Exhibit 10.4

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July 10, 2007

 

To:

Kendle International Inc.

441 Vine Street

Suite 1200

Cincinnati, Ohio 45202

Telephone: (513) 381-5550

Facsimile: (513) 381-5870

 

From:

 JPMorgan Chase Bank, National Association

 London Branch

 P.O. Box 161

 60 Victoria Embankment

 London EC4Y 0JP

 England

 

Re:

Issuer Warrant Transaction

(Reference No. ____________________)

Ladies and Gentlemen:

The purpose of this communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced transaction entered into on the
Trade Date specified below (the “Transaction”) between JPMorgan Chase Bank,
National Association, London Branch (the “Dealer”), represented by J.P. Morgan
Securities Inc. (the “Agent”) as its agent, and Kendle International Inc. (the
“Issuer”). This communication constitutes a “Confirmation” as referred to in the
ISDA Form (as defined below).

1.    This Confirmation is subject to, and incorporates by reference, the
definitions and provisions of the 2000 ISDA Definitions (including the Annex
thereto) (the “2000 Definitions”) and the definitions and provisions of the 2002
ISDA Equity Derivatives Definitions (the “Equity Definitions,” and, together
with the 2000 Definitions, the “Definitions”), in each case as published by the
International Swaps and Derivatives Association, Inc. (the “ISDA”). In the event
of any inconsistency between the 2000 Definitions and the Equity Definitions,
the Equity Definitions will govern to the extent of such inconsistency. For
purposes of the Equity Definitions, each reference herein to a Warrant shall be
deemed to be a reference to a Call or an Option, as the context requires.

Each party is hereby advised, and each party acknowledges, that the other party
has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’
entry into the Transaction to which this Confirmation relates

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746. Registered

Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

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on the terms and conditions set forth below.

This Confirmation evidences a complete and binding agreement between the Dealer
and the Issuer as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall be subject to an agreement (the “Agreement”) in
the form of the 2002 ISDA Master Agreement (the “ISDA Form”) as if the Dealer
and the Issuer had executed an agreement in such form (without any Schedule but
with the elections set forth in this Confirmation). For the avoidance of doubt,
the Transaction shall be the only transaction under the Agreement.

All provisions contained or incorporated by reference in the Agreement will
govern this Confirmation except as expressly modified herein. In the event of
any inconsistency between this Confirmation and either the Definitions or the
Agreement, this Confirmation shall govern to the extent of such inconsistency.

2.    The Transaction constitutes a Warrant Transaction, which shall be
considered a Share Option Transaction for purposes of the Equity Definitions.
The terms of the particular Transaction to which this Confirmation relates are
as follows:

General Terms:

 

Trade Date:

  

July 11, 2007

Effective Date:

  

July 16, 2007, subject to Section 8(m)

Convertible Notes:

  

The Issuer’s 3.375% Convertible Senior Notes due 2012

Components:

  

The Transaction will be divided into individual Components as set forth in Annex
A, each with the terms set forth in this Confirmation, and, in particular, with
the Number of Warrants and Expiration Date set forth in this Confirmation;
provided, however, that the Number of Warrants of each Component shall be
increased to the extent provided for under, and in accordance with, “Number of
Warrants” below. The payments and deliveries to be made upon settlement of the
Transaction will be determined separately for each Component as if each
Component were a separate Transaction under the Agreement.

Warrant Style:

  

European

Warrant Type:

  

Call

Seller:

  

Issuer

Buyer:

  

Dealer

Shares:

  

The Common Stock of the Issuer, no par value (Ticker Symbol:

 

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“KNDL”).

Convertible Notes:

  

The Company’s 3.375% Convertible Senior Notes due 2012

Number of Warrants:

  

For each Component, as provided in Annex A to this Confirmation; provided,
however, that, if UBS Securities LLC exercises its option (the “Over-Allotment
Option”), pursuant to Section 1 of the Underwriting Agreement dated July 10,
2007 between the Issuer and UBS Securities LLC (the “Underwriting Agreement”),
to purchase “Additional Notes” (as defined in the Underwriting Agreement), then,
on such date of exercise, the Number of Warrants for each Component shall,
subject to the payment of the Additional Premium (as defined below) in
accordance herewith, be automatically increased by a number of Warrants (the
“Additional Warrants”) equal to the excess, if any, of (x) the product of (i)
the Number of Warrants for such Component as reflected in Annex A hereto and
(ii) a fraction (A) whose numerator is forty five percent (45%) of the aggregate
principal amount of Additional Notes outstanding immediately after the issuance
of the Additional Notes pursuant to such exercise and (B) whose denominator is
seventy five million dollars ($75,000,000), over (y) the aggregate number of
Warrants, if any, theretofore added to the Number of Warrants for such Component
pursuant to this proviso on account of any prior exercises of the Over-Allotment
Option. For the avoidance of doubt, the Number of Warrants outstanding shall be
reduced by each exercise of Warrants hereunder.

Warrant Entitlement:

  

One (1) Share per Warrant

Strike Price:

  

USD61.217 per Share

Premium:

  

USD9,277,500 (Premium per Warrant: USD5.90213994); provided, however, that if
the Number of Warrants is increased pursuant to the proviso to the definition of
“Number of Warrants” above, then there shall be an additional Premium (the
“Additional Premium”) in an amount equal to the product of the Premium per
Warrant and the sum of the increases in the Number of Warrants for each
Component, which Additional Premium shall be paid by the Buyer to the Seller on
the Additional Premium Payment Date (as defined below).

Premium Payment Date:

  

The Effective Date

Additional Premium

    Payment Date:

  

The closing date for the purchase of the applicable Additional

 

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Notes by UBS Securities LLC from the Issuer pursuant to the Underwriting
Agreement

Exchange:

  

The NASDAQ Global Select Market

Related Exchange:

  

All Exchanges

Procedures for Exercise:

  

In respect of each Component:

Expiration Time:

  

Valuation Time

Expiration Date:

  

As provided in Annex A to this Confirmation (or, if such date is not a Scheduled
Trading Day, the next following Scheduled Trading Day that is not already an
Expiration Date for another Component); provided, however, that if that date is
a Disrupted Day, then the Expiration Date for such Component shall be the first
succeeding Scheduled Trading Day that is not a Disrupted Day and is not, or is
not deemed to be, an Expiration Date in respect of any other Component of the
Transaction hereunder; provided further, that if the Expiration Date has not
occurred pursuant to the preceding proviso as of the Final Disruption Date (as
defined below), then the Final Disruption Date shall be the Expiration Date
(irrespective of whether such date is an Expiration Date in respect of any other
Component for the Transaction). “Final Disruption Date” means June 19, 2013.
Notwithstanding the foregoing and anything to the contrary in the Equity
Definitions, if a Market Disruption Event occurs on any Expiration Date, then
the Calculation Agent may determine that such Expiration Date is a Disrupted Day
only in part, in which case the Calculation Agent shall make adjustments to the
Number of Warrants for the relevant Component for which such day shall be the
Expiration Date and shall designate the Scheduled Trading Day determined in the
manner described in the immediately preceding sentence as the Expiration Date
for the remaining Warrants for such Component. Section 6.6 of the Equity
Definitions shall not apply to any Valuation Date occurring on an Expiration
Date.

