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Exhibit 1.1
K ENDLE
I NTERNATIONAL I NC
.
$175,000,000 Principal
Amount
3.375% Convertible Senior
Notes due 2012
U NDERWRITING
A GREEMENT
July 10, 2007
U NDERWRITING
A GREEMENT
July 10, 2007
UBS Securities LLC
as Managing
Underwriter
299 Park Avenue
New York, New York
10171-0026
Ladies and
Gentlemen:
Kendle International Inc., an
Ohio corporation (the “ Company ”), proposes to
issue and sell to the underwriters named in Schedule A
annexed hereto (the “ Underwriters ”), for whom
you are acting as representative, $175,000,000 aggregate principal
amount of its 3.375% Convertible Senior Notes due 2012 (the “
Firm Notes ”). In addition, solely for the purpose of
covering over-allotments, the Company proposes to grant to the
Underwriters the option to purchase from the Company up to an
additional $25,000,000 aggregate principal amount of the
Company’s 3.375% Convertible Senior Notes due 2012 (the
“ Additional Notes ”). The Firm Notes and the
Additional Notes are hereinafter collectively sometimes referred to
as the “ Notes .” Where the context requires,
the singular shall refer to the plural and the plural shall refer
to the singular.
The Notes are to be issued
pursuant to an indenture dated as of March 21, 2007, between
the Company and LaSalle Bank National Association, as trustee (the
“ Trustee ”), as supplemented by a supplemental
indenture to be dated as of July 16, 2007 between the Company
and the Trustee (such indenture, as supplemented, the “
Indenture ”). The Notes will be convertible in
accordance with their terms and the terms of the Indenture into
cash and, if applicable, shares of the common stock (the “
Common Stock ”) of the Company (the “
Shares ”).
The Notes and the Shares are
described in the Prospectus which is referred to below. In
connection with the issuance and sale of the Notes, the Company
will enter into certain convertible note hedge and warrant
transactions (collectively, the “ Hedging Transactions
”), as described in the Pre-Pricing Prospectus and Prospectus
under the caption “Convertible note hedge warrant
transactions,” pursuant to certain agreements (collectively,
the “ Hedging Transaction Agreements ”)
described thereunder.
The Company has prepared and
filed, in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder
(collectively, the “ Act ”), with the Securities
and Exchange Commission (the “ Commission ”) a
registration statement on Form S-3 (File No. 333-141475) under
the Act (the “ registration statement ”),
including a prospectus, which registration statement registers the
offer and sale of the Notes and the Shares under the Act and
incorporates by reference documents which the Company has filed, or
will file, in accordance with the provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the “ Exchange Act ”).
Amendments to such registration statement, if necessary or
appropriate, have been similarly prepared and filed with the
Commission in accordance with the Act. Such registration statement,
as so amended, has become effective under the Act.
Except where the context
otherwise requires, “ Registration Statement ,”
as used herein, means the registration statement, as amended at the
time of such registration statement’s effectiveness for
purposes of Section 11 of the Act, as such section applies to
the respective Underwriters (the “ Effective Time
”), including (i) all documents filed as a part thereof
or incorporated or deemed to be incorporated by reference therein,
(ii) any information contained or incorporated by reference in
a prospectus filed with the Commission pursuant to Rule 424(b)
under the Act, to the extent such information is deemed, pursuant
to Rule 430B or Rule 430C under the Act, to be part of the
registration statement at the Effective Time, and (iii) any
registration statement filed to register the offer and sale of
Notes pursuant to Rule 462(b) under the Act.
The Company has furnished to
you, for use by the Underwriters and by dealers in connection with
the offering of the Notes, copies of one or more preliminary
prospectus supplements relating to the Notes. Except where the
context otherwise requires, “ Pre-Pricing Prospectus
,” as used herein, means each such preliminary prospectus
supplement, in the form so furnished, including any basic
prospectus (whether or not in preliminary form) furnished to you by
the Company and attached to or used with such preliminary
prospectus supplement. Except where the context otherwise requires,
“ Basic Prospectus ,” as used herein, means any
such basic prospectus and any basic prospectus furnished to you by
the Company and attached to or used with the Prospectus Supplement
(as defined below).
Except where the context
otherwise requires, “ Prospectus Supplement ,”
as used herein, means the final prospectus supplement, relating to
the Notes, filed by the Company with the Commission pursuant to
Rule 424(b) under the Act on or before the second business day
after the date hereof (or such earlier time as may be required
under the Act), in the form furnished by the Company to you for use
by the Underwriters and by dealers in connection with the offering
of the Notes.
Except where the context
otherwise requires, “ Prospectus ,” as used
herein, means the Prospectus Supplement together with the Basic
Prospectus attached to or used with the Prospectus
Supplement.
