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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): December 7, 2006
MannKind Corporation
(Exact name of registrant as specified in its charter)
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Delaware
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000-50865
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13-3607736 |
(State or other jurisdiction of
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(Commission File Number)
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(IRS Employer |
incorporation or organization)
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Identification No.) |
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28903 North Avenue Paine
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91355 |
Valencia, California
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(Zip Code) |
(Address of principal executive offices)
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Registrants telephone number, including area code: (661) 775-5300
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions (see General Instruction A.2.
below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 8.01 Other Events.
On December 7, 2006, MannKind Corporation (the Company) entered into an underwriting agreement
(the Equity Underwriting Agreement) with J.P. Morgan Securities Inc. (J.P. Morgan), Merrill Lynch & Co. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (Merrill Lynch), as
representatives (the Representatives) of the several underwriters named therein (collectively,
the Equity Underwriters). Subject to the terms
and conditions of the Equity Underwriting Agreement, the Company agreed to sell to the Equity
Underwriters, and the Equity Underwriters agreed to purchase from the Company, an aggregate of
20,000,000 shares (the Shares) of the Companys authorized but previously unissued common stock,
par value $0.01 (Common Stock), at a public offering price of $17.42 per Share. Of the Shares, 14,224,000
Shares will be purchased by the Equity Underwriters, less an underwriting discount totaling
approximately $12.4 million, and 5,776,000 Shares will be purchased by the Equity Underwriters
and sold to certain of the Companys officers and directors, including its chairman, chief
executive officer and principal stockholder, Alfred E. Mann. The Equity Underwriters will not
receive any underwriting discount on the Shares sold to the officers and directors. The
resulting aggregate net proceeds to the Company from this Common Stock offering, before expenses,
will be approximately $336.0 million. The Equity Underwriters
obligations to purchase the Shares is subject to the satisfaction of certain customary closing
conditions, including receipt of legal opinions and approval of legal matters by their respective
counsels. The Company also granted the Equity Underwriters a 30-day
option to purchase up to an additional 3,000,000 shares of Common Stock to cover over-allotments. All of the shares of Common
Stock subject to the Equity Underwriters option will be sold less the underwriting discount if the Equity Underwriters exercise
their option. The Company has agreed to indemnify the Equity Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the Act), or to contribute to payments
the Equity Underwriters may be required to make in respect of these liabilities. Subject to
certain exceptions, the Company and all of the Companys directors and executive officers also
agreed not to sell or transfer any Common Stock held by them for 90 days after December 7, 2006
without first obtaining the written consent of the Representatives. A copy of the Equity Underwriting
Agreement is attached hereto as Exhibit 1.1 and is incorporated by reference herein.
On December 7, 2006, the Company also entered into an underwriting agreement (the Notes
Underwriting Agreement) with Merrill Lynch and J.P. Morgan (collectively, the Note Underwriters).
Subject to the terms and conditions of the Notes
Underwriting Agreement, the Company agreed to sell to the Note Underwriters, and the Note
Underwriters agreed to purchase from the Company, $100.0 million aggregate principal amount of the Companys
3.75% Senior Convertible Notes due 2013 (the Notes), less an underwriting discount totaling $3.0 million. The resulting aggregate net proceeds to the Company from this Note offering, before
expenses, will be $97.0 million. The Notes will be convertible by holders into shares of Common Stock at an initial
conversion rate of 44.5002 shares of Common Stock per $1,000 principal amount of the Notes (subject
to adjustment as described in the Notes Underwriting Agreement), which represents an initial
conversion price of approximately $22.47 per share. The Note Underwriters obligations to purchase the Notes
is subject to the satisfaction of certain customary closing conditions, including receipt of legal opinions
and approval of legal matters by its counsel. The Company also granted the Note Underwriters a 13-day
option to purchase up to an additional $15.0 million aggregate principal amount of the Notes
to cover over-allotments. Pursuant to the terms of the Notes Underwriting
Agreement, the Company has agreed to indemnify the Note Underwriters against certain liabilities,
including liabilities under the Act, or to contribute to payments the Note Underwriters may be
required to make in respect of these liabilities. Subject to certain exceptions, the Company and
certain of its directors and executive officers have also agreed not to sell or transfer any Common
Stock held by them for 90 days after December 7, 2006 without first obtaining the written consent
of the Note Underwriters. A copy of the Note Underwriting Agreement is attached hereto as Exhibit 1.2 and is incorporated by reference
herein.
The closings of the sales of 20,000,000 Shares and $100.0 million aggregate principal amount of the
Notes are scheduled to occur on or about December 12, 2006. The Shares and the Notes (and the
shares of Common Stock issuable upon conversion thereof) have been registered pursuant to
registration statements on Form S-3 (Registration Statement Nos. 333-138373 and 333-139154) filed with the
Securities and Exchange Commission under the Act.
The summary of the foregoing transactions
is qualified in its entirety by reference to the text of
the related agreements, which are included as exhibits hereto and incorporated by reference herein.
On December 6, 2007 the Company, Mr. Mann and
Biomed Partners, LLC agreed to amend outstanding warrants to purchase an aggregate of 1,710,091 shares of Common Stock
held by Mr. Mann and Biomed Partners, LLC to provide that such warrants
shall not be exercisable until such time as the Company has at least 100 million shares of Common
Stock duly and validly authorized.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking
statements, including statements
related to the sale by MannKind of its securities. Words such as believes, anticipates, plans,
expects, intend, will, goal, potential and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are based upon the Companys current expectations and involve risks and uncertainties.
Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of
these risks and uncertainties, which include, without limitation, risks related to the Companys ability to meet the closing conditions required for the consummation of the public offerings and other risks detailed in the Registration Statements covering the offerings and in the Companys filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended December 31, 2005 and periodic reports on Form 10-Q
and Form 8-K. Do not place undue reliance on these forward-looking statements, which speak only as
of the date of this report.
All forward-looking statements are qualified in their entirety by this cautionary statement, and,
except where required by law, the Company undertakes no obligation to revise or update any
forward-looking statements to reflect events or circumstances after the date of this report.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
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Exhibit Number |
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Description |
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1.1
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Equity Underwriting Agreement, dated December 7, 2006 |
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1.2
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Notes Underwriting Agreement, dated December 7, 2006 |
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5.1
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Opinion of Cooley Godward Kronish LLP |
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23.1
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Consent of Cooley Godward Kronish LLP (included in its
opinion filed as Exhibit 5.1 hereto) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MANNKIND CORPORATION |
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By: |
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/s/ David Thomson |
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Name:
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David Thomson, Ph.D., J.D. |
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Title:
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Corporate Vice President, General |
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Counsel and Secretary |
Dated: December 7, 2006
EXHIBIT INDEX
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Exhibit Number |
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Description |
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1.1
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Equity Underwriting Agreement, dated December 7, 2006 |
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1.2
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Notes Underwriting Agreement, dated December 7, 2006 |
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5.1
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Opinion of Cooley Godward Kronish LLP |
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23.1
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Consent of Cooley Godward Kronish LLP (included in its
opinion filed as Exhibit 5.1 hereto) |
exv1w1
Exhibit 1.1
MANNKIND CORPORATION
20,000,000 Shares of Common Stock
Underwriting Agreement
December 7, 2006
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As
Representatives of the
several
Underwriters listed
in
Schedule 1 hereto
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
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World Financial Center
New York, New York 10080
Ladies and Gentlemen:
MannKind Corporation, a Delaware corporation (the Company), proposes to issue and sell to
the several Underwriters listed in Schedule 1 hereto (the Underwriters), for whom you are acting
as representatives (the Representatives), an aggregate of 20,000,000 shares of common stock, par
value $0.01 per share, of the Company (the Underwritten Shares) and, at the option of the
Underwriters, up to an additional 3,000,000 shares of Common Stock of the Company (the Option
Shares). The Underwritten Shares include 5,776,000 shares of common stock, par value $0.01 per
share, of the Company (the Affiliate Shares) to be purchased by the persons named in Schedule 2
hereto (the Affiliate Purchasers). The Underwritten Shares and the Option Shares are herein
referred to as the Shares. The shares of common stock of the Company to be outstanding after
giving effect to the sale of the Shares are herein referred to as the Stock.
Concurrent with the offering and sale of the Shares by the Company pursuant to the terms of
this Agreement, the Company is offering to sell $100,000,000 in aggregate principal amount (or
$115,000,000 in aggregate principal amount if the underwriters exercise their over allotment
option) of 3.75% Senior Convertible Notes due 2013 (the Notes) pursuant to the terms of a
Purchase Agreement, dated of even date herewith, among the Company, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) and J.P. Morgan Securities Inc.
(JPMorgan) (the Concurrent Debt Offering). The offering, issuance and sale
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of the Shares by the Company pursuant to the terms of this Agreement are not contingent on the
successful completion of the Concurrent Debt Offering.
The Company hereby confirms its agreement with the several Underwriters concerning the
purchase and sale of the Shares, as follows:
1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the Commission) under the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the Securities Act), a registration
statement (File No. 333-138373), including a prospectus, relating to the Shares and other
securities of the Company. Such registration statement was declared effective on November 7, 2006.
Such registration statement, as amended at the time it became effective, including the
information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part
of the registration statement at the time of its effectiveness (Rule 430 Information), is
referred to herein as the Registration Statement; and as used herein, the term Preliminary
Prospectus means each prospectus included in such registration statement (and any amendments
thereto) before it became effective, any prospectus filed with the Commission pursuant to Rule
424(a) under the Securities Act and the prospectus included in the Registration Statement at the
time of its effectiveness, together with any prospectus supplement filed with the Commission
pursuant to Rule 424(b) under the Securities Act, that omits Rule 430 Information, and the term
Prospectus means the prospectus, together with any prospectus supplement filed pursuant to Rule
424(b) under the Securities Act, in the form first used (or made available upon request of
purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales
of the Shares. If the Company has filed an abbreviated registration statement pursuant to Rule
462(b) under the Securities Act (the Rule 462 Registration Statement), then any reference herein
to the term Registration Statement shall be deemed to include such Rule 462 Registration
Statement. Any reference in this Agreement to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the effective
date of the Registration Statement or the date of such Preliminary Prospectus or the Prospectus, as
the case may be and any reference to amend, amendment or supplement with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder (collectively, the Exchange
Act) that are deemed to be incorporated by reference therein. Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Registration Statement and the
Prospectus.
At or prior to the time when sales of the Shares were first made (the Time of Sale), the
Company had prepared the following information (collectively, the Time of Sale Information): a
Preliminary Prospectus dated November 27, 2006, and each free-writing prospectus (as defined
pursuant to Rule 405 under the Securities Act) listed on Annex D hereto and the pricing information
set forth on Annex E.
2. Purchase of the Shares by the Underwriters. (a) The Company agrees to issue and
sell the Shares to the several Underwriters as provided in this Agreement, and each
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Underwriter, on the basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the
Company the respective number of Underwritten Shares set forth opposite such Underwriters name in
Schedule 1 hereto at a price per share (the Purchase Price) of $16.55 (other than the Affiliate
Shares, which shall be purchased at a price of $17.42 per Affiliate Share).
In addition, the Company agrees to issue and sell the Option Shares to the several
Underwriters as provided in this Agreement, and the Underwriters, on the basis of the
representations, warranties and agreements set forth herein and subject to the conditions set forth
herein, shall have the option to purchase, severally and not jointly, from the Company the Option
Shares at the Purchase Price.
If any Option Shares are to be purchased, the number of Option Shares to be purchased by each
Underwriter shall be the number of Option Shares which bears the same ratio to the aggregate number
of Option Shares being purchased as the number of Underwritten Shares set forth opposite the name
of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 10
hereof) bears to the aggregate number of Underwritten Shares being purchased from the Company by
the several Underwriters, subject, however, to such adjustments to eliminate any fractional Shares
as the Representatives in their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares at any time in whole,
or from time to time in part, on or before the thirtieth day following the date of this Agreement,
by written notice from the Representatives to the Company. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being exercised and the date and time
when the Option Shares are to be delivered and paid for which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than
the tenth full business day (as hereinafter defined) after the date of such notice (unless such
time and date are postponed in accordance with the provisions of Section 10 hereof). Any such
notice shall be given at least two business days prior to the date and time of delivery specified
therein.
It is understood and agreed that the Affiliate Shares will initially be reserved for offer and
sale to the Affiliate Purchasers upon the terms and subject to the conditions set forth in this
Agreement and the Prospectus and will be sold to the Affiliate Purchasers at the higher of (i) the
offering price to the public set forth on the cover page to the Prospectus or (ii) the closing bid
price of the Companys common stock immediately preceding the effectiveness of this Agreement. Any
Affiliate Shares that are not orally confirmed for purchase by Affiliate Purchasers by the end of
the business day on which this Agreement is executed or other such time established by the
Representatives will be offered to the public as set forth in the Prospectus.
(b) The Company understands that the Underwriters intend to make a public offering of the
Shares as soon after the effectiveness of this Agreement as in the judgment of the Representatives
is advisable, and initially to offer the Shares on the terms set forth in the Prospectus. The
Company acknowledges and agrees that the Underwriters may offer and sell
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Shares to or through any affiliate of an Underwriter and that any such affiliate may offer and sell
Shares purchased by it to or through any Underwriter.
(c) Payment for the Shares shall be made by wire transfer in immediately available funds to
the account specified by the Company to the Representatives in the case of the Underwritten Shares,
at the offices of Latham & Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa,
California 92626 at 10:00 A.M. New York City time on December 12, 2006, or at such other time or
place on the same or such other date, not later than the fifth business day thereafter, as the
Representatives and the Company may agree upon in writing or, in the case of the Option Shares, on
the date and at the time and place specified by the Representatives in the written notice of the
Underwriters election to purchase such Option Shares. The time and date of such payment for the
Underwritten Shares is referred to herein as the Closing Date and the time and date for such
payment for the Option Shares, if other than the Closing Date, is herein referred to as the
Additional Closing Date.
Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as
the case may be, shall be made against delivery to the Representatives for the respective accounts
of the several Underwriters of the Shares to be purchased on such date in definitive form
registered in such names and in such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the sale of the Shares duly
paid by the Company. The certificates for the Shares will be made available for inspection and
packaging by the Representatives at the office of JPMorgan set forth above not later than 1:00
P.M., New York City time, on the business day prior to the Closing Date or the Additional Closing
Date, as the case may be.
(d) The Company acknowledges and agrees that the Underwriters are acting solely in the
capacity of an arms length contractual counterparty to the Company with respect to the offering of
Shares contemplated hereby (including in connection with determining the terms of the offering) and
not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person.
Additionally, neither the Representatives nor any other Underwriter is advising the Company or any
other person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company
with respect thereto. Any review by the Underwriters of the Company, the transactions contemplated
hereby or other matters relating to such transactions will be performed solely for the benefit of
the Underwriters and shall not be on behalf of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants
to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of
filing thereof, complied in all material respects with the Securities Act, and did not contain any
untrue statement of a material fact or omit to state a material fact required to be
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stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the Company makes
no representation and warranty with respect to any statements or omissions made in reliance upon
and in conformity with information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use in any Preliminary Prospectus.
Each Preliminary Prospectus and the Prospectus delivered to the Underwriters for use in connection
with this offering was identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T or Rule 424(b) of
the Securities Act.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and
at the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading; provided that the Company makes no representation and warranty with respect to
any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through the Representatives
expressly for use in such Time of Sale Information. No statement of material fact included in the
Prospectus has been omitted from the Time of Sale Information and no statement of material fact
included in the Time of Sale Information that is required to be included in the Prospectus has been
omitted therefrom.
(c) Issuer Free Writing Prospectus. Other than the Preliminary Prospectus and the Prospectus,
the Company (including its agents and representatives, other than the Underwriters in their
capacity as such) has not made, used, prepared, authorized, approved or referred to and will not
prepare, make, use, authorize, approve or refer to any written communication (as defined in Rule
405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy
the Shares (each such communication by the Company or its agents and representatives (other than a
communication referred to in clause (i) below) an Issuer Free Writing Prospectus) other than (i)
any communication not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities
Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex D hereto and other
written communications approved in writing in advance by the Representatives. Each such Issuer
Free Writing Prospectus complied in all material respects with the Securities Act, has been filed
in accordance with the Securities Act (to the extent required thereby) and, when taken together
with the Preliminary Prospectus filed prior to the first use of such Issuer Free Writing
Prospectus, did not, and at the Closing Date and as of the Additional Closing Date, as the case may
be, will not, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in each such Issuer Free Writing
Prospectus in reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the Representatives expressly for
use in any Issuer Free Writing Prospectus. Each such Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of the public offer and sale of the
Shares or until any earlier date that the issuer notified or notifies JPMorgan and Merrill Lynch as
described in Section 4(e), did not, does not
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and will not include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, including any document
incorporated by reference therein and any Preliminary Prospectus deemed to be a part thereof that
has not been superseded or modified.
(d) Registration Statement and Prospectus. The Registration Statement has been declared
effective by the Commission. No order suspending the effectiveness of the Registration Statement
has been issued by the Commission and no proceeding for that purpose or pursuant to Section 8A of
the Securities Act against the Company or related to the offering has been initiated or threatened
by the Commission or, to the knowledge of the Company, are contemplated by the Commission, and any
request received by the Company on the part of the Commission for additional information has been
complied with; the Registration Statement is not the subject of a pending proceeding or examination
under Section 8(d) or 8(e) of the Securities Act; as of the applicable effective date of the
Registration Statement and any amendment thereto, the Registration Statement (as amended or
supplemented as of such date) complied and will comply in all material respects with the Securities
Act, and did not and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements therein
not misleading; and as of the date of the Prospectus (as amended or supplemented as of such date)
and any amendment or supplement thereto and as of the Closing Date and as of the Additional Closing
Date, as the case may be, the Prospectus will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation and warranty with respect to any
statements or omissions made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement and the Prospectus and any amendment or supplement
thereto.
(e) Incorporated Documents. The documents incorporated by reference in the Registration
Statement, the Prospectus or the Time of Sale Information, when they became effective or were filed
with the Commission, as the case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and none of such documents contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and any further documents so filed and incorporated by reference in
the Registration Statement, the Prospectus or the Time of Sale Information, when such documents
become effective or are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act, as applicable, and will not
contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(f) Financial Statements. The financial statements and the related notes thereto of the
Company and its consolidated subsidiaries included or incorporated by reference in the Registration
Statement, the Time of Sale Information and the Prospectus comply in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as
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applicable, and present fairly the financial position of the Company and its subsidiaries as of the
dates indicated and the results of their operations and the changes in their cash flows for the
periods specified; such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the periods covered
thereby, and the supporting schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein; and the pro
forma financial information and the related notes thereto included or incorporated by
reference in the Registration Statement, the Time of Sale Information and the Prospectus have been
prepared in accordance with the applicable requirements of the Securities Act and the Exchange Act,
as applicable, and the assumptions underlying such pro forma financial information
are reasonable and are set forth in the Registration Statement, the Time of Sale Information and
the Prospectus. The selected financial data included or incorporated by reference in the Time of
Sale Information and the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial statements included or
incorporated by reference in the Registration Statement. No other financial statements or
schedules are required to be included in the Registration Statement, the Time of Sale Information
or the Prospectus. All disclosures contained in the Registration Statement, the Time of Sale
Information or the Prospectus, or incorporated by reference therein, regarding non-GAAP financial
measures (as such term is defined by the rules and regulations of the Commission) comply with
Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the
extent applicable. Except as described in the Registration Statement, the Time of Sale Information
or the Prospectus, there are no material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or any other relationships with unconsolidated entities or
other persons, that may have a material current or future effect on the Companys financial
condition, changes in financial condition, results of operations, liquidity, capital expenditures,
capital resources or significant components of revenue or expenses.
(g) No Material Adverse Change. Since the date of the most recent financial statements of the
Company included or incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus, (i) there has not been any material change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any dividend or distribution of any
kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or
any material adverse change, or any development involving a prospective material adverse change, in
or affecting the business, properties, management, financial position, stockholders equity or
results of operations of the Company and its subsidiaries taken as a whole; (ii) neither the
Company nor any of its subsidiaries has entered into any transaction or agreement that is material
to the Company and its subsidiaries taken as a whole or incurred any liability or obligation,
direct or contingent, that is material to the Company and its subsidiaries taken as a whole; and
(iii) neither the Company nor any of its subsidiaries has sustained any material loss or
interference with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor disturbance or dispute or any action, order or decree of
any court or arbitrator or governmental or regulatory authority, except in each case as otherwise
disclosed in the Registration Statement, the Time of Sale Information and the Prospectus.
8
(h) Organization and Good Standing. The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified, in good standing or have such power or authority would
not, individually or in the aggregate, have a material adverse effect on the business, properties,
management, financial position, stockholders equity or results of operations of the Company and
its subsidiaries taken as a whole (a Material Adverse Effect). The Company has no significant
subsidiaries.
(i) Capitalization. The Company has an authorized capitalization as set forth in the
Registration Statement, the Time of Sale Information and the Prospectus under the heading
Capitalization; all the outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; except as described in or expressly contemplated by the Time of Sale
Information and the Prospectus and the Concurrent Debt Offering, there are no outstanding rights
(including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other equity interest in the
Company or any of its subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the Company or any such
subsidiary, any such convertible or exchangeable securities or any such rights, warrants or
options; the capital stock of the Company conforms in all material respects to the description
thereof contained in the Registration Statement, the Time of Sale Information and the Prospectus;
and all the outstanding shares of capital stock or other equity interests of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other claim of any third party.
(j) Due Authorization. The Company has full right, power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; and all action required to be taken for
the due and proper authorization, execution and delivery by it of this Agreement and the
consummation by it of the transactions contemplated hereby has been duly and validly taken.
(k) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered
by the Company, and constitutes the legal and binding obligation of the Company, enforceable in
accordance with its terms, except to the extent that rights to indemnity hereunder may be limited
by federal or state securities laws and except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
(l) The Shares. The Shares to be issued and sold by the Company hereunder have been duly
authorized by the Company and, when issued and delivered and paid for as provided herein, will be
duly and validly issued and will be fully paid and nonassessable and will conform to the
9
descriptions thereof in the Registration Statement, Time of Sale Information and the
Prospectus; and the issuance of the Shares is not subject to any preemptive or similar rights.
