SHARE LENDING AGREEMENT Dated as of August 18, 2010 Among MANNKIND CORPORATION (“Lender”), and BANK OF AMERICA, N.A. (“Borrower”).
EXHIBIT
99.2
EXECUTION VERSION
Dated as of August 18, 2010
Among
MANNKIND CORPORATION (“Lender”),
and
BANK OF AMERICA, N.A. (“Borrower”).
This Share Lending Agreement (this “Agreement”) sets forth the terms and conditions under
which Borrower may borrow from Lender shares of Lender’s Common Stock.
The parties hereto agree as follows:
Section 1. Certain Definitions. The following capitalized terms shall have the following
meanings:
“Borrowing Notice” means a written notice from Borrower to Lender specifying the number of
Loaned Shares (not to exceed the Maximum Number of Shares) and the date and time for the
commencement of the Loan, which time and date shall not be earlier than 9:00 a.m. New York City on
the second Business Day following receipt by Lender of the Borrowing Notice, and shall not be later
than 9:00 a.m. on the Closing Date.
“Business Day” means a day on which (i) regular trading occurs in the principal trading market
for the Common Stock and (ii) the Clearing Organization is open.
“Cash” means any coin or currency of the United States as at the time shall be legal tender
for payment of public and private debts.
“Clearing Organization” means The Depository Trust Company, or, if agreed to by Borrower and
Lender, a Securities Intermediary at which Borrower and Lender both maintain accounts.
“Closing Date” means the closing date of the initial issuance of the Convertible Notes.
“Common Stock” means shares of Common Stock, par value $0.01 per share, of Lender; provided
that, if the Common Stock shall be exchanged or converted into any stock, other securities or other
property or assets or any
combination thereof (excluding cash) (the “Reference Property”) as the result of (a) any
recapitalization, reclassification or change of the Common Stock (other than changes resulting from
a subdivision or combination of the Common Stock), (b) any consolidation, merger or combination
involving Lender, (c) any sale, conveyance or lease to another corporation of all or substantially
all of Lender’s property and assets or (d) any statutory share exchange (any of clauses (a), (b),
(c) or (d), a “Merger Event”), then, effective upon the effectiveness of such transaction, one
share of Common Stock shall be deemed to be the amount and type of such Reference Property received
in exchange for or upon conversion of one share of Common Stock (including any share as
reclassified). For purposes of the foregoing, where a share of Common Stock may be converted or
exchanged into more than a single type of Reference Property based upon any form of stockholder
election, such consideration will be deemed to be the weighted average of the types and amounts of
Reference Property received by the holders of the Common Stock that affirmatively make such an
election.
“Convertible Notes” means the $100,000,000 aggregate principal amount of 5.75% Senior
Convertible Notes due 2015 issued by Lender, or up to $115,000,000 aggregate principal amount to
the extent the option to purchase additional Convertible Notes is exercised in full as set forth in
the underwriting agreement relating to the Convertible Notes.
“Disrupted Day” means any Business Day on which any of the following occurs: (i) any
suspension of or limitation imposed on trading relating to the Common Stock or futures or options
contracts relating to the Common Stock by the principal U.S. exchange on which the Common Stock is
traded, or any exchange or quotation system where trading has a material effect on the overall
market for such futures or options contracts, (ii) any event that disrupts or impairs (as
determined by Borrower in its commercially reasonable judgment) the ability of market participants
in general to effect transactions in or obtain market values for the Common Stock or any such
futures or options contracts, or (iii) the closure on any Business Day of any such exchange or
quotation system prior to its scheduled closing time.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Lender’s Designated Account” means the securities account of Lender maintained on the books
of Borrower, as Securities Intermediary (account number 6ZJ-10064), established simultaneously with
the execution of this Agreement.
“Loaned Shares” means shares of Common Stock initially transferred to Borrower pursuant to
Section 2; provided that upon the termination of any portion of the Loan, the number of Loaned
Shares shall be reduced by the number of Loaned Shares transferred by Borrower to Lender; provided
further that in respect of any such share of Common Stock initially transferred to Borrower by
Lender and subsequently transferred by Borrower to another transferee, “Loaned Shares” means an
equivalent number of shares of identical Common Stock. If, as a result
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of a stock split (excluding, for the avoidance of doubt, any share dividend) or reverse stock
split, the number of outstanding shares of Common Stock is increased or decreased, then the number
of Loaned Shares shall be proportionately increased or decreased, as the case may be. If, pursuant
to the definition of Common Stock, a share of Common Stock is deemed to be stock, other securities
or other property or assets as specified therein, then each Loaned Share shall correspondingly
change to include Reference Property. For purposes of return of Loaned Shares by Borrower pursuant
to Section 4 or purchase or sale of securities pursuant to Section 10, such term shall mean
securities of the same issuer, class and quantity as the Loaned Shares as adjusted pursuant to the
two preceding sentences.
“Maximum Number of Shares” means 9,000,000 shares of Common Stock.