“ Permitted Free
Writing Prospectuses ,” as used herein, means the
documents listed on Schedule B attached hereto and each
“road show” (as defined in Rule 433 under the Act), if
any, related to the offering of the Notes contemplated hereby that
is a “written communication” (as defined in Rule 405
under the Act). The Underwriters have not offered or sold and will
not offer or sell, without the Company’s consent, any Notes
by means of any “free writing prospectus” (as defined
in Rule 405 under the Act) that is not a Permitted Free Writing
Prospectus and that either (i) is required to be filed by the
Underwriters with the Commission pursuant to Rule 433 under the Act
or (ii) contains any “issuer information” (as
defined in Rule 433 under the Act) that has not theretofore been
filed with the Commission by the Company, other than a Permitted
Free Writing Prospectus.
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“ Disclosure
Package ,” as used herein, means any Pre-Pricing
Prospectus or Basic Prospectus, in either case together with any
combination of one or more of the Permitted Free Writing
Prospectuses, if any.
Any reference herein to the
registration statement, the Registration Statement, any Basic
Prospectus, any Pre-Pricing Prospectus, the Prospectus Supplement,
the Prospectus or any Permitted Free Writing Prospectus shall be
deemed to refer to and include the documents, if any, incorporated
by reference, or deemed to be incorporated by reference, therein
(the “ Incorporated Documents ”), including,
unless the context otherwise requires, the documents, if any, filed
as exhibits to such Incorporated Documents. Any reference herein to
the terms “ amend ,” “ amendment
” or “ supplement ” with respect to the
Registration Statement, any Basic Prospectus, any Pre-Pricing
Prospectus, the Prospectus Supplement, the Prospectus or any
Permitted Free Writing Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act on or
after the initial effective date of the Registration Statement, or
the date of such Basic Prospectus, such Pre-Pricing Prospectus, the
Prospectus Supplement, the Prospectus or such Permitted Free
Writing Prospectus, as the case may be, and deemed to be
incorporated therein by reference.
As used in this Agreement,
“ business day ” shall mean a day on which the
New York Stock Exchange (the “ NYSE ”) is open
for trading. The terms “herein,” “hereof,”
“hereto,” “hereinafter” and similar terms,
as used in this Agreement, shall in each case refer to this
Agreement as a whole and not to any particular section, paragraph,
sentence or other subdivision of this Agreement. The term
“or,” as used herein, is not exclusive.
The Company and the
Underwriters agree as follows:
1. Sale and Purchase .
Upon the basis of the representations and warranties and subject to
the other terms and conditions herein set forth, the Company agrees
to issue and sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from
the Company the aggregate principal amount of Firm Notes set forth
opposite the name of such Underwriter in Schedule A attached
hereto, subject to adjustment in accordance with Section 8
hereof, in each case at a purchase price of 97.00% of the principal
amount thereof. The Company is advised by you that the Underwriters
intend (i) to make a public offering of their respective
portions of the Firm Notes as soon after the effectiveness of this
Agreement as in your judgment is advisable and (ii) initially
to offer the Firm Notes upon the terms set forth in the Prospectus.
You may from time to time increase or decrease the public offering
price after the initial public offering to such extent as you may
determine.
In addition, the Company
hereby grants to the several Underwriters the option (the “
Over-Allotment Option ”) to purchase, and upon the
basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Underwriters shall have
the right to purchase, severally and not jointly, from the Company,
ratably in accordance with the aggregate principal amount of Firm
Notes to be purchased by each of them, all or a portion of the
Additional Notes as may be necessary to cover over-allotments made
in connection with the offering of the Firm Notes, at a purchase
price of 97.00% of the principal amount thereof. The Over-Allotment
Option may be exercised by UBS Securities LLC (“ UBS
”) on behalf of the several Underwriters at any time
and
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from time to time on or before the
thirtieth day following the date of the Prospectus Supplement by
written notice to the Company. Such notice shall set forth the
aggregate principal amount of Additional Notes as to which the
Over-Allotment Option is being exercised and the date and time when
the Additional Notes are to be delivered (any such date and time
being herein referred to as an “ additional time of
purchase ”); provided , however , that no
additional time of purchase shall be earlier than the “time
of purchase” (as defined below) nor earlier than the second
business day after the date on which the Over-Allotment Option
shall have been exercised nor later than the tenth business day
after the date on which the Over-Allotment Option shall have been
exercised. The principal amount of Additional Notes to be sold to
each Underwriter shall be the principal amount which bears the same
proportion to the aggregate principal amount of Additional Notes
being purchased as the principal amount of Firm Notes set forth
opposite the name of such Underwriter on Schedule A hereto
bears to the aggregate principal amount of Firm Notes, subject to
adjustment in accordance with Section 8 hereof.
