue Sky Laws ”) or
Shares that cannot otherwise be freely sold, transferred, pledged
or otherwise disposed of without registration under the Securities
Act or under applicable Blue Sky Laws unless such sale, transfer,
pledge or other disposition is made in a transaction exempt from or
not subject to registration thereunder.
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Upon request by Bank Group,
Counterparty agrees to promptly remove, or cause to be removed, any
legends referring to any transfer restrictions from such
Unregistered Shares upon delivery by Bank Group to Counterparty of
a seller’s representation letter in the form customarily
delivered by Bank Group in connection with resales of restricted
securities pursuant to Rule 144 under the
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Securities Act, together with any
supporting documentation which shall be required by Counterparty in
its reasonable, good faith discretion (which may include an opinion
of counsel); provided that , at the time of such request,
Bank Group has satisfied all holding period and other requirements
of Rule 144 applicable to Bank Group.
Notwithstanding anything to the
contrary in this Confirmation, at the election of Bank Group by
notice to Counterparty no later than two Exchange Business Days
prior to the Scheduled Termination Date (or in the case of an
Accelerated Termination Date, no later than the time of designation
thereof), any delivery of Shares by Counterparty as part of the
Counterparty Share Delivery Amount or pursuant to this
Section 3 shall comply with the terms of Annex A
hereof.
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4.
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Additional
Agreements of the Parties :
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4.1
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For the
avoidance of doubt, the last sentence of the first paragraph of
6(e) of the Agreement shall not apply with respect to the
Transaction.
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4.2
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Bank agrees
that in the event of the bankruptcy of Counterparty, Bank shall not
have rights or assert a claim that is senior in priority to the
rights and claims available to the shareholders of the common stock
of Counterparty; provided, however, that nothing herein
shall limit or shall be deemed to limit Bank’s right to
pursue remedies in the event of a breach by Counterparty of its
obligations and agreements with respect to the Transaction; and
provided further that in pursuing a claim against
Counterparty in the event of a bankruptcy, insolvency or
dissolution with resp
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