“Relevant Price” on any Business Day means, with respect to the Common Stock, the dollar
volume weighted average price per share of Common Stock for such Business Day based on transactions
executed during such Business Day, as reported on Bloomberg Screen “MNKD.UQ <Equity> VAP
<Go>.” (or any successor thereto); or, in the event such price is not so reported on such
Business Day for any reason, as reasonably determined by the Borrower.
“Securities Act” means the Securities Act of 1933, as amended.
“Securities Intermediary” means a “securities intermediary” as defined by Section 8-102(a)(14)
of the UCC.
“UCC” means the Uniform Commercial Code, as in effect in the State of New York, as in effect
from time to time. Any reference to particular sections of the UCC shall be deemed to embrace
successor renumbered provisions thereof.
Section 2. Loan of Shares; Transfers of Loaned Shares.
(a) Subject to the terms and conditions of this Agreement, Lender hereby agrees to make
available for borrowing by Borrower, on or prior to the closing date of the initial issuance of
Convertible Notes (the “Closing Date”), a number of shares of Common Stock up to the Maximum Number
of Shares.
(b) Subject to the terms and conditions of this Agreement, Borrower may by delivery of a
Borrowing Notice to Lender on or prior to the Closing Date, seek to initiate a transaction in which
Lender will lend shares of Common Stock to Borrower through the issuance by Lender of such Loaned
Shares to Borrower upon the terms, and subject to the conditions, set forth in this Agreement (such
issuance and loan, the “Loan”). The Loan shall be confirmed by a schedule and receipt listing the
Loaned Shares provided by Lender to Borrower (the “Confirmation”). Such Confirmation shall
constitute conclusive evidence with
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respect to the Loan, including the number of shares of Common Stock that are the subject of
the Loan.
(c) Notwithstanding anything to the contrary in this Agreement, Borrower shall not be
permitted to borrow or have any right to take delivery of, or otherwise receive or be deemed to
have received, any shares of Common Stock hereunder to the extent (but only to the extent) that
after such receipt of such Common Stock (i) the “beneficial ownership” (within the meaning of
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of Common
Stock by Borrower or any affiliate of Borrower or other person subject to aggregation with Borrower
under such Section 13(d) and such rules (Borrower and any such affiliate or other person,
collectively, “Borrower Group”) would exceed 4.5%, as determined by Borrower in its sole
discretion, (ii) Borrower would be subject to Section 16(b) of the Exchange Act, (iii) Borrower or
any “affiliate” or “associate” of Borrower would be an “interested stockholder” of Lender, as all
such terms are defined in Section 203 of the Delaware General Corporation Law or (iv) Borrower,
Borrower Group (as defined below) or any person whose ownership position would be aggregated with
Borrower or Borrower Group (Borrower, Borrower Group or any such person, a “Borrower Person”) under
any federal, state or local laws, regulations or regulatory orders applicable to ownership of
Common Stock (“Applicable Laws”), owns, beneficially owns, constructively owns, holds the power to
vote or otherwise meets a relevant definition of ownership in excess of a number of shares of
Common Stock equal to (a) the number of shares of Common Stock that would give rise to a reporting
or registration obligation or other requirement (including obtaining prior approval by a state or
federal regulator) of a Borrower Person under Applicable Laws, and with respect to which such
requirements have not been met or the relevant approval has not been received or that would give
rise to any consequences under the constitutive documents of Lender or any contract or agreement to
which Lender is a party, in each case minus (b) 1% of the number of shares of Common Stock
outstanding on the date of determination, in each case as determined by Borrower in its sole
discretion (each of clauses (i) to (iv) above, an “Ownership Limitation”), and if the Loan breaches
any Ownership Limitation, the Loan shall be void and have no effect to the extent (but only to the
extent) of such breach. If any delivery owed to Borrower hereunder is not made, in whole or in
part, as a result of an Ownership Limitation, Lender’s obligation to make such delivery shall not
be extinguished and Lender shall make such delivery as promptly as practicable after, but in no
event later than one Business Day after, Borrower gives notice to Lender that such delivery would
not result in any Ownership Limitation being breached. If, notwithstanding the foregoing, any
delivery of Common Stock is erroneously made to Borrower or Borrower otherwise receives or is
deemed to have received Common Stock in excess of the foregoing limitation contrary to the first
sentence of this clause (c), such Common Stock shall remain the property of Lender and Borrower
shall be deemed to hold the same as bailee of Lender and shall have no voting, dispositive control
or pecuniary interest with respect thereto.
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(d) Lender shall transfer to Borrower a number of shares of Common Stock equal to the number
of Loaned Shares specified in the Borrowing Notice on or before the time and date specified in the
Borrowing Notice for the commencement of the Loan in the manner set forth under Section 11 below.