2. Payment and
Delivery . Payment of the purchase price for the Firm Notes
shall be made to the Company by Federal Funds wire transfer,
against delivery of the Firm Notes to you through the facilities of
The Depository Trust Company (“ DTC ”) for the
respective accounts of the Underwriters. Such payment and delivery
shall be made at 10:00 A.M., New York City time, on July 16,
2007 (unless another time shall be agreed to by you and the Company
or unless postponed in accordance with the provisions of
Section 8 hereof). The time at which such payment and delivery
are to be made is hereinafter sometimes called the “ time
of purchase .” Electronic transfer of the Firm Notes
shall be made to you at the time of purchase in such names and in
such denominations as you shall specify.
Payment of the purchase price
for the Additional Notes shall be made at the additional time of
purchase in the same manner and at the same office and time of day
as the payment for the Firm Notes. Electronic transfer of the
Additional Notes shall be made to you at the additional time of
purchase in such names and in such denominations as you shall
specify.
For the purpose of expediting
the checking of the certificates for the Notes by you, the Company
agrees to make such certificates available to you for such purpose
at least one full business day preceding the time of purchase or
the additional time of purchase, as the case may be.
Deliveries of the documents
described in Section 6 hereof with respect to the purchase of
the Notes shall be made at the offices of Dewey Ballantine LLP at
1301 Avenue of the Americas, New York, New York 10019, at 9:00
A.M., New York City time, on the date of the closing of the
purchase of the Firm Notes or the Additional Notes, as the case may
be.
3. Representations and
Warranties of the Company . The Company represents and warrants
to and agrees with each of the Underwriters that:
(a) the Registration
Statement has heretofore become effective under the Act or, with
respect to any registration statement to be filed to register the
offer and sale of Notes and the Shares pursuant to Rule 462(b)
under the Act, will be filed with the
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Commission and become
effective under the Act no later than 10:00 P.M., New York City
time, on the date hereof; no stop order of the Commission
preventing or suspending the use of any Basic Prospectus, any
Pre-Pricing Prospectus, the Prospectus Supplement, the Prospectus
or any Permitted Free Writing Prospectus, or the effectiveness of
the Registration Statement, has been issued, and no proceedings for
such purpose have been instituted or, to the Company’s
knowledge, are contemplated by the Commission;
(b) the Registration
Statement complied when it became effective, complies as of the
date hereof and, as amended or supplemented, at the time of
purchase, each additional time of purchase, if any, and at all
times during which a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of
Notes, will comply, in all material respects, with the requirements
of the Act; the conditions to the use of Form S-3 in connection
with the offering and sale of the Notes and Shares as contemplated
hereby have been satisfied; the Registration Statement meets, and
the offering and sale of the Notes and the Shares as contemplated
hereby complies with, the requirements of Rule 415 under the Act
(including, without limitation, Rule 415(a)(5) under the Act); the
Registration Statement did not, as of the Effective Time, contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; each Pre-Pricing Prospectus
complied, at the time it was filed with the Commission, and
complies as of the date hereof, in all material respects with the
requirements of the Act; at no time during the period that begins
on the earlier of the date of such Pre-Pricing Prospectus and the
date such Pre-Pricing Prospectus was filed with the Commission and
ends at the time of purchase did or will any Pre-Pricing
Prospectus, as then amended or supplemented, include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and
at no time during such period did or will any Pre-Pricing
Prospectus, as then amended or supplemented, together with any
combination of one or more of the then issued Permitted Free
Writing Prospectuses, if any, include an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; each Basic Prospectus
complied or will comply, as of its date and the date it was or will
be filed with the Commission, complies as of the date hereof (if
filed with the Commission on or prior to the date hereof) and, at
the time of purchase, each additional time of purchase, if any, and
at all times during which a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of
Notes, will comply, in all material respects, with the requirements
of the Act; at no time during the period that begins on the earlier
of the date of such Basic Prospectus and the date such Basic
Prospectus was filed with the Commission and ends at the time of
purchase did or will any Basic Prospectus, as then amended or
supplemented, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, and at no time during such period
did or will any Basic Prospectus, as then amended or supplemented,
together with any combination of one or more of the then issued
Permitted Free Writing
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Prospectuses, if any, include
an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; each of the Prospectus Supplement and the Prospectus
will comply, as of the date that it is filed with the Commission,
the date of the Prospectus Supplement, the time of purchase, each
additional time of purchase, if any, and at all times during which
a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Notes, in all material
respects, with the requirements of the Act (in the case of the
Prospectus, including, without limitation, Section 10(a) of
the Act); at no time during the period that begins on the earlier
of the date of the Prospectus Supplement and the date the
Prospectus Supplement is filed with the Commission and ends at the
later of the time of purchase, the latest additional time of
purchase, if any, and the end of the period during which a
prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Notes did or will any
Prospectus Supplement or the Prospectus, as then amended or
supplemented, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; at no time during the period that
begins on the date of such Permitted Free Writing Prospectus and
ends at the time of purchase did or will any Permitted Free Writing
Prospectus include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided , however , that the
Company makes no representation or warranty in this
Section 3(b) with respect to any statement contained in the
Registration Statement, any Pre-Pricing Prospectus, the Prospectus
or any Permitted Free Writing Prospectus in reliance upon and in
conformity with information concerning an Underwriter and furnished
in writing by or on behalf of such Underwriter through you to the
Company expressly for use in the Registration Statement, such
Pre-Pricing Prospectus, the Prospectus or such Permitted Free
Writing Prospectus; each Incorporated Document, at the time such
document was filed, or will be filed, with the Commission or at the
time such document became or becomes effective, as applicable,
complied or will comply, in all material respects, with the
requirements of the Exchange Act and did not or will not, as
applicable, include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading;
(c) prior to the execution of
this Agreement, the Company has not, directly or indirectly,
offered or sold any Notes by means of any “prospectus”
(within the meaning of the Act) or used any
“prospectus” (within the meaning of the Act) in
connection with the offer or sale of the Notes, in each case other
than the Pre-Pricing Prospectuses and the Permitted Free Writing
Prospectuses, if any; the Company has not, directly or indirectly,
prepared, used or referred to any Permitted Free Writing Prospectus
except in compliance with Rules 164 and 433 under the Act; assuming
that such Permitted Free Writing Prospectus is so sent or given
after the Registration Statement was filed with the Commission (and
after such Permitted Free Writing Prospectus was, if required
pursuant to Rule 433(d) under the Act, filed with the Commission),
the sending or giving, by
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any Underwriter, of any
Permitted Free Writing Prospectus will satisfy the provisions of
Rule 164 and Rule 433 (without reliance on subsections (b),
(c) and (d) of Rule 164); the conditions set forth in one
or more of subclauses (i) through (iv), inclusive, of Rule
433(b)(1) under the Act are satisfied, and the registration
statement relating to the offering of the Notes and the Shares
contemplated hereby, as initially filed with the Commission,
includes a prospectus that, other than by reason of Rule 433 or
Rule 431 under the Act, satisfies the requirements of
Section 10 of the Act; neither the Company nor the
Underwriters are disqualified, by reason of subsection (f) or
(g) of Rule 164 under the Act, from using, in connection with
the offer and sale of the Notes and the Shares, “free writing
prospectuses” (as defined in Rule 405 under the Act) pursuant
to Rules 164 and 433 under the Act; the Company is not an
“ineligible issuer” (as defined in Rule 405 under the
Act) as of the eligibility determination date for purposes of Rules
164 and 433 under the Act with respect to the offering of the Notes
and the Shares contemplated by the Registration Statement, without
taking into account any determination by the Commission pursuant to
Rule 405 under the Act that it is not necessary under the
circumstances that the Company be considered an “ineligible
issuer”; the parties hereto agree and understand that the
content of any and all “road shows” (as defined in Rule
433 under the Act) related to the offering of the Notes and the
Shares contemplated hereby is solely the property of the
Company;
(d) as of the date of this
Agreement, the Company has an authorized and outstanding
capitalization as set forth in the Registration Statement, the
Pre-Pricing Prospectuses and the Prospectus under
“Capitalization” and “Description of Common
Stock” and “Description of Preferred Stock” (and
any similar sections or information, if any, contained in any
Permitted Free Writing Prospectus), and, as of the time of purchase
and any additional time of purchase, as the case may be, the
Company shall have an authorized and outstanding capitalization as
set forth in the Registration Statement, the Pre-Pricing
Prospectuses and the Prospectus under Capitalization
“Description of Common Stock” and “Description of
Preferred Stock” (and any similar sections or information, if
any, contained in any Permitted Free Writing Prospectus) (subject,
in each case, to the issuance of shares of Common Stock upon
exercise of stock options and warrants disclosed as outstanding in
the Registration Statement (excluding the exhibits thereto), each
Pre-Pricing Prospectus and the Prospectus and the grant of options
under existing stock option plans described in the Registration
Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus); all of the issued and outstanding
shares of capital stock, including the Common Stock, of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all applicable
securities laws and were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right; upon
issuance, the Shares will be duly listed, and admitted and
authorized for trading, on the Nasdaq Global Select Market (“
NASDAQ ”);
(e) the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Ohio, with full corporate
power and authority to own, lease and operate its properties and
conduct its business as
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described in the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the
Permitted Free Writing Prospectuses, if any, to execute and deliver
this Agreement, the Indenture and the Notes and to issue, sell and
deliver the Notes and the Shares issuable upon conversion of the
Notes as contemplated by this Agreement, the Indenture and the
Notes, and to enter into and perform the Hedge Transaction
Agreements;
(f) the Company is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in
good standing would not, individually or in the aggregate, either
(i) have a material adverse effect on the business,