(m) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(n) No Conflicts. The execution, delivery and performance by the Company of this Agreement
and the consummation of the transactions contemplated herein (including the offering, issuance and
sale of the Shares pursuant to this Agreement and the use of the proceeds from the sale of the
Shares to repay the outstanding amounts to Alfred E. Mann as described in the Preliminary
Prospectus and the Prospectus under the caption Use of Proceeds) and in the Concurrent Debt
Offering do not and will not, whether with or without the giving of notice or passage of time or
both, (i) conflict with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or any of its subsidiaries or (iii) result in the violation
of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except in the case of clause (i) above, for any such
conflict, breach, violation, default, lien, charge or encumbrance that would not, individually or
in the aggregate, have a Material Adverse Effect.
(o) No Consents Required. No filing with, or consent, approval, authorization, order,
registration, license, decree or qualification of, any court or arbitrator or governmental or
regulatory authority is required for the execution, delivery and performance by the Company of this
Agreement, the issuance and sale of the Shares and the consummation of the transactions
contemplated herein and in the Concurrent Debt Offering, except for (i) the registration of the
Shares and the Notes under the Securities Act, (ii) such filings, consents, approvals,
authorizations, orders, registrations, licenses, decrees or qualifications as may be required under
applicable state securities laws in connection with the purchase and distribution of the Shares by
the Underwriters, and (iii) listing of the Shares on the National Association of Securities Dealers
Automated Quotations Global Market (the Nasdaq Global Market), which will be made prior to the
Closing Date.
10
(p) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its subsidiaries is or may be
a party or to which any property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or materially and adversely affect the ability of the Company to perform its obligations
under this Agreement; to the knowledge of the Company, no such investigations, actions, suits or
proceedings are threatened or contemplated by any governmental or regulatory authority or
threatened by others; and (i) there are no current or pending legal, governmental or regulatory
actions, suits or proceedings that are required under the Securities Act to be described in the
Registration Statement that are not so described in the Registration Statement, the Time of Sale
Information and the Prospectus and (ii) there are no statutes, regulations or contracts or other
documents that are required under the Securities Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus that are not so filed as
exhibits to the Registration Statement or described in the Registration Statement, the Time of Sale
Information and the Prospectus.
(q) Independent Accountants. Deloitte & Touche LLP, who have certified the annual financial
statements included in the Registration Statement or incorporated by reference in the Registration
Statement, the Time of Sale Information or the Prospectus, is an independent registered public
accounting firm with the respect to the Company and its subsidiaries within the applicable rules
and regulations adopted by the Commission and the Public Accounting Oversight Board (United States)
and as required by the Securities Act.
(r) Title to Real and Personal Property. The Company and its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of
real and personal property that are material to the respective businesses of the Company and its
subsidiaries, in each case free and clear of all mortgages, pledges, security interest, liens,
encumbrances, claims, restrictions and defects and imperfections of title except those that (i) do
not materially interfere with the use made and proposed to be made of such property by the Company
and its subsidiaries or (ii) could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. All of the leases and subleases material to the business of the
Company and its subsidiaries, taken as a whole, and under which the Company or any of its
subsidiaries holds properties described in the Time of Sale Information or the Prospectus, are in
full force and effect, and neither the Company nor any subsidiary has any written notice of any
material claim of any sort that has been asserted by anyone adverse to the rights of the Company or
any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
(s) Title to Intellectual Property. The Company owns, possesses or can acquire on reasonable
terms all Intellectual Property (as defined below) used in the conduct of the business of the
Company as described in the Registration Statement, the Time of Sale Information and the Prospectus
as now conducted or to be conducted, except where the failure to own, possess or be able to acquire
such Intellectual Property could not, individually or in the aggregate, have a Material Adverse
Effect, and (A) to the knowledge of the Company, there is no infringement,
11
misappropriation or violation by third parties of any such Intellectual Property; (B) there is no
pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others
challenging the rights of the Company in or to any such Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis for any such claim; (C) the Intellectual
Property owned by the Company and, to the knowledge of the Company, the Intellectual Property
licensed to the Company have not been adjudged invalid or unenforceable, in whole or in part, and
there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such claim; and (D)
except as disclosed in the Registration Statement, the Time of Sale Information and the Prospectus,
there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or
claim by others that the Company infringes, misappropriates or otherwise violates any Intellectual
Property or other proprietary rights of others, the Company has not received any written notice of
such claim and the Company is unaware of any other facts which would form a reasonable basis for
any such claim. The term Intellectual Property as used herein means all patents, patent
applications, trade and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual
property.
(t) No Undisclosed Relationships. No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that
is required by the Securities Act to be described in the Registration Statement and the Prospectus
and that is not so described in such documents and in the Time of Sale Information.
(u) Investment Company Act. The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in the Registration
Statement, the Time of Sale Information and the Prospectus and the offering and sale of the Notes
as contemplated in the Concurrent Debt Offering, will not be required to register as an investment
company or an entity controlled by an investment company within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder
(collectively, Investment Company Act).
(v) Public Utility Holding Company Act. Neither the Company nor any of its subsidiaries is a
holding company or a subsidiary company of a holding company or an affiliate thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
(w) Taxes. The Company and its subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed through the date hereof and is not in
default in the payment of any taxes which were payable pursuant to said returns or any assessments
with respect thereto, other than any which the Company or any of its subsidiaries is contesting in
good faith. There is no pending dispute with any taxing authority relating to any of such returns
and the Company has no knowledge of any proposed liability for any tax to be imposed upon the
properties or assets of the Company or any of its subsidiaries for which there is not an adequate
reserve reflected in the Companys financial statements included in the Registration Statement.
12
(x) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration Statement, the Time of Sale
Information and the Prospectus, except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and except as described in the
Registration Statement, the Time of Sale Information and the Prospectus, neither the Company nor
any of its subsidiaries has received notice of any revocation or modification of any such license,
certificate, permit or authorization, or has knowledge of any proceedings relating to the
revocation or modification of any such license, certificate, permit or authorization, or has any
reason to believe that any such license, certificate, permit or authorization will not be renewed
in the ordinary course, except where the failure to renew such license, certificate, permit or
authorization would not, individually or in the aggregate, have a Material Adverse Effect.
(y) FDA Compliance. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, the Company: (A) is and at all times has been in full compliance
with all statutes, rules, regulations, or guidances applicable to the ownership, testing,
development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion,
sale, offer for sale, storage, import, export or disposal of any product under development,
manufactured or distributed by the Company (Applicable Laws); (B) has not received any FDA Form
483, notice of adverse finding, warning letter, untitled letter or other correspondence or notice
from the U.S. Food and Drug Administration (the FDA) or any other federal, state, local or
foreign governmental or regulatory authority alleging or asserting noncompliance with any
Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable Laws (Authorizations); (C)
possesses all Authorizations and such Authorizations are valid and in full force and effect and are
not in violation of any term of any such Authorizations; (D) has not received notice of any claim,
action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from the
FDA or any other federal, state, local or foreign governmental or regulatory authority or third
party alleging that any product operation or activity is in violation of any Applicable Laws or
Authorizations and has no knowledge that the FDA or any other federal, state, local or foreign
governmental or regulatory authority or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding; (E) has not received notice that the FDA or
any other federal, state, local or foreign governmental or regulatory authority has taken, is
taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no
knowledge that the FDA or any other federal, state, local or foreign governmental or regulatory
authority is considering such action; (F) has filed, obtained, maintained or submitted all reports,
documents, forms, notices, applications, records, claims, submissions and supplements or amendments
as required by any Applicable Laws or Authorizations and that all such reports, documents, forms,
notices, applications, records, claims, submissions and supplements or amendments were complete and
correct on the date filed (or were corrected or supplemented by a subsequent submission); and (G)
has not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be
initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post
sale warning, dear doctor letter, or
13
other notice or action relating to the alleged lack of safety or efficacy of any product or any
alleged product defect or violation and, to the Companys knowledge, no third party has initiated,
conducted or intends to initiate any such notice or action.
(z) Clinical Studies. The studies, tests and preclinical and clinical trials conducted by or
on behalf of the Company were and, if still pending, are being conducted in accordance with
experimental protocols, procedures and controls pursuant to accepted professional scientific
standards and all Applicable Laws and Authorizations, including, without limitation, the Federal
Food, Drug and Cosmetic Act and the rules and regulations promulgated thereunder (collectively,
FFDCA); the descriptions of the results of such studies, tests and trials contained in the
Registration Statement, the Time of Sale Information and the Prospectus are accurate and complete
in all material respects and fairly present the data derived from such studies, tests and trials;
except to the extent disclosed in the Registration Statement, the Time of Sale Information and the
Prospectus, the Company is not aware of any studies, tests or trials, the results of which the
Company believes reasonably call into question the study, test, or trial results described or
referred to in the Registration Statement, the Time of Sale Information and the Prospectus when
viewed in the context in which such results are described and the clinical state of development;
and, since March 24, 2001, the Company has not received any notices or correspondence from the FDA
or any other federal, state, local or foreign governmental or regulatory authority requiring the
termination, suspension or material modification of any studies, tests or preclinical or clinical
trials of Technosphere, Technosphere Insulin or cancer vaccines conducted by or on behalf of the
Company.
(aa) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is contemplated or threatened
and the Company is not aware of any existing or imminent labor disturbance by, or dispute with, the
employees of any of its or its subsidiaries principal suppliers, contractors or customers, except
as would not have a Material Adverse Effect.
(bb) Compliance With Environmental Laws. (i) The Company and its subsidiaries (x) are, and at
all prior times were, in compliance with any and all applicable federal, state, local or foreign
statute, law, rule, regulation, ordinance, code or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively,
Hazardous Materials) or to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively, Environmental Laws), (y)
have received and are in compliance with all permits, licenses, certificates or other
authorizations or approvals required of them under applicable Environmental Laws to conduct their
respective businesses, and (z) have not received notice of any actual or potential liability under
or relating to any Environmental Laws, including for the investigation or remediation of any
disposal or release of Hazardous Materials, and have no knowledge of any event or condition that
would reasonably be expected to result in any such notice, and (ii) there
14
are no costs or liabilities associated with Environmental Laws of or relating to the Company or its
subsidiaries, except in the case of each of (i) and (ii) above, for any such failure to comply, or
failure to receive required permits, licenses or approvals, or cost or liability, as would not,
individually or in the aggregate, have a Material Adverse Effect; and (iii) except as described in
the Registration Statement, the Time of Sale Information and the Prospectus, (x) there are no
proceedings that are pending, or that are known to be contemplated, against the Company or any of
its subsidiaries under any Environmental Laws in which a governmental entity is also a party, other
than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000
or more will be imposed, (y) the Company and its subsidiaries are not aware of any issues regarding
compliance with Environmental Laws, or liabilities or other obligations under Environmental Laws or
concerning hazardous or toxic substances or wastes, pollutants or contaminants, that could
reasonably be expected to have a material effect on the capital expenditures, earnings or
competitive position of the Company and its subsidiaries, and (z) none of the Company and its
subsidiaries anticipates material capital expenditures relating to any Environmental Laws.
(cc) Compliance With ERISA. (i) Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), for which the
Company or any member of its Controlled Group (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the Code)) would have any liability (each, a Plan) has been maintained in
material compliance with its terms and the requirements of any applicable statutes, orders, rules
and regulations, including but not limited to ERISA and the Code; (ii) no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect
to any Plan excluding transactions effected pursuant to a statutory or administrative exemption;
(iii) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302
of ERISA, no accumulated funding deficiency as defined in Section 412 of the Code, whether or not
waived, has occurred or is reasonably expected to occur; (iv) the fair market value of the assets
of each Plan exceeds the present value of all benefits accrued under such Plan (determined based on
those assumptions used to fund such Plan); (v) no reportable event (within the meaning of Section
4043(c) of ERISA) has occurred or is reasonably expected to occur; and (vi) neither the Company nor
any member of the Controlled Group has incurred, nor reasonably expects to incur, any liability
under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC, in the
ordinary course and without default) in respect of a Plan (including a multiemployer plan, within
the meaning of Section 4001(a)(3) of ERISA).
(dd) Disclosure Controls. The Company and its subsidiaries maintain an effective system of
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that is
designed to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commissions rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the Companys
management as appropriate to allow timely decisions regarding required disclosure. The Company and
its subsidiaries have carried out evaluations of the
15
effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the
Exchange Act.
(ee) Accounting Controls. The Company and its subsidiaries maintain systems of internal
control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that comply
with the requirements of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including, but not limited to internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
managements general or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to assets is permitted only in
accordance with managements general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, the Company is not aware
of any material weaknesses in the Companys internal controls.
(ff) Insurance. The Company and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks as are, to the knowledge of the
Company, adequate to protect the Company and its subsidiaries and their respective businesses; and
neither the Company nor any of its subsidiaries has (i) received notice from any insurer or agent
of such insurer that capital improvements or other expenditures are required or necessary to be
made in order to continue such insurance or (ii) any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage at reasonable cost from similar insurers as may be necessary to continue its business.
All such insurance is outstanding and duly in force on the date hereof.
(gg) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(hh) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
16
administered or enforced by any governmental agency (collectively, the Money Laundering Laws) and
no action, suit or proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.
(ii) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge
of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (OFAC); and the Company will not directly
or indirectly use the proceeds of the offering of the Shares hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(jj) No Restrictions on Subsidiaries. No subsidiary of the Company is currently prohibited,
directly or indirectly, under any agreement or other instrument to which it is a party or is
subject, from paying any dividends to the Company, from making any other distribution on such
subsidiarys capital stock, from repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiarys properties or assets to the Company
or any other subsidiary of the Company.
(kk) No Brokers Fees. Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finders fee or like payment in connection with the offering and sale of the
Shares.
(ll) No Registration Rights. No person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by reason of the filing
of the Registration Statement with the Commission or the issuance and sale of the Shares, other
than such rights as have been satisfied or duly and validly waived.
(mm) No Stabilization. The Company has not taken, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Shares.
(nn) Business With Cuba. The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(oo) Margin Rules. Neither the issuance, sale and delivery of the Shares nor the application
of the proceeds thereof by the Company as described in the Registration Statement, the Time of Sale
Information and the Prospectus will violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board of Governors.
17
(pp) Forward-Looking Statements. No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration
Statement, the Time of Sale Information and the Prospectus has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.
(qq) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included in the
Registration Statement, the Time of Sale Information and the Prospectus is not based on or derived
from sources that are reliable and accurate in all material respects.
(rr) Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any
of the Companys directors or officers, in their capacities as such, to comply with any provision
of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder
(collectively, the Sarbanes-Oxley Act), including Section 402 thereof related to loans and
Sections 302 and 906 thereof related to certifications.
(ss) Status under the Securities Act. The Company is not an ineligible issuer as defined
under the Securities Act, in each case at the times specified in the Securities Act in connection
with the offering of the Shares.
(tt) Audit Committee/Internal Controls. The Companys board of directors has validly
appointed an audit committee whose composition satisfies the requirements of Rule 4350(d)(2) of the
Rules of the NASD (the NASD Rules) and the Companys board of directors and/or the audit
committee has adopted a charter that satisfies the requirements of Rule 4350(d)(1) of the NASD
Rules. Neither the Companys board of directors nor the audit committee has been informed, nor is
any director of the Company aware, of (x) any significant deficiencies in the design or operation
of the Companys internal controls that could adversely affect the Companys ability to record,
process, summarize and report financial data or any material weakness in the Companys internal
controls; or (y) any fraud, whether or not material, that involves management or other employees of
the Company who have a significant role in the Companys internal controls.
(uu) Listing on the Nasdaq Global Market. The Common Stock of the Company is listed on the
Nasdaq Global Market under the ticker symbol MNKD. The Company has not received any notice that
it is not in compliance with the listing requirements of the Nasdaq Global Market. The Company is,
and has no reason to believe that it will not in the foreseeable future continue to be (except as a
result of minimum trading price requirements), in compliance with all such listing requirements.
There are no affiliations with the NASD among the Companys officers or directors. A registration
statement relating to the Common Stock on Form 8-A or other applicable form under the Exchange Act
has become effective.
(yy) Stock Options. With respect to the stock options (the Stock Options) granted pursuant
to the stock-based compensation plans of the Company and its subsidiaries (the Company Stock
Plans), (i) each Stock Option intended to qualify as an incentive stock option under Section 422
of the Code as of its Grant Date (as defined below) so qualified, (ii) each grant of a Stock Option
was duly authorized no later than the date on which the grant of such Stock Option was by its terms
to be effective (the Grant Date) by all necessary corporate
18
action, including, as applicable, approval by the board of directors of the Company (or a duly
constituted and authorized committee thereof) and any required stockholder approval by the
necessary number of votes or written consents, (iii) each such grant was made in accordance with
the terms of the Company Stock Plans, the Exchange Act and the rules of The Nasdaq Global Market
and (iv) each such grant was properly accounted for in accordance with GAAP in the financial
statements (including the related notes) of the Company and disclosed in the Companys filings with
the Commission to the extent required in accordance with the Exchange Act and all other applicable
laws. There is no and has been no policy or practice of the Company to coordinate the grant of
Stock Options prior to the release or other public announcement of material information regarding
the Company or its subsidiaries or their results of operations or prospects.
4. Further Agreements of the Company. The Company covenants and agrees with each
Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) (without reliance on Rule 424(b)(8)) and Rule 430A, 430B
or 430C under the Securities Act, will file any Issuer Free Writing Prospectus to the extent
required by Rule 433 under the Securities Act; and will file promptly all reports and any
definitive proxy or information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; and the Company will furnish copies of the Prospectus and each
Issuer Free Writing Prospectus (to the extent not previously delivered) to the Underwriters in New
York City prior to 10:00 A.M., New York City time, on the business day next succeeding the date of
this Agreement in such quantities as the Representatives may reasonably request.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representatives,
a facsimile copy of the Registration Statement as originally filed and each amendment thereto, in
each case including all exhibits and consents filed therewith and documents incorporated by
reference therein; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement
as originally filed and each amendment thereto (without exhibits) and (B) during the Prospectus
Delivery Period (as defined below), as many copies of the Prospectus (including all amendments and
supplements thereto and documents incorporated by reference therein) and each Issuer Free Writing
Prospectus as the Representatives may reasonably request. As used herein, the term Prospectus
Delivery Period means such period of time after the first date of the public offering of the
Shares as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is
required by law to be delivered (or required to be delivered but for Rule 172 under the Securities
Act) in connection with sales of the Shares by any Underwriter or dealer.
(c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before using, authorizing,
approving, referring to or filing any Issuer Free Writing Prospectus, and before filing any
amendment or supplement to the Registration Statement (including any filing under Rule 424(b) under
the Securities Act) or the Prospectus, the Company will furnish to the
19
Representatives and counsel for the Underwriters a copy of the proposed Issuer Free Writing
Prospectus, amendment or supplement for review and will not use, authorize, approve, refer to or
file any such Issuer Free Writing Prospectus or file any such proposed amendment or supplement to
which the Representatives reasonably objects, unless upon the written advice of counsel to the
Company that such action is necessary.
(d) Notice to the Representatives. The Company will advise the Representatives promptly, and
confirm such advice in writing, (i) when the Registration Statement has become effective; (ii) when
any amendment to the Registration Statement has been filed or becomes effective; (iii) when any
supplement to the Prospectus or any Issuer Free Writing Prospectus or any amendment to the
Prospectus has been filed; (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the receipt of any
comments from the Commission relating to the Registration Statement or any other request by the
Commission for any additional information; (v) of the issuance by the Commission of any order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for
that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event
within the Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale
Information or any Issuer Free Writing Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances existing
when the Prospectus, the Time of Sale Information or any such Issuer Free Writing Prospectus is
delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice
with respect to any suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company
will use its best efforts to prevent the issuance of any such order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification of the Shares and, if any such order is issued,
will obtain as soon as possible the withdrawal thereof.
(e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event shall
occur or condition shall exist as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Prospectus to comply with law, the Company will immediately
notify the Representatives thereof and forthwith prepare and, subject to paragraph (c) above, file
with the Commission and furnish to the Underwriters and to such dealers as the Representatives may
designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus will comply with law, (2) if at any time prior to the Closing Date (i) any event
shall occur or condition shall exist as a result of which the Time of Sale Information as then
amended or supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
20
light of the circumstances, not misleading or (ii) it is necessary to amend or supplement the Time
of Sale Information to comply with law, the Company will immediately notify the Representatives
thereof and forthwith prepare and, subject to paragraph (c) above, file with the Commission (to the
extent required) and furnish to the Underwriters and to such dealers as the Representatives may
designate, such amendments or supplements to the Time of Sale Information as may be necessary so
that the statements in the Time of Sale Information as so amended or supplemented will not, in the
light of the circumstances, be misleading or so that the Time of Sale Information will comply with
law and (3) if at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus
conflicted or would conflict with the information contained in the Registration Statement or any
Preliminary Prospectus or included or would include an untrue statement of a material fact or
omitted or would omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances prevailing at that subsequent time, not misleading, the Company
will promptly notify the Representatives and will promptly amend or supplement, at its own expense,
such Issuer Free Writing Prospectus, or the Preliminary Prospectus and the Prospectus to eliminate
or correct such conflict, untrue statement or omission.
(f) Blue Sky Compliance. The Company will qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request
and will continue such qualifications in effect so long as required for distribution of the Shares;
provided that the Company shall not be required to (i) qualify as a foreign corporation or
other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be
required to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so
subject.
(g) Earning Statement. The Company will make generally available to its security holders and
the Representatives as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering
a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the effective date (as defined in Rule 158) of the Registration Statement.
(h) Clear Market. For a period of 90 days after the date of this Agreement, the Company will
not (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or indirectly, any shares of Stock or any
securities convertible into or exercisable or exchangeable for Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of the Stock, whether any such transaction described in clause (i) or (ii) above is to be settled
by delivery of Stock or such other securities, in cash or otherwise, without the prior written
consent of the Representatives, other than (A) the Shares to be sold hereunder, (B) grants of
equity awards under equity incentive plans existing as of the date of this Agreement and disclosed
in the Time of Sale Information, (C) issuances of any shares of Stock of the Company upon the
exercise of options granted under such equity incentive plans or under other options,
21
warrants or other rights outstanding as of the date hereof and disclosed in the Time of Sale
Information and (D) the Notes issued pursuant to the purchase agreement dated the date hereof with
respect to the Concurrent Debt Offering and shares of Stock issuable upon conversion of such Notes.
Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day restricted period, the
Company issues an earnings release or material news or a material event relating to the Company
occurs; or (2) prior to the expiration of the 90-day restricted period, the Company announces that
it will release earnings results during the 16-day period beginning on the last day of the 90-day
period, the restrictions imposed by this Agreement shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release or the occurrence of the
material news or material event.
(i) Insider Trading. Unless the Representatives otherwise agree, in their sole discretion and
in writing, prior to the 90th day following the Closing Date, the Company will not waive the terms
of its written insider trading policy applicable to all officers and directors of the Company.
(j) Use of Proceeds. The Company will apply the net proceeds from the sale of the Shares as
described in the Registration Statement, the Time of Sale Information and the Prospectus under the
heading Use of Proceeds.
(k) No Stabilization. The Company will not take, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Shares and will not take any action prohibited by Regulation M under the Exchange
Act in connection with the distribution of the Shares contemplated hereby.
(l) Exchange Listing. The Company will use its best efforts to list for quotation the Shares
on the Nasdaq Global Market.
(m) Reports. To the extent not available on the Commissions EDGAR system, so long as the
Shares are outstanding, the Company will furnish to the Representatives, as soon as they are
available, copies of all Exchange Act reports or other communications (financial or other)
furnished to holders of the Shares solely in their capacity as such, and copies of any Exchange Act
reports and financial statements furnished to or filed with the Commission or any national
securities exchange or automatic quotation system.
(n) Record Retention. The Company will, pursuant to reasonable procedures developed in good
faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission
in accordance with Rule 433 under the Securities Act.
(o) Compliance with Registration Statement. The Company will comply with all the undertakings
contained in the Registration Statement.
(p) Controls and Procedures. For a period of one year from the date of this Agreement, the
Company and its subsidiaries will maintain such controls and other procedures, including without
limitation those required by Sections 302 and 906 of the Sarbanes-Oxley Act and the applicable
regulations thereunder, that are designed to ensure that information required to
22
be disclosed by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Commissions
rules and forms, including without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the Companys management, including its
principal executive officer and its principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required disclosure, to ensure that
material information relating to Company, including its subsidiaries, is made known to them by
others within those entities.
(q) Sarbanes-Oxley Act. For a period of one year from the date of this Agreement, the Company
and its subsidiaries will comply with all effective applicable provisions of the Sarbanes-Oxley
Act.
5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and
agrees that:
(a) It has not and will not use, authorize use of, refer to, or participate in the planning
for use of, any free writing prospectus, as defined in Rule 405 under the Securities Act (which
term includes use of any written information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and any press release issued by the
Company) other than (i) a free writing prospectus that contains no issuer information (as defined
in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation
by reference) in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus,
(ii) any Issuer Free Writing Prospectus listed on Annex D or prepared pursuant to Section 3(c) or
Section 4(c) above, or (iii) any free writing prospectus prepared by such underwriter and approved
by the Company in advance in writing (each such free writing prospectus referred to in clauses (i)
or (iii), an Underwriter Free Writing Prospectus).
(b) It has not and will not distribute any Underwriter Free Writing Prospectus referred to in
clause (a)(i) in a manner reasonably designed to lead to its broad unrestricted dissemination.
(c) It has not and will not, without the prior written consent of the Company, use any free
writing prospectus that contains the final terms of the Shares unless such terms have previously
been included in a free writing prospectus filed with the Commission; provided that Underwriters
may use a term sheet substantially in the form of Annex E hereto without the consent of the
Company; provided further that any Underwriter using such term sheet shall notify the Company, and
provide a copy of such term sheet to the Company, prior to, or substantially concurrently with, the
first use of such term sheet.
(d) It will, pursuant to reasonable procedures developed in good faith, retain copies of each
free writing prospectus used or referred to by it, in accordance with Rule 433 under the Securities
Act.
23
(e) It is not subject to any pending proceeding under Section 8A of the Securities Act with
respect to the offering (and will promptly notify the Company if any such proceeding against it is
initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters Obligations. The obligation of each Underwriter to
purchase the Underwritten Shares on the Closing Date or the Option Shares on the Additional Closing
Date, as the case may be as provided herein is subject to the performance by the Company of its
covenants and other obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose or pursuant to
Section 8A under the Securities Act shall be pending before or threatened by the Commission; the
Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission
under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the extent required
by Rule 433 under the Securities Act) and in accordance with Section 4(a) hereof; and all requests
by the Commission for additional information shall have been complied with to the reasonable
satisfaction of the Representatives.
(b) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of the Closing Date or
the Additional Closing Date, as the case may be; and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall be true and correct on and as
of the Closing Date or the Additional Closing Date, as the case may be.
(c) No Downgrade. Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded any securities or preferred stock of or
guaranteed by the Company or any of its subsidiaries by any nationally recognized statistical
rating organization, as such term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, or has changed its outlook with respect to, its rating of any
securities or preferred stock of or guaranteed by the Company or any of its subsidiaries (other
than an announcement with positive implications of a possible upgrading).
(d) No Material Adverse Change. No event or condition of a type described in Section 3(g)
hereof shall have occurred or shall exist, which event or condition is not described in the Time of
Sale Information (excluding any amendment or supplement thereto) and the Prospectus (excluding any
amendment or supplement thereto) and the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares
on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the
manner contemplated by this Agreement, the Time of Sale Information and the Prospectus.
(e) Officers Certificate. The Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate of the chief
24
financial officer or chief accounting officer of the Company and one additional senior executive
officer of the Company who is satisfactory to the Representatives (i) confirming that such officers
have carefully reviewed the Registration Statement, the Time of Sale Information and the Prospectus
and, to the knowledge of such officers, the representations set forth in Sections 3(b) and 3(d)
hereof are true and correct, (ii) confirming that the other representations and warranties of the
Company in this Agreement are true and correct and that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or
prior to such Closing Date and (iii) to the effect set forth in paragraphs (a), (c) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date or the Additional
Closing Date, as the case may be, Deloitte & Touche LLP shall have furnished to the
Representatives, at the request of the Company, letters, dated the respective dates of delivery
thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type customarily included in
accountants comfort letters to underwriters with respect to the financial statements and certain
financial information contained or incorporated by reference in the Registration Statement, the
Time of Sale Information and the Prospectus; provided, that the letter delivered on the Closing
Date or the Additional Closing Date, as the case may be shall use a cut-off date no more than
three business days prior to such Closing Date or such Additional Closing Date, as the case may be.
(g) Opinion of Counsel for the Company. Cooley Godward Kronish LLP, counsel for the Company,
shall have furnished to the Representatives, at the request of the Company, their written opinion,
dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect
set forth in Annex A hereto.
(h) Opinion of Special Regulatory Counsel for the Company. Hyman, Phelps & McNamara, P.C.,
special counsel for the Company for regulatory matters, shall have furnished to the
Representatives, at the request of the Company, their written opinion, dated the Closing Date or
the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representatives, to the effect set forth in Annex B
hereto.
(i) Opinion of Special Intellectual Property Counsel for the Company. Preston Gates & Ellis,
LLP special counsel for the Company for Intellectual Property matters, shall have furnished to the
Representatives, at the request of the Company, their written opinion, dated the Closing Date or
the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representatives, to the effect set forth in Annex C
hereto.
(j) Opinion of Counsel for the Underwriters. The Representatives shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Latham &
Watkins LLP, counsel for the Underwriters, with respect to such matters as the Representatives may
reasonably request, and such counsel shall have received such
25
documents and information as they may reasonably request to enable them to pass upon such matters.
(k) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the Closing Date or
the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares.
(l) Good Standing. The Representatives shall have received on and as of the Closing Date or
the Additional Closing Date, as the case may be, satisfactory evidence of the good standing of the
Company and its subsidiaries in their respective jurisdictions of organization and their good
standing as foreign entities in such other jurisdictions as the Representatives may reasonably
request, in each case in writing or any standard form of telecommunication from the appropriate
Governmental Authorities of such jurisdictions.
(m) Exchange Listing. The Shares to be delivered on the Closing Date or Additional Closing
Date, as the case may be, shall have been approved for listing on the Nasdaq Global Market.
(n) Lock-up Agreements. The lock-up agreements, each substantially in the form of Exhibit A
hereto, between you and certain shareholders, officers and directors of the Company relating to
sales and certain other dispositions of shares of Stock or certain other securities, delivered to
the Representatives on or before the date hereof, shall be in full force and effect on the Closing
Date or Additional Closing Date, as the case may be.
(o) Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as
the case may be, the Company shall have furnished to the Representatives such further certificates
and documents as the Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless
each Underwriter, its affiliates, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities (including, without
limitation, the reasonable legal fees and other reasonable expenses incurred in connection with any
suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or
several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or caused by any omission or alleged
omission to state therein a material fact required to be
26
stated therein or necessary in order to make the statements therein, not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto), any Issuer Free Writing Prospectus or any Time of Sale
Information (including any Time of Sale Information that has subsequently been amended) or caused
by any omission or alleged omission to state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact included in any materials or
information provided to investors by, or with the written approval of, the Company in connection
with the marketing of the offering of the Shares, including any road show or investor presentations
made to the investors by the Company (whether in person or electronically), or the omission or
alleged omission therefrom of a material fact necessary in order to make the statements therein,
when taken together with the Time of Sale Information, in the light of the circumstances under
which they are made, not misleading, or (iv) any action taken or omitted to be taken in good faith
by the Underwriters in connection with the sale of the Affiliate Securities to the Affiliate
Purchasers, and the failure of any Affiliate Purchaser to pay for and accept delivery of the
Affiliate Securities that the Affiliate Purchaser agreed to purchase, except that this clause (iv)
shall not apply to the extent that such loss, claim, damage or liability (or action in respect
thereof) is finally judicially determined to have resulted from the gross negligence or willful
misconduct of such Underwriter, and in the case of each of clause (i) and (ii) above, except
insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of the information
described as such in subsection (b) below.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representatives expressly for use in the
Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free
Writing Prospectus or any Time of Sale Information (including any Time of Sale Information that has
subsequently been amended), it being understood and agreed upon that the only such information
furnished by any Underwriter consists of the following information in the Prospectus furnished on
behalf of each Underwriter: the concession figures appearing in the sixth paragraph under the
caption Underwriting, and the information contained under the caption UnderwritingPassive
Market Making.
(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such
person (the Indemnified Person) shall promptly notify the person against
27
whom such indemnification may be sought (the Indemnifying Person) in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from any liability that it
may have under this Section 7 except to the extent that it has been materially prejudiced (through
the forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this Section 7. If any
such proceeding shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified
Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in such
proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to
the contrary or (ii) the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person. It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid
or reimbursed as they are incurred. Any such separate firm for any Underwriter, its affiliates,
directors and officers and any control persons of such Underwriter shall be designated in writing
by JPMorgan and Merrill Lynch and any such separate firm for the Company, its directors, its
officers who signed the Registration Statement and any control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested
that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30
days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request prior to the date
of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have been sought
hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such proceeding and (y) does
not include any statement as to or any admission of fault, culpability or a failure to act by or on
behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable
28
by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other, from the offering of the Shares or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the relative fault of the
Company, on the one hand, and the Underwriters, on the other, in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the same respective proportions as the
net proceeds (after deducting underwriting discounts and commissions but before deducting expenses)
received by the Company from the sale of the Shares and the total underwriting discounts and
commissions received by the Underwriters in connection therewith, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate offering price of the Shares. The
relative fault of the Company, on the one hand, and the Underwriters, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or other expenses incurred
by such Indemnified Person in connection with any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount
in excess of the amount by which the total underwriting discounts and commissions received by such
Underwriter with respect to the offering of the Shares exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters obligations to
contribute pursuant to this Section 7 are several in proportion to their respective purchase
obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any Indemnified Person
at law or in equity.
8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
29
9. Termination. This Agreement may be terminated in the absolute discretion of the
Representatives, by notice to the Company, if after the execution and delivery of this Agreement
and prior to the Closing Date or, in the case of the Option Shares, prior to the Additional Closing
Date (i) trading generally shall have been suspended or materially limited on or by any of the New
York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers,
Inc., the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended
on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking
activities shall have been declared by federal or New York State authorities; or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that, in the judgment of the
Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with
the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as
the case may be, on the terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Prospectus.
10. Defaulting Underwriter. (a) If, on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter defaults on its obligation to purchase the Shares that it
has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their
discretion arrange for the purchase of such Shares by other persons satisfactory to the Company on
the terms contained in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Shares, then
the Company shall be entitled to a further period of 36 hours within which to procure other persons
satisfactory to the non-defaulting Underwriters to purchase such Shares on such terms. If other
persons become obligated or agree to purchase the Shares of a defaulting Underwriter, either the
non-defaulting Underwriters or the Company may postpone the Closing Date or the Additional Closing
Date, as the case may be, for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Registration Statement and the
Prospectus that effects any such changes. As used in this Agreement, the term Underwriter
includes, for all purposes of this Agreement unless the context otherwise requires, any person not
listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Shares that a defaulting
Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in
paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or
the Additional Closing Date, as the case may be does not exceed one-eleventh of the aggregate
number of Shares to be purchased on such date, then the Company shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares that such Underwriter agreed to
purchase hereunder on such date plus such Underwriters pro rata share (based on the number of
Shares that such Underwriter agreed to purchase on such date) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
30
(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in
paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or
the Additional Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount of
Shares to be purchased on such date, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement or, with respect to any Additional Closing Date, the
obligation of the Underwriters to purchase Shares on the Additional Closing Date, as the case may
be, shall terminate without liability on the part of the non-defaulting Underwriters. Any
termination of this Agreement pursuant to this Section 10 shall be without liability on the part of
the Company, except that the Company will continue to be liable for the payment of expenses as set
forth in Section 11 hereof and except that the provisions of Section 7 hereof shall not terminate
and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its default.
11. Payment of Expenses. (a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid
all costs and expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery
of the Shares and any taxes payable in that connection; (ii) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement, the Preliminary
Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and the Prospectus
(including all exhibits, amendments and supplements thereto) and the distribution thereof; (iii)
the costs of reproducing and distributing this Agreement; (iv) the fees and expenses of the
Companys counsel and independent accountants; (v) the fees and expenses incurred in connection
with the registration or qualification and determination of eligibility for investment of the
Shares under the laws of such jurisdictions as the Representatives may designate and the
preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and
expenses of counsel for the Underwriters); (vi) the cost of preparing stock certificates; (vii) the
costs and charges of any transfer agent and any registrar; (viii) all expenses and application fees
incurred in connection with any filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc.; (ix) all expenses incurred by the Company in connection
with any road show presentation to potential investors; and (x) all expenses and application fees
related to the listing of the Shares on the Nasdaq Global Market.
(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the Company for any reason
fails to tender the Shares for delivery to the Underwriters or (iii) the Underwriters decline to
purchase the Shares for any reason permitted under this Agreement, the Company agrees to reimburse
the Underwriters for all out-of-pocket costs and expenses (including the fees and expenses of their
counsel) reasonably incurred by the Underwriters in connection with this Agreement and the offering
contemplated hereby.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and the officers
and directors and any controlling persons referred to in Section 7 hereof. Nothing in this
31
Agreement is intended or shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such
purchase.
13. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Underwriters contained in this Agreement or made
by or on behalf of the Company or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the Shares and shall remain
in full force and effect, regardless of any termination of this Agreement or any investigation made
by or on behalf of the Company or the Underwriters.
14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term affiliate has the meaning set forth in Rule 405 under the Securities
Act; (b) the term business day means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term subsidiary has the meaning set forth in Rule
405 under the Securities Act; and (d) the term significant subsidiary has the meaning set forth
in Rule 1-02 of Regulation S-X under the Exchange Act.
15. Miscellaneous. (a) Authority of the Representatives. Any action by the
Underwriters hereunder may be taken by JPMorgan and Merrill Lynch, acting together, on behalf of
the Underwriters, and any such action taken by JPMorgan and Merrill Lynch shall be binding upon the
Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Underwriters shall be given to the Representatives c/o J.P.
Morgan Securities Inc., 277 Park Avenue, New York, New York 10172 (fax: (212) 622-8358); Attention:
Equity Syndicate Desk and Merrill Lynch & Co., 4 World Financial Center, New York, New York 10030
(fax: (212) 738-1069); Attention: Marcelo Cosma, with a copy to Latham & Watkins LLP, 650 Town
Center Drive, 20th Floor, Costa Mesa, California 92626 (fax: (714) 755-8290); Attention:
R. Scott Shean. Notices to the Company shall be given to it at MannKind Corporation, 28903 North
Avenue Paine, Valencia, California 91355, (fax: (661) 755-2086); Attention: General Counsel, with a
copy to Cooley Godward Kronish LLP, 4401 Eastgate Mall, San Diego, California 92121 (fax: (858)
550-6420); Attention: D. Bradley Peck.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.
32
(f) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
33
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
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Very truly yours,
MANNKIND CORPORATION
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By |
/s/
David Thomson |
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Name: David Thomson |
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Title: Vice President and
General Counsel |
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Accepted:
December 7, 2006
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
For themselves and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
J.P. MORGAN SECURITIES INC.
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By |
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/s/ Sri Kosaraju |
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Authorized Signatory
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MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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By |
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/s/ Edmund Baxter |
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Authorized Signatory
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34
Schedule 1
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|
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Underwriter |
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Number of Shares |
J.P. Morgan Securities Inc. |
|
|
6,947,500 |
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Merrill Lynch, Pierce, Fenner & Smith
Incorporated |
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6,947,500 |
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Wachovia Capital Markets, LLC |
|
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2,977,500 |
|
CIBC World Markets Corp. |
|
|
1,488,750 |
|
Leerink Swan & Co. Inc. |
|
|
1,488,750 |
|
Oppenheimer & Co. Inc. |
|
|
150,000 |
|
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|
|
|
|
|
|
|
|
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Total |
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|
20,000,000 |
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Schedule 2
Affiliate Purchasers
Alfred E. Mann
Hakan S. Edstrom
Kent Kresa
Annex A
Form of Opinion of Counsel for the Company
1. The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware with requisite corporate power to own or lease, as
the case may be, and to operate its properties and conduct its business as described in the Time of
Sale Information and the Prospectus.
2. The Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of the states identified on Exhibit A hereof.
3. The Securities have been duly authorized and, when issued and paid for by the Underwriters
pursuant to the Agreement, will be validly issued, fully paid and nonassessable.
4. The holders of outstanding shares of capital stock of the Company are not entitled to
preemptive or, to our knowledge, rights of first refusal or other similar rights to subscribe for
the Securities.
5. To our knowledge, there is (i) no action, suit or proceeding by or before any court or
other governmental agency, authority or body or any arbitrator pending or overtly threatened
against the Company or its properties by a third party of a character required to be disclosed in
the Time of Sale Information or the Prospectus that is not disclosed in the Time of Sale
Information or the Prospectus as required by the Securities Act and the rules thereunder, and (ii)
no indenture, contract, lease, mortgage, deed of trust, note agreement, loan or other agreement or
instrument of a character required to be filed as an exhibit to the Registration Statement, which
is not filed as required by the Securities Act and the rules thereunder.
6. The statements in (i) the Prospectus under the headings Description of Common Stock
(other than the first paragraph thereof) and (ii) Item 15 in the Registration Statement, insofar as
such statements purport to summarize legal matters, agreements or documents discussed therein,
fairly present, to the extent required by the Securities Act and the rules thereunder, in all
material respects, such legal matters, agreements or documents. The statements in Part II, Item 1
of the Companys Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006,
filed with the Commission on November 2, 2006, insofar as such statements constitute summaries of
the proceedings described therein, fairly summarize the matters referred to therein in all material
respects. The statements in the Prospectus under the heading Material U.S. Federal Income Tax
Consequences for Non-U.S. Holders, to the extent that they constitute matters of U.S. federal
income tax laws and legal conclusions with respect thereto, are accurate in all material respects.
7. The Registration Statement has become effective under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement has been issued and no proceedings for
that purpose have been instituted or overtly threatened. Any required filing of
2
the Prospectus, and any supplement thereto, pursuant to Rule 424(b) under the Securities Act,
has been made in the manner and within the time period required by Rule 424(b).
8. The Registration Statement, the Preliminary Prospectus, the Prospectus, and documents
incorporated by reference in the Prospectus set forth therein under the heading Incorporation by
Reference (other than the financial statements and notes thereto or other financial or statistical
data derived therefrom, as to which we express no opinion) comply as to form in all material
respects with the applicable requirements of the Securities Act and the rules thereunder.
9. The Agreement has been duly authorized by all necessary corporate action on the part of the
Company and has been duly executed and delivered by the Company.
10. The Company is not, and, after giving effect to the offering and sale of the Securities
and the application of the proceeds thereof as described in the Prospectus, will not be, an
investment company as defined in the Investment Company Act.
11. No consent, approval, authorization or filing with or order of any U.S. Federal or
California court or governmental agency or body having jurisdiction over the Company is required
for the consummation by the Company of the transactions contemplated by the Agreement, except such
as have been obtained under the Securities Act and except such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by
the Underwriters in the manner contemplated in the Agreement and in the Prospectus, or under the
bylaws, rules and regulations of the NASD.
12. The issue and sale of the Securities pursuant to the Agreement will not result in a breach
or violation of (i) any Material Contract, (ii) the charter or bylaws of the Company or (iii) to
our knowledge, any statute, law, rule, or regulation which, in our experience is typically
applicable to transactions of the nature contemplated by the Agreement and is applicable to the
Company, or any order, writ, judgment, injunction, decree, or award that has been entered against
the Company and of which we are aware, in each case the breach or violation of which would
materially and adversely affect the Company.