Section 3. Loan Fee. Borrower agrees to pay Lender a single loan fee per Loan (a “Loan Fee”)
equal to $0.01 per Loaned Share. The Loan Fee shall be paid by Borrower on or before the time of
transfer of the Loaned Shares pursuant to Section 2(d) on a delivery-versus-payment basis through
the facilities of the Clearing Organization. In addition to all other consideration provided
pursuant to this Agreement or otherwise, Lender agrees that the Loan Fee will constitute
consideration for the issuance of the Loaned Shares to be issued by Lender.
Section 4. Loan Terminations.
(a) Borrower may terminate all or any portion of the Loan on any Business Day by giving
written notice thereof to Lender and transferring the corresponding number of Loaned Shares to
Lender (with an amount of cash determined by Borrower in its reasonable discretion in lieu of
fractional Loaned Shares), without any consideration being payable in respect thereof by Lender to
Borrower.
(b) Subject to Section 10, the Loan shall terminate on the date this Agreement terminates
pursuant to Section 13 (the “Facility Termination Date”) and all outstanding Loaned Shares shall be
delivered by Borrower to Lender (with an amount of cash determined by Borrower in its reasonable
discretion in lieu of fractional Loaned Shares), without any consideration being payable in respect
thereof by Lender to Borrower, no later than the fifth Business Day following the Facility
Termination Date.
(c) Subject to Section 10, if the Loan or any portion thereof is terminated upon the
occurrence of a Default as set forth in Section 9, the Loaned Shares shall be delivered by Borrower
to Lender, without any consideration being payable in respect thereof by Lender to Borrower, no
later than the third Business Day following the termination date of such Loan, as provided in
Section 9.
(d) If, pursuant to a Merger Event, the Common Stock is changed, reclassified, exchanged for,
or converted into, Reference Property, then:
(i) if such Reference Property consists entirely of cash, the Loan shall terminate on
the date of effectiveness of any such change, reclassification, exchange or conversion and
Borrower shall, on or prior to the fifth Business Day following such effective date, pay,
in full satisfaction of any obligation to return Loaned Shares hereunder, cash in an
amount equal to the product of (A) the number of Loaned Shares outstanding immediately
prior to such effective date and (B) the amount of
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cash per share of Common Stock received by holders of Common Stock in such event; and
(ii) if such Reference Property consists of both cash and securities or other
property, (A) the Loan shall not terminate as a result of any such event, (B) the amount
of Loaned Shares shall be adjusted as set forth in the definition thereof, and (C)
Borrower shall, on the fifth Business Day following the effective date of any such
exchange or conversion, pay cash in an amount equal to the product of (1) the number of
Loaned Shares outstanding immediately prior to such effective date (without, for the
avoidance of doubt, giving effect to any adjustment) and (2) the amount of cash per share
of Common Stock received by holders of Common Stock in such event.
(e) For the avoidance of doubt, Borrower may deliver shares of Common Stock that are subject
to restrictions under the Securities Act to Lender in respect of any part of its obligation to
return Loaned Shares hereunder.
Section 5. Distributions.
(a) If (i) Lender pays a cash dividend or makes a cash distribution in respect of all of its
outstanding Common Stock, and (ii) as of the record date for such cash dividend or distribution the
Loan or any portion thereof remains outstanding, Borrower shall pay to Lender, within three
Business Days after the payment of such dividend or distribution, an amount in cash equal to the
product of (x) the amount per share of such dividend or distribution and (y) the number of Loaned
Shares outstanding as of the record date of such dividend or distribution.
(b) If at any time when the Loan or any portion thereof is outstanding under this Agreement,
Lender makes a distribution in respect of all of its outstanding Common Stock (other than a
distribution upon liquidation or a reorganization in bankruptcy) in property or securities,
including any options, warrants, rights or privileges in respect of securities and including any
distribution of Common Stock (a “Non—Cash Distribution”), then as of the date such Non-Cash
Distribution is paid, such Non-Cash Distribution shall be deemed to be included in the Loan and
each “Loaned Share” shall be deemed to include the per share of Common Stock kind and amount of
such Non-Cash Distribution; provided that in lieu of the Non-Cash Distribution being included in
the Loan and the Loaned Shares, Borrower may deliver to Lender, within three business days after
the payment of such Non-Cash Distribution, the market value of the product of (x) the amount per
share of Common Stock of such Non-Cash Distribution and (y) the number of Loaned Shares outstanding
as of the record date of such Non-Cash Distribution, as determined by the Borrower in accordance
with market practice for the property or securities constituting the Non-Cash Distribution;
provided further that if Borrower returns any Loaned Shares to Lender following a record date for
such a Non-Cash Distribution but prior to the payment of such Non-Cash Distribution, Borrower shall
deliver to Lender, at Borrower’s election,
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either (A) an amount of such Non-Cash Distribution equal to the product of (x) the amount per
share of Common Stock of such Non-Cash Distribution and (y) the number of Loaned Shares so returned
or (B) the market value of the property and securities described in clause (A) as determined by
Borrower in accordance with market practice for the property or securities constituting the
Non-Cash Distribution, in either case within three Business Days after the payment of such Non-Cash
Distribution.