properties, financial condition, results of operations or prospects
of the Company and the Subsidiaries (as defined below) taken as a
whole, (ii) prevent or materially interfere with consummation
of the transactions contemplated by this Agreement, the Indenture
or the Notes or the Hedging Transactions or (iii) result in
the delisting of shares of Common Stock from NASDAQ (the occurrence
of any such effect or any such prevention or interference or any
such result described in the foregoing clauses (i), (ii) or
(iii) being herein referred to as a “ Material
Adverse Effect ”);
(g) the Company has no
subsidiaries (as defined under the Act) other than the subsidiaries
listed on Schedule C hereto (collectively, the “
Subsidiaries ”); except as described in the
Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, or as would not, individually or in the aggregate, have
a Material Adverse Effect, the Company owns, directly or
indirectly, all of the issued and outstanding capital stock of each
of the Subsidiaries; other than the capital stock of the
Subsidiaries or as otherwise disclosed in the Registration
Statement, each Pre-Pricing Prospectus and the Prospectus, the
Company does not own, directly or indirectly, any shares of stock
or any other equity interests or long-term debt securities of any
corporation, firm, partnership, joint venture, association or other
entity; complete and correct copies of the charters and the bylaws
of the Company and each Subsidiary and all amendments thereto have
been made available for your review, and no changes therein will be
made on or after the date hereof through and including the time of
purchase or, if later, any additional time of purchase; each
Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation (or, in jurisdictions outside the United States
where the concept of good standing is not applicable, is validly
existing), with full corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any;
each Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing (or, in jurisdictions outside
the United States where such concepts are not applicable, has the
legal authority to conduct its business therein) where the
ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to
be so qualified and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect; except as disclosed
in the Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, all of the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued,
are fully paid and
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non-assessable (or, similar
concepts, as applicable, with respect to jurisdictions outside the
United States), have been issued in compliance with all applicable
securities laws, were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right and
are owned by the Company subject to no security interest, other
encumbrance or adverse claims; and except as described in the
Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert
any obligation into shares of capital stock or ownership interests
in the Subsidiaries are outstanding; the Company has no
“significant subsidiary,” as that term is defined in
Rule 1-02(w) of Regulation S-X under the Act, substituting 5% for
10%, other than Kendle GmbH, Kendle NC Inc., Kendle Clinical
Development Services Limited, Kendle UK Limited and Kendle
International B.V.;
(h) this Agreement has been
duly authorized, executed and delivered by the Company;
(i) the Indenture has been
duly qualified under the Trust Indenture Act of 1939, as amended
(the “ Trust Indenture Act ”), and has been duly
authorized by the Company and, when executed and delivered by the
Company and the Trustee, will be a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and general principles of
equity;
(j) the Notes have been duly
authorized by the Company and, when executed and delivered by the
Company and duly authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms hereof, will constitute legal, valid and
binding obligations of the Company, enforceable in accordance with
their terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and general principles
of equity, and will be entitled to the benefits of the Indenture;
the Shares issuable upon conversion of the Notes have been duly
authorized and validly reserved for issuance upon conversion of the
Notes, and, upon conversion of the Notes in accordance with their
terms and the terms of the Indenture, will be issued free of
statutory and contractual preemptive rights, resale rights, rights
of first refusal and similar rights and free of any voting
restrictions (and will be free of any restriction, pursuant to the
Company’s charter or bylaws or any agreement or other
instrument to which the Company is a party, upon the transfer
thereof), and are sufficient in number to meet the current
conversion requirements (assuming all conditions to such conversion
have been satisfied) based on the product of (i) the sum of
the Conversion Rate (as defined in the Indenture) in effect as of
the time of purchase and the maximum number of additional shares
identified in the table under the caption “Description of
notes—Adjustment to the conversion rate upon the occurrence
of a make-whole fundamental change—The increase in the
conversion rate” in the Prospectus; and (ii) the
aggregate principal amount, expressed in thousands of dollars, of
Notes to be outstanding immediately after such time of purchase or
additional time of purchase, as applicable; such Shares, when so
issued upon such conversion in accordance with the terms of the
Notes and of the Indenture, will be duly and validly issued and
fully paid and nonassessable; and the certificates for such Shares
will be in due and proper form;
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(k) each of the Hedging
Transaction Agreements has been duly authorized by the Company and,
when executed and delivered by the Company and the counterparty or
counterparties thereto, will be a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and general principles of equity;
the shares issuable pursuant to the Hedging Transaction Agreements
have been duly authorized and validly reserved for issuance in
accordance with their terms and the terms of the Indenture and will
