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EXHIBIT 4.1
SHAREHOLDER RIGHTS AGREEMENT
Dated August 13, 1999
between
KENDLE INTERNATIONAL INC.
and
THE FIFTH THIRD BANK,
As Rights Agent
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS....................................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT....................................7
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES.........................7
SECTION 4. FORM OF RIGHT CERTIFICATES.....................................9
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION...................9
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES; UNCERTIFICATED RIGHTS...........................10
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS.................11
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES............13
SECTION 10. RECORD DATE...................................................14
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON;
EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS..........15
SECTION 12. ADJUSTMENTS...................................................19
SECTION 13. CERTIFICATE OF ADJUSTMENT.....................................20
SECTION 14. ADDITIONAL COVENANTS..........................................20
SECTION 15. FRACTIONAL RIGHTS AND SHARES..................................21
SECTION 16. RIGHTS OF ACTION..............................................22
SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT CERTIFICATES.......22
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.............23
SECTION 19. CONCERNING THE RIGHTS AGENT...................................23
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SECTION 20. MERGER, CONSOLIDATION OR CHANGE OF RIGHTS AGENT................23
SECTION 21. DUTIES OF RIGHTS AGENT.........................................24
SECTION 22. CHANGE OF RIGHTS AGENT.........................................26
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES...........27
SECTION 24. REDEMPTION AND TERMINATION.....................................27
SECTION 25. NOTICES........................................................28
SECTION 26. SUPPLEMENTS AND AMENDMENTS.....................................29
SECTION 27. SUCCESSORS.....................................................29
SECTION 28. BENEFITS OF AGREEMENT; DETERMINATIONS AND ACTIONS BY THE
BOARD OF DIRECTORS; ETC........................................30
SECTION 29. SEVERABILITY...................................................30
SECTION 30. GOVERNING LAW..................................................31
SECTION 31. COUNTERPARTS; EFFECTIVENESS....................................31
SECTION 32. DESCRIPTIVE HEADINGS...........................................31
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SHAREHOLDER RIGHTS AGREEMENT
SHAREHOLDER RIGHTS AGREEMENT ("Agreement") dated as of August 13, 1999,
between KENDLE INTERNATIONAL INC., an Ohio corporation ("Kendle"), and THE FIFTH
THIRD BANK, an Ohio corporation, as Rights Agent (the "Rights Agent").
Subject to the terms and provisions hereof, the Board of Directors of
Kendle has authorized and declared a dividend of one Right for each Common
Share, no par value, of Kendle outstanding at the Close of Business on the date
hereof (the "Record Date"), and has authorized the issuance of one Right (as
such number may hereafter be adjusted pursuant to the provisions of this
Agreement) with respect to each Common Share that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date or the Expiration Date; provided, however, that Rights may be
issued with respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date in accordance with the provisions of Section 24. Each Right
shall initially represent the right to purchase one one-thousandth (1/1,000) of
a Common Share, no par value, of Kendle.
Capitalized terms have the meanings set forth herein.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
"Acquiring Person" means any Person who or which, alone or together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of more than 15% of the Common Shares then outstanding, but shall not include
(a) Kendle, any Subsidiary of Kendle, Candace Kendle, Christopher Bergen, any
trust established by either of them or any corporation or other entity
controlled by either of them, any employee benefit or compensation plan of
Kendle or of any of its Subsidiaries, or any Person holding Common Shares for or
pursuant to the terms of any such employee benefit or compensation plan or (b)
any Person who has become and is the Beneficial Owner of more than 15% of the
Common Shares at the time outstanding solely as the result of (i) a change in
the aggregate number of Common Shares outstanding since the last date on which
such Person acquired Beneficial Ownership of any Common Shares, (ii) the
acquisition by such Person or one or more of its Affiliates or Associates of
Beneficial Ownership of additional Common Shares if such acquisition was made in
the good faith belief that such acquisition would not (A) cause the Beneficial
Ownership by such Person, together with its Affiliates and Associates, to exceed
15% of the Common Shares outstanding at the time of such acquisition and such
good faith belief was based on the good faith reliance on information contained
in publicly filed reports or documents of Kendle that are inaccurate or
out-of-date or (B) otherwise cause a Distribution Date or the adjustment
provided for in Section 11.1 to occur, or (iii) the acquisition by such Person
or one or more of its Affiliates or Associates of Beneficial Ownership of
additional Common Shares if the Board of
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Directors of Kendle determines that such acquisition was made in good faith
without the knowledge by such Person or Affiliates or Associates that such
Person would thereby become an Acquiring Person, which determination of the
Board of Directors of Kendle shall be conclusive and binding on such Person, the
Rights Agent, the holders of the Rights and all other Persons. Notwithstanding
clause (b)(ii) or (b)(iii) of the prior sentence, if any Person that is not an
Acquiring Person due to such clause (b)(ii) or (b)(iii) does not reduce its
percentage of Beneficial Ownership of Common Shares to 15% or less by the Close
of Business on the tenth calendar day after notice from Kendle (the date of
notice being the first day) that such Person's Beneficial Ownership of Common
Shares would make it an Acquiring Person, such Person shall, at the end of such
ten calendar day period, become an Acquiring Person and such clause (b)(ii) or
(b)(iii) shall no longer apply to such Person. For purposes of this definition,
the determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of Kendle.
"Affiliate" and "Associate," when used with reference to any Person,
has the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act (as hereinafter defined), as in
effect on the date of this Agreement.
A Person is deemed the "Beneficial Owner" of, and is deemed to
"beneficially own," and is deemed to have "Beneficial Ownership" of, any
securities:
(a) that such Person or any of such Person's Affiliates or Associates
is deemed to "beneficially own" within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement;
(b) that such Person or any of such Person's Affiliates or Associates
has: (i) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed under clause (i)
to be the Beneficial Owner of, or to beneficially own, or to have Beneficial
Ownership of, any securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange
thereunder or cease to be subject to withdrawal by the tendering security
holder; or (ii) the right to vote pursuant to any agreement, arrangement or
understanding (written or oral); provided, however, that a Person shall not be
deemed under this clause (ii) to be the Beneficial Owner of, or to beneficially
own, any security if (A) the agreement, arrangement or understanding (written or
oral) to vote such security arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation made
generally to all holders of Common Shares of Kendle pursuant to, and in
accordance with, the applicable rules and regulations under the Exchange Act and
(B) the beneficial ownership of such security is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
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(c) that are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (written or oral) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to clause (b)(ii) of this definition) or disposing of
any securities of Kendle.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
deemed the "Beneficial Owner" of, or to "beneficially own," or to have
"Beneficial Ownership" of, any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with Kendle.
"Book Value," when used with reference to Common Shares issued by any
Person, means the amount of equity of such Person applicable to each Common
Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price, per Common Share,
which is less than such Book Value before giving effect to such exercise or
conversion (whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (ii) all dividends and other distributions on the
capital stock of such Person declared prior to the date as of which such Book
Value is to be determined and to be paid or made after such date, and (iii) any
other agreement, arrangement or understanding (written or oral), or transaction
or other action contemplated prior to the date as of which such Book Value is to
be determined that would have the effect of thereafter reducing such Book Value.
"Business Combination" has the meaning set forth in Section 11.3.1.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of Ohio are authorized or obligated by
law or executive order to close.
"Close of Business" on any given date means 5:00 p.m., Eastern time, on
such date; provided, however, that, if such date is not a Business Day, "Close
of Business" shall mean 5:00 p.m., Eastern time, on the next succeeding Business
Day.
"Common Shares," when used with reference to Kendle prior to a Business
Combination, shall mean the shares of Common Stock of Kendle or any other shares
of capital stock of Kendle into which the Common Stock shall be reclassified or
changed. "Common Shares," when used with reference to any Person (other than
Kendle prior to a Business Combination), shall mean shares of capital stock of
such Person (if such Person is a corporation) of any class or series, or units
of equity
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interests in such Person (if such Person is not a corporation) of any class or
series, the terms of which do not limit (as a maximum amount and not merely in
proportional terms) the amount of dividends or income payable or distributable
on such class or series or the amount of assets distributable on such class or
series upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person and do not provide that such class or series is subject to
redemption at the option of such Person, or any shares of capital stock or units
of equity interests into which the foregoing shall be reclassified or changed.