Section 6. Rights in Respect of Loaned Shares. Subject to the terms of this Agreement, and
except as otherwise agreed by Borrower and Lender, Borrower, insofar as it is the record owner of
Loaned Shares, shall have all of the incidents of ownership in respect of any such Loaned Shares
until such Loaned Shares are required to be delivered to Lender in accordance with the terms of
this Agreement, including the right to transfer the Loaned Shares to others with all such incidents
of ownership. Borrower agrees that it or any of its affiliates that are the record or beneficial
owner of any Loaned Shares (x) held by Borrower or any of its affiliates prior to any sale thereof
under a registration statement by Borrower or its affiliate or (y) held by Borrower or its
affiliate specifically for the purpose of hedging this Agreement and facilitating the hedging of an
investment in Convertible Notes by holders thereof as determined by Borrower in its sole discretion
(other than, for the avoidance of doubt, any Common Stock that is held in the account of, and
beneficially owned by, any unaffiliated third party, where such third party has the power to direct
the vote of such Common Stock), will not vote or provide any consent or take any similar action
with respect to such Loaned Shares on any matter submitted to a vote of Lender’s stockholders
during the term of the Loan.
Section 7. Representations and Warranties.
(a) Each of Borrower and Lender represents and warrants to the other that as of the date
hereof:
(i) it has full power to execute and deliver this Agreement, to enter into the Loan
contemplated hereby and to perform its obligations hereunder;
(ii) it has taken all necessary action to authorize such execution, delivery and
performance;
(iii) this Agreement constitutes its legal, valid and binding obligation enforceable
against it in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity) and
except that rights to indemnification and contribution
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hereunder may be limited by federal or state securities laws or public policy
relating thereto;
(iv) the execution, delivery and performance of this Agreement does not and will not
violate, contravene, or constitute a default under, (A) its certificate of incorporation,
bylaws or other governing documents, (B) any laws, rules or regulations of any
governmental authority to which it is subject, (C) any contracts, agreements or instrument
to which it is a party or (D) any judgment, injunction, order or decree by which it is
bound, except, in the case of each of clauses (B), (C) and (D), for any such violation,
contravention or default that would not reasonably be expected to (I) have a material
adverse effect on the financial condition, business, properties or results of operations
of Lender and its subsidiaries, or Borrower and its affiliates, as applicable, taken as a
whole or (II) materially impair Borrower’s or Lender’s, as applicable, ability to perform
its obligations under this Agreement; and
(v) this Agreement is not unsuitable for it in the light of such party’s financial
situation, investment objectives and needs and it is entering into this Agreement in
reliance upon such tax, accounting, regulatory, legal and financial advice as it deems
necessary and not upon any view expressed by the other.
(b) Lender represents and warrants to Borrower, as of the date hereof, and as of the date the
Loaned Shares are transferred to Borrower pursuant to Section 2(d) hereof, and agrees with
Borrower, that:
(i) The Loaned Shares and all other outstanding shares of Common Stock of Lender have
been duly authorized and, upon the issuance and delivery of the Loaned Shares to Borrower
in accordance with the terms and conditions hereof, and subject to the contemporaneous or
prior receipt of the applicable Loan Fee by Lender, the Loaned Shares will be duly
authorized, validly issued, fully paid non-assessable shares of Common Stock; and the
stockholders of Lender have no preemptive rights with respect to the Loaned Shares.
(ii) Lender acknowledges that Borrower is not making any representations or
warranties or taking any position or expressing any view with respect to the treatment of
the Agreement or transactions contemplated hereby under any accounting standards including
ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, ASC Topic 480,
Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging —
Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s
Liabilities & Equity Project.
(iii) To Lender’s knowledge, no state or local (including non-U.S. jurisdictions)
law, rule, regulation or regulatory order applicable to
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the Common Stock (excluding banking laws, rules, regulations or regulatory orders and
any other law, rule, regulation or regulatory order that is applicable to Borrower due to
the nature of Borrower’s business) in any jurisdiction in which Lender or any subsidiary
thereof is organized, conducts business, operates or is licensed on the date hereof would
give rise to any reporting, consent, registration or other requirement (including without
limitation a requirement to obtain prior approval from any person or entity) solely as a
result of Borrower or its affiliates owning or holding (however defined) shares of Common
Stock.
(iv) It is entering into the Agreement in good faith and not as part of a plan or
scheme to evade compliance with federal securities laws including, without limitation,
Rule 10b-5 under the Exchange Act or any other antifraud or anti-manipulation provisions
of the federal or applicable state securities laws.
(c) Lender represents and warrants to Borrower, as of the date hereof and as of the date the
Loaned Shares are transferred to Borrower pursuant to Section 2(d) hereof, that the outstanding
shares of Common Stock are listed on The NASDAQ Global Market (the “NASDAQ”) and, as of the date
any Loaned Shares are transferred to Borrower pursuant to Section 2(d) hereof, (1) a listing
application for the Loaned Shares shall have been submitted to NASDAQ and (2) NASDAQ shall not have
rejected such application.