***********************
In connection with the preparation of the Registration Statement, Time of Sale Information and the
Prospectus, we have participated in conferences with officers and other representatives of the
Company, with its certified public accountants and with Preston Gates & Ellis, LLP and Hyman,
Phelps & McNamara, P.C., as well as with representatives of the Underwriters and their counsel. At
such conferences, the contents of the Registration Statement, Time of Sale Information and the
Prospectus and related matters were discussed. We have not independently verified, and accordingly
are not confirming and assume no responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement, Time of Sale Information or the Prospectus. On
the basis of the foregoing, no facts have come to our attention that have caused us to believe (i)
that the Registration Statement (except as to the financial statements and schedules, related notes
and other financial data and statistical data derived therefrom, as to which we express no
comment), at the date and time that the Registration Statement became
3
effective, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not misleading, (ii) that
the Time of Sale Information (except as to the financial statements and schedules, related notes
and other financial and statistical data derived therefrom, as to which we express no comment) as
of the Time of Sale contained any untrue statement of a material fact or omitted to state a
material fact necessary, in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or (iii) that the Prospectus (except as to the
financial statements and schedules, related notes and other financial and statistical data derived
therefrom, as to which we express no comment) as of its date or dates as amended or supplemented,
if applicable, and as of the date hereof contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary, in order to make the statements
therein, in light of the circumstances under which they were made, not misleading.
This opinion is intended for the sole benefit of the several Underwriters and may not be made
available to or relied upon by any other person, firm or entity without our prior written consent.
This opinion is limited to the matters expressly set forth in this letter, and no opinion has been
implied, or may be inferred, beyond the matters expressly stated. This opinion speaks only as to
law and facts in effect or existing as of the date hereof and we undertake no obligation or
responsibility to update or supplement this opinion to reflect any facts or circumstances that may
hereafter come to our attention or any changes in any law that may hereafter occur.
Annex B
Form of Opinion of Special Regulatory Counsel for the Company
December ___, 2006
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
As Representatives of the several Underwriters listed
in Schedule 1 hereto
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
This opinion letter is being furnished to you at the request of Mannkind Corporation, a
Delaware corporation (the Company), pursuant to Section 6(h) of the Underwriting Agreement dated
December ___, 2006 between you and the Company (the Underwriting Agreement), relating to the
public offering by the Company of shares of the Companys common stock, par value
$0.01 per share (the Offering). Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Underwriting Agreement.
We have been retained by the Company to act as U.S. Food and Drug Administration (FDA)
regulatory counsel for the limited purpose of reviewing the information relating to FDA regulatory
matters contained in certain sections of the Companys (i) Registration Statement on Form S-3 (File
No. 333-138373), which was filed with the Securities and Exchange Commission (SEC) on November 2,
2006 (the Registration Statement), (ii) the prospectus filed with the SEC on November 8, 2006
(the Base Prospectus), (iii) the preliminary prospectus supplement filed with the SEC on
November 27, 2006 (the Preliminary Prospectus Supplement and, together with the Base Prospectus,
the Preliminary Prospectus) and (iv) the prospectus supplement filed with the SEC on December
[6], 2006 (the Prospectus Supplement, and together with the Base Prospectus, the Prospectus)
specified below. We have not been retained by the Company or anyone else to pass upon any other
information in the Registration Statements or Prospectus, nor have we represented the Company in
connection with other matters. For purposes of this opinion letter, FDA Laws, laws that we
specialize in, shall mean the Federal Food, Drug, and Cosmetic Act (the FDC Act) set forth at 21
U.S.C. § 301 et seq. and the regulations promulgated under the authority of the FDC Act,
each as amended, and the enforcement of the FDC Act by the FDA.
In connection with this opinion letter, we have made such legal and factual examinations and
inquiries as we have deemed necessary or appropriate for the purposes of this opinion. In that
regard, we have requested from the Company all documents and information material to
2
disclosures regarding FDA regulatory matters, and have received, reviewed and relied upon only
the following:
1. Information in the Registration Statement and Prospectus, and documents incorporated
therein by reference, pertaining to FDA regulatory matters under the following captions
(collectively referred to herein as the Designated Regulatory Provisions): Prospectus
Supplement Summary Mannkind Corporation Overview; Prospectus Supplement Summary Mannkind
Corporation Recent Developments; Risk Factors Certain risks related to regulatory approvals -
Our product candidates must undergo rigorous preclinical and clinical testing and we must obtain
regulatory approvals, which could be costly and time consuming and subject us to unanticipated
delays or prevent us from marketing any products; Business Overview; Business Clinical
Development Activities; Managements Discussion and Analysis of Financial Condition and Results
of Operations Clinical Development Activities; Business Government Regulation and Product
Approval; Risk Factors Risks Related to Our Business We depend heavily on the successful
development and commercialization of our lead product candidate, the Technosphere Insulin System,
which is still under development, and our other product candidates, which are in preclinical
development; Risk Factors Risks Related to Our Business Testing of Our Technosphere Insulin
System or another product candidate may not yield successful results, and even if it does, we may
still be unable to commercialize that product candidate; Risk Factors Risks Related to Our
Business If we are unable to transition successfully from an early stage development company to a
company that commercializes therapeutics, our operations would suffer; Risk Factors Risks
Related to Our Business We have never manufactured our Technosphere Insulin System or any other
product candidate in commercial quantities, and if we fail to develop an effective manufacturing
capability for our product candidates or to engage third-party manufacturers with this capability,
we may be unable to commercialize these products; Risk Factors Risks Related to Regulatory
Approvals.
2. The Officers Certificate, dated December ___, 2006, signed by David Thomson, Ph.D., J.D.,
Corporate Vice President, General Counsel and Corporate Secretary, certifying certain facts
relating to the Company (the Officers Certificate) and attached here as Attachment A.
3. Copies of the documents listed in Attachment B, which were provided to us by the Company
and which the Company identified as responsive to our request for all material documents pertaining
to the Designated Regulatory Provisions.
4. Representations made to us during discussions with Mr. David Thomson, Ms. Donna Gale, Dr.
Anders Boss, and Dr. John Bedard during the period November 21-26, 2007.
We have assumed with your approval the accuracy and completeness of all statements of fact
relating to the Company and the status of its products and, except as set forth above, you have not
asked us to make, and we have not made, any independent investigations with regard to such matters
for purposes of rendering the opinions herein. We have also assumed the accuracy and completeness
of all documents and records that we have reviewed, the genuineness of all signatures, the
authenticity of the documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
3
reproduced copies. We have further assumed that with respect to the laws identified above,
all statutes, judicial and administrative decisions, and rules and regulations of governmental
agencies or self regulatory bodies, applicable to this opinion letter, are generally available to
lawyers practicing in the area of the FDA laws and are in a format that makes legal research
reasonably feasible.
Further, we have not independently verified, nor do we take any responsibility for, or are we in
any way addressing, any statements of belief attributable to the Company or whether or not the
Company is in compliance with the FDA Laws.
This opinion is based solely on matters of law as they pertain to FDA Laws, as implemented by FDA,
and we express no opinion as to any other federal, state, local or foreign laws, statutes,
regulations or ordinances.
Based on, subject to, and limited by the foregoing, we are of the opinion that:
(i) Insofar as the statements in the Designated Regulatory Provisions purport to
describe or summarize applicable provisions of the FDA Laws, such statements are
accurate in all material respects, subject to any qualifications set forth therein;
and
(ii) Nothing has come to our attention which causes us to believe that the
Designated Regulatory Provisions,
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a. |
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In the Registration Statement on [insert date
RS became effective] and at all times subsequent thereto up to and on
the Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; |
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b. |
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In the Preliminary Prospectus [include any
other prospectuses filed with the SEC before or on the date of the UW
agreement that include FDA information and that HPM has an opportunity
to review] as of the date of the Underwriting Agreement, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and |
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c. |
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In the Prospectus as of [insert date of final
prospectus] and as of the date hereof, contained or contains any untrue
statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. |
* * * *
This opinion letter is given as of the date hereof and we assume no obligation to advise you
of any changes in the foregoing subsequent to the delivery of this opinion. This opinion is solely
for the information of the addressee hereof and is not to be quoted in whole or in part or
4
otherwise referred to, nor is it to be filed with any governmental agency or any other person
without our prior written consent. No one other than the addressee hereof is entitled to rely on
this opinion. This opinion is rendered solely for purposes of the Offering and should not be
relied upon for any other purpose. Nothing herein should be construed to cause us to be considered
experts within the meaning of Section 11 of the Securities Act of 1933, as amended.
Sincerely,
Hyman, Phelps & McNamara, P.C.
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By: |
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Josephine M. Torrente
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5
OFFICERS CERTIFICATE
The undersigned, David Thompson, Corporate Vice President, General Counsel and Corporate Secretary
of Mannkind Corporation, (the Company) does hereby certify in his capacity as an officer of the
Company and not in his individual capacity that:
To the best of my knowledge, the Registration Statement on Form S-3 (File No. 333-138373), which
was filed with the Securities and Exchange Commission (SEC) on November 2, 2006, (ii) the
preliminary prospectus filed with the SEC on November 8, 2006 (the Preliminary Prospectus), and
(iii) the prospectus supplement filed with the SEC on November 27, 2006 (the Prospectus
Supplement and, together with the Preliminary Prospectus, the Prospectus) as those terms are
defined in the letter to the Underwriters from Hyman, Phelps & McNamara, P.C., are complete and
accurate summaries of the facts described therein.
IN WITNESS
WHEREOF, I have signed my name as of the ___ day of 2006.
Annex C
Form of Opinion of Special Intellectual Property Counsel for the Company
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Re:
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Purchase of up to [17,500,000 shares of Common Stock (the Shares)]
[$100,000,000 principal amount of ___% Senior Convertible Notes due 2013 (the Notes)
of MannKind Corporation by the Underwriters pursuant to the Underwriting Agreement
dated ___, 2006 |
Ladies and Gentlemen:
We have acted as special counsel to MannKind Corporation, a Delaware corporation (the Company),
with respect to certain intellectual property matters as further described below. This opinion is
being delivered pursuant to Section 6(i) of the Underwriting Agreement dated December ___, 2006
(the Underwriting Agreement), between the Company and you, as representatives of the several
underwriters named in Schedule A to the Underwriting Agreement (the Underwriters). Unless
specifically defined herein or unless the context requires otherwise, capitalized terms used herein
shall have the meanings set forth in the Underwriting Agreement.
Our role with respect to the intellectual property matters of the Company is limited to legal
representation concerning inventions, patents, patent applications and trade secrets relating to
the Companys cancer therapy research and diketopiperazine drug delivery devices (as each is
described in the Registration Statement and Prospectus), an analysis of certain patent law issues
relating to U.S. Patent Nos. 5,506,203, 5,518,998, 5,997,848, 6,395,774, 6,663,898 and 6,737,045
and rendering opinions to the Company with respect thereto, and a review of the disclosures in the
Registration Statement, the Time of Sale Information and the Prospectus with respect to other
intellectual property matters of the Company. We have not audited the Companys trademarks.
In connection with the preparation of this opinion, we have examined such documents and considered
such questions of law as we have deemed necessary or appropriate. We have assumed the authenticity
of all documents submitted to us as originals, the conformity with originals of all documents
submitted to us as copies, and the genuineness of all signatures. We have also assumed the legal
capacity of all natural persons and that, with respect to all parties to agreements or instruments
relevant hereto, such parties had the requisite power and authority to execute, deliver and perform
such agreements or instruments, that such agreements or instruments have been duly authorized by
all requisite action, executed and delivered by such parties, and that such agreements or
instruments are the valid, binding and enforceable obligations of such parties.
Whenever a statement herein is qualified by known to us, to our current actual knowledge, or
similar phrase, it is intended to indicate that no attorney who has rendered substantive legal
services to the Company relating to intellectual property matters and is currently employed by our
firm has any conscious awareness of facts or other information which indicates that any of the
opinions contained herein are untrue. However, except as otherwise expressly indicated, we
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have not undertaken any independent investigation to determine the accuracy of such statement, and
any limited inquiry undertaken by us during the preparation of this opinion letter should not be
regarded as such an investigation; no inference as to our knowledge of any matters bearing on the
accuracy of any such statement should be drawn from the fact of our representation of the Company.
Based upon the foregoing, and subject to the additional assumptions, exceptions, qualifications and
limitations set forth below, we are of the opinion that:
1. To our knowledge, (i) there are no legal or governmental proceedings pending relating to patent
rights, trade secrets, copyrights, trademarks, service marks of the Company or its subsidiaries,
and (ii) no such proceedings are threatened or contemplated by governmental authorities or others.
2. To our knowledge, (i) except as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus and specifically with respect to U.S. Patent Nos. 5,506,203,
5,518,998, 5,997,848, 6,395,774, 6,663,898 and 6,737,045, neither the Company nor its subsidiaries
are infringing or otherwise violating any claim of an issued patent of a third party (including,
without limitation, U.S. Patent Nos. 6,214,804, 6,331,318, 6,413,942 and 6,685,967), or the rights
of any third party in trade secrets, copyrights, trademarks or service marks, and, upon
commercialization of the products in the form presently in clinical trials described in the
Registration Statement, the Time of Sale Information and the Prospectus, neither the Company nor
its subsidiaries would be infringing or otherwise violating any claim in a currently issued patent
or published patent application of a third party or the rights of any third party in trade secrets,
copyrights, trademarks or service marks, and (ii) there are no infringements by any third party or
any patent of the Company or its subsidiaries, or the rights of the Company or its subsidiaries in
trade secrets, copyrights, trademarks or service marks which in our judgment could materially
affect the Companys use thereof.
3. For the reasons set forth in opinions delivered to the Company we are of the opinion that U.S.
Patent Nos. 5,506,203, 5,518,998, 5,997,848, 6,395,774 6,663,898, and 6,737,045 are invalid and
unenforceable as to the Companys product candidates in the form presently in clinical trials.
4. Based solely upon a review of the Companys internal files and publicly available records in the
USPTO, the Company or a Subsidiary is the record owner of the patents referenced in the
Registration Statement and the Prospectus as owned by the Company. We are unaware of any third
party, including any academic institution or governmental entity, that has any ownership interest
in any patents, trade secrets, copyrights, trademarks or service marks that are owned by the
Company or its subsidiaries.
5. We are unaware of any facts which would form a basis for a finding of unenforceability or
invalidity of any of the Companys or any of its subsidiaries patents (including upon
commercialization of the product candidates in the form presently in clinical trials described in
the Registration Statement, the Time of Sale Information and the Prospectus).
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6. To our knowledge, the patents and patent applications of the Company and its subsidiaries which
encompass the product candidates in the form presently in clinical trials described in the
Registration Statement, Time of Sale Information and the Prospectus disclose or claim patentable
subject matter under United States patent laws.
7. We and, to our knowledge, the Company and its subsidiaries, have complied with the required duty
of candor and good faith in dealing with the USPTO and foreign patent offices in connection with
the patents and patent applications of the Company and its subsidiaries, including the duty to
disclose all information believed to be material to the patentability thereof.
8. We are unaware of any material fact with respect to the patent applications of the Company or
any of its subsidiaries presently on file in the USPTO or foreign patent offices that (i) would
preclude the issuance of patents with respect to such applications, or (ii) would lead us to
conclude that such patents, when issued, would not be valid and enforceable in accordance with
applicable regulations (including upon commercialization of the product candidates in the form
presently in clinical trials described in the Registration Statement, the Time of Sale Information
and the Prospectus).
9. Except as disclosed in the Registration Statement, we are not aware that the Company lacks or
will be unable to obtain any rights to use all Intellectual Property necessary to the conduct of
its business as now operated by it, except where the failure to own or possess or otherwise be able
to acquire such Intellectual Property rights would not, singly or in the aggregate, have a Material
Adverse Effect.
10. We have reviewed the statements made in the Companys Form 10-K for the year ended December 31,
2005 under the heading BusinessIntellectual Property and Proprietary Technology and in the
Companys Form 10-Q for the quarter ended September 30, 2006 under the heading Risk FactorsRisks
Related to Intellectual Property and, insofar as such statements constitute a summary of the
Companys Intellectual Property, they fairly and accurately summarize in all material respects the
legal matters, documents and proceedings relating to such Intellectual Property described therein.
Although we have not undertaken to investigate or verify independently and are not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Time of Sale Information and the Prospectus (other
than those specific matters on which we are opining in paragraph 10 hereof), and based solely upon
on the examinations and inquiries described in the forepart of this letter, and the limitations
inherent in the examination made by us and the knowledge available to us, we can advise you
supplementally as a matter of fact and not as an opinion that nothing has come to our attention
that causes us to believe that the Intellectual Property matters in:
(i) the Registration Statement, at the time such Registration Statement became effective,
contained an untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
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(ii) the Time of Sale Information as of the date of the Underwriting Agreement, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(iii) the Prospectus as of its date and as of the date hereof, contained or contains an untrue
statement of material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading.
We do not purport to be experts on or to be qualified to express any opinion herein concerning, nor
do we express any opinion herein concerning, any law other than the laws of the State of California
and the federal law of the United States.
This opinion is furnished to you in connection with the transactions contemplated by the
Underwriting Agreement and is solely for the benefit of you and the several Underwriters, and may
not be relied upon by any other person or for any other purpose without our prior written consent.
This opinion speaks only as of the date above written, and we hereby expressly disclaim any duty to
update any of the statements made herein.
Very truly yours,
Annex D
Time of Sale Information
Issuer Free Writing Prospectus Filed pursuant to Rule 433, relating to Registration Statement Nos.
333-138373 and 333-139154 (Supplementing Preliminary Prospectus Supplement dated November 27,
2006), as filed with the Commission on December 7, 2006.
Annex E
MannKind Corporation
Pricing Term Sheet
None
Exhibit A
FORM OF LOCK-UP AGREEMENT
November __, 2006
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CIBC World Markets Corp.
Leerink & Swan Co. Inc.
Wachovia Capital Markets, LLC
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Re: MannKind Corporation Public Offering (Equity)
Ladies and Gentlemen:
The undersigned understands that each of you propose to enter into an Underwriting Agreement
(the Underwriting Agreement) with MannKind Corporation, a Delaware corporation (the Company),
providing for the public offering (the Public Offering) by you (the Underwriters) of common
stock, par value $0.01 per share, of the Company (the Securities). Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Underwriting Agreement.
In consideration of your agreement to purchase and make the Public Offering of the Securities,
and for other good and valuable consideration receipt of which is hereby acknowledged, the
undersigned hereby agrees that, without the prior written consent of J.P. Morgan Securities Inc.
(JPMorgan) and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill
Lynch) on behalf of the Underwriters, the undersigned will not, during the period commencing on
the date hereof and ending 90 days after the date of the Underwriting Agreement, (1) offer, pledge,
announce the intention to sell, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any
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shares of common stock, $0.01 par value per share (the Common Stock) or any securities
convertible into or exercisable or exchangeable for Common Stock (including without limitation,
Common Stock which may be deemed to be beneficially owned by the undersigned in accordance with the
rules and regulations of the Securities and Exchange Commission and securities which may be issued
upon exercise of a stock option or warrant) or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. Notwithstanding the foregoing, and
subject to the conditions below, the undersigned may transfer shares of Common Stock without the
prior written consent of JPMorgan and Merrill Lynch, provided that (1) JPMorgan and Merrill Lynch
receive a signed lock-up agreement for the balance of the lockup period from each donnee, trustee,
distributee, or transferee, as the case may be, (2) any such transfer shall not involve a
disposition for value, (3) such transfers are not required to be reported in any public report or
filing with the Securities and Exchange Commission, or otherwise and (4) the undersigned does not
otherwise voluntarily effect any such public report or filing regarding such transfer:
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as a bona fide gift or gifts; or |
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to any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned (for purposes of this lock-up agreement, immediate
family shall mean any relationship by blood, marriage or adoption, not more remote
than first cousin); or |
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(iii) |
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as a distribution to limited partners or stockholders of the undersigned. |
[In addition, notwithstanding the lock-up restrictions described in the preceding paragraph,
the undersigned shall be permitted, pursuant to a written trading plan under Rule 10b5-1 of the
Securities Exchange Act of 1934, as amended (a Plan), to sell, only pursuant to such Plan, up to
an aggregate of ___shares of Common Stock prior to the expiration of the 90-day restricted
period (as the same may be extended pursuant to the terms hereof); provided, however, that if no
Plan exists as of the date of this Letter Agreement, the undersigned shall be permitted to adopt a
Plan on or after the fourth trading day after the date of the Underwriting Agreement.] In addition,
the undersigned agrees that, without the prior written consent of JPMorgan and Merrill Lynch on
behalf of the Underwriters, it will not, during the period ending 90 days after the date of the
Underwriting Agreement, make any demand for or exercise any right with respect to, the registration
of any shares of Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock.
Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day restricted period,
the Company issues an earnings release or material news or a material event relating to the Company
occurs; or (2) prior to the expiration of the 90-day restricted period, the Company announces that
it will release earnings results during the 16-day period beginning on the last day of the 90-day
period, the restrictions imposed by this Letter Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence
of the material news or material event, unless JPMorgan and Merrill Lynch on behalf of the
Underwriters waive, in writing, such extension.
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The undersigned hereby acknowledges and agrees that written notice of any extension of the
90-day restricted period pursuant to the previous paragraph will be delivered by JPMorgan and
Merrill Lynch to the Company and that any such notice properly delivered will be deemed to have
been given to, and received by, the undersigned. The undersigned further agrees that, prior to
engaging in any transaction or taking any other action that is subject to the terms of this Letter
Agreement during the period from the date of this Letter Agreement to and including the
34th day following the expiration of the initial 90-day restricted period, it will give
notice thereof to the Company and will not consummate such transaction or take any such action
unless it has received written confirmation from the Company that the 90-day restricted period (as
may have been extended pursuant to the previous paragraph) has expired.
In furtherance of the foregoing, the undersigned also agrees and consents to the entry of stop
transfer instructions with the Companys transfer agent and registrar against the transfer of the
undersigneds shares of Common Stock except in compliance with the foregoing restrictions. The
undersigned hereby represents and warrants that the undersigned has full power and authority to
enter into this Letter Agreement. All authority herein conferred or agreed to be conferred and any
obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not become effective, or
if the Underwriting Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Securities to be sold
thereunder, the undersigned shall be released from all obligations under this Letter Agreement.
The undersigned understands that the you are entering into the Underwriting Agreement and
proceeding with the Public Offering in reliance upon this Letter Agreement. This Letter Agreement
shall be governed by and construed in accordance with the laws of the State of New York, without
regard to the conflict of laws principles thereof.