"Common Stock" means common stock, no par value, of Kendle.
"Control" with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, by or through
stock ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
Persons by or through stock ownership, agency or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
"Distribution Date" has the meaning set forth in Section 3.2.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect
on the date in question, unless otherwise specifically provided.
"Exchange Consideration" has the meaning set forth in Section 11.2.1.
"Expiration Date" has the meaning set forth in Section 7.1.
"Kendle" has the meaning set forth in the introductory paragraph of
this Agreement; provided, however, that if there is a Business Combination,
"Kendle" has the meaning set forth in Section 11.3.5.
"Major Part," when used with reference to the assets of Kendle and its
Subsidiaries as of any date, means assets (a) having a fair market value
aggregating 50% or more of the total fair market value of all the assets of
Kendle and its Subsidiaries (taken as a whole) as of the date in question, (b)
accounting for 50% or more of the total value (net of depreciation and
amortization) of all the assets of Kendle and its Subsidiaries (taken as a
whole) as would be shown on a consolidated or combined balance sheet of Kendle
and its Subsidiaries as of the date in question, prepared in accordance with
generally accepted accounting principles then in effect, or (c) accounting for
50% or more of the total amount of earnings before interest, taxes, depreciation
and amortization or of the revenues of Kendle and its Subsidiaries (taken as a
whole) as would be shown on, or derived from, a consolidated or combined
statement of income or net earnings of Kendle and its Subsidiaries for the
period of 12 months ending on the last day of Kendle's monthly accounting period
next preceding the date in question, prepared in accordance with generally
accepted accounting principles then in effect.
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"Market Value," when used with reference to Common Shares on any date,
means the average of the daily closing prices, per share, of such Common Shares
for the period that is the shorter of (a) 30 consecutive Trading Days ending on
the Trading Day immediately prior to the date in question or (b) the number of
consecutive Trading Days beginning on the Trading Day immediately after the date
of the first public announcement of the event requiring a determination of the
Market Value of Common Shares and ending on the Trading Day immediately prior to
the record date of such event; provided, however, that, in the event that the
Market Value of such Common Shares is to be determined in whole or in part
during a period following the announcement by the issuer of such Common Shares
of any action of the type described in Section 12.1 that would require an
adjustment thereunder, then, and in each such case, the Market Value of such
Common Shares shall be appropriately adjusted to reflect the effect of such
action on the market price of such Common Shares. The closing price for each
Trading Day shall be the closing price quoted on the composite tape for
securities listed on the principal United States securities exchange registered
under the Exchange Act (or any recognized foreign stock exchange) on which such
securities are listed, or, if such securities are not listed on any such
exchange, the closing price quoted on The Nasdaq Stock Market or, if such
securities are not so quoted, the average of the closing bid and asked
quotations with respect to a share of such securities on any National
Association of Securities Dealers, Inc. quotations system or such other system
then in use, or if no such quotations are available, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in such securities selected by the Board of Directors of Kendle, or if on any
such Trading Day no market maker is making a market in such securities, the
closing price of such securities on such Trading Day shall be deemed to be the
fair value of such securities as determined in good faith by the Board of
Directors of Kendle (whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent, the holders of
Rights and all other Persons).
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity and shall include any successor (by merger or
otherwise) of such entity.
"Principal Party" means the Surviving Person (as hereinafter defined)
in a Business Combination; provided, however, that, (i) if such Surviving Person
is a direct or indirect Subsidiary of any other Person, "Principal Party" means
the Person which is the ultimate parent of such Surviving Person and which is
not itself a Subsidiary of another Person, and (ii) in the event ultimate
control of such Surviving Person is shared by two or more Persons, "Principal
Party" means that Person that is immediately controlled by such two or more
Persons.
"Purchase Price" with respect to each Right means $5.00, as such amount
may from time to time be adjusted as provided herein, and shall be payable in
lawful money of the United States of America. All references herein to the
Purchase Price means the Purchase Price as in effect at the time in question.
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"Record Date" has the meaning set forth in the introductory paragraph
of this Agreement.
"Redemption Date" has the meaning set forth in Section 24.1.
"Redemption Price" with respect to each Right means $.01, as such
amount may from time to time be adjusted in accordance with Section 12. All
references herein to the Redemption Price means the Redemption Price as in
effect at the time in question.
"Registered Common Shares" means Common Shares that are, as of the date
of consummation of a Business Combination, and have continuously been for the 12
months immediately preceding such date, registered under Section 12 of the
Exchange Act.
"Right" means the right to purchase Common Shares (or other securities)
as provided in this Agreement.
"Rights Agent" has the meaning set forth in Section 2.
"Right Certificate" means a certificate evidencing a Right in
substantially the form attached as Exhibit A.
"Securities Act" means the Securities Act of 1933, as in effect on the
date in question, unless otherwise specifically provided in this Rights
Agreement.
"Subsidiary" means a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"Summary of Rights" has the meaning set forth in Section 3.
"Surviving Person" means (a) the Person which is the continuing or
surviving Person in a consolidation or merger specified in Section 11.3.1(A) or
11.3.1(B) or (b) the Person to which the Major Part of the assets of Kendle and
its Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed
of in a transaction specified in Section 11.3.1(C); provided, however, that, if
the Major Part of the assets of Kendle and its Subsidiaries is sold, leased,
exchanged or otherwise transferred or disposed of in one or more related
transactions specified in Section 11.3.1(C) to more than one Person, the
"Surviving Person" in such case means the Person that acquired assets of Kendle
and/or its Subsidiaries with the greatest fair market value in such transaction
or transactions.
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"Trading Day" means a day on which the principal national securities
exchange (or principal recognized foreign stock exchange, as the case may be) on
which any securities or Rights, as the case may be, are listed or admitted to
trading is open for the transaction of business or, if the securities or Rights
in question are not listed or admitted to trading on any national securities
exchange (or recognized foreign stock exchange, as the case may be), a Business
Day.
SECTION 2. APPOINTMENT OF RIGHTS AGENT
Kendle hereby appoints The Fifth Third Bank as Rights Agent to act as
agent for Kendle in accordance with the terms and conditions hereof. The Fifth
Third Bank hereby accepts such appointment. Kendle may from time to time appoint
one or more co-Rights Agents as it may deem necessary or desirable. The term
"Rights Agent" used herein refers, collectively, to the Rights Agent together
with any such co-Rights Agents. If Kendle appoints one or more co-Rights Agents,
the respective duties of the Rights Agent and any co-Rights Agents shall be as
Kendle shall determine. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any such co-Rights Agent.
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES
3.1 One Right shall be associated with each Kendle Common Share
outstanding on the Record Date, each additional Kendle Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date or the Expiration Date and each additional Kendle
Common Share with which Rights are issued after the Distribution Date but prior
to the earlier of the Redemption Date and the Expiration Date as provided in
Section 24; provided, however, that, if the number of outstanding Rights are
combined into a smaller number of outstanding Rights pursuant to Section 12.1,
the appropriate fractional Right determined pursuant to such Section shall
thereafter be associated with each such Kendle Common Share.
3.2 Until the earlier of (i) such time as Kendle learns that a Person
has become an Acquiring Person or (ii) the Close of Business on such date, if
any, as may be designated by the Board of Directors of Kendle following the
commencement of, or first public disclosure of an intent to commence, a tender
or exchange offer by any Person (other than Kendle, any Subsidiary of Kendle,
Candace Kendle, Christopher Bergen, any trust established by either of them or
any corporation or other entity controlled by either of them, any employee
benefit or compensation plan of Kendle or of any of its Subsidiaries, or any
Person holding Common Shares for or pursuant to the terms of any such employee
benefit or compensation plan) for outstanding Common Shares, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of more than 15% of the outstanding Common Shares (the Close of
Business on the earlier of such dates being the "Distribution Date"), (x) the
Rights shall, except as otherwise provided in Section 3.1, be evidenced by the
certificates for Common Shares registered in the names of the holders thereof
and not by separate Right Certificates, (y) the Rights, including the right to
receive Right Certificates, shall be transferable only in connection with the
transfer of Common Shares and (z) Kendle shall
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notify the Rights Agent as promptly as practicable that the Distribution Date
has occurred. As soon as practicable after the Distribution Date and receipt by
the Rights Agent of all necessary information, the Rights Agent shall send, by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Distribution Date, at the address of such holder shown on the records of
Kendle, a Right Certificate evidencing one whole Right for each Kendle Common
Share (or for the number of Common Shares with which one whole Right is then
associated if the number of Rights per Kendle Common Share held by such record
holder has been adjusted in accordance with the proviso in Section 3.1). If the
number of Rights associated with each Kendle Common Share has been adjusted in
accordance with the proviso in Section 3.1, at the time of distribution of the
Right Certificates Kendle may make any necessary and appropriate rounding
adjustments so that Right Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Right in accordance
with Section 15.1. Kendle shall notify the Rights Agent as promptly as
practicable of any such adjustments and the Rights Agent is authorized and
protected in relying on such adjustment. As of and after the Distribution Date,
the Rights shall be evidenced solely by such Right Certificates.