(d) Borrower and Lender agree that the Loan shall be accounted for, as of the date of this
Agreement (and, for the avoidance of doubt, without giving effect to any change in generally
accepted accounting principles, or the application thereof, that is made after the date of this
Agreement and that applies to Lender retroactively), as a single transaction under EITF 09-01, not
representing the repurchase of shares of Common Stock or another equivalent transaction but rather,
consistent with the intent of the parties, representing a loan of shares of Common Stock by Lender
to Borrower.
(e) The representations and warranties of Borrower and Lender under this Section 7 shall
remain in full force and effect at all times during the term of this Agreement and shall survive
the termination of this Agreement for any reason.
Section 8. Covenants.
(a) Borrower covenants and agrees with Lender that it will not transfer or dispose of any
Loaned Shares transferred to Borrower by Lender hereunder of which it is the record owner except
pursuant to a registration statement that is effective under the Securities Act; provided that
Borrower may transfer any such Loaned Shares to any of its affiliates without a registration
statement so long as such affiliate transferee does not transfer or dispose of such Loaned Shares
to any non-affiliated transferee except pursuant to a registration statement that is effective
under the Securities Act.
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(b) Lender agrees and acknowledges that Borrower has represented to Lender that Borrower is a
“financial institution” within the meaning of Section 101(22) of the Bankruptcy Code. The parties
hereto further agree and acknowledge (A) that this Agreement is intended to be a “securities
contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a “settlement payment,” or “margin payment,” as such terms
are defined in Section 741(8) and Section 741(5) of the Bankruptcy Code, and a “transfer,” as such
term is defined in Section 101(54) of the Bankruptcy Code, and (B) that Borrower is intended to be
entitled to the protections afforded by, among other sections, Sections 362(b)(6), 546(e) and 555
of the Bankruptcy Code.
(c) Lender covenants and agrees that, at least ten days prior to effecting any repurchase of
shares of Common Stock, Lender shall give Borrower a written notice of the estimated number of its
outstanding shares of Common Stock after giving effect to such repurchase (a “Repurchase Notice”)
if, following such repurchase, the Outstanding Borrow Percentage, as determined on the day of such
repurchase after giving effect thereto, shall have increased by more than 0.5% since the
immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, the
number of outstanding shares of Common Stock as of the date hereof). The “Outstanding Borrow
Percentage” as of any day is the fraction (A) the numerator of which is the number of Loaned Shares
outstanding on such day and (B) the denominator of which is the number of shares of Common Stock
outstanding on such day, including such Loaned Shares.
(d) Lender covenants and agrees that, unless otherwise agreed to by Borrower in writing,
Lender shall not, and shall not permit any of its direct or indirect subsidiaries, or any entity or
person controlled by Lender, to, directly or indirectly, purchase shares of Common Stock if, after
giving effect to such purchase, the number of outstanding Loaned Shares shall be in excess of 9.0%
of the number of outstanding shares of Common Stock at such time.
(e) Borrower covenants and agrees that it shall not, and shall not permit any of its direct or
indirect subsidiaries to, directly or indirectly acquire record or beneficial ownership of shares
of Common Stock (other than the Loaned Shares) if, as a result of such acquisition, it or any of
its affiliates would become a beneficial owner of 9.0% or more of the number of outstanding shares
of Common Stock at such time.
(f) Lender covenants and agrees that, on the date hereof, Lender shall provide to Borrower a
properly executed Internal Revenue Service Form W-9.
(g) Borrower covenants and agrees with Lender that, insofar as Borrower or any of its
affiliates is the record owner of any Loaned Shares, such Loaned Shares shall be used for the
purpose of (x) directly or indirectly facilitating the sale of the Convertible Notes and hedging
activities (including short sales of Loaned Shares or entry into cash-settled swap agreements with
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regard to the Common Stock) (all such facilitation and hedging activities, the “Hedging
Activities”) relating to the Convertible Notes by the holders thereof or (y) performing Borrower’s
obligations under this Agreement during any Scheduled Unwind Period.
(h) Lender covenants and agrees with Borrower that it shall have no interest whatsoever in any
of the proceeds that Borrower or its affiliates may receive in connection with the Hedging
Activities and that Borrower or its affiliates shall be entitled to all such proceeds, if any.
(i) Lender covenants and agrees that upon the occurrence of any event described in clause (a)
— (d) in the definition of “Common Stock” that results in right of holders of Common Stock to
receive more than one type of consideration based upon any form of stockholder election, Lender
shall notify Borrower promptly (but in any case prior to the effective date of such event) of the
weighted average of the types and amounts of Reference Property received by the holders of the
Common Stock that affirmatively make such an election.
Section 9. Events of Default.