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Very truly yours,
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exv1w2
Exhibit 1.2
MANNKIND CORPORATION
$100,000,000
3.75% Senior Convertible Notes Due 2013
Underwriting Agreement
December 7, 2006
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. Morgan Securities Inc.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
MannKind Corporation, a Delaware corporation (the Company), proposes to issue and sell to
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) and J.P.
Morgan Securities Inc. (JPMorgan, together with Merrill Lynch, the Underwriters), $100,000,000
aggregate principal amount of its 3.75% Senior Convertible Notes due 2013 (the Notes), and with
respect to the grant by the Company to the Underwriters, acting severally and jointly, of the
option described in Section 2(a) hereof to purchase all or any part of an additional $15,00,000
aggregate principal amount of Notes to cover over-allotments, if any. The aforesaid $100,000,000
principal amount of the Notes to be purchased by the Underwriters (the Initial Securities) and
all or any part of the $15,000,000 aggregate principal amount of Notes subject to the option
described in Section 2(a) hereof (the Option Securities) are hereinafter called, collectively,
the Securities. The Securities will be issued pursuant to an Indenture dated November 1, 2006,
as amended by that first supplement to the indenture, dated as of the Closing Date (the
Indenture), between the Company and Wells Fargo Bank, N.A., as trustee (the Trustee).
Securities issued in book-entry form will be issued to Cede & Co. as nominee of The Depository
Trust Company (DTC) pursuant to a letter agreement, to be dated as of the Closing Time (as
herein) (the DTC Agreement), among the Company, the Trustee and DTC.
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The Securities are convertible into shares of common stock, par value $0.01 per share, of the
Company (the Underlying Common Stock) in accordance with the terms of the Securities and the
Indenture, at the initial conversion price set forth on Annex E.
Concurrent with the offering and sale of the Securities by the Company pursuant to the terms
of this Agreement, the Company is offering to sell up to 23,000,000 shares of its common stock
(including the underwriters over-allotment) (the Shares), pursuant to the terms of a Purchase
Agreement, dated of even date herewith, among the Company, JPMorgan, Merrill Lynch, CIBC World
Markets Corp., Leerink Swan & Co., Inc. and Wachovia Securities (the Concurrent Equity Offering).
The offering, issuance and sale of the Securities by the Company pursuant to the terms of this
Agreement are not contingent on the successful completion of the Concurrent Equity Offering.
The Company hereby confirms its agreement with the Underwriters concerning the purchase and
sale of the Securities, as follows:
1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the Commission) under the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the Securities Act), a registration
statement (File No. 333-138373), including a prospectus, relating to the Securities and other
securities of the Company. Such registration statement was declared effective on November 7, 2006.
Such registration statement, as amended at the time it became effective, including the
information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part
of the registration statement at the time of its effectiveness (Rule 430 Information), is
referred to herein as the Registration Statement; and as used herein, the term Preliminary
Prospectus means each prospectus included in such registration statement (and any amendments
thereto) before it became effective, any prospectus filed with the Commission pursuant to Rule
424(a) under the Securities Act and the prospectus included in the Registration Statement at the
time of its effectiveness, together with any prospectus supplement filed with the Commission
pursuant to Rule 424(b) under the Securities Act, that omits Rule 430 Information, and the term
Prospectus means the prospectus, together with any prospectus supplement filed pursuant to Rule
424(b) under the Securities Act, in the form first used (or made available upon request of
purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales
of the Securities. If the Company has filed an abbreviated registration statement pursuant to Rule
462(b) under the Securities Act (the Rule 462 Registration Statement), then any reference herein
to the term Registration Statement shall be deemed to include such Rule 462 Registration
Statement. Any reference in this Agreement to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the effective
date of the Registration Statement or the date of such Preliminary Prospectus or the Prospectus, as
the case may be and any reference to amend, amendment or supplement with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder (collectively, the Exchange
Act) that are deemed to be incorporated by reference therein.
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Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Registration Statement and the
Prospectus.
At or prior to the time when sales of the Securities were first made (the Time of Sale), the
Company had prepared the following information (collectively, the Time of Sale Information): a
Preliminary Prospectus dated November 27, 2006, and each free-writing prospectus (as defined
pursuant to Rule 405 under the Securities Act) listed on Annex D hereto and the pricing information
set forth on Annex E.
2. Purchase of the Securities by the Underwriters. (a) The Company agrees to issue
and sell the Securities to the Underwriters as provided in this Agreement, and each Underwriter, on
the basis of the representations, warranties and agreements set forth herein and subject to the
conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the
respective aggregate principal amount of Securities set forth opposite such Underwriters name in
Schedule 1 hereto at a price equal to 97% of the principal amount thereof (the Purchase Price)
plus accrued interest, if any, from December 6, 2006, to the Closing Date.
In addition, the Company agrees to issue and sell up to $15,000,000 principal amount of Option
Securities to the Underwriters at the Purchase Price plus accrued interest, if any, from the
Closing Date to the date of payment and delivery, and the Underwriters, on the basis of the
representations, warranties and agreements set forth herein and subject to the conditions set forth
herein, shall have the option to purchase, severally and not jointly, from the Company the Option
Securities at the Purchase Price.
If any Option Securities are to be purchased, the number of Option Securities to be purchased
by each Underwriter shall be the number of Option Securities which bears the same ratio to the
aggregate principal amount of Securities being purchased as the aggregate principle amount of
Initial Securities set forth opposite the name of such Underwriter in Schedule 1 hereto (or such
number increased as set forth in Section 10 hereof) bears to the aggregate principal amount of
Initial Securities being purchased from the Company by the Underwriters, subject, however, to such
adjustments to eliminate any fractional Securities as the Underwriters in their sole discretion
shall make.
The Underwriters may exercise the option to purchase the Option Securities at any time in
whole, or from time to time in part, on or before the thirtieth day following the date of this
Agreement, by written notice from the Underwriters to the Company. Such notice shall set forth the
aggregate number of Option Securities as to which the option is being exercised and the date and
time when the Option Securities are to be delivered and paid for which may be the same date and
time as the Closing Date (as hereafter defined) but shall not be earlier than the Closing Date nor
later than the tenth full business day (as hereinafter defined) after the date of such notice
(unless such time and date are postponed in accordance with the provisions of Section 10 hereof).
Any such notice shall be given at least two business days prior to the date and time of delivery
specified therein.
(b) The Company understands that the Underwriters intend to make a public offering of the
Securities as soon after the effectiveness of this Agreement as in the judgment of the
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Underwriters
is advisable, and initially to offer the Securities on the terms set forth in the Prospectus. The
Company acknowledges and agrees that the Underwriters may offer and sell Securities to or through
any affiliate of an Underwriter and that any such affiliate may offer and sell Securities purchased
by it to or through any Underwriter.
(c) Payment for the Securities shall be made by wire transfer in immediately available funds
to the account specified by the Company to the Underwriters for the Initial Securities, at the
offices of Latham & Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa,
California 92626 at 10:00 A.M. New York City time on December 12, 2006, or at such other time or
place on the same or such other date, not later than the fifth business day thereafter, as the
Underwriters and the Company may agree upon in writing or, in the case of the Option Securities, on
the date and at the time and place specified by the Underwriters in the written notice of the
Underwriters election to purchase such Option Securities. The time and date of such payment for
the Initial Securities is referred to herein as the Closing Date and the time and date for such
payment for the Option Securities, if other than the Closing Date, is herein referred to as the
Additional Closing Date.
Payment for the Securities to be purchased on the Closing Date or the Additional Closing Date,
as the case may be, shall be made against delivery to the Underwriters for their respective
accounts of the Securities to be purchased on such date in definitive form registered in such names
and in such denominations as the Underwriters shall request in writing not later than two full
business days prior to the Closing Date or the Additional Closing Date, as the case may be, with
any transfer taxes payable in connection with the sale of the Securities duly paid by the Company.
The certificates for the Securities will be made available for inspection and packaging by the
Underwriters at the office of Merrill Lynch set forth above not later than 1:00 P.M., New York City
time, on the business day prior to the Closing Date or the Additional Closing Date, as the case may
be.
(d) The Company acknowledges and agrees that the Underwriters are acting solely in the
capacity of an arms length contractual counterparty to the Company with respect to the offering of
Securities contemplated hereby (including in connection with determining the terms of the offering)
and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person.
Additionally, neither Underwriter is advising the Company or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with
its own advisors concerning such matters and shall be responsible for making its own independent
investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall
have no responsibility or liability to the Company with respect thereto. Any review by the
Underwriters of the Company, the transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the Underwriters and shall not be on
behalf of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants
to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus, at
5
the time of
filing thereof, complied in all material respects with the Securities Act, and did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by such Underwriter
expressly for use in any Preliminary Prospectus. Each
Preliminary Prospectus and the Prospectus delivered to the Underwriters for use in connection with
this offering was identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T or Rule 424(b) of
the Securities Act.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and
at the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading; provided that the Company makes no representation and warranty with respect to
any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter expressly for use in such
Time of Sale Information. No statement of material fact included in the Prospectus has been
omitted from the Time of Sale Information and no statement of material fact included in the Time of
Sale Information that is required to be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing Prospectus. Other than the Preliminary Prospectus and the Prospectus,
the Company (including its agents and representatives, other than the Underwriters in their
capacity as such) has not made, used, prepared, authorized, approved or referred to and will not
prepare, make, use, authorize, approve or refer to any written communication (as defined in Rule
405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy
the Securities (each such communication by the Company or its agents and representatives (other
than a communication referred to in clause (i) below) an Issuer Free Writing Prospectus) other
than (i) any communication not constituting a prospectus pursuant to Section 2(a)(10)(a) of the
Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex D hereto
and other written communications approved in writing in advance by the Underwriter. Each such
Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has been
filed in accordance with the Securities Act (to the extent required thereby) and, when taken
together with the Preliminary Prospectus filed prior to the first use of such Issuer Free Writing
Prospectus, did not, and at the Closing Date and as of the Additional Closing Date, as the case may
be, will not, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in each such Issuer Free Writing
Prospectus in reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter expressly for use in any Issuer Free
Writing Prospectus. Each such Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
6
Securities or until any
earlier date that the issuer notified or notifies the Underwriters as described in Section 4(e),
did not, does not and will not include any information that conflicted, conflicts or will conflict
with the information contained in the Registration Statement or the Prospectus, including any
document incorporated by reference therein and any Preliminary Prospectus deemed to be a part
thereof that has not been superseded or modified.
(d) Registration Statement and Prospectus. The Registration Statement has been declared
effective by the Commission. No order suspending the effectiveness of the Registration Statement
has been issued by the Commission and no proceeding for that purpose or pursuant to
Section 8A of the Securities Act against the Company or related to the offering has been initiated
or threatened by the Commission or, to the knowledge of the Company, are contemplated by the
Commission, and any request received by the Company on the part of the Commission for additional
information has been complied with; the Registration Statement is not the subject of a pending
proceeding or examination under Section 8(d) or 8(e) of the Securities Act; as of the applicable
effective date of the Registration Statement and any amendment thereto, the Registration Statement
(as amended or supplemented as of such date) complied and will comply in all material respects with
the Securities Act, and did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and as of the date of the Prospectus (as amended or supplemented
as of such date) and any amendment or supplement thereto and as of the Closing Date and as of the
Additional Closing Date, as the case may be, the Prospectus will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under which they were made,
not misleading; provided that the Company makes no representation and warranty with respect
to any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter expressly for use in the
Registration Statement and the Prospectus and any amendment or supplement thereto.
(e) Incorporated Documents. The documents incorporated by reference in the Registration
Statement, the Prospectus or the Time of Sale Information, when they became effective or were filed
with the Commission, as the case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and none of such documents contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and any further documents so filed and incorporated by reference in
the Registration Statement, the Prospectus or the Time of Sale Information, when such documents
become effective or are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act, as applicable, and will not
contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(f) Financial Statements. The financial statements and the related notes thereto of the
Company and its consolidated subsidiaries included or incorporated by reference in the Registration
Statement, the Time of Sale Information and the Prospectus comply in all material
7
respects with the
applicable requirements of the Securities Act and the Exchange Act, as applicable, and present
fairly the financial position of the Company and its subsidiaries as of the dates indicated and the
results of their operations and the changes in their cash flows for the periods specified; such
financial statements have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods covered thereby, and the supporting schedules
included or incorporated by reference in the Registration Statement present fairly the information
required to be stated therein; and the pro forma financial information and the
related notes thereto included or incorporated by reference in the Registration Statement, the Time
of Sale Information and the Prospectus have been prepared in accordance with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and the assumptions
underlying such pro forma financial information are reasonable
and are set forth in the Registration Statement, the Time of Sale Information and the Prospectus.
The selected financial data included or incorporated by reference in the Time of Sale Information
and the Prospectus present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included or incorporated by reference in
the Registration Statement. No other financial statements or schedules are required to be included
in the Registration Statement, the Time of Sale Information or the Prospectus. All disclosures
contained in the Registration Statement, the Time of Sale Information or the Prospectus, or
incorporated by reference therein, regarding non-GAAP financial measures (as such term is defined
by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and
Item 10 of Regulation S-K under the Securities Act, to the extent applicable. Except as described
in the Registration Statement, the Time of Sale Information or the Prospectus, there are no
material off-balance sheet transactions, arrangements, obligations (including contingent
obligations), or any other relationships with unconsolidated entities or other persons, that may
have a material current or future effect on the Companys financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital resources or significant
components of revenue or expenses.
(g) No Material Adverse Change. Since the date of the most recent financial statements of the
Company included or incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus, (i) there has not been any material change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any dividend or distribution of any
kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or
any material adverse change, or any development involving a prospective material adverse change, in
or affecting the business, properties, management, financial position, stockholders equity or
results of operations of the Company and its subsidiaries taken as a whole; (ii) neither the
Company nor any of its subsidiaries has entered into any transaction or agreement that is material
to the Company and its subsidiaries taken as a whole or incurred any liability or obligation,
direct or contingent, that is material to the Company and its subsidiaries taken as a whole; and
(iii) neither the Company nor any of its subsidiaries has sustained any material loss or
interference with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor disturbance or dispute or any action, order or decree of
any court or arbitrator or governmental or regulatory authority, except in each case as otherwise
disclosed in the Registration Statement, the Time of Sale Information and the Prospectus.
8
(h) Organization and Good Standing. The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified, in good standing or have such power or authority would
not, individually or in the aggregate, have a material adverse effect on the business, properties,
management, financial position, stockholders equity or results of operations of the Company and
its subsidiaries taken as a whole (a Material Adverse Effect). The Company has no significant
subsidiaries.
(i) Capitalization. The Company has an authorized capitalization as set forth in the
Registration Statement, the Time of Sale Information and the Prospectus under the heading
Capitalization; all the outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; except as described in or expressly contemplated by the Time of Sale
Information and the Prospectus and the Concurrent Equity Offering, there are no outstanding rights
(including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other equity interest in the
Company or any of its subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the Company or any such
subsidiary, any such convertible or exchangeable securities or any such rights, warrants or
options; the capital stock of the Company conforms in all material respects to the description
thereof contained in the Registration Statement, the Time of Sale Information and the Prospectus;
and all the outstanding shares of capital stock or other equity interests of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other claim of any third party.
(j) Due Authorization. The Company has full right, power and authority to execute and deliver
this Agreement, the Indenture and the DTC Agreement (together the Transaction Documents), and to
perform its obligations thereunder; and all action required to be taken for the due and proper
authorization, execution and delivery by it of the Transactions Documents and the consummation by
it of the transactions contemplated thereunder have been duly and validly taken.
(k) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered
by the Company, and constitutes the legal and binding obligation of the Company, enforceable in
accordance with its terms, except to the extent that rights to indemnity hereunder may be limited
by federal or state securities laws and except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
(l) The Indenture. The Indenture has been duly authorized by the Company and duly qualified
under the Trust Indenture Act of 1939 (the 1939 Act) and, when duly executed and delivered by the
Company and the Trustee, will constitute a valid and binding agreement of the
9
Company, enforceable
against the Company in accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of creditors rights
generally and except as enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(m) The Securities. The Securities have been duly authorized and, at the Closing Date, will
have been duly executed by the Company and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors rights generally and except as enforcement thereof is subject to general principles of
equity
(regardless of whether enforcement is considered in a proceeding in equity or at law), and
will be in the form contemplated by, and entitled to the benefits of, the Indenture.
(n) The Underlying Common Stock. The Underlying Common Stock conforms to all statements
relating thereto contained or incorporated by reference in the Time of Sale Information and the
Prospectus. Upon issuance and delivery of the Securities in accordance with this Agreement and the
Indenture, the Securities will be convertible at the option of the holder thereof for shares of
Underlying Common Stock in accordance with the terms of the Securities and the Indenture; the
shares of the Underlying Common Stock issuable upon conversion of the Securities have been duly
authorized and reserved for issuance upon such conversion by all necessary corporate action and
such shares, when issued upon conversion, will be validly issued and will be fully paid and
non-assessable; no holder of such shares will be subject to debts or liabilities of the Company by
reason of being such a holder; and the issuance of such shares upon such conversion will not be
subject to the preemptive or other similar rights of any security holder of the Company.
(o) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(p) No Conflicts. The execution, delivery and performance by the Company of the Transaction
Documents and the consummation of the transactions contemplated therein (including the offering,
issuance and sale of the Securities pursuant to this Agreement and the use of the proceeds from the
sale of the Securities to repay the outstanding amounts to Alfred E. Mann as
10
described in the
Preliminary Prospectus and the Prospectus under the caption Use of Proceeds) and in the
Concurrent Equity Offering do not and will not, whether with or without the giving of notice or
passage of time or both, (i) conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its subsidiaries or (iii)
result in the violation of any law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority, except in the case of clause (i)
above, for any such conflict, breach, violation, default, lien, charge or encumbrance that would
not, individually or in the aggregate, have a Material Adverse Effect.
(q) No Consents Required. No filing with, or consent, approval, authorization, order,
registration, license, decree or qualification of, any court or arbitrator or governmental or
regulatory authority is required for the execution, delivery and performance by the Company of the
Transaction Documents, the issuance and sale of the Securities and the consummation of the
transactions contemplated herein and in the Concurrent Equity Offering, except for (i) the
registration of the Securities and the Underlying Common Stock under the Securities Act, (ii) such
filings, consents, approvals, authorizations, orders, registrations, licenses, decrees or
qualifications as may be required under applicable state securities laws in connection with the
purchase and distribution of the Securities by the Underwriters, and (iii) listing of the
Securities on the National Association of Securities Dealers Automated Quotations Global Market
(the Nasdaq Global Market), which will be made prior to the Closing Date.
(r) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its subsidiaries is or may be
a party or to which any property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or materially and adversely affect the ability of the Company to perform its obligations
under this Agreement; to the knowledge of the Company, no such investigations, actions, suits or
proceedings are threatened or contemplated by any governmental or regulatory authority or
threatened by others; and (i) there are no current or pending legal, governmental or regulatory
actions, suits or proceedings that are required under the Securities Act to be described in the
Registration Statement that are not so described in the Registration Statement, the Time of Sale
Information and the Prospectus and (ii) there are no statutes, regulations or contracts or other
documents that are required under the Securities Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus that are not so filed as
exhibits to the Registration Statement or described in the Registration Statement, the Time of Sale
Information and the Prospectus.
(s) Independent Accountants. Deloitte & Touche LLP, who have certified the annual financial
statements included in the Registration Statement or incorporated by reference in the
11
Registration
Statement, the Time of Sale Information or the Prospectus, is an independent registered public
accounting firm with the respect to the Company and its subsidiaries within the applicable rules
and regulations adopted by the Commission and the Public Accounting Oversight Board (United States)
and as required by the Securities Act.
(t) Title to Real and Personal Property. The Company and its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of
real and personal property that are material to the respective businesses of the Company and its
subsidiaries, in each case free and clear of all mortgages, pledges, security interest, liens,
encumbrances, claims, restrictions and defects and imperfections of title except those that (i) do
not materially interfere with the use made and proposed to be made of such property by the Company
and its subsidiaries or (ii) could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. All of the leases and subleases material to the business of the
Company and its subsidiaries, taken as a whole, and under which the Company or any of its
subsidiaries holds properties described in the Time of Sale Information or the Prospectus, are in
full force and effect, and neither the Company nor any subsidiary has any written notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease.
(u) Title to Intellectual Property. The Company owns, possesses or can acquire on reasonable
terms all Intellectual Property (as defined below) used in the conduct of the business of the
Company as described in the Registration Statement, the Time of Sale Information and the Prospectus
as now conducted or to be conducted, except where the failure to own, possess or be able to acquire
such Intellectual Property could not, individually or in the aggregate, have a Material Adverse
Effect, and (A) to the knowledge of the Company, there is no infringement, misappropriation or
violation by third parties of any such Intellectual Property; (B) there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the
rights of the Company in or to any such Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (C) the Intellectual Property owned
by the Company and, to the knowledge of the Company, the Intellectual Property licensed to the
Company have not been adjudged invalid or unenforceable, in whole or in part, and there is no
pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property, and the Company is unaware of
any facts which would form a reasonable basis for any such claim; and (D) except as disclosed in
the Registration Statement, the Time of Sale Information and the Prospectus, there is no pending
or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others that
the Company infringes, misappropriates or otherwise violates any Intellectual Property or other
proprietary rights of others, the Company has not received any written notice of such claim and the
Company is unaware of any other facts which would form a reasonable basis for any such claim. The
term Intellectual Property as used herein means all patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions,
trade secrets, technology, know-how and other intellectual property.
12
(v) No Undisclosed Relationships. No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that
is required by the Securities Act to be described in the Registration Statement and the Prospectus
and that is not so described in such documents and in the Time of Sale Information.
(w) Investment Company Act. The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as described in the Registration
Statement, the Time of Sale Information and the Prospectus and the offering and sale of the Shares
as contemplated in the Concurrent Equity Offering, will not be required to register as an
investment company or an entity controlled by an investment company within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, Investment Company Act).