be issued free of statutory and contractual preemptive rights,
resale rights, rights of first refusal and similar rights and free
of any voting restrictions (and will be free of any restriction,
pursuant to the Company’s charter or bylaws or any agreement
or other instrument to which the Company is a party, upon the
transfer thereof);
(l) the terms of the Notes,
the Indenture and the capital stock of the Company, including the
Shares, and the Hedging Transactions conform in all material
respects to each description thereof contained in the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the
Permitted Free Writing Prospectuses, if any;
(m) neither the Company nor
any of the Subsidiaries is in breach or violation of or in default
under (nor has any event occurred which, with notice, lapse of time
or both, would result in any breach or violation of, constitute a
default under or give the holder of any indebtedness (or a person
acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a part of such
indebtedness under) (A) its charter or bylaws, or (B) any
indenture, mortgage, deed of trust, bank loan or credit agreement
or other evidence of indebtedness, or any license, lease, contract
or other agreement or instrument to which it is a party or by which
it or any of its properties may be bound or affected, or
(C) any federal, state, local or foreign law, regulation or
rule, or (D) any rule or regulation of any self-regulatory
organization or other non-governmental regulatory authority
(including, without limitation, the rules and regulations of
NASDAQ), or (E) any decree, judgment or order applicable to it
or any of its properties or assets except, with respect to clauses
(B), (C) and (D), for such breaches, violations or defaults
that would not, individually or in the aggregate, have a Material
Adverse Effect;
(n) the execution, delivery
and performance of this Agreement, the Indenture and the Notes and
the consummation of the transactions contemplated hereby and
thereby, including the issuance and sale of the Notes, the issuance
of the Shares issuable upon conversion of the Notes, the
consummation of the Hedging Transactions, and the application of
the net proceeds from the offering of the Notes as described in the
Prospectus, will not conflict with, result in any breach or
violation of or constitute a default under (nor constitute any
event which, with notice, lapse of time or both, would result in
any breach or violation of, constitute a default under or give the
holder of any indebtedness (or a person acting on such
holder’s behalf) the right to require
- 10 -
the repurchase, redemption or
repayment of all or a part of such indebtedness under) (or result
in the creation or imposition of a lien, charge or encumbrance on
any property or assets of the Company or any Subsidiary pursuant
to) (A) the charter or bylaws of the Company or any of the
Subsidiaries, or (B) any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or
any license, lease, contract or other agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound or
affected, or (C) any federal, state, local or foreign law,
regulation or rule, or (D) any rule or regulation of any
self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the rules and regulations
of NASDAQ), or (E) any decree, judgment or order applicable to
the Company or any of the Subsidiaries or any of their respective
properties or assets except, with respect to Clause (B), for such
breaches, violations or defaults that would not, individually or in
the aggregate, have a Material Adverse Effect;
(o) no approval,
authorization, consent or order of or filing with any federal,
state, local or foreign governmental or regulatory commission,
board, body, authority or agency, or of or with any self-regulatory
organization or other non-governmental regulatory authority
(including, without limitation, NASDAQ), or approval of the
stockholders of the Company, is required in connection with the
issuance and sale of the Notes or the issuance of Shares upon
conversion of the Notes or the consummation of the transactions
contemplated by this Agreement, the Indenture or the Notes, or the
consummation of the Hedging Transactions, other than (i) as
have been obtained from NASDAQ, (ii) as may be required under
the securities or blue sky laws of the various jurisdictions in
which the Notes are being offered by the Underwriters or
(iii) under the Conduct Rules of the National Association of
Securities Dealers, Inc. (the “ NASD
”);
(p) except as described in
the Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, (i) no person has the right, contractual or
otherwise, to cause the Company to issue or sell to it any shares
of Common Stock or shares of any other capital stock or other
equity interests of the Company, (ii) no person has any
preemptive rights, resale rights, rights of first refusal or other
rights to purchase any shares of Common Stock or shares of any
other capital stock of or other equity interests in the Company and
(iii) no person has the right to act as an underwriter or
initial purchaser or as a financial advisor to the Company in
connection with the offer and sale of the Notes; no person has the
right, contractual or otherwise, to cause the Company to register
under the Act any shares of Common Stock or shares of any other
capital stock of or other equity interests in the Company, or to
include any such shares or interests in the Registration Statement
or the offering contemplated thereby;
(q) each of the Company and
the Subsidiaries has all necessary licenses, authorizations,
consents and approvals and has made all necessary filings required
under any applicable law, regulation or rule, and has obtained all
necessary licenses, authorizations, consents and approvals from
other persons, in order to conduct their respective businesses,
except where the failure to obtain such license, authorization,
consent or approval or make such filing would not, individually or
in the aggregate,
- 11 -
have a Material Adverse
Effect; neither the Company nor any of the Subsidiaries is in
violation of, or in default under, or has received notice of any
proceedings relating to revocation or modification of, any such
license, authorization, consent or approval or any federal, state,