Market Disruption Event:

  

Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words
“during the one hour period that ends at the relevant Valuation Time, Latest
Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case
may be,” in clause (ii) thereof.

Automatic Exercise:

  

Applicable; and means that each Warrant not previously exercised

 

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under the Transaction will be deemed to be automatically exercised at the
applicable Expiration Time on the Expiration Date unless the Buyer notifies the
Seller (by telephone or in writing) prior to the Expiration Time on the
Expiration Date that it does not wish Automatic Exercise to occur, in which case
Automatic Exercise will not apply.

Issuer’s Telephone

  

    Number, Facsimile

  

    Number and Contact

  

    Details for purposes of

  

    Giving Notice:

  

Attn: Chief Financial Officer

  

Telephone: (513) 381-5550

  

Facsimile: (513) 381-5870

Settlement Terms:

  

In respect of each Component:

Settlement Currency:

  

USD

Net Share Settlement:

  

On each Settlement Date, the Issuer shall deliver to the Dealer a number of
Shares equal to the Number of Shares to be Delivered for such Settlement Date to
the account specified by the Dealer and cash in lieu of any fractional shares
valued at the Relevant Price on the Valuation Date corresponding to such
Settlement Date. If, in the reasonable opinion of the Issuer or the Dealer based
on advice of counsel, for any reason, the Shares deliverable upon Net Share
Settlement would not be immediately freely transferable by the Dealer under Rule
144(k) under the Securities Act of 1933, as amended (the “Securities Act”), then
the Dealer may elect to either (i) accept delivery of such Shares
notwithstanding any such restriction on transfer or (ii) have the provisions set
forth in Section 8(b) below apply.

  

The Number of Shares to be Delivered shall be delivered by the Issuer to the
Dealer no later than 12:00 noon, New York City time, on the relevant Settlement
Date.

Number of Shares to be

    Delivered:

  

In respect of each Exercise Date, subject to the last sentence of Section 9.5 of
the Equity Definitions, the product of (i) the number of Warrants exercised or
deemed to be exercised on such Exercise Date; (ii) the Warrant Entitlement; and
(iii) a fraction (A) whose numerator is the excess of the VWAP Price (as defined
below) on the Valuation Date occurring on such Exercise Date over the Strike

 

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Price and (B) whose denominator is such VWAP Price.

VWAP Price:

  

For each Valuation Date, the per Share volume-weighted average price as
displayed under the heading “Bloomberg VWAP” on Bloomberg page KNDL.UQ <Equity>
VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00
p.m., New York City time, on such Valuation Date (or if such volume-weighted
average price is unavailable, the market value of one (1) Share on such
Valuation Date, as determined by the Calculation Agent). Notwithstanding
anything to the contrary in the Equity Definitions, if there is a Market
Disruption Event on any Valuation Date, then the Calculation Agent shall
determine the VWAP Price for such Valuation Date on the basis of its good faith
estimate, determined in a commercially reasonable manner, of the market value
for the relevant Shares on such Valuation Date.

Other Applicable

    Provisions:

  

The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the Equity Definitions
shall be modified by excluding any representations therein relating to
restrictions, obligations, limitations or requirements under applicable
securities laws as a result of the fact that Seller is the Issuer of the Shares)
and 9.12 of the Equity Definitions will be applicable, except that all
references in such provisions to “Physical Settlement” or “settled by delivery”
shall be read as references to “Net Share Settled.” “Net Share Settled” in
relation to any Warrant means that Net Share Settlement is applicable to such
Warrant.

Settlement Terms:

  

In respect of each Component:

Method of Adjustment:

  

Calculation Agent Adjustment

Extraordinary Dividend:

  

Any cash dividend on the Shares with an ex-dividend date occurring during the
period from, and including, the Trade Date to, but excluding, the last
Expiration Date.

Extraordinary Events:

  

New Shares:

  

Section 12.1(i) of the Equity Definitions is hereby amended by deleting the text
in clause (i) in its entirety and replacing it with the phrase “publicly quoted,
traded or listed on any of the New York Stock Exchange, the American Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their

 

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respective successors).”

Consequences of Merger Events:

    (a) Share-for-Share:

  

Modified Calculation Agent Adjustment

    (b) Share-for-Other:

  

Cancellation and Payment (Calculation Agent Determination) or Modified
Calculation Agent Adjustment, at the election of the Buyer, it being understood
that the Buyer shall have the option to elect for Cancellation and Payment
(Calculation Agent Determination) to apply to a portion of the Transaction and
for Modified Calculation Agent Adjustment to apply to a portion of the
Transaction.

    (c) Share-for- Combined:

  

Component Adjustment (Calculation Agent Determination)

Tender Offer:

  

Applicable

Consequences of Tender Offers:

    (a) Share-for-Share:

  

Modified Calculation Agent Adjustment

    (b) Share-for-Other:

  

Cancellation and Payment (Calculation Agent Determination) or Modified
Calculation Agent Adjustment, at the election of the Buyer, it being understood
that the Buyer shall have the option to elect for Cancellation and Payment
(Calculation Agent Determination) to apply to a portion of the Transaction and
for Modified Calculation Agent Adjustment to apply to a portion of the
Transaction.

    (c) Share-for- Combined:

  

Component Adjustment (Calculation Agent Determination)

Nationalization,

    Insolvency or Delisting:

  

Cancellation and Payment (Calculation Agent Determination); provided, however,
that in addition to the provisions of Section 12.6(a)(iii) of the Equity
Definitions, it shall also constitute a Delisting if the Exchange is located in
the United States and the Shares are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock Exchange, the American Stock Exchange,
The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective
successors), and if the Shares are immediately re-listed, re-traded or re-quoted
on any such exchange or quotation system, then such exchange or quotation system
shall thereafter be deemed to be the Exchange; provided further, that the

 

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definition of “Delisting” in Section 12.6(a)(iii) of the Equity Definitions
shall be deemed to be amended by adding “, subject to no further conditions,”
after the word “will.”

Additional Disruption Events:

    (a) Change in Law:

  

Applicable

    (b) Insolvency Filing:

  

Applicable

    (c) Hedging

        Disruption:

  

Applicable

    (d) Increased Cost

        of Hedging:

  

Applicable; provided, however, that the Dealer shall act in good faith on a
commercially reasonable basis to obtain the lowest cost of hedging.