(x) Public Utility Holding Company Act. Neither the Company nor any of its subsidiaries is a
holding company or a subsidiary company of a holding company or an affiliate thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
(y) Taxes. The Company and its subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed through the date hereof and is not in
default in the payment of any taxes which were payable pursuant to said returns or any assessments
with respect thereto, other than any which the Company or any of its subsidiaries is contesting in
good faith. There is no pending dispute with any taxing authority relating to any of such returns
and the Company has no knowledge of any proposed liability for any tax to be imposed upon the
properties or assets of the Company or any of its subsidiaries for which there is not an adequate
reserve reflected in the Companys financial statements included in the Registration Statement.
(z) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration Statement, the Time of Sale
Information and the Prospectus, except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and except as described in the
Registration Statement, the Time of Sale Information and the Prospectus, neither the Company nor
any of its subsidiaries has received notice of any revocation or modification of any such license,
certificate, permit or authorization, or has knowledge of any proceedings relating to the
revocation or modification of any such license, certificate, permit or authorization, or has any
reason to believe that any such license, certificate, permit or authorization will not be renewed
in the ordinary course, except where the failure to renew such license, certificate, permit or
authorization would not, individually or in the aggregate, have a Material Adverse Effect.
(aa) FDA Compliance. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, the Company: (A) is and at all times has been in full
13
compliance
with all statutes, rules, regulations, or guidances applicable to the ownership, testing,
development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion,
sale, offer for sale, storage, import, export or disposal of any product under development,
manufactured or distributed by the Company (Applicable Laws); (B) has not received any FDA Form
483, notice of adverse finding, warning letter, untitled letter or other correspondence or notice
from the U.S. Food and Drug Administration (the FDA) or any other federal, state, local or
foreign governmental or regulatory authority alleging or asserting noncompliance with any
Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable Laws (Authorizations); (C)
possesses all Authorizations and such Authorizations are valid and in full force and effect and are
not in violation of any term of any such Authorizations; (D) has not received notice of any claim,
action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from the
FDA or any other federal, state, local or foreign governmental or regulatory authority or third
party alleging that any product operation or activity is in violation of any Applicable Laws or
Authorizations and has no knowledge that the FDA or any other federal, state, local or foreign
governmental or regulatory authority or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding; (E) has not received notice that the FDA or
any other federal, state, local or foreign governmental or regulatory authority has taken, is
taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no
knowledge that the FDA or any other federal, state, local or foreign governmental or regulatory
authority is considering such action; (F) has filed,
obtained, maintained or submitted all reports, documents, forms, notices, applications, records,
claims, submissions and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments were complete and correct on the date filed (or were
corrected or supplemented by a subsequent submission); and (G) has not, either voluntarily or
involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any
recall, market withdrawal or replacement, safety alert, post sale warning, dear doctor letter, or
other notice or action relating to the alleged lack of safety or efficacy of any product or any
alleged product defect or violation and, to the Companys knowledge, no third party has initiated,
conducted or intends to initiate any such notice or action.
(bb) Clinical Studies. The studies, tests and preclinical and clinical trials conducted by or
on behalf of the Company were and, if still pending, are being conducted in accordance with
experimental protocols, procedures and controls pursuant to accepted professional scientific
standards and all Applicable Laws and Authorizations, including, without limitation, the Federal
Food, Drug and Cosmetic Act and the rules and regulations promulgated thereunder (collectively,
FFDCA); the descriptions of the results of such studies, tests and trials contained in the
Registration Statement, the Time of Sale Information and the Prospectus are accurate and complete
in all material respects and fairly present the data derived from such studies, tests and trials;
except to the extent disclosed in the Registration Statement, the Time of Sale Information and the
Prospectus, the Company is not aware of any studies, tests or trials, the results of which the
Company believes reasonably call into question the study, test, or trial results described or
referred to in the Registration Statement, the Time of Sale Information and the Prospectus when
viewed in the context in which such results are described and the clinical state of development;
and, since March 24, 2001, the Company has not received any notices or correspondence from
14
the FDA
or any other federal, state, local or foreign governmental or regulatory authority requiring the
termination, suspension or material modification of any studies, tests or preclinical or clinical
trials of Technosphere, Technosphere Insulin or cancer vaccines conducted by or on behalf of the
Company.
(cc) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is contemplated or threatened
and the Company is not aware of any existing or imminent labor disturbance by, or dispute with, the
employees of any of its or its subsidiaries principal suppliers, contractors or customers, except
as would not have a Material Adverse Effect.
(dd) Compliance With Environmental Laws. (i) The Company and its subsidiaries (x) are, and at
all prior times were, in compliance with any and all applicable federal, state, local or foreign
statute, law, rule, regulation, ordinance, code or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively,
Hazardous Materials) or to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively, Environmental Laws), (y)
have received and are in compliance with all permits, licenses,
certificates or other authorizations or approvals required of them under applicable Environmental
Laws to conduct their respective businesses, and (z) have not received notice of any actual or
potential liability under or relating to any Environmental Laws, including for the investigation or
remediation of any disposal or release of Hazardous Materials, and have no knowledge of any event
or condition that would reasonably be expected to result in any such notice, and (ii) there are no
costs or liabilities associated with Environmental Laws of or relating to the Company or its
subsidiaries, except in the case of each of (i) and (ii) above, for any such failure to comply, or
failure to receive required permits, licenses or approvals, or cost or liability, as would not,
individually or in the aggregate, have a Material Adverse Effect; and (iii) except as described in
the Registration Statement, the Time of Sale Information and the Prospectus, (x) there are no
proceedings that are pending, or that are known to be contemplated, against the Company or any of
its subsidiaries under any Environmental Laws in which a governmental entity is also a party, other
than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000
or more will be imposed, (y) the Company and its subsidiaries are not aware of any issues regarding
compliance with Environmental Laws, or liabilities or other obligations under Environmental Laws or
concerning hazardous or toxic substances or wastes, pollutants or contaminants, that could
reasonably be expected to have a material effect on the capital expenditures, earnings or
competitive position of the Company and its subsidiaries, and (z) none of the Company and its
subsidiaries anticipates material capital expenditures relating to any Environmental Laws.
(ee) Compliance With ERISA. (i) Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA),
15
for which the
Company or any member of its Controlled Group (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the Code)) would have any liability (each, a Plan) has been maintained in
material compliance with its terms and the requirements of any applicable statutes, orders, rules
and regulations, including but not limited to ERISA and the Code; (ii) no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect
to any Plan excluding transactions effected pursuant to a statutory or administrative exemption;
(iii) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302
of ERISA, no accumulated funding deficiency as defined in Section 412 of the Code, whether or not
waived, has occurred or is reasonably expected to occur; (iv) the fair market value of the assets
of each Plan exceeds the present value of all benefits accrued under such Plan (determined based on
those assumptions used to fund such Plan); (v) no reportable event (within the meaning of Section
4043(c) of ERISA) has occurred or is reasonably expected to occur; and (vi) neither the Company nor
any member of the Controlled Group has incurred, nor reasonably expects to incur, any liability
under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC, in the
ordinary course and without default) in respect of a Plan (including a multiemployer plan, within
the meaning of Section 4001(a)(3) of ERISA).
(ff) Disclosure Controls. The Company and its subsidiaries maintain an effective system of
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that is
designed to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commissions rules and forms, including controls and procedures
designed to ensure that such information is accumulated and
communicated to the Companys management as appropriate to allow timely decisions regarding
required disclosure. The Company and its subsidiaries have carried out evaluations of the
effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the
Exchange Act.
(gg) Accounting Controls. The Company and its subsidiaries maintain systems of internal
control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that comply
with the requirements of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including, but not limited to internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
managements general or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to assets is permitted only in
accordance with managements general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, the Company is not aware
of any material weaknesses in the Companys internal controls.
16
(hh) Insurance. The Company and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks as are, to the knowledge of the
Company, adequate to protect the Company and its subsidiaries and their respective businesses; and
neither the Company nor any of its subsidiaries has (i) received notice from any insurer or agent
of such insurer that capital improvements or other expenditures are required or necessary to be
made in order to continue such insurance or (ii) any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage at reasonable cost from similar insurers as may be necessary to continue its business.
All such insurance is outstanding and duly in force on the date hereof.
(ii) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(jj) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the Money Laundering Laws) and
no action, suit or proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.
(kk) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge
of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (OFAC); and the Company will not directly
or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(ll) No Restrictions on Subsidiaries. No subsidiary of the Company is currently prohibited,
directly or indirectly, under any agreement or other instrument to which it is a party or is
subject, from paying any dividends to the Company, from making any other distribution on such
17
subsidiarys capital stock, from repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiarys properties or assets to the Company
or any other subsidiary of the Company.
(mm) No Brokers Fees. Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finders fee or like payment in connection with the offering and sale of the
Securities.
(nn) No Registration Rights. No person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by reason of the filing
of the Registration Statement with the Commission or the issuance and sale of the Securities, other
than such rights as have been satisfied or duly and validly waived.
(oo) No Stabilization. The Company has not taken, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Securities.
(pp) Business With Cuba. The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(qq) Margin Rules. Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in the Registration Statement, the
Time of Sale Information and the Prospectus will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors.
(rr) Forward-Looking Statements. No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained in the
Registration Statement, the Time of Sale Information and the Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.
(ss) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included in the
Registration Statement, the Time of Sale Information and the Prospectus is not based on or derived
from sources that are reliable and accurate in all material respects.
(tt) Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any
of the Companys directors or officers, in their capacities as such, to comply with any provision
of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder
(collectively, the Sarbanes-Oxley Act), including Section 402 thereof related to loans and
Sections 302 and 906 thereof related to certifications.
(uu) Status under the Securities Act. The Company is not an ineligible issuer as defined
under the Securities Act, in each case at the times specified in the Securities Act in connection
with the offering of the Securities.
18
(vv) Audit Committee/Internal Controls. The Companys board of directors has validly
appointed an audit committee whose composition satisfies the requirements of Rule 4350(d)(2) of the
Rules of the NASD (the NASD Rules) and the Companys board of directors and/or the audit
committee has adopted a charter that satisfies the requirements of Rule 4350(d)(1) of the NASD
Rules. Neither the Companys board of directors nor the audit committee has been informed, nor is
any director of the Company aware, of (x) any significant deficiencies in the design or operation
of the Companys internal controls that could adversely affect the Companys ability to record,
process, summarize and report financial data or any material weakness in the Companys internal
controls; or (y) any fraud, whether or not material, that involves management or other employees of
the Company who have a significant role in the Companys internal controls.
(ww) Listing on the Nasdaq Global Market. The Common Stock of the Company is listed on the
Nasdaq Global Market under the ticker symbol MNKD. The Company has not received any notice that
it is not in compliance with the listing requirements of the Nasdaq Global Market. The Company is,
and has no reason to believe that it will not in the foreseeable future continue to be (except as a
result of minimum trading price requirements), in compliance with all such listing requirements.
There are no affiliations with the NASD among the Companys officers or directors. A registration
statement relating to the Common Stock on Form 8-A or other applicable form under the Exchange Act
has become effective.
(xx) Stock Options. With respect to the stock options (the Stock Options) granted pursuant
to the stock-based compensation plans of the Company and its subsidiaries (the Company Stock
Plans), (i) each Stock Option intended to qualify as an incentive stock option under Section 422
of the Code as of its Grant Date (as defined below) so qualified, (ii) each grant of a Stock Option
was duly authorized no later than the date on which the grant of such Stock Option was by its terms
to be effective (the Grant Date) by all necessary corporate action, including, as applicable,
approval by the board of directors of the Company (or a duly constituted and authorized committee
thereof) and any required stockholder approval by the necessary number of votes or written
consents, (iii) each such grant was made in accordance with
the terms of the Company Stock Plans, the Exchange Act and the rules of The Nasdaq Global Market
and (iv) each such grant was properly accounted for in accordance with GAAP in the financial
statements (including the related notes) of the Company and disclosed in the Companys filings with
the Commission to the extent required in accordance with the Exchange Act and all other applicable
laws. There is no and has been no policy or practice of the Company to coordinate the grant of
Stock Options prior to the release or other public announcement of material information regarding
the Company or its subsidiaries or their results of operations or prospects.
4. Further Agreements of the Company. The Company covenants and agrees with each
Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) (without reliance on Rule 424(b)(8)) and Rule 430A, 430B
or 430C under the Securities Act, will file any Issuer Free Writing Prospectus to the extent
required by Rule 433 under the Securities Act; and will file
19
promptly all reports and any
definitive proxy or information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in connection with the
offering or sale of the Securities; and the Company will furnish copies of the Prospectus and each
Issuer Free Writing Prospectus (to the extent not previously delivered) to the Underwriters in New
York City prior to 10:00 A.M., New York City time, on the business day next succeeding the date of
this Agreement in such quantities as the Underwriters may reasonably request.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the Underwriters, a
facsimile copy of the Registration Statement as originally filed and each amendment thereto, in
each case including all exhibits and consents filed therewith and documents incorporated by
reference therein; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement
as originally filed and each amendment thereto (without exhibits) and (B) during the Prospectus
Delivery Period (as defined below), as many copies of the Prospectus (including all amendments and
supplements thereto and documents incorporated by reference therein) and each Issuer Free Writing
Prospectus as the Underwriters may reasonably request. As used herein, the term Prospectus
Delivery Period means such period of time after the first date of the public offering of the
Securities as in the opinion of counsel for the Underwriters a prospectus relating to the
Securities is required by law to be delivered (or required to be delivered but for Rule 172 under
the Securities Act) in connection with sales of the Securities by any Underwriter or dealer.
(c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before using, authorizing,
approving, referring to or filing any Issuer Free Writing Prospectus, and before filing any
amendment or supplement to the Registration Statement (including any filing under Rule 424(b) under
the Securities Act) or the Prospectus, the Company will furnish to the Underwriters and counsel for
the Underwriters a copy of the proposed Issuer Free Writing Prospectus, amendment or supplement for
review and will not use, authorize, approve, refer to or file any such Issuer Free Writing
Prospectus or file any such proposed amendment or supplement to which the Underwriters reasonably
object, unless upon the written advice of counsel to the Company that such action is necessary.
(d) Notice to the Underwriters. The Company will advise the Underwriters promptly, and
confirm such advice in writing, (i) when the Registration Statement has become effective; (ii) when
any amendment to the Registration Statement has been filed or becomes effective; (iii) when any
supplement to the Prospectus or any Issuer Free Writing Prospectus or any amendment to the
Prospectus has been filed; (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the receipt of any
comments from the Commission relating to the Registration Statement or any other request by the
Commission for any additional information; (v) of the issuance by the Commission of any order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for
that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event
within the Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale
Information or any Issuer Free Writing Prospectus as then amended
20
or supplemented would include any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances existing
when the Prospectus, the Time of Sale Information or any such Issuer Free Writing Prospectus is
delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice
with respect to any suspension of the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company
will use its best efforts to prevent the issuance of any such order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification of the Securities and, if any such order is issued,
will obtain as soon as possible the withdrawal thereof.
(e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event shall
occur or condition shall exist as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Prospectus to comply with law, the Company will immediately
notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file
with the Commission and furnish to the Underwriters and to such dealers as the Underwriters may
designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus will comply with law, (2) if at any time prior to the Closing Date (i) any event
shall occur or condition shall exist as a result of which the Time of Sale Information as then
amended or supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the circumstances,
not misleading or (ii) it is necessary to amend or supplement the Time of Sale Information to
comply with law, the Company will immediately notify the Underwriters thereof and forthwith prepare
and, subject to paragraph (c) above, file with the Commission (to the extent required) and furnish
to the Underwriters and to such dealers as the Underwriters may designate, such amendments or
supplements to the Time of Sale Information as may be necessary so that the statements in the Time
of Sale Information as so amended or supplemented will not, in the light of the circumstances, be
misleading or so that the Time of Sale Information will comply with law and (3) if at any time
following the issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained in the Registration
Statement or any Preliminary Prospectus or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at that subsequent time, not
misleading, the Company will promptly notify the Underwriters and will promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus, or the Preliminary Prospectus
and the Prospectus to eliminate or correct such conflict, untrue statement or omission.
(f) Blue Sky Compliance. The Company will qualify the Securities and the shares of Underlying
Common Stock for offer and sale under the securities or Blue Sky laws of such jurisdictions as the
Underwriters shall reasonably request and will continue such qualifications in
21
effect so long as
required for distribution of the Securities; provided that the Company shall not be
required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in
any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general
consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any
such jurisdiction if it is not otherwise so subject.
(g) Earning Statement. The Company will make generally available to its security holders and
the Underwriters as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering
a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the effective date (as defined in Rule 158) of the Registration Statement.
(h) Clear Market. For a period of 90 days after the date of this Agreement, the Company will
not (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or indirectly, any shares of Stock or any
securities convertible into or exercisable or exchangeable for Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of the Stock, whether any such transaction described in clause (i) or (ii) above is to be settled
by delivery of Stock or such other securities, in cash or otherwise, without the prior written
consent of the Representatives, other than (A) the Securities to be sold hereunder and the
Underlying Common Stock issuable upon conversion of such Securities, (B) grants of equity awards
under equity incentive plans existing as of the date of this Agreement and disclosed in the Time of
Sale Information, (C) issuances of any shares of Stock of the Company upon the exercise of options
granted under such equity incentive plans or under other options, warrants or other rights
outstanding as of the date hereof and disclosed in the Time of Sale Information and (D) the Shares
issued pursuant to the purchase agreement dated the date hereof with respect to the Concurrent
Equity Offering. Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day
restricted period, the Company issues an earnings release or material news or a material event
relating to the Company occurs; or (2) prior to the expiration of the 90-day restricted period, the
Company announces that it will release earnings results during the 16-day period beginning on the
last day of the 90-day period, the restrictions imposed by this Agreement shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
(i) Insider Trading. Unless the Underwriters otherwise agree, in their sole discretion and in
writing, prior to the 90th day following the Closing Date, the Company will not waive the terms of
its written insider trading policy applicable to all officers and directors of the Company.
(j) DTC. The Company will cooperate with the Underwriters and use its best efforts to permit
the offered Securities to be eligible for clearance and settlement through the facilities of the
DTC.
22
(k) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities
as described in the Registration Statement, the Time of Sale Information and the Prospectus under
the heading Use of Proceeds.
(l) No Stabilization. The Company will not take, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Securities and will not take any action prohibited by Regulation M under the
Exchange Act in connection with the distribution of the Securities contemplated hereby.
(m) Exchange Listing. The Company will use its best efforts to list for quotation the
Underlying Common Stock issuable upon conversion of the Securities on the Nasdaq Global Market.
(n) Reservation of Securities. The Company will reserve and keep available at all times, free
of preemptive or other similar rights, a sufficient number of shares of its common stock, for the
purpose of enabling the Company to satisfy any obligations to issue Underlying Common Stock upon
conversion of the Securities.
(o) Reports. To the extent not available on the Commissions EDGAR system, so long as the
Securities are outstanding, the Company will furnish to the Underwriters, as soon as they are
available, copies of all Exchange Act reports or other communications (financial or other)
furnished to holders of the Securities solely in their capacity as such, and copies of any Exchange
Act reports and financial statements furnished to or filed with the Commission or any national
securities exchange or automatic quotation system.
(p) Record Retention. The Company will, pursuant to reasonable procedures developed in good
faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission
in accordance with Rule 433 under the Securities Act.
(q) Compliance with Registration Statement. The Company will comply with all the undertakings
contained in the Registration Statement.
(r) Controls and Procedures. For a period of one year from the date of this Agreement, the
Company and its subsidiaries will maintain such controls and other procedures, including without
limitation those required by Sections 302 and 906 of the Sarbanes-Oxley Act and the applicable
regulations thereunder, that are designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commissions rules and forms,
including without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the Companys management,
including its principal executive officer and its principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required
disclosure, to ensure that material information relating to Company, including its subsidiaries, is
made known to them by others within those entities.
23
(s) Sarbanes-Oxley Act. For a period of one year from the date of this Agreement, the Company
and its subsidiaries will comply with all effective applicable provisions of the Sarbanes-Oxley
Act.
5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and
agrees that:
(a) It has not and will not use, authorize use of, refer to, or participate in the planning
for use of, any free writing prospectus, as defined in Rule 405 under the Securities Act (which
term includes use of any written information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and any press release issued by the
Company) other than (i) a free writing prospectus that contains no issuer information (as defined
in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation
by reference) in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus,
(ii) any Issuer Free Writing Prospectus listed on Annex D or prepared pursuant to Section 3(c) or
Section 4(c) above, or (iii) any free writing prospectus prepared by such underwriter and approved
by the Company in advance in writing (each such free writing prospectus referred to in clauses (i)
or (iii), an Underwriter Free Writing Prospectus).
(b) It has not and will not distribute any Underwriter Free Writing Prospectus referred to in
clause (a)(i) in a manner reasonably designed to lead to its broad unrestricted dissemination.
(c) It has not and will not, without the prior written consent of the Company, use any free
writing prospectus that contains the final terms of the Securities unless such terms have
previously been included in a free writing prospectus filed with the Commission; provided that
Underwriters may use a term sheet substantially in the form of Annex E hereto without the consent
of the Company; provided further that any Underwriter using such term sheet shall notify the
Company, and provide a copy of such term sheet to the Company, prior to, or substantially
concurrently with, the first use of such term sheet.
(d) It will, pursuant to reasonable procedures developed in good faith, retain copies of each
free writing prospectus used or referred to by it, in accordance with Rule 433 under the Securities
Act.
(e) It is not subject to any pending proceeding under Section 8A of the Securities Act with
respect to the offering (and will promptly notify the Company if any such proceeding against it is
initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters Obligations. The obligation of each Underwriter to
purchase the Initial Securities on the Closing Date or the Option Securities on the Additional
Closing Date, as the case may be as provided herein is subject to the performance by the
Company of its covenants and other obligations hereunder and to the following additional
conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose or pursuant
24
to
Section 8A under the Securities Act shall be pending before or threatened by the Commission; the
Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission
under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the extent required
by Rule 433 under the Securities Act) and in accordance with Section 4(a) hereof; and all requests
by the Commission for additional information shall have been complied with to the reasonable
satisfaction of the Underwriters.
(b) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of the Closing Date or
the Additional Closing Date, as the case may be; and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall be true and correct on and as
of the Closing Date or the Additional Closing Date, as the case may be.