3.3 As soon as practicable, and in any event no later than 30 days,
after the Record Date, Kendle will send a copy of a Summary of Rights to
Purchase Common Shares of Kendle, in substantially the form attached hereto as
Exhibit B (the "Summary of Rights") to each record holder of its Common Shares
as of the Close of Business on the Record Date at the address of such holder
shown on the records of Kendle and to the Rights Agent. With respect to any
certificate for Common Shares outstanding as of the Record Date, until the
earliest of the Distribution Date, the Redemption Date or the Expiration Date,
(i) the Rights associated with the Common Shares represented by any such
certificate shall be evidenced by such certificates for the Common Shares with a
copy of the Summary of Rights attached thereto and the registered holders of the
Common Shares shall also be the registered holders of the associated Rights and
(ii) the surrender for transfer of any such certificate, even without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with the Common Shares represented thereby.
3.4 Certificates issued for Common Shares after the Record Date
(including upon transfer or exchange of outstanding Common Shares), but prior to
the earliest of the Distribution Date, the Redemption Date or the Expiration
Date, shall have printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Shareholder Rights
Agreement dated as of August 13, 1999 as it may be amended
from time to time (the "Agreement"), between Kendle
International Inc. and The Fifth Third Bank, as Rights Agent,
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of Kendle. Under certain circumstances, as set forth
in the Agreement, such Rights shall be evidenced by separate
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certificates and shall no longer be evidenced by this
certificate. Kendle shall mail to the holder of this
certificate a copy of the Agreement without charge after
receipt of a written request therefor. RIGHTS BENEFICIALLY
OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES
(AS SUCH TERMS ARE DEFINED IN THE SHAREHOLDER RIGHTS
AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE
NULL AND VOID AND NONTRANSFERABLE.
Notwithstanding this Section 3.4, neither the omission of a legend nor the
inclusion of a legend that makes reference to a rights agreement other than the
Agreement shall affect the enforceability of any part of this Agreement or the
rights of any holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES
The Right Certificates (and the form of election to purchase and form
of assignment to be printed on the reverse side thereof) shall be in
substantially the form set forth as Exhibit A and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as Kendle may deem appropriate (which do not affect the duties
or responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections 7,
11 and 24, the Right Certificates, whenever issued, shall be dated as of the
Distribution Date, and on their face shall entitle the holders thereof to
purchase such number of Common Shares as shall be set forth therein for the
Purchase Price set forth therein, subject to adjustment from time to time as
herein provided.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION
5.1 The Right Certificates shall be executed on behalf of Kendle by the
Chairman of the Board, any Vice Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or any Vice
President (whether preceded by any additional title) of Kendle, either manually
or by facsimile signature, and have affixed thereto Kendle's seal or a facsimile
thereof, which shall be attested by the Secretary, an Assistant Secretary or a
Vice President (whether preceded by any additional title, provided that such
Vice President shall not have also executed the Right Certificates) of Kendle,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid or obligatory
for any purpose unless so countersigned. In case any officer of Kendle who shall
have signed any of the Right Certificates shall cease to be such an officer of
Kendle before countersignature by the Rights Agent and issuance and delivery by
Kendle, such Right Certificates may nevertheless be countersigned by the Rights
Agent and issued and delivered by Kendle with the same force and
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effect as though the person who signed such Right Certificates had not ceased to
be such an officer of Kendle; and any Right Certificate may be signed on behalf
of Kendle by any person who, at the actual date of execution of such Right
Certificate, shall be a proper officer of Kendle to sign such Right Certificate,
although at the date of execution of this Agreement any such person was not such
an officer of Kendle.
5.2 Following the Distribution Date, the Rights Agent shall keep, or
cause to be kept, at its office designated for such purpose and for receipt by
the Rights Agent of all necessary information, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES;
UNCERTIFICATED RIGHTS
6.1 Subject to the provisions of Sections 7.5 and 15, at any time after
the Distribution Date, and at or prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date, any Right Certificate or Right
Certificates may be transferred, split-up, combined or exchanged for another
Right Certificate or Right Certificates representing, in the aggregate, the same
number of Rights as the Right Certificate or Right Certificates surrendered then
represented. Any registered holder desiring to transfer, split-up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent and shall surrender the Right Certificate or Right Certificates
to be transferred, split-up, combined or exchanged at the office of the Rights
Agent designated for such purpose; provided, however, that neither the Rights
Agent nor Kendle shall be obligated to take any action whatsoever with respect
to the transfer of any Right Certificate surrendered for transfer until the
registered holder shall have completed and signed the certification contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as Kendle or
the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
subject to Sections 7.5 and 15, countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. Kendle may require payment of a sum sufficient to cover any tax or
charge that may be imposed in connection with any transfer, split-up,
combination or exchange of Right Certificates. The Rights Agent shall have no
duty or obligation under this Section 6.1 unless and until it is satisfied that
all such taxes and/or charges have been paid.
6.2 Upon receipt by Kendle and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a valid
Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, at Kendle's request, reimbursement to Kendle
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to
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the Rights Agent and cancellation of the Right Certificate if mutilated, Kendle
shall make a new Right Certificate of like tenor and deliver such new Right
Certificate to the Rights Agent for delivery to the registered owner in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
6.3 Notwithstanding any other provision hereof, Kendle and the Rights
Agent may amend this Agreement to provide for uncertificated Rights in addition
to or in place of Rights evidenced by Right Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS
7.1 Subject to Section 7.5 and except as otherwise provided herein
(including Section 11), each Right shall entitle the registered holder thereof,
upon exercise thereof as provided herein, to purchase for the Purchase Price, at
any time after the Distribution Date and at or prior to the earliest of (i) the
Close of Business on the 10th anniversary of the date of this Agreement (the
Close of Business on such date being the "Expiration Date") or (ii) the
Redemption Date, one one-thousandth (1/1,000) of a Common Share, subject to
adjustment from time to time as provided in Sections 11 and 12.
7.2 The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly and properly executed, to the Rights Agent at the office of the Rights
Agent designated for such purpose, together with payment of the Purchase Price
for each one one-thousandth (1/1,000) of a Common Share as to which the Rights
are exercised, at or prior to the earlier of (i) the Expiration Date or (ii) the
Redemption Date.
7.3 Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly and properly executed,
accompanied by payment of the Purchase Price for the Common Shares to be
purchased together with an amount equal to any applicable tax or charge, in
lawful money of the United States of America, in cash or by certified check or
money order payable to the order of Kendle, the Rights Agent shall thereupon (i)
either (A) promptly requisition from any transfer agent of the Common Shares (or
make available, if the Rights Agent is the transfer agent) certificates for the
number of shares of Common Shares to be purchased and Kendle hereby irrevocably
authorizes its transfer agent to comply with all such requests or (B) if Kendle
shall have elected to deposit the Common Shares with a depositary agent under a
depositary arrangement, promptly requisition from the depositary agent
depositary receipts representing the number of one one-thousandth (1/1,000) of a
share of Common Shares to be purchased (in which case certificates for the
Common Shares to be represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and Kendle shall direct the depositary
agent to comply with all such requests, (ii) when appropriate, promptly
requisition from Kendle the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 15, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the
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registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.