    (e) Loss of Stock

        Borrow:

  

Applicable

    Maximum Stock

        Loan Rate:

  

100 basis points

    (f) Increased

        Cost of Stock

        Borrow:

  

Applicable

        Initial Stock

            Loan Rate:

  

30 basis points

Hedging Party:

  

The Buyer for all applicable Additional Disruption Events

Determining Party:

  

The Buyer for all applicable Additional Disruption Events

Non-Reliance:

  

Applicable

Agreements and

  

    Acknowledgments

  

    Regarding Hedging

  

    Activities:

  

Applicable

Additional

  

    Acknowledgments:

  

Applicable

3.    Calculation Agent: Dealer. With respect to any determination, calculation
or

 

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computation made by the Calculation Agent, in its capacity as such, hereunder,
the Calculation Agent shall, upon the written request of the Issuer, provide the
Issuer with an explanation of such determination, calculation or computation.

4.    Account Details.

 Dealer Payment Instructions:

JPMorgan Chase Bank, National Association, New York

ABA: 021 000 021

Favour: JPMorgan Chase Bank, National Association – London

A/C: 0010962009 CHASUS33

 Issuer Payment Instructions:

To be provided by Issuer.

5.    Offices.

 The Office of Dealer for the Transaction is:

JPMorgan Chase Bank, National Association

London Branch

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

 The Office of Issuer for the Transaction is:

N/A

For the purpose of Section 10(c) of the Agreement, the Issuer is not a
Multibranch Party.

6.    Notices. For purposes of this Confirmation:

 Address for notices or communications to the Issuer:

 

  

To:

  

Kendle International Inc.

441 Vine Street

Suite 1200

Cincinnati, Ohio 45202

  

Attn:

  

Chief Financial Officer

  

Telephone:

  

(513) 381-5550

  

Facsimile:

  

(513) 381-5870

 

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Address for notices or communications to Dealer:

  

To:

  

JPMorgan Chase Bank, National Association

277 Park Avenue, 11th Floor

New York, NY 10172

  

Attn:

  

Eric Stefanik

  

Title:

  

Operations Analyst, EDG Corporate Marketing

  

Telephone:

  

(212) 622-5814

  

Facsimile:

  

(212) 622-8534

7.         Representations, Warranties and Agreements.

(a)    In addition to the representations and warranties in the Agreement and
those contained elsewhere herein, the Issuer represents and warrants to and for
the benefit of, and agrees with, the Dealer as follows:

  (i)    On the Trade Date, (A) the Issuer is not aware of any material
nonpublic information regarding the Issuer or the Shares; and (B) all reports
and other documents filed by the Issuer with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), and the Exchange Act, when considered as a whole (with the more recent of
such reports and documents deemed to amend inconsistent statements contained in
any earlier such reports and documents), do not contain any untrue statement of
a material fact or any omission of a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading.

  (ii)    Without limiting the generality of Section 13.1 of the Equity
Definitions, the Issuer acknowledges that the Dealer is not making any
representations or warranties with respect to the treatment of the Transaction
under any applicable accounting concepts, including, without limitation, FASB
Statements 128, 133, 149 or 150 (each as amended) or EITF Issue Nos. 00-19,
01-06 or 03-06 (or any successor issue statements) or under FASB’s Liabilities &
Equity Project.

  (iii)    Prior to the Trade Date, the Issuer shall deliver to the Dealer a
resolution of the Issuer’s board of directors authorizing the Transaction and
such other certificate or certificates as the Dealer shall reasonably request.

  (iv)    The Issuer is not entering into this Confirmation to create actual or
apparent trading activity in the Shares (or any security convertible into, or
exercisable or exchangeable for, Shares) or to raise or depress or otherwise
manipulate the price of the Shares (or any security convertible into, or
exercisable or exchangeable for, Shares) or otherwise in violation of the
Exchange Act.

 

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  (v)    The Issuer is not, and after giving effect to the transactions
contemplated hereby will not be, an “investment company,” as such term is
defined in the Investment Company Act of 1940, as amended.

  (vi)    On the Trade Date (A) the fair value of the assets of the Issuer
exceeds the liabilities of the Issuer, including contingent liabilities; (B) the
capital of the Issuer is adequate to conduct the business of the Issuer; and
(C) the Issuer has the ability to pay its debts and obligations as such debts
mature and does not intend to, and does not believe that it will, incur debt
beyond its ability to pay as such debts mature.

  (vii)    The Issuer shall not take any action to decrease the number of
Available Shares (as defined below) below the Capped Number (as defined below).

  (viii)    The representations and warranties of the Issuer set forth in
Section 3 of the Agreement and Section 3 of the Underwriting Agreement, dated
July 10, 2007, between the Issuer and UBS Securities LLC are true and correct
and are hereby deemed to be repeated to the Dealer as if set forth herein.

  (ix)    The Issuer understands that no obligations of the Dealer to it
hereunder will be entitled to the benefit of deposit insurance and that such
obligations will not be guaranteed by any affiliate of the Dealer or any
governmental agency.

  (x)    The Issuer is not on the date hereof engaged, and the Issuer shall not,
until the second Scheduled Trading Day immediately following the Trade Date,
engage, in a “distribution” (as defined in Regulation M under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of any securities of the
Issuer, other than the distribution of the Convertible Notes.

  (xi)    The Shares of the Issuer initially issuable upon exercise of the
Warrants (the “Warrant Shares”) have been reserved for issuance by all required
corporate action of the Issuer, have been duly authorized and, when delivered in
accordance herewith upon the exercise of the Warrants, will be validly issued,
fully paid and non-assessable, and the issuance of the Warrant Shares will not
be subject to any preemptive or similar rights.

(b)    Each of the Buyer and the Issuer agrees and represents that it is an
“eligible contract participant” as defined in Section 1a(12) of the U.S.
Commodity Exchange Act, as amended.

(c)    Each of the Dealer and the Issuer acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) thereof. Accordingly, the Dealer
represents and warrants to Issuer that (i) it has the financial ability to bear
the economic risk of its investment in the

 

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Transaction and is able to bear a total loss of its investment, and its
investments in and liabilities in respect of the Transaction, which it
understands is not readily marketable, are not disproportionate to its net
worth, and it is able to bear any loss in connection with the Transaction,
including the loss of its entire investment in the Transaction; (ii) it is an
“accredited investor” as that term is defined in Regulation D under the
Securities Act; (iii) it is entering into the Transaction for its own account
and without a view to the distribution or resale thereof; (iv) the assignment,
transfer or other disposition of the Transaction has not been and will not be
registered under the Securities Act and is restricted under this Confirmation,
the Securities Act and state securities laws; and (v) its financial condition is
such that it has no need for liquidity with respect to its investment in the
Transaction and no need to dispose of any portion thereof to satisfy any
existing or contemplated undertaking or indebtedness and is capable of assessing
the merits of and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms, conditions and
risks of the Transaction.