(a) The Loan may, at the option of Lender by a written notice to Borrower, be terminated (i)
immediately upon the occurrence of any of the events set forth in Section 9(a)(iii) or Section
9(a)(iv) below and (ii) two Business Days following such notice upon the occurrence of any of the
other events set forth below (each, a “Borrower Default”):
(i) Borrower fails to deliver Loaned Shares to Lender as required by Section 4,
subject to Section 10;
(ii) Borrower fails to deliver or pay to Lender when due any cash, securities or
other property as required by Section 5;
(iii) the filing by or on behalf of Borrower of a voluntary petition or an answer
seeking reorganization, arrangement, readjustment of its debts or for any other relief
under any bankruptcy, reorganization, receivership, compromise, arrangement, insolvency,
readjustment of debt, dissolution, moratorium, delinquency, winding-up or liquidation or
similar act or law, of any state, federal or other applicable foreign jurisdictions, now
or hereafter existing (“Bankruptcy Law”), or any action by Borrower for, or consent or
acquiescence to, the appointment of a receiver trustee, conservatory, custodian or similar
official of Borrower, or of all or a substantial part of its property; or the making by
Borrower of a general assignment for the benefit of creditors; or the admission by
Borrower in writing of its inability to pay its debts as they become due;
(iv) the filing of any involuntary petition against Borrower in bankruptcy or seeking
reorganization, arrangement, readjustment of its
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debts or for any other relief under any Bankruptcy Law and an order for relief by a
court having jurisdiction in the premises shall have been issued or entered therein; or
any other similar relief shall be granted under any applicable federal or state law or law
of any other applicable foreign jurisdictions; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator,
trustee or other officer having similar powers over Borrower or over all or a part of its
property shall have been entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of Borrower or of all or a substantial part of its property; or
the issuance of a warrant of attachment, execution or similar process against any
substantial part of the property of Borrower; and continuance of any such event for 15
consecutive calendar days unless dismissed, bonded to the satisfaction of the court having
jurisdiction in the premises or discharged;
(v) Borrower fails to provide any indemnity as required by Section 12;
(vi) Borrower notifies Lender of its inability to or intention not to perform
Borrower’s obligations hereunder or otherwise disaffirms, rejects or repudiates any of its
obligations hereunder; or
(vii) any representation made by Borrower under this Agreement in connection with the
Loan hereunder shall be incorrect or untrue in any material respect during the term of the
Loan or Borrower fails to comply in any material respect with any of its covenants under
this Agreement.
(b) The Loan may, at the option of Borrower by a written notice to Lender, be terminated two
Business Days following such notice by Borrower upon the occurrence of any of the events set forth
below (each, a “Lender Default”):
(i) the filing by or on behalf of Lender of a voluntary petition or an answer seeking
reorganization, arrangement, readjustment of its debts or for any other relief under any
Bankruptcy Law, or any action by Lender for, or consent or acquiescence to, the
appointment of a receiver, trustee, custodian or similar official of Lender, or of all or
a substantial part of its property; or the making by Lender of a general assignment for
the benefit of creditors; or the admission by Lender in writing of its inability to pay
its debts as they become due; or
(ii) the filing of any involuntary petition against Lender in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts or for any other relief under any
Bankruptcy Law and an order for relief by a court having jurisdiction in the premises
shall have been issued or entered therein; or any other similar relief shall be granted
under any
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applicable federal or state law or law of any other applicable foreign jurisdictions;
or a decree or order of a court having jurisdiction in the premises for the appointment of
a receiver, liquidator, sequestrator, trustee or other officer having similar powers over
Lender or over all or a part of its property shall have been entered; or the involuntary
appointment of an interim receiver, trustee or other custodian of Lender or of all or a
substantial part of its property; or the issuance of a warrant of attachment, execution or
similar process against any substantial part of the property of Lender; and continuance of
any such event for 45 consecutive calendar days unless dismissed, bonded to the
satisfaction of the court having jurisdiction in the premises or discharged.
Section 10. Borrower’s Right to Extend; Lender’s Remedies.
(a) Except to the extent a Loan is terminated pursuant to Section 9 as a result of a Borrower
Default, Borrower may, following the termination of any portion of the Loan pursuant to Section 4,
delay the date on which the related Loaned Shares are due to Lender (the “Settlement Due Date” as
so delayed to the extent applicable), with respect to some or all of such Loaned Shares, if
Borrower determines in good faith upon the advice of counsel that such extension is necessary or
appropriate to enable Borrower or any of its affiliates to effect purchases of Common Stock to
deliver to Lender pursuant to this Agreement in a manner that (x) is, or would be, in compliance
with legal and regulatory requirements (i) applicable to Borrower or such affiliates in purchasing
such shares of Common Stock or (ii) if Borrower were deemed to be Lender or an affiliated purchaser
of Lender, that would be applicable to Lender in purchasing such shares of Common Stock and (y)
shall not be commercially impracticable, in the reasonable judgment of Borrower, in the time period
required by Section 4.