7.4 In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 15.
7.5 Notwithstanding anything in this Agreement to the contrary, any
Rights that are at any time beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of Kendle has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7.5, shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. Kendle shall use all reasonable efforts to ensure that the provisions
of this Section 7.5 are complied with, but Kendle and the Rights Agent shall
have no liability to any holder of any Right Certificate or any other Person as
a result of Kendle's failure to make any determinations with respect to an
Acquiring Person or its Affiliate or Associate, or any transferee thereof,
hereunder.
7.6 Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor Kendle shall be obligated to undertake any action with
respect to a registered holder of any Right Certificates upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as Kendle or the Rights Agent shall reasonably request.
7.7 Kendle may temporarily suspend, for a period of time not to exceed
90 calendar days after the Distribution Date, the exercisability of the Rights
in order to prepare and file a registration statement under the Securities Act,
on an appropriate form, with respect to the securities purchasable upon exercise
of the Rights and permit such registration statement to become effective;
provided, however, that no such suspension shall remain effective after, and the
Rights shall without any further action by Kendle or any other Person become
exercisable immediately upon, the effectiveness of such registration statement.
Upon any such suspension, Kendle shall issue a public
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announcement with prompt notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended and shall issue a
further public announcement with prompt notice to the Rights Agent at such time
as the suspension is no longer in effect. Notwithstanding any provision herein
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification under the "Blue Sky" or securities laws of such
jurisdiction shall not have been obtained or the exercise of the Rights shall
not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES
All Right Certificates surrendered or presented for the purpose of
exercise, transfer, split-up, combination or exchange shall, and any Right
Certificate representing Rights that have become null and void and
nontransferable pursuant to Section 7.5 surrendered or presented for any purpose
shall, if surrendered or presented to Kendle or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered or presented to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by this Agreement. Kendle shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any Right
Certificate purchased or acquired by Kendle. The Rights Agent shall deliver all
canceled Right Certificates to Kendle, or shall, at the written request of
Kendle, destroy such canceled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to Kendle.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON SHARES
9.1 Kendle covenants and agrees that it shall cause to be reserved and
kept available out of its authorized and unissued Common Shares, free from
preemptive rights or any right of first refusal, a number of Common Shares
sufficient to permit the exercise in full of all outstanding Rights.
9.2 In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise or
exchange of Rights in accordance with Section 11, Kendle covenants and agrees
that it shall take all such action as may be necessary to authorize additional
shares Common Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11; provided, however, that if Kendle is unable to cause the
authorization of additional Common Shares, then Kendle shall, or if action by
Kendle's shareholders is necessary to cause such authorization in lieu of
seeking any such authorization, Kendle may, to the extent necessary and
permitted by applicable law and any agreements or instruments in effect prior to
the Distribution Date to which it is a party, (i) upon surrender of a Right, pay
cash equal to the Purchase Price in lieu of issuing Common Shares and requiring
payment therefor, (ii) upon due exercise of a Right and payment of the Purchase
Price for each Common Share as to which such Right is exercised, issue equity
securities having a value equal to the value of the Common Shares that otherwise
would have been issuable pursuant to Section 11, which value shall be determined
by a nationally recognized investment banking firm selected by the Board of
Directors of Kendle, or (iii)
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upon due exercise of a Right and payment of the Purchase Price for each Common
Share as to which such Right is exercised, distribute a combination of Common
Shares, cash and/or other equity and/or debt securities having an aggregate
value equal to the value of the Common Shares that otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of Kendle.
To the extent that any legal or contractual restrictions (pursuant to agreements
or instruments in effect prior to the Distribution Date to which it is party)
prevent Kendle from paying the full amount payable in accordance with the
foregoing sentence, Kendle shall pay to holders of the Rights as to which such
payments are being made all amounts that are not then restricted on a pro rata
basis as such payments become permissible under such legal or contractual
restrictions until such payments have been paid in full.
9.3 Kendle covenants and agrees that it shall take all such action as
may be necessary to ensure that all Common Shares delivered upon exercise or
exchange of Rights shall, at the time of delivery of the certificates for such
Common Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
9.4 So long as the Common Shares issuable upon the exercise or exchange
of Rights are to be listed on any national securities exchange, Kendle covenants
and agrees to use its best efforts to cause, from and after such time as the
Rights become exercisable or exchangeable, all Common Shares reserved for such
issuance to be listed on such securities exchange upon official notice of
issuance upon such exercise or exchange.
9.5 Kendle further covenants and agrees that it shall pay when due and
payable any and all taxes and charges which may be payable in respect of the
issuance or delivery of Right Certificates or of any Common Shares or other
securities upon the exercise or exchange of the Rights. Kendle shall not,
however, be required to pay any tax or charge which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or in
respect of the issuance or delivery of certificates for the Common Shares or
other securities, as the case may be, in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or exchange or to issue or deliver any certificates for Common Shares
or other securities, as the case may be, upon the exercise or exchange of any
Rights until any such tax or charge shall have been paid (any such tax or charge
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to Kendle's satisfaction that no such tax or
charge is due.
SECTION 10. RECORD DATE
Each Person in whose name any certificate for Common Shares or other
securities is issued upon the exercise or exchange of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares or
other securities, as the case may be, represented thereby on, and such
certificate shall be dated, the date on which the Right Certificate evidencing
such Rights was
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duly surrendered and payment of any Purchase Price (and any applicable taxes or
charges) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the transfer books of Kendle for the Common Shares
or other securities, as the case may be, are closed, such Person shall be deemed
to have become the record holder of such Common Shares or other securities, as
the case may be, on, and such certificate shall be dated, the next succeeding
Business Day on which the transfer books of Kendle for the Common Shares or
other securities, as the case may be, are open.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE
OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS
11.1 Upon a Person's becoming an Acquiring Person, each holder of a
Right, except as provided in Section 7.5, shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Agreement, such number of Common Shares as shall equal the result
obtained by multiplying the Purchase Price by a fraction, the numerator of which
is the number of one one-thousandths (1/1,000) of a Common Share for which such
Right is then exercisable and the denominator of which is 50% of the Market
Value of the Common Shares on the date on which such Person became an Acquiring
Person. As soon as practicable after a Person becomes an Acquiring Person
(provided Kendle shall not have elected to make the exchange permitted by
Section 11.2.1 for all outstanding Rights), Kendle covenants and agrees to use
its best efforts to:
11.1.1 prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Common Shares
purchasable upon exercise of the Rights;
11.1.2 cause such registration statement to become effective
as soon as practicable after such filing;
11.1.3 cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date; and
11.1.4 qualify or register the Common Shares purchasable upon
exercise of the Rights under the "Blue Sky" or securities laws of such
jurisdictions as may be necessary or appropriate.
11.2
11.2.1 The Board of Directors of Kendle may, at its option, at
any time after a Person becomes an Acquiring Person, mandatorily exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that shall have become null and void and nontransferable pursuant to the
provisions of Section 7.5) for consideration per Right consisting of either (A)
one-half of the securities that would be issuable at such time upon the exercise
of one
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Right in accordance with Section 11.1 or, if applicable, Section 9.2(ii) or
9.2(iii) or (B) if applicable, the cash consideration specified in Section
9.2(i) (the consideration issuable per Right pursuant to this Section 11.2.1
being the "Exchange Consideration"). If the Board of Directors of Kendle elects
to exchange all the Rights for Exchange Consideration pursuant to this Section
11.2.1 prior to the physical distribution of the Rights Certificates, Kendle may
distribute the Exchange Consideration in lieu of distributing Right
Certificates, in which case for purposes of this Agreement holders of Rights
shall be deemed to have simultaneously received and surrendered for exchange
Right Certificates on the date of such distribution. Notwithstanding the
foregoing, the Board of Directors of Kendle shall not be empowered to effect
such exchange at any time after any Person (other than Kendle , any Subsidiary
of Kendle, Candace Kendle, Christopher Bergen, any trust established by either
of them or any corporation or other entity controlled by either of them, any
employee benefit plan of Kendle or any such Subsidiary, or any Person holding
Common Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of more
than 50% of the Common Shares then outstanding.