(d)    The parties hereto intend for: (a) the Transaction to be a “securities
contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of
the United States Code) (the “Bankruptcy Code”), and the parties hereto to be
entitled to the protections afforded by, among other Sections, Sections
362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code; (b) a
party’s right to liquidate the Transaction and to exercise any other remedies
upon the occurrence of any Event of Default under the Agreement with respect to
the other party to constitute a “contractual right” as described in the
Bankruptcy Code; and (c) each payment and delivery of cash, securities or other
property hereunder to constitute a “margin payment” or “settlement payment” and
a “transfer” as defined in the Bankruptcy Code.

(e)    The Issuer shall deliver to the Dealer an opinion of counsel, dated as of
the Trade Date and in form and substance reasonably acceptable to the Dealer,
with respect to the matters set forth in Section 3(a) of the Agreement.

8.        Other Provisions.

(a)    Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If, subject to Section 8(k) below, the Issuer shall owe
the Buyer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the
Equity Definitions (except in the event of a Tender Offer, Merger Event or
Insolvency in which the consideration or proceeds to be paid to holders of
Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement
(except in the event of an Event of Default in which the Issuer is the
Defaulting Party or a Termination Event in which the Issuer is the Affected
Party, that resulted from an event or events within the Issuer’s control) (a
“Payment Obligation”), then the Issuer shall have the right, in its sole
discretion, to satisfy any such Payment Obligation by the Share Termination
Alternative (as defined below) by giving irrevocable telephonic notice to the
Buyer, confirmed in writing within one (1) Scheduled Trading Day, between the
hours of 9:00 A.M. and 4:00 P.M., New York City time, on the Announcement Date
(in the case of a Nationalization, Insolvency or Delisting), Merger Date, Tender
Offer Date or Early Termination Date, as applicable

 

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(the “Notice of Share Termination”); provided, however, that if the Issuer does
not duly elect to satisfy the Payment Obligation by the Share Termination
Alternative, then the Dealer shall have the right to require Issuer to satisfy
such Payment Obligation by the Share Termination Alternative. Upon such Notice
of Share Termination, or election by the Dealer, the following provisions shall
apply on the Scheduled Trading Day immediately following such Announcement Date
(in the case of a Nationalization, Insolvency or Delisting), Merger Date, Tender
Offer Date or Early Termination Date, as applicable:

 

Share Termination Alternative:

  

Applicable and means that the Issuer shall deliver to Dealer the Share
Termination Delivery Property on the date on which the Payment Obligation would
otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as applicable (the “Share Termination Payment
Date”), in satisfaction of the Payment Obligation.

Share Termination Delivery

    Property:

  

A number of Share Termination Delivery Units, as calculated by the Calculation
Agent, equal to the Payment Obligation divided by the Share Termination Unit
Price. The Calculation Agent shall adjust the Share Termination Delivery
Property by replacing any fractional portion of a security therein with an
amount of cash equal to the value of such fractional security based on the
values used to calculate the Share Termination Unit Price.

Share Termination Unit Price:

  

The value of property contained in one (1) Share Termination Delivery Unit on
the date such Share Termination Delivery Units are to be delivered as Share
Termination Delivery Property, as determined by the Calculation Agent in its
discretion by commercially reasonable means and notified by the Calculation
Agent to the Issuer at the time of notification of the Payment Obligation.

Share Termination Delivery Unit:

  

In the case of a Termination Event, Event of Default or Delisting, one (1) Share
or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer,
one (1) Share or a unit consisting of the number or amount of each type of
property received by a holder of one (1) Share (without consideration of any
requirement to pay cash or other consideration in lieu of fractional amounts of

 

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any securities) in such Insolvency, Nationalization, Merger Event or Tender
Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer
involves a choice of consideration to be received by holders, then such holder
shall be deemed to have elected to receive the maximum possible amount of cash.

Failure to Deliver:

  

Applicable

Other applicable provisions:

  

If the Share Termination Alternative is applicable, then the provisions of
Sections 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement
contained in Section 9.11 of the Equity Definitions shall be modified by
excluding any representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws as a result of the
fact that the Seller is the Issuer of the Shares) and 9.12 of the Equity
Definitions will be applicable, except that all references in such provisions to
“settled by delivery” shall be read as references to “Share Termination
Alternative” and all references to “Shares” shall be read as references to
“Share Termination Delivery Units.” If, in the reasonable opinion of counsel to
the Issuer or the Dealer, for any reason, any securities comprising the Share
Termination Delivery Units deliverable pursuant to this Section 8(a) would not
be immediately freely transferable by the Dealer under Rule 144(k) under the
Securities Act, then the Dealer may elect to either (i) accept delivery of such
securities notwithstanding any such restriction on transfer or (ii) have the
provisions set forth in Section 8(b) below apply.

(b)    Registration/Private Placement Procedures.

  (i)    With respect to the Transaction, the following provisions shall apply
to the extent provided for above opposite the caption “Net Share Settlement” in
Section 2 above or to the extent provided for under Section 8(a). If so
applicable, then, at the election of the Issuer by notice to the Buyer within
one (1) Exchange Business Day after the relevant delivery obligation arises, but
in any event at least one (1) Exchange Business Day prior to the date on which
such delivery obligation is due, either:

 

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(A)    all Shares or Share Termination Delivery Units, as the case may be,
delivered by the Issuer to the Buyer shall be, at the time of such delivery,
covered by an effective registration statement of the Issuer for immediate
resale by the Buyer (such registration statement and the corresponding
prospectus, the “Prospectus”) (including, without limitation, any sections
describing the plan of distribution) in form and content commercially reasonably
satisfactory to the Buyer); or

(B)    the Issuer shall deliver additional Shares or Share Termination Delivery
Units, as the case may be, so that the value of such Shares or Share Termination
Delivery Units, as determined by the Calculation Agent to reflect an appropriate
liquidity discount, equals the value of the number of Shares or Share
Termination Delivery Units that would otherwise be deliverable if such Shares or
Share Termination Delivery Units were freely tradeable (without prospectus
delivery) upon receipt by the Buyer (such value, the “Freely Tradeable Value”);
provided, however, that the Issuer may not make the election described in this
clause (B) if, on the date of its election, it has taken, or caused to be taken,
any action that would make unavailable either the exemption pursuant to
Section 4(2) of the Securities Act for the sale by the Issuer to the Dealer (or
any affiliate designated by the Dealer) of the Shares or the exemption pursuant
to Section 4(1) or Section 4(3) of the Securities Act for resales of the Shares
by the Dealer (or any such affiliate of the Dealer). For the avoidance of doubt,
as used in this Section 8(b) only, the term “Issuer” shall mean the issuer of
the relevant securities, as the context shall require.