local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company or any of the Subsidiaries,
except where such violation, default, revocation or modification
would not, individually or in the aggregate, have a Material
Adverse Effect;
(r) except as described in
the Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, there are no actions, suits, claims, investigations or
proceedings pending or, to the Company’s knowledge,
threatened or contemplated to which the Company or any of the
Subsidiaries or any of their respective directors or officers is or
would be a party or of which any of their respective properties is
or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission,
board, body, authority or agency, or before or by any
self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, NASDAQ), except any such
action, suit, claim, investigation or proceeding which, if resolved
adversely to the Company or any Subsidiary, would not, individually
or in the aggregate, have a Material Adverse Effect;
(s) Deloitte &
Touche LLP, whose report on the consolidated financial statements
of the Company and the Subsidiaries is included or incorporated by
reference in the Registration Statement, the Pre-Pricing
Prospectuses and the Prospectus, are independent registered public
accountants as required by the Act and by the rules of the Public
Company Accounting Oversight Board;
(t) PricewaterhouseCoopers
LLP, whose report on the financial statements of The Phase II-IV
Clinical Services Business of Inveresk Research Group, Inc. and The
Phase II-IV Clinical Services Business of Charles River
Laboratories International, Inc. (“CRL”) are included
or incorporated by reference in the Registration Statement, the
Pre-Pricing Prospectuses and the Prospectus, are independent
registered public accountants as required by the Act and by the
rules of the Public Company Accounting Oversight Board;
(u) the financial statements
included or incorporated by reference in the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the
Permitted Free Writing Prospectuses, if any, together with the
related notes and schedules, present fairly, in all material
respects, the consolidated financial position of the Company and
the Subsidiaries as of the dates indicated and of The Phase II-IV
Clinical Services Business of Inveresk Research Group, Inc. and The
Phase II-IV Clinical Services Business of CRL as of the dates
indicated and the consolidated results of operations, cash flows
and changes in stockholders’ equity of the Company for the
periods specified and of The Phase II-IV Clinical Services Business
of Inveresk Research Group, Inc. and The Phase II-IV Clinical
Services Business of CRL for the periods specified and have been
prepared, in all material respects, in compliance with the
requirements of the Act and Exchange Act and in conformity with
U.S. generally accepted accounting principles applied on a
consistent basis during the periods involved; all pro forma
financial statements or
- 12 -
data included or incorporated
by reference in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, comply with the requirements of the Act and
the Exchange Act, and the assumptions used in the preparation of
such pro forma financial statements and data are reasonable, the
pro forma adjustments used therein are appropriate to give effect
to the transactions or circumstances described therein and the pro
forma adjustments have been properly applied to the historical
amounts in the compilation of those statements and data; the other
financial and statistical data contained or incorporated by
reference in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, are accurately and fairly presented, in all
material respects, and prepared on a basis consistent with the
financial statements and books and records of the Company; there
are no financial statements (historical or pro forma) that are
required to be included or incorporated by reference in the
Registration Statement, any Pre-Pricing Prospectus or the
Prospectus that are not included or incorporated by reference as
required; the Company and the Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not described in the Registration
Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus; and all disclosures contained or
incorporated by reference in the Registration Statement, the
Pre-Pricing Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any, regarding “non-GAAP financial
measures” (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G of the
Exchange Act and Item 10 of Regulation S-K under the Act, to
the extent applicable;
(v) except as disclosed in
the Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, each stock option granted under any stock option plan
of the Company or any Subsidiary (each, a “ Stock Plan
”) was granted with a per share exercise price no less than
the fair market value per share of Common Stock on the grant date
of such option, and no such option was dated as of a date other
than the date such option was deemed, pursuant to U.S. generally
accepted accounting principles, to be granted; except as would not,
individually or in the aggregate, have a Material Adverse Effect,
each such option (i) was granted in compliance with applicable
law and with the applicable Stock Plan(s), (ii) was duly
approved by the board of directors (or a duly authorized committee
thereof) of the Company or such Subsidiary, as applicable, and
(iii) has been properly accounted for in the Company’s
financial statements in accordance with U.S. generally accepted
accounting principles and disclosed in the Company’s filings
with the Commission;
(w) subsequent to the
respective dates as of which information is given in the
Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any, in
each case excluding any amendments or supplements to the foregoing
made after the execution of this Agreement, there has not been
(i) any material adverse change, or any development involving
a prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the
Company and the Subsidiaries taken as a whole, (ii) any
transaction that is material to the
- 13 -
Company and the Subsidiaries
taken as a whole, (iii) any obligation or liability, direct or