(c) No Downgrade. Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded any securities or preferred stock of or
guaranteed by the Company or any of its subsidiaries by any nationally recognized statistical
rating organization, as such term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, or has changed its outlook with respect to, its rating of any
securities or preferred stock of or guaranteed by the Company or any of its subsidiaries (other
than an announcement with positive implications of a possible upgrading).
(d) No Material Adverse Change. No event or condition of a type described in Section 3(g)
hereof shall have occurred or shall exist, which event or condition is not described in the Time of
Sale Information (excluding any amendment or supplement thereto) and the Prospectus (excluding any
amendment or supplement thereto) and the effect of which in the judgment of the Underwriters makes
it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on
the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and the Prospectus.
(e) Officers Certificate. The Underwriters shall have received on and as of the Closing Date
or the Additional Closing Date, as the case may be, a certificate of the chief financial officer or
chief accounting officer of the Company and one additional senior executive officer of the Company
who is satisfactory to the Underwriters (i) confirming that such officers have carefully reviewed
the Registration Statement, the Time of Sale Information and the Prospectus and, to the knowledge
of such officers, the representations set forth in Sections 3(b) and 3(d) hereof are true and
correct, (ii) confirming that the other representations and warranties of the Company in this
Agreement are true and correct and that the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date
and (iii) to the effect set forth in paragraphs (a), (c) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date or the Additional
Closing Date, as the case may be, Deloitte & Touche LLP shall have furnished to the Underwriters,
at the request of the Company, letters, dated the respective dates of delivery
25
thereof and
addressed to the Underwriters, in form and substance reasonably satisfactory to the Underwriters,
containing statements and information of the type customarily included in accountants comfort
letters to underwriters with respect to the financial statements and certain financial information
contained or incorporated by reference in the Registration Statement, the Time of Sale Information
and the Prospectus; provided, that the letter delivered on the Closing Date or the Additional
Closing Date, as the case may be shall use a cut-off date no more than three business days prior
to such Closing Date or such Additional Closing Date, as the case may be.
(g) Opinion of Counsel for the Company. Cooley Godward Kronish LLP, counsel for the Company,
shall have furnished to the Underwriters, at the request of the Company, their written opinion,
dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Underwriters, to the effect set
forth in Annex A hereto.
(h) Opinion of Special Regulatory Counsel for the Company. Hyman, Phelps & McNamara, P.C.,
special counsel for the Company for regulatory matters, shall have furnished to the Underwriters,
at the request of the Company, their written opinion, dated the Closing Date or the Additional
Closing Date, as the case may be, and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Underwriters, to the effect set forth in Annex B hereto.
(i) Opinion of Special Intellectual Property Counsel for the Company. Preston Gates & Ellis,
LLP special counsel for the Company for Intellectual Property matters, shall have furnished to the
Underwriters, at the request of the Company, their written opinion, dated the Closing Date or the
Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Underwriters, to the effect set forth in Annex C hereto.
(j) Opinion of Counsel for the Underwriters. The Underwriters shall have received on and as
of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Latham &
Watkins LLP, counsel for the Underwriters, with respect to such matters as the Underwriters may
reasonably request, and such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
(k) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Securities; and no injunction or
order of any federal, state or foreign court shall have been issued that would, as of the Closing
Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the
Securities.
(l) Good Standing. The Underwriters shall have received on and as of the Closing Date or the
Additional Closing Date, as the case may be, satisfactory evidence of the good standing of the
Company and its subsidiaries in their respective jurisdictions of organization and their good
standing as foreign entities in such other jurisdictions as the Underwriters may
26
reasonably request, in each case in writing or any standard form of telecommunication from the
appropriate Governmental Authorities of such jurisdictions.
(m) Lock-up Agreements. The lock-up agreements, each substantially in the form of Exhibit A
hereto, between you and certain shareholders, officers and directors of the Company relating to
sales and certain other dispositions of shares of the Companys common stock or certain other
securities, delivered to you on or before the date hereof, shall be in full force and effect on the
Closing Date or Additional Closing Date, as the case may be.
(n) Final Term Sheet. The Company agrees to prepare a final term sheet, containing solely a
description of the Securities, in a form approved by the Underwriters, and to file such term sheet
pursuant to Rule 433(d) within the time required by such Rule.
(o) Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as
the case may be, the Company shall have furnished to the Underwriters such further certificates and
documents as the Underwriters may reasonably request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless
each Underwriter, its affiliates, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities (including, without
limitation, the reasonable legal fees and other reasonable expenses incurred in connection with any
suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or
several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or necessary in order to
make the statements therein, not misleading, (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer
Free Writing Prospectus or any Time of Sale Information (including any Time of Sale Information
that has subsequently been amended) or caused by any omission or alleged omission to state therein
a material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or (iii) any untrue statement or alleged untrue
statement of a material fact included in any materials or information provided to investors by, or
with the written approval of, the Company in connection with the marketing of the offering of the
Securities, including any road show or investor presentations made to the investors by the Company
(whether in person or electronically), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, when taken together with the Time of Sale
Information, in the light of the circumstances under which they are made, not misleading; provided,
however, that in the case of each of clause (i) and (ii) above, except insofar as such losses, claims,
27
damages or liabilities arise out of, or are based upon, any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity with any information
relating to any Underwriter furnished to the Company in writing by such Underwriter expressly for
use therein, it being understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in subsection (b) below.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such Underwriter furnished
to the Company in writing by such Underwriter expressly for use in the Registration Statement, the
Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or any Time
of Sale Information (including any Time of Sale Information that has subsequently been amended), it
being understood and agreed upon that the only such information furnished by any Underwriter
consists of the following information in the Prospectus furnished on behalf of each Underwriter:
the concession and reallowance figures appearing in the first paragraph under the caption
UnderwritingCommissions and Discounts, and the information contained under the caption
UnderwritingPrice Stabilization and Short Positions.
(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such
person (the Indemnified Person) shall promptly notify the person against whom such
indemnification may be sought (the Indemnifying Person) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it may have
under this Section 7 except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this Section 7. If any
such proceeding shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified
Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in such
proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to
the contrary or (ii) the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person. It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid
or reimbursed as they are incurred. Any such
28
separate firm for any Underwriter, its affiliates,
directors and officers and any control persons of such Underwriter shall be designated in writing
by each of the Underwriters and any such separate firm for the Company, its directors, its officers
who signed the Registration Statement and any control persons of the Company shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested
that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30
days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request prior to the date
of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have been sought
hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such proceeding and (y) does
not include any statement as to or any admission of fault, culpability or a failure to act by or on
behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other, from the offering of the Securities or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the Company, on the one hand, and the Underwriters, on the other, in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same
respective proportions as the net proceeds (after deducting underwriting discounts and commissions
but before deducting expenses) received by the Company from the sale of the Securities and the
total underwriting discounts and commissions received by the Underwriters in connection therewith,
in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate
offering price of the Securities. The relative fault of the Company, on the one hand, and the
Underwriters, on the other, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Underwriters and the
parties relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
29
(e) Limitation on Liability. The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a
result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of
this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of
the amount by which the total underwriting discounts and commissions received by such Underwriter
with respect to the offering of the Securities exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters obligations to
contribute pursuant to this Section 7 are several in proportion to their respective purchase
obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any Indemnified Person
at law or in equity.
8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
9. Termination. This Agreement may be terminated in the absolute discretion of the
Underwriters, by notice to the Company, if after the execution and delivery of this Agreement and
prior to the Closing Date or, in the case of the Option Securities, prior to the Additional Closing
Date (i) trading generally shall have been suspended or materially limited on or by any of the New
York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers,
Inc., the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended
on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking
activities shall have been declared by federal or New York State authorities; or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that, in the judgment of the
Underwriters, is material and adverse and makes it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Securities on the Closing Date or the Additional Closing Date, as
the case may be, on the terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Prospectus.
10. Defaulting Underwriter. (a) If, on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter defaults on its obligation to purchase the Securities
that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their
discretion arrange for the purchase of such Securities by other persons satisfactory to the Company
on the
30
terms contained in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Securities,
then the Company shall be entitled to a further period of 36 hours within which to procure other
persons satisfactory to the non-defaulting Underwriters to purchase such Securities on such terms.
If other persons become obligated or agree to purchase the Securities of a defaulting Underwriter,
either the non-defaulting Underwriters or the Company may postpone the Closing Date or the
Additional Closing Date, as the case may be, for up to five full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the
Registration Statement and the Prospectus or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Registration Statement and the
Prospectus that effects any such changes. As used in this Agreement, the term Underwriter
includes, for all purposes of this Agreement unless the context otherwise requires, any person not
listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Securities that a
defaulting Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of Securities that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be does not exceed
one-eleventh of the aggregate principal amount of Securities to be purchased on such date, then the
Company shall have the right to require each non-defaulting Underwriter to purchase aggregate
principal amount of Securities that such Underwriter agreed to purchase hereunder on such date plus
such Underwriters pro rata share (based on the aggregate principal amount of Securities that such
Underwriter agreed to purchase on such date) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of Securities that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds
one-eleventh of the aggregate principal amount of Securities to be purchased on such date, or if
the Company shall not exercise the right described in paragraph (b) above, then this Agreement or,
with respect to any Additional Closing Date, the obligation of the Underwriters to purchase
Securities on the Additional Closing Date, as the case may be, shall terminate without liability on
the part of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this
Section 10 shall be without liability on the part of the Company, except that the Company will
continue to be liable for the payment of expenses as set forth in Section 11 hereof and except that
the provisions of Section 7 hereof shall not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its default.
11. Payment of Expenses. (a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid
all costs and expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and
31
delivery
of the Securities and any taxes payable in that connection; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration Statement, the
Preliminary Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and the
Prospectus (including all exhibits, amendments and supplements thereto) and the distribution
thereof; (iii) the costs of reproducing and distributing this Agreement; (iv) the fees and expenses
of the Companys counsel and independent accountants; (v) the fees and expenses incurred in
connection with the registration or qualification and determination of eligibility for investment
of the Securities under the laws of such jurisdictions as the Underwriters may designate and the
preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and
expenses of counsel for the Underwriters); (vi) the cost of preparing stock certificates; (vii) the
costs and charges of any transfer agent and any registrar; (viii) all expenses and application fees
incurred in connection with any filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc.; (ix) all expenses incurred by the Company in connection
with any road show presentation to potential investors; and (x) all expenses and application fees
related to the listing of the Securities on the Nasdaq Global Market.
(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the Company for any reason
fails to tender the Securities for delivery to the Underwriters or (iii) the Underwriters decline
to purchase the Securities for any reason permitted under this Agreement, the Company agrees to
reimburse the Underwriters for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriters in connection with this
Agreement and the offering contemplated hereby.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and the officers
and directors and any controlling persons referred to in Section 7 hereof. Nothing in this
Agreement is intended or shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained herein. No
purchaser of Securities from any Underwriter shall be deemed to be a successor merely by reason of
such purchase.
13. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Underwriters contained in this Agreement or made
by or on behalf of the Company or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall
remain in full force and effect, regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company or the Underwriters.
14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term affiliate has the meaning set forth in Rule 405 under the Securities
Act; (b) the term business day means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term subsidiary has the meaning set forth in Rule
405 under the Securities Act; and (d) the term significant subsidiary has the meaning set forth
in Rule 1-02 of Regulation S-X under the Exchange Act.
32
15. Miscellaneous.
(a) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Underwriters shall be given to the Representatives c/o Merrill
Lynch & Co., 4 World Financial Center, New York, New York 10030 (fax: (212) 738-1069); Attention:
Marcelo Cosma and J.P. Morgan Securities Inc., 277 Park Avenue, New York, New York 10172 (fax:
(212) 622-8358); Attention: Equity Syndicate Desk, with a copy to Latham & Watkins LLP, 650 Town
Center Drive, 20th Floor, Costa Mesa, California 92626 (fax: (714) 755-8290); Attention:
R. Scott Shean. Notices to the Company shall be given to it at MannKind Corporation, 28903 North
Avenue Paine, Valencia, California 91355, (fax: (661) 755-2086); Attention: General Counsel, with a
copy to Cooley Godward Kronish LLP, 4401 Eastgate Mall, San Diego, California 92121 (fax: (858)
550-6420); Attention: D. Bradley Peck.
(b) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(c) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.
(d) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.
(e) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
33
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
|
|
|
|
|
|
Very truly yours,
MANNKIND CORPORATION
|
|
|
By |
/s/
David Thomson |
|
|
|
Name: David Thomson |
|
|
|
Title: Vice President and
General Counsel |
|
|
|
|
|
|
Accepted:
December 7, 2006
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
J.P. MORGAN SECURITIES INC.
For themselves and on behalf of the
|
|
|
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED |
|
|
|
By |
|
/s/ Edmund Baxter |
|
|
Authorized
Signatory |
|
|
|
J.P. MORGAN SECURITIES INC. |
|
|
|
By |
|
/s/ Paul Ohern |
|
|
Authorized
Signatory |
34
Schedule 1
|
|
|
|
|
|
|
Aggregate Principal Amount of |
|
Underwriter |
|
Securities |
|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated |
|
$ |
50,000,000 |
|
J.P. Morgan Securities Inc. |
|
|
50,000,000 |
|
|
|
|
|
Total |
|
$ |
100,000,000 |
|
35
Schedule 2
Conversion Price
$22.47
Annex A
Form of Opinion of Counsel for the Company
1. The Company has been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware with requisite corporate power to own or lease, as the case
may be, and to operate its properties and conduct its business as described in the Time of Sale
Information and the Prospectus.
2. The Company is duly qualified to do business as a foreign corporation and is in good standing
under the laws of the states identified on Exhibit A hereof.
3. The Notes are in a form contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Trustee in accordance with the terms of the
Indenture and issued and delivered against payment of the purchase price thereof, will constitute
valid and binding obligations of the Company, subject, as to enforcement, by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or
affecting creditors rights generally, by general principles of equity and limitations on
availability of equitable relief, including specific performance (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4. Upon issuance and delivery of the Notes in accordance with the Agreement and the Indenture
against payment of the purchase price thereof, the Notes shall be convertible at the option of the
holder thereof for the Shares in accordance with the terms of the Notes and the Indenture.
2
5. The Shares issuable upon conversion of the Notes have been duly authorized and reserved for
issuance and, when so issued and delivered upon such conversion in accordance with the terms of the
Indenture, will be validly issued, fully paid and nonassessable.
6. The holders of outstanding shares of capital stock of the Company are not entitled to preemptive
or, to our knowledge, rights of first refusal or other similar rights to subscribe for the Shares.
7. To our knowledge, there is no action, suit or proceeding by or before any court or other
governmental agency, authority or body or any arbitrator pending or overtly threatened against the
Company or its properties by a third party of a character required to be disclosed in the Time of
Sale Information or the Prospectus that is not disclosed in the Time of Sale Information or the
Prospectus as required by the Securities Act and the rules thereunder.
8. To our knowledge, there is no indenture, contract, lease, mortgage, deed of trust, note
agreement, loan or other agreement or instrument of a character required to be filed as an exhibit
to the Registration Statement, which is not filed as required by the Securities Act and the rules
thereunder.
9. The statements in (i) the Prospectus under the headings Description of Common Stock (other
than the first paragraph thereof) and Description of Notes and (ii) Item 15 in the Registration
Statement, insofar as such statements purport to summarize legal matters, agreements or documents
discussed therein, fairly present, to the extent required by the Securities Act and the rules
thereunder, in all material respects, such legal matters, agreements or documents. The statements
in Part II, Item 1 of the Companys Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2006, filed with the Commission on November 2, 2006, insofar as such statements
constitute summaries of the proceedings described therein, fairly summarize the matters referred to
therein in all material respects. The statements in the Prospectus under the heading Material
U.S. Federal Income Tax Consequences, to the extent that they constitute matters of U.S. federal
income tax laws and legal conclusions with respect thereto, are accurate in all material respects.
10. The Registration Statement has become effective under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement has been issued and no proceedings for
that purpose have been instituted or overtly threatened. Any required filing of the Prospectus,
and any supplement thereto, pursuant to Rule 424(b) under the Securities Act, has been made in the
manner and within the time period required by Rule 424(b).
11. The Registration Statement, the Preliminary Prospectus, the Prospectus, and documents
incorporated by reference in the Prospectus set forth therein under the heading Incorporation by
Reference (other than the financial statements and notes thereto or other financial or statistical
data derived therefrom, as to which we express no opinion) comply as to form in all material
respects with the applicable requirements of the Securities Act and the rules thereunder.
3
12. The Agreement has been duly authorized by all necessary corporate action on the part of the
Company and has been duly executed and delivered by the Company.
13. The Indenture has been duly authorized by all necessary corporate action on the part of the
Company and has been duly executed and delivered by the Company and, constitutes a legally valid
and binding agreement of the Company enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting creditors rights
generally, by general principles of equity and limitations on availability of equitable relief,
including specific performance (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended.
14. The Company is not, and, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Prospectus, will not be, an investment
company as defined in the Investment Company Act.
15. No consent, approval, authorization or filing with or order of any U.S. Federal or California
court or governmental agency or body having jurisdiction over the Company is required for the
consummation by the Company of the transactions contemplated by the Agreement, except such as have
been obtained under the Securities Act and except such as may be required under the blue sky laws
of any jurisdiction in connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated in the Agreement and in the Prospectus, or under the
bylaws, rules and regulations of the NASD.
16. The issue and sale of the Securities pursuant to the Agreement and the Indenture will not
result in a breach or violation of (i) any Material Contract, (ii) the charter or bylaws of the
Company or (iii) to our knowledge, any statute, law, rule, or regulation which, in our experience
is typically applicable to transactions of the nature contemplated by the Agreement and the
Indenture and is applicable to the Company, or any order, writ, judgment, injunction, decree, or
award that has been entered against the Company and of which we are aware, in each case the breach
or violation of which would materially and adversely affect the Company.
***********************
4
In connection with the preparation of the Registration Statement, Time of Sale Information and the
Prospectus, we have participated in conferences with officers and other representatives of the
Company, with its certified public accountants and with Preston Gates & Ellis, LLP and Hyman,
Phelps & McNamara, P.C., as well as with representatives of the Underwriters and their counsel. At
such conferences, the contents of the Registration Statement, Time of Sale Information and the
Prospectus and related matters were discussed. We have not independently verified, and accordingly
are not confirming and assume no responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement, Time of Sale Information or the Prospectus. On
the basis of the foregoing, no facts have come to our attention that have caused us to believe (i)
that the Registration Statement (except as to the financial statements and schedules, related notes
and other financial data and statistical data derived therefrom, as to which we express no
comment), at the date and time that the Registration Statement became effective, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) that the Time of Sale
Information (except as to the financial statements and schedules, related notes and other financial
and statistical data derived therefrom, as to which we express no comment) as of the Time of Sale
contained any untrue statement of a material fact or omitted to state a material fact necessary, in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading, or (iii) that the Prospectus (except as to the financial statements and schedules,
related notes and other financial and statistical data derived therefrom, as to which we express no
comment) as of its date or dates as amended or supplemented, if applicable, and as of the date
hereof contained or contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary, in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
This opinion is intended for the sole benefit of the several Underwriters and may not be made
available to or relied upon by any other person, firm or entity without our prior written consent.
This opinion is limited to the matters expressly set forth in this letter, and no opinion has been
implied, or may be inferred, beyond the matters expressly stated. This opinion speaks only as to
law and facts in effect or existing as of the date hereof and we undertake no obligation or
responsibility to update or supplement this opinion to reflect any facts or circumstances that may
hereafter come to our attention or any changes in any law that may hereafter occur.
Annex B
Form of Opinion of Special Regulatory Counsel for the Company
December __, 2006
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
As Representatives of the several Underwriters listed
in Schedule 1 hereto
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
This opinion letter is being furnished to you at the request of Mannkind Corporation, a
Delaware corporation (the Company), pursuant to Section 6(h) of the Underwriting Agreement dated
December ___, 2006 between you and the Company (the Underwriting Agreement), relating to the
public offering by the Company of
shares of the Companys common stock, par value
$0.01 per share (the Offering). Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Underwriting Agreement.
We have been retained by the Company to act as U.S. Food and Drug Administration (FDA)
regulatory counsel for the limited purpose of reviewing the information relating to FDA regulatory
matters contained in certain sections of the Companys (i) Registration Statement on Form S-3 (File
No. 333-138373), which was filed with the Securities and Exchange Commission (SEC) on November 2,
2006 (the Registration Statement), (ii) the prospectus filed with the SEC on November 8, 2006
(the Base Prospectus), (iii) the preliminary prospectus supplement filed with the SEC on
November 27, 2006 (the Preliminary Prospectus Supplement and, together with the Base Prospectus,
the Preliminary Prospectus) and (iv) the prospectus supplement filed with the SEC on December
[6], 2006 (the Prospectus Supplement, and together with the Base Prospectus, the Prospectus)
specified below. We have not been retained by the Company or anyone else to pass upon any other
information in the Registration Statements or Prospectus, nor have we represented the Company in
connection with other matters. For purposes of this opinion letter, FDA Laws, laws that we
specialize in, shall mean the Federal Food, Drug, and Cosmetic Act (the FDC Act) set forth at 21
U.S.C. § 301 et seq. and the regulations promulgated under the authority of the FDC Act,
each as amended, and the enforcement of the FDC Act by the FDA.