  (ii)    If the Issuer makes the election described in Section 8(b)(i)(A)
above, then:

  (A)    the Buyer (or an Affiliate of the Buyer designated by the Buyer) shall
be afforded a reasonable opportunity to conduct a due diligence investigation
with respect to the Issuer that is customary in scope for underwritten offerings
of equity securities (including, without limitation, the right to have made
available to them for inspection all financial and other records, pertinent
corporate documents and other information reasonably requested by them) and that
yields results that are reasonably satisfactory to the Buyer or such Affiliate,
as the case may be, in its discretion; and

  (B)    the Buyer (or an Affiliate of the Buyer designated by the Buyer) and
the Issuer shall enter into an agreement (a “Registration Agreement”) on
commercially reasonable terms in connection with the public resale of such
Shares or Share Termination Delivery Units, as the case may be, by the Buyer or
such Affiliate substantially similar to underwriting agreements customary for
underwritten offerings of equity securities, in form and substance commercially
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the Buyer or such Affiliate and the Issuer, which Registration Agreement shall
include, without limitation, provisions substantially similar to those contained
in such underwriting agreements relating to the indemnification of, and
contribution in connection with the liability of, the Buyer and its Affiliates
and the Issuer, shall provide for the payment by the Issuer of all expenses in
connection with such resale, including all registration costs and all fees and
expenses of counsel for the Buyer, and shall provide for the delivery of
accountants’ “comfort letters” to the Buyer or such Affiliate with respect to
the financial statements and certain financial information contained in or
incorporated by reference into the Prospectus;

  (iii)    If the Issuer makes the election described in Section 8(b)(i)(B)
above, then:

  (A)    the Buyer (or an Affiliate of the Buyer designated by the Buyer) and
any Non-Competitor (as defined below) that is a potential purchaser of any such
Shares or Share Termination Delivery Units, as the case may be, from the Buyer
or such Affiliate shall be afforded a reasonable opportunity to conduct a due
diligence investigation with respect to the Issuer that is customary in scope
for private placements of equity securities (including, without limitation, the
right to have made available to them for inspection all financial and other
records, pertinent corporate documents and other information reasonably
requested by them) and that yields results that are reasonably satisfactory to
the Buyer or such Affiliate or purchaser, as the case may be, in its discretion,
subject to execution by such recipients of customary confidentiality agreements
reasonably acceptable to the Issuer; “Non-Competitor” means any person or entity
other than a Competitor; “Competitor” means, as of any time, only those persons
or entities identified on Annex C hereto, as amended in accordance herewith
through such time, as a competitor of the Issuer in the Issuer’s principal field
of business; provided, however, that Annex C hereto may be amended in good faith
by the mutual written consent of the Dealer and the Issuer on each six (6) month
anniversary of the Trade Date.

  (B)    the Buyer (or an Affiliate of the Buyer designated by the Buyer) and
the Issuer shall enter into an agreement (a “Private Placement Agreement”) on
commercially reasonable terms in connection with the private placement of such
Shares or Share Termination Delivery Units, as the case may be, by the Issuer to
the Buyer or such Affiliate and the private resales of such shares by the Buyer
or such Affiliate, substantially similar to private placement purchase
agreements customary for private placements of equity securities, in form and
substance commercially reasonably satisfactory to the Buyer and the Issuer,
which Private Placement Agreement shall include, without limitation, provisions
substantially similar to those contained in such private placement purchase
agreements relating to the indemnification of, and contribution in

 

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connection with the liability of, the Buyer and its Affiliates and the Issuer,
shall provide for the payment by the Issuer of all expenses in connection with
such resales, including all fees and expenses of counsel for the Buyer, shall
contain representations, warranties and agreements of the Issuer reasonably
necessary or advisable to establish and maintain the availability of an
exemption from the registration requirements of the Securities Act for such
resales, and provide for the delivery of accountants’ “comfort letters” to the
Buyer or such Affiliate with respect to the financial statements and certain
financial information contained in or incorporated by reference into the
offering memorandum prepared for such resales; and

  (C)    the Issuer agrees that any Shares or Share Termination Delivery Units
so delivered to the Dealer, (i) may be transferred by and among the Dealer and
its affiliates, and the Issuer shall effect such transfer without any further
action by the Dealer and (ii) after the minimum “holding period” within the
meaning of Rule 144(d) under the Securities Act has elapsed with respect to such
Shares or any securities issued by the Issuer comprising such Share Termination
Delivery Units, the Issuer shall promptly remove, or cause the transfer agent
for such Shares or securities to remove, any legends referring to any such
restrictions or requirements from such Shares or securities upon delivery by the
Dealer (or such affiliate of the Dealer) to the Issuer or such transfer agent of
the Seller’s and broker’s representation letters customarily delivered by the
Dealer in connection with resales of restricted securities pursuant to Rule 144
under the Securities Act, without any further requirement for the delivery of
any certificate, consent, agreement, opinion of counsel, notice or any other
document, any transfer tax stamps or payment of any other amount or any other
action by the Dealer (or such affiliate of the Dealer).

(c)    Make-whole Shares. If the Issuer makes the election set forth in
Section 8(b)(i)(B), then the Dealer or its affiliate may sell (which sale shall
be made in a commercially reasonable manner) such Shares or Share Termination
Delivery Units, as the case may be, during a period (the “Resale Period”)
commencing on the Exchange Business Day following delivery of such Shares or
Share Termination Delivery Units, as the case may be, and ending on the Exchange
Business Day on which the Dealer completes the sale of all such Shares or Share
Termination Delivery Units, as the case may be, or a sufficient number of Shares
or Share Termination Delivery Units, as the case may be, so that the realized
net proceeds of such sales exceed the amount of the Payment Obligation or the
Freely Tradeable Value (such amount of the Payment Obligation or Freely
Tradeable Value, as the case may be, the “Required Proceeds”). If any of such
delivered Shares or Share Termination Delivery Units remain unsold after such
realized net proceeds exceed the Required Proceeds, then the Dealer shall return
such remaining Shares or Share Termination Delivery Units to the Issuer. If the
Required Proceeds exceed the realized net proceeds from such resale, then
(i) the Issuer shall transfer to the Dealer by the open of the regular trading
session on the Exchange on the

 

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Exchange Trading Day immediately following the last day of the Resale Period the
amount of such excess (such excess, the “Additional Amount”) in cash or in a
number of additional Shares (the “Make-whole Shares”) in an amount that, based
on the Relevant Price on the last day of the Resale Period (as if such day were
the “Valuation Date” for purposes of computing such Relevant Price), has a
dollar value equal to the Additional Amount; (ii) the Resale Period shall
continue to enable the resale of the Make-whole Shares in the manner
contemplated by this Section 8(c); and (iii) this provision shall be applied
successively until the Additional Amount is equal to zero, subject to
Section 8(e). Without limiting any of the obligations of the Issuer under this
Section 8(c), the Buyer may from time to time demand that the Issuer use its
reasonable best efforts to cause a registration statement covering all Shares or
Share Termination Delivery Units to have become effective, whether such Shares
or Share Termination Delivery Units have been or are yet to be delivered to the
Buyer.