contingent (including any off-balance sheet obligations), incurred
by the Company or any Subsidiary, which is material to the Company
and the Subsidiaries taken as a whole, (iv) any change in the
capital stock or outstanding indebtedness of the Company or any
Subsidiaries or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any
Subsidiary;
(x) the Company has obtained
for the benefit of the Underwriters the agreement (a “
Lock-Up Agreement ”), in the form set forth as
Exhibit A hereto, of each of its directors and
“officers” (within the meaning of Rule 16a-1(f) under
the Exchange Act);
(y) none of the Company nor
any of the Subsidiaries is, and at no time during which a
prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Shares will any of
them be, and, after giving effect to the offering and sale of the
Notes and the application of the proceeds thereof, none of them
will be an “investment company” or an entity
“controlled” by an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as
amended (the “ Investment Company Act
”);
(z) except as disclosed in
the Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, or as would not, individually or in the aggregate, have
a Material Adverse Effect, the Company and each of the Subsidiaries
have good and marketable title to or a valid leasehold interest in
all property (real and personal) described in the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the
Permitted Free Writing Prospectuses, if any, as being owned or
leased by any of them, free and clear of all liens, claims,
security interests or other encumbrances;
(aa) the Company and each of
the Subsidiaries owns or has obtained valid and enforceable
licenses for, or other rights to use, the inventions, patent
applications, patents, trademarks (both registered and
unregistered), tradenames, service names, copyrights, trade secrets
and other proprietary information described in the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the
Permitted Free Writing Prospectuses, if any, as being owned or
licensed by it or which is necessary for the conduct of, or
material to, its businesses (collectively, the “
Intellectual Property ”), except where the failure to
own, license or have such rights would not, individually or in the
aggregate, have a Material Adverse Effect, and the Company is
unaware of any claim to the contrary or any challenge by any other
person to the rights of the Company or any of the Subsidiaries with
respect to the Intellectual Property. Except as would not,
individually or in the aggregate, have a Material Adverse Effect,
neither the Company nor any of the Subsidiaries has infringed or is
infringing the intellectual property of a third party, and neither
the Company nor any Subsidiary has received notice of a claim by a
third party to the contrary;
- 14 -
(bb) neither the Company nor
any of the Subsidiaries is engaged in any unfair labor practice;
except for matters which would not, individually or in the
aggregate, have a Material Adverse Effect, (i) there is
(A) no unfair labor practice complaint pending or, to the
Company’s knowledge, threatened against the Company or any of
the Subsidiaries before the National Labor Relations Board, and no
grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending or, to the
Company’s knowledge, threatened, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the Company’s
knowledge, threatened against the Company or any of the
Subsidiaries and (C) no union representation dispute currently
existing concerning the employees of the Company or any of the
Subsidiaries, (ii) to the Company’s knowledge, except as
disclosed in the Registration Statement, each Pre-Pricing
Prospectus and the Prospectus, no union organizing activities are
currently taking place concerning the employees of the Company or
any of the Subsidiaries and (iii) there has been no violation
of any federal, state, local or foreign law relating to
discrimination in the hiring, promotion or pay of employees, any
applicable wage or hour laws or any provision of the Employee
Retirement Income Security Act of 1974 (“ ERISA
”) or the rules and regulations promulgated thereunder
concerning the employees of the Company or any of the
Subsidiaries;
(cc) the Company and the
Subsidiaries and their respective properties, assets and operations
are in compliance with, and the Company and each of the
Subsidiaries hold all permits, authorizations and approvals
required under, Environmental Laws (as defined below), except to
the extent that failure to so comply or to hold such permits,
authorizations or approvals would not, individually or in the
aggregate, have a Material Adverse Effect; except as disclosed in
the Registration Statement, each Pre-Pricing Prospectus and the
Prospectus, there are no past, present or, to the Company’s
knowledge, reasonably anticipated future events, conditions,
circumstances, activities, practices, actions, omissions or plans
that could reasonably be expected to give rise to any material
costs or liabilities to the Company or any Subsidiary under, or to
interfere with or prevent compliance by the Company or any
Subsidiary with, Environmental Laws; except as would not,
individually or in the aggregate, have a Material Adverse Effect
and except as disclosed in the Registration Statement, each
Pre-Pricing Prospectus and the Prospectus, neither the Company nor
any of the Subsidiaries (i) is the subject of any
investigation, (ii) has received any notice or claim,
(iii) is a party to or affected by any pending or, to the
Company’s knowledge, threatened action, suit or proceeding,
(iv) is bound by any judgment, decree or order or (v) has
entered into any agreement, in each case relating to any alleged
violation of any Environmental Law or any actual or alleged release
or threatened release or cleanup at any location of any Hazardous
Materials (as defined below) (as used herein, “
Environmental Law ” means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, order, decree,
judgment, injunction, permit, license, authorization or other
binding requirement, or common law, relating to health, safety or
the protection, cleanup or restoration of the environment or
natural resources, including thos
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