(b) If, upon the termination of any Loan pursuant to Section 4 and the purchase of Common
Stock in an amount equal to all or any portion of the Loaned Shares to be delivered to Lender by
Borrower in accordance with Section 4 of this Agreement (i) shall be prohibited by any law, rules
or regulation of any governmental authority to which it is or would be subject, (ii) shall violate,
or would upon such purchase likely violate, any order or prohibition of any court, tribunal or
other governmental authority, (iii) shall require the prior consent of any court, tribunal or
governmental authority prior to any such repurchase or (iv) would subject Borrower, in the
commercially reasonable judgment of Borrower, to any liability or potential liability under any
applicable federal securities laws (including, without limitation, Section 16 of the Exchange Act
or applicable banking regulations) (each of (i), (ii), (iii) and (iv), a “Legal Obstacle”), then,
in each case, Borrower shall immediately notify Lender of the Legal Obstacle and the basis
therefor, whereupon such Borrower’s obligations under Section 4 shall be suspended until such time
as no Legal Obstacle with respect to such obligations shall exist (a “Repayment Suspension”).
Following the occurrence of and during the continuation of any Repayment Suspension, Borrower shall
use its reasonable best efforts to remove or cure the Legal
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Obstacle as soon as
practicable and to deliver to Lender any Loaned Shares it actually acquires; provided that
Lender shall promptly reimburse all costs and expenses (including legal counsel to Borrower)
incurred or, at Borrower’s election, provide reasonably adequate surety or guarantee for any such
costs and expenses that may be incurred by Borrower, in each case in removing or curing such Legal
Obstacle.
(c) If Borrower is unable to remove or cure any Legal Obstacle within 10 Business Days, Lender
may elect to require Borrower, upon five Business Days’ advance written notice, to pay to Lender in
lieu of the delivery of Loaned Shares otherwise required to be delivered, an amount in immediately
available funds (the “Replacement Cash”) equal to the product of (A) the average of the Relevant
Prices over the 40 consecutive Business Day period immediately preceding the termination date of
the Loan and (B) the number of Loaned Shares otherwise required to be delivered that Borrower
failed to deliver; provided that if any Business Day in the 40 consecutive Business Day averaging
period described in clause (A) above is a Disrupted Day in full or in part, (x) such averaging
period shall be extended by one Business Day for each such Disrupted Day, and (y) the Borrower
shall calculate the amount of Replacement Cash according to an appropriately weighted average of
the Relevant Prices over such averaging period (as extended).
(d) If Borrower shall fail to deliver to Lender on the Settlement Due Date the applicable
Loaned Shares relating to any portion of the Loan that has been terminated under Section 4 and
Borrower is unable to remove or cure any Legal Obstacle within 10 Business Days or Borrower shall
fail to pay the Replacement Cash to Lender in accordance with Section 10(c) above (to the extent
Borrower is required to pay Replacement Cash), then, in either case, Lender shall have the right
(upon prior written notice to Borrower) to purchase a like number of shares of Common Stock (and,
Non-Cash Distributions, if applicable pursuant to Section 5(b)) (“Replacement Shares”) in the
principal market for such securities in a commercially reasonable manner (and Lender shall promptly
notify Borrower of the aggregate purchase price of the Replacement Shares upon the exercise of such
right). To the extent Lender shall exercise such right, Borrower’s obligation to return a like
amount of Loaned Shares or to pay the Replacement Cash, as applicable, shall terminate and Borrower
shall be liable to Lender for the purchase price of such Replacement Shares (plus all other
amounts, if any, due to Lender hereunder), all of which shall be due and payable within three
Business Days of notice to Borrower by Lender of the aggregate purchase price of the Replacement
Shares. The purchase price of Replacement Shares purchased under this Section 10 shall include
broker’s fees and commissions and all other reasonable costs, fees and expenses related to such
purchase and sale.
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Section 11. Transfers of Common Stock.
(a) The transfer of Loaned Shares to Borrower hereunder shall be made by the crediting by a
Clearing Organization of such Loaned Shares to Borrower’s “securities account” (within the meaning
of Section 8-501 of the UCC) maintained with such Clearing Organization. All transfers of Loaned
Shares to Lender hereunder shall be made by the crediting of such Loaned Shares to Lender’s
Designated Account (whereupon, for the avoidance of doubt, such Loaned Shares credited to Lender’s
Designated Account shall become the property of Lender, and Borrower shall have no voting,
dispositive control or pecuniary interest with respect thereto). In every transfer of “financial
assets” (within the meaning of Section 8-102(a)(9) of the UCC) hereunder, the transferor shall take
all steps necessary (i) to effect a delivery of such financial assets to the transferee under
Section 8-301 of the UCC, or to cause the creation of a security entitlement in favor of the
transferee in such financial assets under Section 8-501 of the UCC, (ii) to enable the transferee
to obtain “control” (within the meaning of Section 8-106 of the UCC), and (iii) to provide the
transferee with comparable rights under any similar law or regulation of any other jurisdiction
that is applicable to such transfer.