(d)    Beneficial Ownership. Notwithstanding any other provisions hereof, the
Buyer may not exercise any Warrant hereunder or be entitled to take delivery of
any Shares deliverable hereunder, and Automatic Exercise shall not apply with
respect to any Warrant hereunder, to the extent (but only to the extent) that,
after such receipt of any Shares upon the exercise of such Warrant or otherwise
hereunder, the Buyer would directly or indirectly beneficially own (as such term
is defined for purposes of Section 13(d) of the Exchange Act) in excess of eight
percent (8.0%) of the outstanding Shares. Any purported delivery hereunder shall
be void and have no effect to the extent (but only to the extent) that, after
such delivery, the Buyer would directly or indirectly so beneficially own in
excess of eight percent (8.0%) of the outstanding Shares. If any delivery owed
to the Buyer hereunder is not made, in whole or in part, as a result of this
provision, the Issuer’s obligation to make such delivery shall not be
extinguished and the Issuer shall make such delivery as promptly as practicable
after, but in no event later than one (1) Business Day after, the Buyer gives
notice to Issuer that, after such delivery, the Buyer would not directly or
indirectly so beneficially own in excess of eight percent (8.0%) of the
outstanding Shares.

(e)    Limitations on Settlement by the Issuer. Notwithstanding anything herein
or in the Agreement to the contrary, in no event shall the Issuer be required to
deliver a number of Shares in connection with the Transaction in excess of twice
the aggregate Number of Warrants hereunder, subject to appropriate adjustments
for stock splits, reverse stock splits, stock combinations, stock dividends,
recapitalizations and similar events or transactions (the “Capped Number”). The
Issuer represents and warrants (which shall be deemed to be repeated on each day
that the Transaction is outstanding) that the Capped Number is equal to or less
than the number of authorized but unissued Shares of the Issuer that are not
reserved for future issuance in connection with transactions in the Shares
(other than the Transaction) on the date of the determination of the Capped
Number (such authorized but unissued Shares, the “Available Shares”). If, as a
result of this Section 8(e), the Issuer shall not have delivered the full number
of Shares otherwise deliverable (the resulting deficit, the “Deficit Shares”),
then the Issuer shall be continually obligated to deliver, from time to time
until the full number of Deficit Shares have been delivered pursuant to this
Section 8(e), Shares when, and to the extent, that (i)

 

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Shares are repurchased, acquired or otherwise received by the Issuer or any of
its subsidiaries after the Trade Date (whether or not in exchange for cash, fair
value or any other consideration); (ii) authorized and unissued Shares
previously reserved for issuance in respect of other transactions become no
longer so reserved; and (iii) the Issuer authorizes additional unissued Shares.
The Issuer shall immediately notify the Dealer of the occurrence of any of the
foregoing events (including the number of Shares subject to clause (i), (ii) or
(iii) and the corresponding number of Shares to be delivered) and promptly
deliver such Shares thereafter.

(f)    Equity Rights. The Buyer acknowledges and agrees that this Confirmation
is not intended to convey to it rights with respect to the Transaction that are
senior to the claims of common stockholders in the event of the Issuer’s
bankruptcy. For the avoidance of doubt, the parties agree that the preceding
sentence shall not apply at any time (other than during the Issuer’s bankruptcy)
to any claim arising as a result of a breach by the Issuer of any of its
obligations under this Confirmation or the Agreement. For the avoidance of
doubt, the parties acknowledge that this Confirmation is not secured by any
collateral that would otherwise secure the obligations of the Issuer herein
under or pursuant to any other agreement.

(g)    Amendments to Equity Definitions and the Agreement. The following
amendments shall be made to the Equity Definitions and to the Agreement:

  (i)    Section 11.2(a) of the Equity Definitions is hereby amended by deleting
the replacing the words “diluting or concentrative” with the word “material”;

  (ii)    The first sentence of Section 11.2(c) of the Equity Definitions, prior
to clause (A) thereof, is hereby amended to read ‘(c) If “Calculation Agent
Adjustment” is specified as the Method of Adjustment in the related Confirmation
of a Share Option Transaction, then following the announcement or occurrence of
any Potential Adjustment Event, the Calculation Agent will determine whether
such Potential Adjustment Event has a material effect on the theoretical value
of the relevant Shares or options on the Shares and, if so, will (i) make
appropriate adjustment(s), if any, to any one or more of:’; and, the portion of
such sentence immediately preceding clause (ii) thereof is hereby amended by
deleting the words “diluting or concentrative” and the words “(provided that no
adjustments will be made to account solely for changes in volatility, expected
dividends, stock loan rate or liquidity relative to the relevant Shares)” and
replacing such latter phrase with the words “(and, for the avoidance of doubt,
adjustments may be made to account solely for changes in volatility, expected
dividends, stock loan rate or liquidity relative to the relevant Shares)”;

  (iii)    Section 11.2(e)(vii) of the Equity Definitions is hereby amended by
deleting the words “diluting or concentrative” and replacing them with the word
“material” and by adding the phrase “or the Warrants” immediately prior to the
period in such Section;

 

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  (iv)    Section 12.6(a)(ii) of the Equity Definitions is hereby amended by
(i) deleting from the fourth line thereof the word “or” after the word
“official” and inserting a comma therefor, and (ii) deleting the semi-colon at
the end of subsection (B) thereof and inserting the following words therefor “or
(C) at the Buyer’s option, the occurrence of any of the events specified in
Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to
that the Issuer”;

  (v)    Section 12.9(b)(iv) of the Equity Definitions is hereby amended by
(i) deleting subsection (A) in its entirety; (ii) deleting the phrase “or (B)”
following subsection (A); (iii) deleting the phrase “in each case” in subsection
(B); and (iv) replacing, in the penultimate sentence, the phrase “neither the
Non-Hedging Party nor the Lending Party lends Shares in the amount of the
Hedging Shares or” with the phrase “a Lending Party is so identified but fails
to so lend Shares in the amount of the Hedging Shares at a rate equal to or less
than the Maximum Stock Loan Rate or”; and

  (vi)    Section 12.9(b)(v) of the Equity Definitions is hereby amended by
(i) adding the word “or” immediately before subsection “(B)”; (ii) deleting the
comma at the end of subsection (A); (iii) deleting subsection (C) in its
entirety; (iv) deleting the word “or” immediately preceding subsection (C); and
(v) deleting the final sentence in its entirety.