In connection with this opinion letter, we have made such legal and factual examinations and
inquiries as we have deemed necessary or appropriate for the purposes of this opinion. In that
regard, we have requested from the Company all documents and information material to
2
disclosures regarding FDA regulatory matters, and have received, reviewed and relied upon only
the following:
1. Information in the Registration Statement and Prospectus, and documents incorporated
therein by reference, pertaining to FDA regulatory matters under the following captions
(collectively referred to herein as the Designated Regulatory Provisions): Prospectus
Supplement Summary Mannkind Corporation Overview; Prospectus Supplement Summary Mannkind
Corporation Recent Developments; Risk Factors Certain risks related to regulatory approvals -
Our product candidates must undergo rigorous preclinical and clinical testing and we must obtain
regulatory approvals, which could be costly and time consuming and subject us to unanticipated
delays or prevent us from marketing any products; Business Overview; Business Clinical
Development Activities; Managements Discussion and Analysis of Financial Condition and Results
of Operations Clinical Development Activities; Business Government Regulation and Product
Approval; Risk Factors Risks Related to Our Business We depend heavily on the successful
development and commercialization of our lead product candidate, the Technosphere Insulin System,
which is still under development, and our other product candidates, which are in preclinical
development; Risk Factors Risks Related to Our Business Testing of Our Technosphere Insulin
System or another product candidate may not yield successful results, and even if it does, we may
still be unable to commercialize that product candidate; Risk Factors Risks Related to Our
Business If we are unable to transition successfully from an early stage development company to a
company that commercializes therapeutics, our operations would suffer; Risk Factors Risks
Related to Our Business We have never manufactured our Technosphere Insulin System or any other
product candidate in commercial quantities, and if we fail to develop an effective manufacturing
capability for our product candidates or to engage third-party manufacturers with this capability,
we may be unable to commercialize these products; Risk Factors Risks Related to Regulatory
Approvals.
2. The Officers Certificate, dated December ___, 2006, signed by David Thomson, Ph.D., J.D.,
Corporate Vice President, General Counsel and Corporate Secretary, certifying certain facts
relating to the Company (the Officers Certificate) and attached here as Attachment A.
3. Copies of the documents listed in Attachment B, which were provided to us by the Company
and which the Company identified as responsive to our request for all material documents pertaining
to the Designated Regulatory Provisions.
4. Representations made to us during discussions with Mr. David Thomson, Ms. Donna Gale, Dr.
Anders Boss, and Dr. John Bedard during the period November 21-26, 2007.
We have assumed with your approval the accuracy and completeness of all statements of fact
relating to the Company and the status of its products and, except as set forth above, you have not
asked us to make, and we have not made, any independent investigations with regard to such matters
for purposes of rendering the opinions herein. We have also assumed the accuracy and completeness
of all documents and records that we have reviewed, the genuineness of all signatures, the
authenticity of the documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
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reproduced copies. We have further assumed that with respect to the laws identified above,
all statutes, judicial and administrative decisions, and rules and regulations of governmental
agencies or self regulatory bodies, applicable to this opinion letter, are generally available to
lawyers practicing in the area of the FDA laws and are in a format that makes legal research
reasonably feasible.
Further, we have not independently verified, nor do we take any responsibility for, or are we in
any way addressing, any statements of belief attributable to the Company or whether or not the
Company is in compliance with the FDA Laws.
This opinion is based solely on matters of law as they pertain to FDA Laws, as implemented by FDA,
and we express no opinion as to any other federal, state, local or foreign laws, statutes,
regulations or ordinances.
Based on, subject to, and limited by the foregoing, we are of the opinion that:
(i) Insofar as the statements in the Designated Regulatory Provisions purport to
describe or summarize applicable provisions of the FDA Laws, such statements are
accurate in all material respects, subject to any qualifications set forth therein;
and
(ii) Nothing has come to our attention which causes us to believe that the
Designated Regulatory Provisions,
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In the Registration Statement on [insert date
RS became effective] and at all times subsequent thereto up to and on
the Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; |
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In the Preliminary Prospectus [include any
other prospectuses filed with the SEC before or on the date of the UW
agreement that include FDA information and that HPM has an opportunity
to review] as of the date of the Underwriting Agreement, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and |
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In the Prospectus as of [insert date of final
prospectus] and as of the date hereof, contained or contains any untrue
statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. |
* * * *
This opinion letter is given as of the date hereof and we assume no obligation to advise you
of any changes in the foregoing subsequent to the delivery of this opinion. This opinion is solely
for the information of the addressee hereof and is not to be quoted in whole or in part or
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otherwise referred to, nor is it to be filed with any governmental agency or any other person
without our prior written consent. No one other than the addressee hereof is entitled to rely on
this opinion. This opinion is rendered solely for purposes of the Offering and should not be
relied upon for any other purpose. Nothing herein should be construed to cause us to be considered
experts within the meaning of Section 11 of the Securities Act of 1933, as amended.
Sincerely,
Hyman, Phelps & McNamara, P.C.
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Josephine M. Torrente |
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5
OFFICERS CERTIFICATE
The undersigned, David Thompson, Corporate Vice President, General Counsel and Corporate Secretary
of Mannkind Corporation, (the Company) does hereby certify in his capacity as an officer of the
Company and not in his individual capacity that:
To the best of my knowledge, the Registration Statement on Form S-3 (File No. 333-138373), which
was filed with the Securities and Exchange Commission (SEC) on November 2, 2006, (ii) the
preliminary prospectus filed with the SEC on November 8, 2006 (the Preliminary Prospectus), and
(iii) the prospectus supplement filed with the SEC on November 27, 2006 (the Prospectus
Supplement and, together with the Preliminary Prospectus, the Prospectus) as those terms are
defined in the letter to the Underwriters from Hyman, Phelps & McNamara, P.C., are complete and
accurate summaries of the facts described therein.
IN WITNESS
WHEREOF, I have signed my name as of the ___ day of
___ 2006.
Annex C
Form of Opinion of Special Intellectual Property Counsel for the Company
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Re:
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Purchase of up to [17,500,000 shares of Common Stock (the Shares)]
[$100,000,000 principal amount of ___% Senior Convertible Notes due 2013 (the Notes)
of MannKind Corporation by the Underwriters pursuant to the Underwriting Agreement
dated ___, 2006 |
Ladies and Gentlemen:
We have acted as special counsel to MannKind Corporation, a Delaware corporation (the Company),
with respect to certain intellectual property matters as further described below. This opinion is
being delivered pursuant to Section 6(i) of the Underwriting Agreement dated December ___, 2006
(the Underwriting Agreement), between the Company and you, as representatives of the several
underwriters named in Schedule A to the Underwriting Agreement (the Underwriters). Unless
specifically defined herein or unless the context requires otherwise, capitalized terms used herein
shall have the meanings set forth in the Underwriting Agreement.
Our role with respect to the intellectual property matters of the Company is limited to legal
representation concerning inventions, patents, patent applications and trade secrets relating to
the Companys cancer therapy research and diketopiperazine drug delivery devices (as each is
described in the Registration Statement and Prospectus), an analysis of certain patent law issues
relating to U.S. Patent Nos. 5,506,203, 5,518,998, 5,997,848, 6,395,774, 6,663,898 and 6,737,045
and rendering opinions to the Company with respect thereto, and a review of the disclosures in the
Registration Statement, the Time of Sale Information and the Prospectus with respect to other
intellectual property matters of the Company. We have not audited the Companys trademarks.
In connection with the preparation of this opinion, we have examined such documents and considered
such questions of law as we have deemed necessary or appropriate. We have assumed the authenticity
of all documents submitted to us as originals, the conformity with originals of all documents
submitted to us as copies, and the genuineness of all signatures. We have also assumed the legal
capacity of all natural persons and that, with respect to all parties to agreements or instruments
relevant hereto, such parties had the requisite power and authority to execute, deliver and perform
such agreements or instruments, that such agreements or instruments have been duly authorized by
all requisite action, executed and delivered by such parties, and that such agreements or
instruments are the valid, binding and enforceable obligations of such parties.
Whenever a statement herein is qualified by known to us, to our current actual knowledge, or
similar phrase, it is intended to indicate that no attorney who has rendered substantive legal
services to the Company relating to intellectual property matters and is currently employed by our
firm has any conscious awareness of facts or other information which indicates that any of the
opinions contained herein are untrue. However, except as otherwise expressly indicated, we
2
have not undertaken any independent investigation to determine the accuracy of such statement, and
any limited inquiry undertaken by us during the preparation of this opinion letter should not be
regarded as such an investigation; no inference as to our knowledge of any matters bearing on the
accuracy of any such statement should be drawn from the fact of our representation of the Company.
Based upon the foregoing, and subject to the additional assumptions, exceptions, qualifications and
limitations set forth below, we are of the opinion that:
1. To our knowledge, (i) there are no legal or governmental proceedings pending relating to patent
rights, trade secrets, copyrights, trademarks, service marks of the Company or its subsidiaries,
and (ii) no such proceedings are threatened or contemplated by governmental authorities or others.
2. To our knowledge, (i) except as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus and specifically with respect to U.S. Patent Nos. 5,506,203,
5,518,998, 5,997,848, 6,395,774, 6,663,898 and 6,737,045, neither the Company nor its subsidiaries
are infringing or otherwise violating any claim of an issued patent of a third party (including,
without limitation, U.S. Patent Nos. 6,214,804, 6,331,318, 6,413,942 and 6,685,967), or the rights
of any third party in trade secrets, copyrights, trademarks or service marks, and, upon
commercialization of the products in the form presently in clinical trials described in the
Registration Statement, the Time of Sale Information and the Prospectus, neither the Company nor
its subsidiaries would be infringing or otherwise violating any claim in a currently issued patent
or published patent application of a third party or the rights of any third party in trade secrets,
copyrights, trademarks or service marks, and (ii) there are no infringements by any third party or
any patent of the Company or its subsidiaries, or the rights of the Company or its subsidiaries in
trade secrets, copyrights, trademarks or service marks which in our judgment could materially
affect the Companys use thereof.
3. For the reasons set forth in opinions delivered to the Company we are of the opinion that U.S.
Patent Nos. 5,506,203, 5,518,998, 5,997,848, 6,395,774 6,663,898, and 6,737,045 are invalid and
unenforceable as to the Companys product candidates in the form presently in clinical trials.
4. Based solely upon a review of the Companys internal files and publicly available records in the
USPTO, the Company or a Subsidiary is the record owner of the patents referenced in the
Registration Statement and the Prospectus as owned by the Company. We are unaware of any third
party, including any academic institution or governmental entity, that has any ownership interest
in any patents, trade secrets, copyrights, trademarks or service marks that are owned by the
Company or its subsidiaries.
5. We are unaware of any facts which would form a basis for a finding of unenforceability or
invalidity of any of the Companys or any of its subsidiaries patents (including upon
commercialization of the product candidates in the form presently in clinical trials described in
the Registration Statement, the Time of Sale Information and the Prospectus).
3
6. To our knowledge, the patents and patent applications of the Company and its subsidiaries which
encompass the product candidates in the form presently in clinical trials described in the
Registration Statement, Time of Sale Information and the Prospectus disclose or claim patentable
subject matter under United States patent laws.
7. We and, to our knowledge, the Company and its subsidiaries, have complied with the required duty
of candor and good faith in dealing with the USPTO and foreign patent offices in connection with
the patents and patent applications of the Company and its subsidiaries, including the duty to
disclose all information believed to be material to the patentability thereof.
8. We are unaware of any material fact with respect to the patent applications of the Company or
any of its subsidiaries presently on file in the USPTO or foreign patent offices that (i) would
preclude the issuance of patents with respect to such applications, or (ii) would lead us to
conclude that such patents, when issued, would not be valid and enforceable in accordance with
applicable regulations (including upon commercialization of the product candidates in the form
presently in clinical trials described in the Registration Statement, the Time of Sale Information
and the Prospectus).
9. Except as disclosed in the Registration Statement, we are not aware that the Company lacks or
will be unable to obtain any rights to use all Intellectual Property necessary to the conduct of
its business as now operated by it, except where the failure to own or possess or otherwise be able
to acquire such Intellectual Property rights would not, singly or in the aggregate, have a Material
Adverse Effect.
10. We have reviewed the statements made in the Companys Form 10-K for the year ended December 31,
2005 under the heading BusinessIntellectual Property and Proprietary Technology and in the
Companys Form 10-Q for the quarter ended September 30, 2006 under the heading Risk FactorsRisks
Related to Intellectual Property and, insofar as such statements constitute a summary of the
Companys Intellectual Property, they fairly and accurately summarize in all material respects the
legal matters, documents and proceedings relating to such Intellectual Property described therein.
Although we have not undertaken to investigate or verify independently and are not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Time of Sale Information and the Prospectus (other
than those specific matters on which we are opining in paragraph 10 hereof), and based solely upon
on the examinations and inquiries described in the forepart of this letter, and the limitations
inherent in the examination made by us and the knowledge available to us, we can advise you
supplementally as a matter of fact and not as an opinion that nothing has come to our attention
that causes us to believe that the Intellectual Property matters in:
(i) the Registration Statement, at the time such Registration Statement became effective,
contained an untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
4
(ii) the Time of Sale Information as of the date of the Underwriting Agreement, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(iii) the Prospectus as of its date and as of the date hereof, contained or contains an untrue
statement of material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading.
We do not purport to be experts on or to be qualified to express any opinion herein concerning, nor
do we express any opinion herein concerning, any law other than the laws of the State of California
and the federal law of the United States.
This opinion is furnished to you in connection with the transactions contemplated by the
Underwriting Agreement and is solely for the benefit of you and the several Underwriters, and may
not be relied upon by any other person or for any other purpose without our prior written consent.
This opinion speaks only as of the date above written, and we hereby expressly disclaim any duty to
update any of the statements made herein.
Very truly yours,
Annex D
Time of Sale Information
Issuer Free Writing Prospectus Filed pursuant to Rule 433, relating to Registration Statement Nos.
333-138373 and 333-139154 (Supplementing Preliminary Prospectus Supplement dated November 27,
2006), as filed with the Commission on December 7, 2006.
Annex E
MannKind Corporation
Pricing Term Sheet
None
Exhibit A
FORM OF LOCK-UP AGREEMENT
November __, 2006
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. Morgan Securities Inc.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Re: MannKind Corporation Public Offering (Notes)
Ladies and Gentlemen:
The undersigned understands that each of you propose to enter into an Underwriting Agreement
(the Underwriting Agreement) with MannKind Corporation, a Delaware corporation (the Company),
providing for the public offering (the Public Offering) by you (the Underwriters) of Senior
Convertible Notes of the Company (the Securities). The Securities will be convertible into shares
of common stock, $0.01 par value per share (the Common Stock). Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the Underwriting Agreement.
In consideration of your agreement to purchase and make the Public Offering of the Securities,
and for other good and valuable consideration receipt of which is hereby acknowledged, the
undersigned hereby agrees that, without the prior written consent of Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) and J.P. Morgan Securities Inc.
(JPMorgan), the undersigned will not, during the period commencing on the date hereof and ending
90 days after the date of the Underwriting Agreement, (1) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock (including without limitation, Common Stock which
may be deemed to be beneficially owned by the
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undersigned in accordance with the rules and regulations of the Securities and Exchange Commission
and securities which may be issued upon exercise of a stock option or warrant) or (2) enter into
any swap or other agreement that transfers, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash or otherwise.
Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer
shares of Common Stock without the prior written consent of Merrill Lynch and JPMorgan, provided
that (1) Merrill Lynch and JPMorgan receive a signed lock-up agreement for the balance of the
lockup period from each donnee, trustee, distributee, or transferee, as the case may be, (2) any
such transfer shall not involve a disposition for value, (3) such transfers are not required to be
reported in any public report or filing with the Securities and Exchange Commission, or otherwise
and (4) the undersigned does not otherwise voluntarily effect any such public report or filing
regarding such transfer:
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to any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned (for purposes of this lock-up agreement, immediate
family shall mean any relationship by blood, marriage or adoption, not more remote
than first cousin); or |
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as a distribution to limited partners or stockholders of the undersigned. |
[In addition, notwithstanding the lock-up restrictions described in the preceding paragraph,
the undersigned shall be permitted, pursuant to a written trading plan under Rule 10b5-1 of the
Securities Exchange Act of 1934, as amended (a Plan), to sell, only pursuant to such Plan, up to
an aggregate of
shares of Common Stock prior to the expiration of the 90-day restricted
period (as the same may be extended pursuant to the terms hereof); provided, however, that if no
Plan exists as of the date of this Letter Agreement, the undersigned shall be permitted to adopt a
Plan on or after the fourth trading day after the date of the Underwriting Agreement.] In addition,
the undersigned agrees that, without the prior written consent of Merrill Lynch and JPMorgan, it
will not, during the period ending 90 days after the date of the Underwriting Agreement, make any
demand for or exercise any right with respect to, the registration of any shares of Common Stock or
any security convertible into or exercisable or exchangeable for Common Stock.
Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day restricted period,
the Company issues an earnings release or material news or a material event relating to the Company
occurs; or (2) prior to the expiration of the 90-day restricted period, the Company announces that
it will release earnings results during the 16-day period beginning on the last day of the 90-day
period, the restrictions imposed by this Letter Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence
of the material news or material event, unless Merrill Lynch and JPMorgan waive, in writing, such
extension.
The undersigned hereby acknowledges and agrees that written notice of any extension of the
90-day restricted period pursuant to the previous paragraph will be delivered by Merrill Lynch and
JPMorgan to the Company and that any such notice properly delivered will be deemed to
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have been given to, and received by, the undersigned. The undersigned further agrees that, prior to
engaging in any transaction or taking any other action that is subject to the terms of this Letter
Agreement during the period from the date of this Letter Agreement to and including the
34th day following the expiration of the initial 90-day restricted period, it will give
notice thereof to the Company and will not consummate such transaction or take any such action
unless it has received written confirmation from the Company that the 90-day restricted period (as
may have been extended pursuant to the previous paragraph) has expired.
In furtherance of the foregoing, the undersigned also agrees and consents to the entry of stop
transfer instructions with the Companys transfer agent and registrar against the transfer of the
undersigneds shares of Common Stock except in compliance with the foregoing restrictions. The
undersigned hereby represents and warrants that the undersigned has full power and authority to
enter into this Letter Agreement. All authority herein conferred or agreed to be conferred and any
obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not become effective, or
if the Underwriting Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Securities to be sold
thereunder, the undersigned shall be released from all obligations under this Letter Agreement.
The undersigned understands that the you are entering into the Underwriting Agreement and
proceeding with the Public Offering in reliance upon this Letter Agreement. This Letter Agreement
shall be governed by and construed in accordance with the laws of the State of New York, without
regard to the conflict of laws principles thereof.
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exv5w1
Exhibit 5.1
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December 7, 2006
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D. Bradley Peck |
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MannKind Corporation
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T: (858) 550-6012 |
28903 North Avenue Paine
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bpeck@cooley.com |
Valencia, CA 91355 |
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Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection with the offering by
MannKind Corporation, a Delaware corporation (the Company), of up to 20,000,000 shares
of the Companys common stock, par value $0.01 (the Shares), plus an aggregate of $100,000,000
principal amount of the Companys 3.75% Senior Convertible Notes due 2013 (the Notes) convertible
into 4,450,020 shares of the Companys common stock (the Conversion Shares), pursuant to a
Registration Statement on Form S-3 (No. 333-138373) (the Initial Registration Statement), filed
with the Securities and Exchange Commission (the Commission) under the Securities Act of 1933, as
amended (the Act), a Registration Statement on Form S-3 (No. 333-139154) filed with the SEC pursuant to Rule
462(b) of the Act (the 462(b) Registration Statement and collectively with the Initial
Registration Statement, the Registration Statements), the prospectus included within the Initial
Registration Statement (the Base Prospectus), and the prospectus supplements dated November 27,
2006 and December 7, 2006 filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations of the Act (the Prospectus Supplements) . (The Base Prospectus and
Prospectus Supplements are collectively referred to as the Prospectus.) The Notes will be issued
pursuant to the Indenture dated as of November 1, 2006 between the Company and Wells Fargo Bank
Minnesota, National Association, as Trustee (as defined therein), (the Indenture) and a First Supplemental Indenture
(the Supplemental Indenture) to be entered into between the Company and Wells Fargo Bank
Minnesota, National Association, as Trustee, on the date the Notes are issued.
In connection with this opinion, we have examined and relied upon the Registration Statements
and Prospectus, the Indenture, the form of Supplemental Indenture, the form of Note contained in
the Supplemental Indenture, the Companys Amended and Restated Certificate of Incorporation and
Bylaws, and the originals or copies certified to our satisfaction of such records, documents,
certificates, memoranda and other instruments as in our judgment are necessary or appropriate to
enable us to render the opinion expressed below.
Our opinion herein is expressed solely with respect to the federal laws of the United States, the
Delaware General Corporation Law and, as to the Notes constituting valid and legally binding
obligations of the Company, solely with respect to the laws of the State of New York. Our opinion
is based on these laws as in effect on the date hereof. We express no opinion as to whether the
laws of any jurisdiction are applicable to the subject matter hereof. We are not
rendering any opinion as to compliance with any federal or state antifraud law, rule or regulation
relating to securities, or to the sale or issuance thereof.
4401 EASTGATE MALL SAN DIEGO CA 92121 T: (858) 550-6000 F: (858) 550-6420 WWW.COOLEY.COM
MannKind Corporation
December 7, 2006
Page Two
In rendering this opinion, we have assumed the genuineness and authenticity of all signatures on
original documents; the genuineness and authenticity of all documents submitted to us as originals;
the conformity to originals of all documents submitted to us as copies; the accuracy, completeness
and authenticity of certificates of public officials; and the due authorization, execution and
delivery of all documents where authorization, execution and delivery are prerequisites to the
effectiveness of such documents.
We have assumed that the Supplemental Indenture will be duly executed and delivered by the Company
and the Trustee in the form approved by the Companys Board of Directors (or a duly formed
committee thereof) and that the terms of the Supplemental Indenture are as described in the
Registration Statements and Prospectus.
On the basis of the foregoing, and in reliance thereon, we are of the opinion that (i) the Shares,
when sold in accordance with the Registration Statements and Prospectus, will be validly issued,
fully paid and nonassessable, (ii) when duly executed and delivered by the Company, authenticated
by the Trustee in accordance with the terms of the Indenture and Supplemental Indenture and issued
and delivered to the purchasers thereof against payment therefor, the Notes will be valid and
legally binding obligations of the Company, enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws relating to or affecting creditors
rights generally and by general principles of equity and limitations on availability of equitable
relief, including specific performance (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and (iii) the Conversion Shares, when issued in accordance with
the terms of the Notes, will be validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption Legal Matters in the Prospectus and to
the filing of this opinion as an exhibit to the Registration Statements.
Very truly yours,
Cooley Godward Kronish LLP
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By:
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/s/ D. Bradley Peck
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D. Bradley Peck |
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4401 EASTGATE MALL SAN DIEGO CA 92121 T: (858) 550-6000 F: (858) 550-6420 WWW.COOLEY.COM