11.2.2 Any action of the Board of Directors of Kendle ordering
the exchange of any Rights pursuant to Section 11.2.1 shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right so exchanged pursuant
to Section 11.1 shall terminate and the only right thereafter of a holder of
such Right shall be to receive the Exchange Consideration in exchange for each
such Right held by such holder or, if the Exchange Consideration shall not have
been paid or issued, to exercise any such Right pursuant to Section 11.3.1.
Kendle shall promptly give public notice and prompt notice to the Rights Agent
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. Kendle promptly
shall mail a notice of any such exchange to all holders of the Rights to be
exchanged at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange shall state the method by which the exchange of the Rights for the
Exchange Consideration will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which shall have become null and void and nontransferable pursuant to the
provisions of Section 7.5) held by each holder of Rights.
11.3
11.3.1 If, directly or indirectly, any transactions specified
in the following clause (A), (B) or (C) of this Section 11.3.1 (each such
transaction being a "Business Combination") shall be consummated then, in each
such case, proper provision shall be made so that each holder of a Right, except
as provided in Section 7.5, shall thereafter have the right to receive, upon the
exercise thereof for the Purchase Price in accordance with the terms of this
Agreement, the securities specified in Sections 11.3.2 and 11.3.3 (or, at such
holder's option, the securities specified in Section 11.1 if Kendle is the
surviving corporation in such Business Combination):
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(1) Kendle shall consolidate with, or merge with and into, any
Acquiring Person or any Affiliate or Associate of an Acquiring Person;
(2) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into Kendle and, in connection
with such merger, all or part of the Common Shares shall be changed
into or exchanged for capital stock or other securities of Kendle or of
any Acquiring Person or Affiliate or Associate of an Acquiring Person
or cash or any other property; or
(3) Kendle shall sell, lease, exchange or otherwise transfer
or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more
transactions, the Major Part of the assets of Kendle and its
Subsidiaries (taken as a whole) to any Acquiring Person or any
Affiliate or Associate of an Acquiring Person:
11.3.2 If the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter represent the
right to receive, upon the exercise thereof for the Purchase Price in accordance
with the terms of this Agreement, such number of Registered Common Shares of
such Principal Party, free and clear of all liens, encumbrances or other adverse
claims, as shall have an aggregate Market Value as of the time of exercise
thereof equal to the result obtained by multiplying the Purchase Price by two.
11.3.3 If the Principal Party involved in such Business
Combination does not have Registered Common Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Agreement, at the election
of the holder of such Right at the time of the exercise thereof, any of:
(x) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an aggregate
Book Value immediately after giving effect to such Business
Combination equal to the result obtained by multiplying the
Purchase Price by two;
(y) such number of Common Shares of the Principal
Party in such Business Combination (if the Principal Party is
not also the Surviving Person in such Business Combination) as
shall have an aggregate Book Value immediately after giving
effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two; or
(z) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons that has
Registered Common Shares outstanding, such number of
Registered Common Shares of whichever of such Affiliates of
the Principal Party has Registered Common Shares with the
greatest aggregate Market Value on the date of consummation of
such Business Combination as shall have an aggregate Market
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Value on the date of such Business Combination equal to the
result obtained by multiplying the Purchase Price by two.
11.3.4 Kendle shall not consummate any Business Combination unless each
issuer of Common Shares for which Rights may be exercised, as set forth in this
Section 11.3, shall have sufficient authorized Common Shares that have not been
issued or reserved for issuance (and which shall, when issued upon exercise
thereof in accordance with this Agreement, be validly issued, fully paid and
nonassessable and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof) to
permit the exercise in full of the Rights in accordance with this Section 11.3.4
and unless prior thereto:
(1) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights, shall be effective
under the Securities Act and
(2) Kendle and each such issuer shall have:
(1) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such
issuer of the obligations set forth in this Section 11.3 and
the Rights Agent is authorized and protected in relying on
such agreement (including the obligation of such issuer to
issue Common Shares upon the exercise of Rights in accordance
with the terms set forth in Sections 11.3.1 and 11.3.5) and
further providing that such issuer, at its own expense, shall
use its best efforts to:
(x) cause a registration statement under the
Securities Act on an appropriate form, with respect
to the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the
Expiration Date;
(y) qualify or register the Rights and the
Common Shares of such issuer purchasable upon
exercise of the Rights under the "Blue Sky" or
securities laws of such jurisdictions as may be
necessary or appropriate; and
(z) list the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights
on each national securities exchange on which the
Common Shares were listed prior to the consummation
of the Business Combination or, if the Common Shares
were not listed on a national securities exchange
prior to the consummation of the Business
Combination, on a national securities exchange;
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(2) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a valid, binding
and enforceable agreement of such issuer and such opinion shall be conclusive
for all purposes; and
(3) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number of Common
Shares of such issuer that may be purchased upon the exercise of each Right
after the consummation of such Business Combination and such certificate shall
be conclusive for all purposes.
11.3.5 After consummation of any Business Combination and subject to
the provisions of Section 11.3.4, (A) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11.3.5 shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of Kendle pursuant to this Agreement, (B) the term "Company" shall
thereafter be deemed to refer to such issuer, (C) each such issuer shall take
such steps in connection with such consummation as may be necessary to assure
that the provisions hereof (including the provisions of Sections 11.1 and 11.3)
shall thereafter be applicable, as nearly as reasonably may be, in relation to
its Common Shares thereafter deliverable upon the exercise of the Rights, and
(D) the number of Common Shares of each such issuer thereafter receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions of
Sections 11 and 12 and the provisions of Sections 7, 9 and 10 shall apply, as
nearly as reasonably may be, on like terms to any such Common Shares.
SECTION 12. ADJUSTMENTS
12.1 To preserve the actual or potential economic value of the Rights,
if at any time after the date of this Agreement there shall be any change in the
Common Shares, whether by reason of stock dividends, stock splits,
reclassifications, recapitalizations, mergers, consolidations, combinations or
exchanges of securities, split-ups, split-offs, spin-offs, liquidations, other
similar changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Shares (other than distribution of the Rights or regular quarterly
cash dividends), or otherwise, then, in each such event the Board of Directors
of Kendle shall make such appropriate adjustments in the number of Common Shares
(or the number and kind of other securities) issuable upon exercise of each
Right, the Purchase Price and Redemption Price in effect at such time and the
number of Rights outstanding at such time (including the number of Rights or
fractional Rights associated with each Common Share) such that following such
adjustment such event shall not have had the effect of reducing or limiting the
benefits the holders of the Rights would have had absent such event.
12.2 If, as a result of an adjustment made pursuant to Section 12.1,
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Common Shares, thereafter the number of such
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the
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provisions of Sections 11 and 12 and the provisions of Sections 7, 9 and 10 with
respect to the Common Shares shall apply, as nearly as reasonably may be, on
like terms to any such other securities.
12.3 All Rights originally issued by Kendle subsequent to any
adjustment made to the amount of Common Shares or other securities relating to a
Right shall evidence the right to purchase, for the Purchase Price, the adjusted
number and kind of securities purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
12.4 Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares or number or kind of other securities issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the terms that were expressed in the initial
Right Certificates issued hereunder.
12.5 In any case in which action taken pursuant to Section 12.1
requires that an adjustment be made effective as of a record date for a
specified event, Kendle may elect to defer with prompt notice thereof to the
Rights Agent until the occurrence of such event the issuing to the holder of any
Right exercised after such record date the Common Shares and/or other
securities, if any, issuable upon such exercise over and above the Common Shares
and/or other securities, if any, issuable before giving effect to such
adjustment; provided, however, that Kendle shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to receive
such additional securities upon the occurrence of the event requiring such
adjustment.
SECTION 13. CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made as provided in Section 11 or 12, Kendle
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts and comparisons accounting for such adjustment, (b)
promptly file with the Rights Agent and with each transfer agent for the Common
Shares a copy of such certificate, and (c) mail a brief summary thereof to each
holder of a Right Certificate (or, prior to the Distribution Date, of the Common
Shares) in accordance with Section 25. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
SECTION 14. ADDITIONAL COVENANTS
14.1 Notwithstanding any other provision of this Agreement, no
adjustment to the number of Common Shares (or fractions of a share) or other
securities for which a Right is exercisable or the number of Rights outstanding
or associated with each Common Share or any similar or other adjustment shall be
made or be effective if such adjustment would have the effect of reducing or
limiting the benefits the holders of the Rights would have had absent such
adjustment, including the
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benefits under Sections 11 and 12, unless the terms of this Agreement are
amended so as to preserve such benefits.