(h)    Transfer and Assignment. The Buyer may transfer or assign its rights and
obligations hereunder and under the Agreement, in whole or in part, at any time
to any Non-Competitor, without the consent of the Issuer, provided the Dealer
shall use its reasonable efforts not to effect such a transfer or assignment to
a Competitor. In connection with any transfer or assignment by the Buyer of its
rights and obligations hereunder and under the Agreement, (i) the Buyer shall
promptly provide written notice to the Issuer of such transfer or assignment, as
the case may be, and the identity of the relevant transferee or assignee; and
(ii) the Issuer shall execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to effect and carry out
such transfer or assignment. If after the Buyer’s commercially reasonable
efforts, the Buyer is unable to effect such a transfer or assignment on pricing
terms reasonably acceptable to the Buyer and within a time period reasonably
acceptable to the Buyer of a sufficient number of Warrants to reduce the Buyer’s
“beneficial ownership” (within the meaning of Section 13 of the Exchange Act and
rules promulgated thereunder) to seven and one half percent (7.5%) of the
Issuer’s outstanding Shares or less or to reduce the Warrant Equity Percentage
(as defined below) to fourteen and one half percent (14.5%) or less, then the
Buyer may designate any Exchange Business Day as an Early Termination Date with
respect to a portion (the “Terminated Portion”) of this Transaction, such that
its “beneficial ownership” following such partial termination will be equal to
or less than seven and one half percent (7.5%) or the Warrant Equity Percentage
following such partial termination will be equal to or less than fourteen and
one half percent (14.5%), as applicable. “Warrant Equity Percentage” means a
fraction, expressed as a percentage, (x) whose numerator is the product of
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Warrants and (b) the Warrant Entitlement; and (y) whose denominator is the
number of the Issuer’s outstanding Shares. In the event that the Buyer so
designates an Early Termination Date with respect to a portion of this
Transaction, a payment shall be made pursuant to Section 6 of the Agreement as
if (I) an Early Termination Date had been designated in respect of a Transaction
having terms identical to this Transaction and a Number of Warrants equal to the
Terminated Portion, (II) the Issuer shall be the sole Affected Party with
respect to such partial termination and (III) such Transaction shall be the only
Terminated Transaction (and, for the avoidance of doubt, the provisions of
Section 8(a) shall apply to any amount that is payable by the Buyer to the
Issuer pursuant to this sentence).

(i)    Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, the Issuer and each of its employees,
representatives or other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to the Issuer relating to such tax treatment and tax structure.

(j)    Designation by the Dealer. Notwithstanding any other provision in this
Confirmation to the contrary requiring or allowing the Dealer to purchase, sell,
receive or deliver any Shares or other securities to or from the Issuer, the
Dealer may designate any of its affiliates to purchase, sell, receive or deliver
such Shares or other securities and otherwise to perform the Dealer obligations
in respect of the Transaction and any such designee may assume such obligations.
The Dealer shall be discharged of its obligations to the Issuer to the extent of
any such performance.

(k)    Netting and Set-off. Each party waives any and all rights it may have to
set off, whether arising under any agreement, applicable law or otherwise. The
provisions of Section 2(c) of the Agreement shall not be applicable to the
Transaction.

(l)    Additional Termination Event. Notwithstanding anything to the contrary in
this Confirmation, upon the occurrence of one of the following events, with
respect to this Transaction, (A) the Dealer shall have the right to designate
such event an Additional Termination Event and designate an Early Termination
Date pursuant to Section 6(b) of the Agreement and (B) the Issuer shall be
deemed the sole Affected Party and the Transaction shall be deemed the sole
Affected Transaction:

  (i)    if, within the period commencing on the Trade Date and ending on the
second anniversary of the Premium Payment Date, the Buyer reasonably determines
in good faith that it is advisable to terminate a portion of the Transaction so
that the Buyer’s related hedging activities in the ordinary course of business
will comply with applicable securities laws, rules or regulations; or

  (ii)    there is a default by the Issuer or any subsidiary in the payment of
the principal or interest on any mortgage, agreement or other instrument under
which there may be outstanding, or by which there may be secured or evidenced

 

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any indebtedness for money borrowed in excess of USD15 million in the aggregate
of the Issuer and/or any of its subsidiaries (whether such indebtedness now
exists or shall hereafter be created), resulting in such indebtedness becoming
or being declared due and payable, and such acceleration shall not have been
rescinded or annulled within ten (10) days after written notice of such
acceleration has been received by the Issuer or such subsidiary.

(m)    Effectiveness. If, prior to the Effective Date, the Buyer reasonably
determines that it is advisable to cancel the Transaction because of concerns
that the Buyer’s related hedging activities could be viewed as not complying
with applicable securities laws, rules or regulations, then the Transaction
shall be cancelled and shall not become effective, and neither party shall have
any obligation to the other party in respect of the Transaction.

(n)    Right to Extend. The Dealer may postpone, in whole or in part, any
Expiration Date or any other date of valuation or delivery with respect to some
or all of the relevant Warrants (in which event the Calculation Agent shall make
appropriate adjustments to the Number of Warrants with respect to one or more
Expiration Dates) if the Dealer determines, in good faith in its commercially
reasonable judgment, that such extension is reasonably necessary or appropriate,
under legal, regulatory or self-regulatory requirements, or related policies and
procedures, applicable to the Dealer, to preserve the Dealer’s ability to
conduct hedging or hedge unwind activities hereunder in light of existing
liquidity conditions or to enable the Dealer to effect purchases of Shares in
connection with its hedging, hedge unwind or settlement activities hereunder in
a manner that would, if the Dealer were the Issuer or an affiliated purchaser of
the Issuer, be in compliance with such requirements, policies and procedures.

(o)    Additional Provisions. The Issuer covenants and agrees that, as promptly
as practicable following the public announcement of any consolidation, merger
and binding share exchange to which the Issuer is a party, or any sale of all or
substantially all of the Issuer’s assets, in each case pursuant to which the
Shares will be converted into cash, securities or other property, the Issuer
shall notify the Dealer in writing of the types and amounts of consideration
that holders of Shares have elected to receive upon consummation of such
transaction or event (the date of such notification, the “Consideration
Notification Date”); provided, however, that in no event shall the Consideration
Notification Date be later than the date on which such transaction or event is
consummated.

(p)    Early Unwind. If the sale by the Issuer of the Convertible Notes (or, if
the Over-Allotment Option is exercised, the applicable Additional Notes) is not
consummated with UBS Securities LLC pursuant to the Underwriting Agreement for
any reason by the close of business in New York on July 16, 2007 (or, with
respect to any Additional Notes, the date (the “Over-Allotment Closing Date”) of
the “additional time of sale” set forth in the notice of exercise of the
Over-Allotment Option delivered pursuant to Section 1 of the Underwriting
Agreement), or such later date as agreed upon by the parties (July 16, 2007 or
the Over-Allotment Closing Date, as applicable, or such

 

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later date being the “Early Unwind Date”), then (i) the Transaction (or, with
respect to any Additional Notes, the Additional Warrants) shall automatically
terminate (the “Early Unwind”) on the Early Unwind Date; (ii) the Transaction
(or, with respect to any Additional Notes, the Additional Warrants) and all of
the respective rights and obligations of the Dealer and the Issuer hereunder
with respect to the Transaction or the Additional Warrants, as applicable, shall
be cancelled and terminated. Following such termination and cancellation, each
party shall be released and discharged by the other party from and agrees not to
make any claim against the other party with respect to any obligations or
liabilities of either party arising out of, and to be performed in connection
with, the Transaction or the Additional Warrants, as applicable, either prior
to, on or after the Early Unwind Date. The Dealer and the Issuer each represent
and acknowledge to the other that upon an Early Unwind, all obligations with
respect to the Transaction or the Additional Warrants, as applicable, shall be
deemed fully and finally discharged.