14.2 Kendle covenants and agrees that, after the Distribution Date,
except as permitted by Section 26, it shall not take (or permit any Subsidiary
of Kendle to take) any action if at the time such action is taken it is intended
or reasonably foreseeable that such action will reduce or otherwise limit the
benefits the holders of the Rights would have had absent such action, including
the benefits under Sections 11 and 12. Any action taken by Kendle during any
period after any Person becomes an Acquiring Person but prior to the
Distribution Date shall be null and void unless such action could be taken under
this Section 14.2 from and after the Distribution Date. Kendle shall not
consummate any Business Combination if any issuer of Common Shares for which
Rights may be exercised after such Business Combination in accordance with
Section 11.3 shall have taken any action that reduces or otherwise limits the
benefits the holders of the Rights would have had absent such action, including
the benefits under Sections 11 and 12.
SECTION 15. FRACTIONAL RIGHTS AND SHARES
15.1 Kendle may, but shall not be required to, issue fractions of
Rights or distribute Right Certificates that evidence fractional Rights. In lieu
of such fractional Rights, Kendle may pay to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current Market
Value of a whole Right. For purposes of this Section 15.1, the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
15.2 Kendle may, but shall not be required to, issue fractions of
Common Shares upon exercise of the Rights or distribute certificates that
evidence fractional Common Shares. In lieu of fractional Common Shares, Kendle
may elect to (i) utilize a depository arrangement as provided by the terms of
the Common Shares or (ii) in the case of a fraction of a Common Share (other
than one one-thousandth (1/1,000) of a Common Share or any integral multiple
thereof), pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current Market Value of one Common Share. If, as a result of an
adjustment made pursuant to Section 12.1, the holder of any Right thereafter
exercised shall become entitled to receive any securities other than Common
Shares, the provisions of this Section 15.1 shall apply, as nearly as reasonably
may be, on like terms to such other securities.
15.3 Kendle may, but shall not be required to, issue fractions of
Common Shares upon exchange of Rights pursuant to Section 11.2, or to distribute
certificates that evidence fractional Common Shares. In lieu of such fractional
Common Shares, Kendle may pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
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otherwise be issuable an amount in cash equal to the same fraction of the
current Market Value of one Common Share as of the date on which a Person became
an Acquiring Person.
15.4 The holder of Rights by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as provided in this Section 15.
SECTION 16. RIGHTS OF ACTION
16.1 All rights of action in respect of this Agreement are vested in
the respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares) may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against Kendle to enforce,
or otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations of any Person
under, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
16.2 Any holder of Rights who prevails in an action to enforce the
provisions of this Agreement shall be entitled to recover from Kendle the
reasonable costs and expenses, including attorneys' fees, incurred in such
action.
SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT CERTIFICATES
17.1 Prior to the Distribution Date, the Rights shall be transferable
only in connection with the transfer of the Common Shares and the Right
associated with each Kendle Common Share shall be automatically transferred upon
the transfer of each Kendle Common Share.
17.2 After the Distribution Date, the Right Certificates shall be
transferable, subject to Section 7.5, only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer.
17.3 Kendle and the Rights Agent may deem and treat the Person in whose
name a Right Certificate (or, prior to the Distribution Date, the associated
Common Shares certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated certificate for Common
Shares
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made by anyone other than Kendle or the Rights Agent) for all purposes
whatsoever, and neither Kendle nor the Rights Agent shall be affected by any
notice to the contrary.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Right Certificate shall be entitled to vote
or receive dividends or be deemed, for any purpose, the holder of the Common
Shares or of any other securities of Kendle which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of Kendle,
including any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders, or to receive dividends or other distributions or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
SECTION 19. CONCERNING THE RIGHTS AGENT
Kendle agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. Kendle also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability or
expense incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises. This indemnification shall survive the expiration or termination
of the Rights or this Agreement.
The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Stock or for other securities of Kendle, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged by the proper Person or Persons.
SECTION 20. MERGER, CONSOLIDATION OR CHANGE OF RIGHTS AGENT
Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
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succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, or any Affiliate of the Rights Agent that
undertakes the corporate trust or stock transfer business of the Rights Agent as
a result of transfer, assignment or any other means, shall be the successor to
the Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 22 hereof. In case at the time such successor
Rights Agent shall succeed to the agency related by this Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Rights Certificates and this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and this Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT
The Rights Agent undertakes only the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which Kendle
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:
21.1 The Rights Agent may consult with legal counsel (who may be legal
counsel for Kendle), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
21.2 Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current per share market price") be proved or established by
Kendle prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the President, a Vice President, the
Treasurer or the Secretary of Kendle and delivered to the Rights
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Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
21.3 The Rights Agent shall be liable hereunder to Kendle and any other
Person only for its own gross negligence, bad faith or willful misconduct.
21.4 The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by Kendle only.
21.5 The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by Kendle of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11 or 12
or any other provision hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Common Shares to be purchased
pursuant to this Agreement or any Right Certificate or as to whether any Common
Shares will, when so issued, be validly authorized and issued, fully paid and
nonassessable; nor will it be liable for any federal or state transfer taxes or
charges that may be due upon the issuance or transfer of any Common Share or
Right Certificate.
21.6 Kendle agrees that it shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
21.7 The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, a Vice President, the Secretary
or the Treasurer of Kendle, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
such instructions. When applying to any such officer for instructions, the
Rights Agent may set forth in writing (1) any proposed action or omission of the
Rights Agent with respect to its duties or obligations under this Agreement and
(ii) the date on or after which the Rights Agent proposes such action will be
taken or omitted. Such date shall not be less than three Business Days after any
such officer receives such application for instructions from the Rights Agent,
unless an earlier date is mutually agreed to by the parties. Unless the Rights
Agent
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has received written instructions from Kendle (including any such officer) with
respect to such proposed action or omission prior to such date (or, if longer,
in the case of a proposed action to be taken, prior to the Rights Agent actually
taking such action), the Rights Agent shall not be liable for the actions or
omissions set forth in such application, provided that such action or omission
does not violate any express provisions of this Agreement. The Rights Agent may
execute and exercise any of the rights or powers vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents.
21.8 The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of Kendle or become pecuniarily interested in any transaction in
which Kendle may be interested, or contract with or lend money to Kendle or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for Kendle or for any other legal entity.
21.9 No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights
hereunder if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to the Rights Agent.
21.10 If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase, as the case may be, has either
not been completed or indicated an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with Kendle.
SECTION 22. CHANGE OF RIGHTS AGENT
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to Kendle and to each transfer agent of the Common Shares by registered
or certified mail, and to the holders of the Right Certificates by first-class
mail. Kendle may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Shares, by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, Kendle shall appoint a successor to the
Rights Agent. If Kendle shall fail to make such appointment within a period of
30 days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by Kendle), then the
incumbent Rights or the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment
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of a new Rights Agent. Any successor Rights Agent, whether appointed by Kendle
or by such a court, shall be (A) a corporation organized and doing business
under the laws of the United States or any state therein, in good standing,
having a principal office in a state in the United States, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million or (B) an affiliate of a corporation described
in clause (A) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, Kendle shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares, and as soon as practicable thereafter mail a notice thereof
in writing to the registered holders of the Right Certificates (which notice may
be included in any regularly scheduled mailing to shareholders whether such
mailing is by first-class mail or otherwise). Failure to give any notice
provided for in this Section 22, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, Kendle may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the earlier of the Redemption Date
and the Expiration Date, Kendle (a) shall, with respect to Common Shares so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of securities,
notes or debentures issued by Kendle, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of Kendle and with prompt
notice thereof to the Rights Agent, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificate shall be issued if, and to the
extent that, Kendle shall be advised by counsel that such issuance would create
a significant risk of material adverse tax consequences to Kendle or the Person
to whom such Right Certificate would be issued, (ii) no such Right Certificate
shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof, and (iii) no such
Right Certificate shall be issued to an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
SECTION 24. REDEMPTION AND TERMINATION
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24.1 The Board of Directors of Kendle may, at its option, at any time
prior to the earlier of (i) such time as a Person becomes an Acquiring Person
and (ii) the Expiration Date, order the redemption of all, but not fewer than
all, the then outstanding Rights at the Redemption Price (the date of such
redemption being the "Redemption Date"), and Kendle, at its option, may pay the
Redemption Price either in cash or Common Shares or other securities of Kendle
deemed by the Board of Directors of Kendle, in the exercise of its sole
discretion, to be at least equivalent in value to the Redemption Price.