(q)    Legal Opinions. The Issuer shall furnish to the Dealer, on the Trade
Date, an opinion of Keating Muething & Klekamp PLL, counsel for the Company,
addressed to the Dealer, and dated the Trade Date, in form and substance
satisfactory to the Dealer, in the form set forth in Annex B hereto.

(r)    Counterparts. This Confirmation may be executed and delivered in
counterparts (including, without limitation, by facsimile transmission or
electronic messaging), each of which will be deemed to be an original and which
together shall constitute one and the same agreement among the parties.

(s)    Waiver of Trial by Jury. EACH OF THE ISSUER AND THE BUYER HEREBY
IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF THE BUYER OR ITS
AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

(t)    Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY
AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK LOCATED IN NEW
YORK COUNTY IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY
OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH
RESPECT TO, THESE COURTS.

(u)    Role of Agent. Each party agrees and acknowledges that (i) the Agent, an
affiliate of the Dealer, has acted solely as agent and not as principal with
respect to this Transaction and (ii) the Agent has no obligation or liability,
by way of guaranty,

 

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endorsement or otherwise, in any manner in respect of this Transaction
(including, if applicable, in respect of the settlement thereof). Each party
agrees it will look solely to the other party (or any guarantor in respect
thereof) for performance of such other party’s obligations under this
Transaction.

(v)    Determinations. Each calculation, decision or other determination by a
party under the Agreement or this Confirmation shall be made in good faith on a
commercially reasonable basis.

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]

 

- 24 -

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LOGO [g34803img01.jpg]

 

The Issuer hereby agrees (i) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified; and (ii) to confirm that the foregoing (in the exact
form provided by the Dealer) correctly sets forth the terms of the agreement
between the Dealer and the Issuer with respect to the Transaction, by manually
signing this Confirmation as evidence of agreement to such terms and providing
the other information requested herein and immediately returning an executed
copy to EDG Confirmation Group, J.P. Morgan Securities Inc., 277 Park Avenue,
11th Floor, New York, NY 10172-3401, or by fax to (212) 622-8519.

 

Very truly yours,

J.P. MORGAN SECURITIES INC., as agent for JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION

By:

 

/s/ Sudheer Tegulapalle

 

Authorized Signatory

 

Name:  Sudheer Tegulapalle

 

Executive Director

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746. Registered

Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

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LOGO [g34803img01.jpg]

 

Agreed and accepted by:

 

KENDLE INTERNATIONAL INC.

By:

 

/s/ Karl Brenkert III

 

Name: Karl Brenkert III

 

Title: Chief Financial Officer

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746. Registered

Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

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Annex A

For each Component of the Transaction, the Number of Warrants and Expiration
Date is set forth below.

 

Component Number

  

Number of Warrants

  

Expiration Date

1

   15,718    January 15, 2013

2

   15,718    January 16, 2013

3

   15,718    January 17, 2013

4

   15,718    January 18, 2013

5

   15,718    January 22, 2013

6

   15,718    January 23, 2013

7

   15,718    January 24, 2013

8

   15,718    January 25, 2013

9

   15,718    January 28, 2013

10

   15,718    January 29, 2013

11

   15,718    January 30, 2013

12

   15,718    January 31, 2013

13

   15,718    February 1, 2013

14

   15,718    February 4, 2013

15

   15,718    February 5, 2013

16

   15,718    February 6, 2013

17

   15,718    February 7, 2013

18

   15,718    February 8, 2013

19

   15,718    February 11, 2013

20

   15,718    February 12, 2013

21

   15,718    February 13, 2013

22

   15,718    February 14, 2013

23

   15,718    February 15, 2013

24

   15,718    February 19, 2013

25

   15,718    February 20, 2013

26

   15,718    February 21, 2013

27

   15,718    February 22, 2013

28

   15,718    February 25, 2013

29

   15,718    February 26, 2013

30

   15,718    February 27, 2013

31

   15,718    February 28, 2013

32

   15,718    March 1, 2013

33

   15,718    March 4, 2013

34

   15,718    March 5, 2013

35

   15,718    March 6, 2013

36

   15,718    March 7, 2013

37

   15,718    March 8, 2013

38

   15,718    March 11, 2013

39

   15,718    March 12, 2013

40

   15,718    March 13, 2013

 

A-1

--------------------------------------------------------------------------------

Component Number

  

Number of Warrants

  

Expiration Date

41

   15,718    March 14, 2013

42

   15,718    March 15, 2013

43

   15,718    March 18, 2013

44

   15,718    March 19, 2013

45

   15,718    March 20, 2013

46

   15,718    March 21, 2013

47

   15,718    March 22, 2013

48

   15,718    March 25, 2013

49

   15,718    March 26, 2013

50

   15,718    March 27, 2013

51

   15,718    March 28, 2013

52

   15,718    April 1, 2013

53

   15,718    April 2, 2013

54

   15,718    April 3, 2013

55

   15,718    April 4, 2013

56

   15,718    April 5, 2013

57

   15,718    April 8, 2013

58

   15,718    April 9, 2013

59

   15,718    April 10, 2013

60

   15,718    April 11, 2013

61

   15,718    April 12, 2013

62

   15,718    April 15, 2013

63

   15,718    April 16, 2013

64

   15,718    April 17, 2013

65

   15,718    April 18, 2013

66

   15,718    April 19, 2013

67

   15,718    April 22, 2013

68

   15,718    April 23, 2013

69

   15,718    April 24, 2013

70

   15,718    April 25, 2013

71

   15,718    April 26, 2013

72

   15,718    April 29, 2013

73

   15,718    April 30, 2013

74

   15,718    May 1, 2013

75

   15,718    May 2, 2013

76

   15,718    May 3, 2013

77

   15,718    May 6, 2013

78

   15,718    May 7, 2013

79

   15,718    May 8, 2013

80

   15,718    May 9, 2013

81

   15,718    May 10, 2013

82

   15,718    May 13, 2013

83

   15,718    May 14, 2013

84

   15,718    May 15, 2013

85

   15,718    May 16, 2013

 

A-2

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Component Number

  

Number of Warrants

  

Expiration Date

86

   15,718    May 17, 2013

87

   15,718    May 20, 2013

88

   15,718    May 21, 2013

89

   15,718    May 22, 2013

90

   15,718    May 23, 2013

91

   15,718    May 24, 2013

92

   15,718    May 28, 2013

93

   15,718    May 29, 2013

94

   15,718    May 30, 2013

95

   15,718    May 31, 2013

96

   15,718    June 3, 2013

97

   15,718    June 4, 2013

98

   15,718    June 5, 2013

99

   15,718    June 6, 2013

100

   15,806    June 7, 2013

 

A-3