24.2 Immediately upon the action of the Board of Directors of Kendle
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 Business Days after the action of the Board of Directors of
Kendle ordering the redemption of the Rights, Kendle shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to the Rights Agent and to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Each
such notice of redemption shall state the method by which payment of the
Redemption Price will be made. The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or not
the holder of Rights receives such notice. In any case, failure to give such
notice by mail, or any defect in the notice, to any particular holder of Rights
shall not affect the sufficiency of the notice to other holders of Rights.
SECTION 25. NOTICES
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of a Right Certificate (or, prior to the
Distribution Date, of the Common Shares) to or on Kendle shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Kendle International Inc.
700 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202
Attention: Corporate Secretary
Subject to the provisions of Section 22, any notice, demand or delivery
authorized by this Agreement to be given or made by Kendle or by the holder of a
Right Certificate (or, prior to the Distribution Date, of the Common Shares) to
or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with Kendle) as follows:
The Fifth Third Bank
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Corporate Trust Administration
Mail Drop 1090D2
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Dana Hushak
Notices, demands or deliveries authorized by this Agreement to be given
or made by Kendle or the Rights Agent to any holder of a Right Certificate (or,
prior to the Distribution Date, of the Common Shares) shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares.
SECTION 26. SUPPLEMENTS AND AMENDMENTS
At any time prior to the time any person becomes an Acquiring Person,
and subject to the last sentence of this Section 26, Kendle may, and the Rights
Agent shall if Kendle so directs, supplement or amend any provision of this
Agreement (including the date on which the Expiration Date or the Distribution
Date shall occur, the amount of the Purchase Price, the definition of "Acquiring
Person" or the time during which the Rights may be redeemed pursuant to Section
24) without the approval of any holder of the Rights. From and after the time
any Person becomes an Acquiring Person, and subject to applicable law, Kendle
may, and the Rights Agent shall if Kendle so directs, amend this Agreement
without the approval of any holders of Right Certificates (a) to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision of this Agreement or (b)
to make any other provisions in regard to matters or questions arising hereunder
which Kendle may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Any
supplement or amendment adopted during any period after any Person has become an
Acquiring Person but prior to the Distribution Date shall be null and void
unless such supplement or amendment could have been adopted under the prior
sentence from and after the Distribution Date. Upon the delivery of a
certificate from an appropriate officer of Kendle which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, and
such supplement or amendment does not change or increase the Rights Agent's
duties, liabilities or obligations, the Rights Agent shall execute such
supplement or amendment. In addition, notwithstanding anything to the contrary
contained in this Agreement, no supplement or amendment to this Agreement shall
be made which reduces the Redemption Price (except as required by Section 12.1).
SECTION 27. SUCCESSORS
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All the covenants and provisions of this Agreement by or for the
benefit of Kendle or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
SECTION 28. BENEFITS OF AGREEMENT; DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS; ETC.
28.1 Nothing in this Agreement shall be construed to give to any Person
other than Kendle, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, of the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of Kendle, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, of the Common Shares).
28.2 Except as explicitly otherwise provided in this Agreement, the
Board of Directors of Kendle shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of Kendle or to Kendle, or as may be necessary
or advisable in the administration of this Agreement, including the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend this Agreement and a determination of whether there is an Acquiring
Person) and each shall be conclusive for all purposes.
28.3 Nothing contained in this Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of Kendle to exercise its
fiduciary duty. Without limiting the foregoing, nothing contained herein shall
be construed to suggest or imply that the Board of Directors shall not be
entitled to reject any tender offer or other acquisition proposal, or to
recommend that holders of Common Shares reject any tender offer, or to take any
other action (including the commencement, prosecution, defense or settlement of
any litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer or other acquisition proposal that
the Board of Directors believes is necessary or appropriate in the exercise of
such fiduciary duty.
SECTION 29. SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
SECTION 30. GOVERNING LAW
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This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the law of the State of Ohio and for all
purposes shall be governed by and construed in accordance with the law of such
State applicable to contracts to be made and performed entirely within such
State, provided, however, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of Ohio applicable to contracts made and to be
performed entirely within such State.
SECTION 31. COUNTERPARTS; EFFECTIVENESS
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
This Agreement shall be effective as of the Close of Business on the date
hereof.
SECTION 32. DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
KENDLE INTERNATIONAL INC.
BY: /s/ Timothy M. Mooney
--------------------------------
Timothy M. Mooney
Executive Vice President -
Chief Financial Officer
THE FIFTH THIRD BANK, as Rights Agent
BY: /s/ Dana Hushak
--------------------------------
Dana Hushak
Vice President and Trust Officer
36
EXHIBIT A
[Form of Right Certificate]
Certificate No. ____________________
_________ Rights
NOT EXERCISABLE AFTER THE CLOSE OF BUSINESS ON AUGUST 13, 2009 OR EARLIER IF
REDEEMED BY KENDLE. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
KENDLE, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE AGREEMENT. RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE AGREEMENT) AND BY ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
KENDLE INTERNATIONAL INC.
This certifies that ________________, or ________________ registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Shareholder Rights Agreement dated as of August 13, 1999 as it
may be amended from time to time (the "Agreement"), between Kendle International
Inc., an Ohio corporation (the "Company"), and The Fifth Third Bank, as Rights
Agent (the "Rights Agent"), unless the Rights evidenced hereby shall have been
previously redeemed or exchanged by Kendle, to purchase from Kendle at any time
after the Distribution Date (as defined in the Agreement) and prior to 5:00
p.m., Eastern time, on _________, 2009 (the "Expiration Date"), at the principal
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-thousandth (1/1,000) of a fully paid,
nonassessable Common Share, no par value, of Kendle (the "Common Shares"), at a
purchase price per one one-thousandth (1/1,000) of a share equal to $5.00 (the
"Purchase Price") payable in cash, upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of the Close of Business on August 13, 1999. As provided
in the Agreement, the Purchase Price and the number and kind of shares which may
be purchased upon the exercise of each Right evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in
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the Agreement), such Rights shall be null and void and nontransferable and the
holder of any such Right (including any purported transferee or subsequent
holder) shall not have any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which reference
to the Agreement is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, Kendle and the holders of the Right Certificates. Copies of the
Agreement are on file at the above-mentioned office of the Rights Agent and are
also available from Kendle upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Agreement, the Rights evidenced by
this Right Certificate may be redeemed by Kendle at its option at a redemption
price (in cash or shares of Common Stock or other securities of Kendle deemed by
the Board of Directors to be at least equivalent in value) of $.01 per Right
(which amount shall be subject to adjustment as provided in the Agreement) at
any time prior to the earlier of (i) such time as a Person becomes an Acquiring
Person and (ii) the Expiration Date.
Kendle may, but shall not be required to, issue fractions of Common
Shares or distribute certificates which evidence fractions of Common Shares upon
the exercise of any Right or Rights evidenced hereby. In lieu of issuing
fractional shares, Kendle may elect to make a cash payment as provided in the
Agreement for fractions of a share other than one one-thousandth (1/1,000) of a
share or any integral multiple thereof or to issue certificates or utilize a
depository arrangement as provided in the terms of the Agreement and the Common
Shares.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of Kendle which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of Kendle, including, without limitation, any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Agreement), or to receive dividends or other distributions or
subscription rights, or
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otherwise, until the Right or Rights evidenced by this Right Certificate
shall have been exercised as provided in accordance with the provisions of the
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
WITNESS the facsimile signature of the proper officers of Kendle and
its corporate seal.
Dated as of ____________
KENDLE INTERNATIONAL INC.
BY:______________________________
Title:
Attest:
- -------------------------
Name:
Title:
Date of countersignature:
Countersigned:
THE FIFTH THIRD BANK,
as Rights Agent,
BY_______________________
Authorized Signatory
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[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to
exercise the Rights represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Right Certificate to purchase the Common Shares (or
other shares) issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
________________________________________________________________________________
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:__________
____________________________________________
Signature
Signature Guaranteed:
40
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns and transfer unto ________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________ Attorney, to transfer
the within Right Certificate on the books of the within-named Corporation, with
full power of substitution.
Dated:___________
_____________________________________
Signature
Signature Guaranteed:
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined in the Agreement), (2) this Rights Certificate is not
being sold, assigned or transferred to or on behalf of any such Acquiring
Person, Affiliate or Associate, and (3) after inquiry and to the best knowledge
of the undersigned, the undersigned did not acquire the Rights evidenced by this
Right Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Agreement).
_____________________________________
Signature
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NOTICE
The signature on the foregoing Form of Election to Purchase or Form of
Assignment must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
42
EXHIBIT B
RIGHTS BENEFICIALLY OWNED BY ANY ACQUIRING PERSONS
OR THEIR AFFILIATES OR ASSOCIATES AND BY ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS ARE
NULL AND VOID AND NONTRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
OF KENDLE INTERNATIONAL INC.
On August 13, 1999 the Board of Directors of Kendle International Inc.
declared a dividend of one Right for each outstanding share of Common Stock, no
par value, of Kendle (together with certain other equity securities described in
the Agreement defined below, the "Common Shares"). The Rights will be issued to
the holders of record of Common Shares outstanding at the Close of Business on
August 13, 1999 (the "Record Date") and with respect to Common Shares issued
thereafter until the Distribution Date (as defined below). Each Right, when it
becomes exercisable as described below, will entitle the registered holder to
purchase from Kendle one one-thousandth (1/1,000) of a Common Share, no par
value, of Kendle (the "Common Shares") at a price of $5.00 (the "Purchase
Price"). The description and terms of the Rights are set forth in a Shareholder
Rights Agreement dated as of August 13, 1999 as it may be amended from time to
time (the "Agreement"), between Kendle and The Fifth Third Bank, as Rights Agent
(the "Rights Agent").
Until the earlier of (i) such time as Kendle learns that a person or
group (including any affiliate or associate of such person or group) has
acquired, or obtained the right to acquire, beneficial ownership of more than
15% of the outstanding Common Shares (such person or group being called an
"Acquiring Person") and (ii) such date, if any, as may be designated by the
Board of Directors of Kendle following the commencement of, or first public
disclosure of an intention to commence, a tender or exchange offer for
outstanding Common Shares which could result in such person or group becoming
the beneficial owner of more than 15% of the outstanding Common Shares (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced by certificates for Common Shares registered in the names of the
holders thereof (which certificates for Common Shares shall also be deemed to be
Right Certificates (as defined below)) and not by separate Right Certificates.
With respect to any certificate for Common Shares outstanding as of the Record
Date, until the Distribution Date the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates along
with a copy of this Summary of Rights, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. Therefore, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the
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close of business on the Distribution Date, and such separate Right Certificates
alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the Close of Business on August 13, 2009 (the "Expiration Date"),
unless earlier redeemed or exchanged by Kendle as described below.
The number of Common Shares or other securities issuable upon exercise
of the Rights is subject to adjustment by the Board of Directors of Kendle in
the event of any change in the Common Shares, whether by reason of stock
dividends, stock splits, recapitalizations, reclassifications, mergers,
consolidations, combinations or exchanges of securities, split-ups, split-offs,
spin-offs, liquidations, other similar changes in capitalization, any
distribution or issuance of assets, evidences of indebtedness or subscription
rights, options or warrants to holders of Common Shares or otherwise. The
Purchase Price and the number of Common Shares or other securities issuable upon
exercise of the Rights are subject to adjustment from time to time in the event
of the declaration of a stock dividend on the Common Shares payable in Common
Shares or a subdivision or combination of the Common Shares prior to the
Distribution Date.
The Common Shares are authorized to be issued in fractions which are an
integral multiple of one one-thousandth (1/1,000) of a Common Share. Kendle may,
but is not required to, issue fractions of shares upon the exercise of Rights,
and in lieu of fractional shares, Kendle may make a cash payment based on the
market price of such shares on the first trading date prior to the date of
exercise or utilize a depositary arrangement as provided by the terms of the
Common Shares.
Subject to the right of the Board of Directors of Kendle to redeem or
exchange the Rights as described below, at such time as there is an Acquiring
Person, the holder of each Right will thereafter have the right to receive, upon
exercise thereof, for the Purchase Price, that number of one one-thousandth
(1/1,000) of a Common Share equal to the number of Common Shares which at the
time of such transaction would have a market value of twice the Purchase Price.
Any Rights that are or were beneficially owned by an Acquiring Person on or
after the Distribution Date will become null and void and will not be subject to
this "flip-in" provision.
If Kendle is acquired in a merger or other business combination by an
Acquiring Person that is a publicly traded corporation or 50% or more of
Kendle's assets or assets representing 50% or more of Kendle's earning power are
sold, leased, exchanged or otherwise transferred (in one or more transactions)
to an Acquiring Person that is a publicly traded corporation, proper provision
must be made so that each Right will entitle its holder to purchase, for the
Purchase Price, that number of common shares of such corporation which at the
time of the transaction would have a market value of twice the Purchase Price.
If Kendle is acquired in a merger or other business combination by an Acquiring
Person that is not a publicly traded entity or 50% or more of Kendle's assets or
assets representing 50% or more of the earning power of Kendle are sold, leased,
exchanged or otherwise transferred (in one or more transactions) to an Acquiring
Person that is not a publicly traded entity,
44
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proper provision must be made so that each Right will entitle its holder to
purchase, for the Purchase Price, at such holder's option, (i) that number of
shares of the surviving corporation in the transaction with such entity (or, at
such holder's option, of the surviving corporation in such acquisition, which
could be Kendle) which at the time of the transaction would have a book value of
twice the Purchase Price or (ii) that number of shares of such entity which at
the time of the transaction would have a book value of twice the Purchase Price
or (iii) if such entity has an affiliate which has publicly traded common
shares, that number of common shares of such affiliate which at the time of the
transaction would have a market value of twice the Purchase Price. This
"flip-over" provision only applies to a merger or similar business combination
with an Acquiring Person.
ANY RIGHTS THAT ARE OR WERE, AT ANY TIME ON OR AFTER THE DATE AN
ACQUIRING PERSON BECOMES SUCH, BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (OR A TRANSFEREE THEREOF) WILL
BECOME NULL AND VOID AND ANY HOLDER OF ANY SUCH RIGHT (INCLUDING ANY SUBSEQUENT
HOLDER) WILL BE UNABLE TO EXERCISE ANY SUCH RIGHT.
The Rights are redeemable by the Board of Directors at a redemption
price of $.01 per Right (the "Redemption Price") any time prior to the earlier
of (i) such time as there is an Acquiring Person and (ii) the Expiration Date.
Immediately upon the action of the Board electing to redeem the Rights, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
After there is an Acquiring Person the Board of Directors may elect to
exchange each Right (other than Rights owned by an Acquiring Person) for
consideration per Right consisting of one-half of the securities that would be
issuable at such time upon the exercise of one Right pursuant to the terms of
the Agreement. Notwithstanding the foregoing, the Board of Directors of Kendle
shall not be empowered to effect such exchange at any time after any Person
(other than Kendle, any Subsidiary of Kendle, Candace Kendle, Christopher
Bergen, any trust established by either of them or any corporation or other
entity controlled by either of them, any employee benefit plan of Kendle or any
such Subsidiary, or any entity holding Common Shares for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of such
person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
At any time prior to such time as there shall be an Acquiring Person,
Kendle may, without the approval of any holder of the Rights, supplement or
amend any provision of the Agreement (including the date on which the Expiration
Date or the Distribution Date shall occur, the amount of the Purchase Price or
the definition of "Acquiring Person"), except that no supplement or amendment
shall be made that reduces the Redemption Price of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of Kendle, including, without limitation, the right to
vote or to receive dividends.
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A copy of the Agreement will be filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the
Agreement is available free of charge from Kendle upon written request. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Agreement, which is incorporated
herein by reference.