(b) Except as otherwise provided herein, all transfers of cash hereunder to Borrower or Lender
shall be by wire transfer in immediately available, freely transferable funds.
(c) A transfer of securities or cash may be effected under this Section 11 on any Business Day
except (i) a Business Day on which the transferee is closed for business at its address set forth
in Section 17 or (ii) a Business Day on which a Clearing Organization or wire transfer system is
closed, if the facilities of such Clearing Organization or wire transfer system are required to
effect such transfer. Any transfer not effected because of this clause (c) shall be made on the
next following Business Day on which such transfer may be made.
Section 12. Indemnities.
(a) Lender hereby agrees to indemnify and hold harmless Borrower and its affiliates and its
former, present and future directors, officers, employees and other agents and representatives from
and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens,
taxes, penalties, obligations and expenses (including, without limitation, any losses relating to
Borrower’s market activities as a consequence of becoming, or of the risk of becoming, subject to
Section 16(b) of the Exchange Act, including, without limitation, any forbearance from market
activities or cessation of market activities and any losses in connection therewith) incurred or
suffered by any such person or entity directly or indirectly arising from, by reason of, or in
connection with, (i) any breach by Lender of any of its representations or warranties contained in
Section 7 or (ii) any breach by Lender of any of its covenants or agreements in this Agreement
(including, without limitation, Section 8(c)).
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(b) Borrower hereby agrees to indemnify and hold harmless Lender and its affiliates and its
former, present and future directors, officers, employees and other agents and representatives from
and against any and all liabilities, judgments, claims, settlements, losses, damages, fees, liens,
taxes, penalties, obligations and expenses incurred or suffered by any such person or entity
directly or indirectly arising from, by reason of, or in connection with (i) any breach by Borrower
of any of its representations or warranties contained in Section 7 or (ii) any breach by Borrower
of any of its covenants or agreements in this Agreement.
(c) In case any claim or litigation which might give rise to any obligation of a party under
this Section 12 (each an “Indemnifying Party”) shall come to the attention of the party seeking
indemnification hereunder (the “Indemnified Party”), the Indemnified Party shall promptly notify
the Indemnifying Party in writing of the existence and amount thereof; provided that the failure of
the Indemnified Party to give such notice shall not adversely affect the right of the Indemnified
Party to indemnification under this Agreement, except to the extent the Indemnifying Party is
materially prejudiced thereby. The Indemnifying Party shall promptly notify the Indemnified Party
in writing if it accepts such claim or litigation as being within its indemnification obligations
under this Section 12. Such response shall be delivered no later than 30 days after the initial
notification from the Indemnified Party; provided that, if the Indemnifying Party reasonably cannot
respond to such notice within 30 days, the Indemnifying Party shall respond to the Indemnified
Party as soon thereafter as reasonably possible.
(d) An Indemnifying Party shall be entitled to participate in and, if (i) in the good faith
judgment of the Indemnified Party such claim can properly be resolved by money damages alone and
the Indemnifying Party has the financial resources to pay such damages and (ii) the Indemnifying
Party admits that this indemnity fully covers the claim or litigation, the Indemnifying Party shall
be entitled to direct the defense of any claim at its expense, but such defense shall be conducted
by legal counsel reasonably satisfactory to the Indemnified Party. An Indemnified Party shall not
make any settlement of any claim or litigation under this Section 12 without the written consent of
the Indemnifying Party.
Section 13. Termination of Agreement.
(a) This Agreement shall terminate upon the earliest of (i) the 45th Business Day following
the date as of which the entire principal amount of Convertible Notes ceases to be outstanding and
Lender has settled all payments or deliveries in respect of such Convertible Notes, whether as a
result of conversion, redemption, repurchase, cancellation, at maturity or otherwise, subject to
Section 10, (ii) the written agreement of Lender and Borrower to so terminate, (iii) August 24,
2010 (or such later date as Borrower and Lender shall have agreed which in no event shall be later
than September 7, 2010) (August 24, 2010 or such later date being the “Early Unwind Date”) if the
initial offering of the Convertible
16
Notes has not closed prior to such Early Unwind Date pursuant to the terms of the underwriting
agreement relating to the Convertible Notes, (iv) the occurrence of a Borrower Default, at the
option of Lender, as set forth in Section 9(a) and (v) the occurrence of a Lender Default, at the
option of Borrower, as set forth in Section 9(b).
(b) Unless otherwise agreed in writing by Borrower and Lender, the provisions of Section 12
shall survive the termination of this Agreement.
Section 14. Delegation. Neither party shall delegate its obligations under this Agreement
without the prior written consent of the other party, and any attempt to delegate obligations
arising under this Agreement without such consent shall be void; provided that notwithstanding the
foregoing and anything to the contrary herein, Borrower may designate any person to deliver or
receive Loaned Shares or cash to or from Lender when deliverable in accordance with this Agreement
and to otherwise perform Borrower’s obligations in respect of this Agreement and any such designee
may assume such obligations. Borrower shall only be discharged of its obligations to Lender to the
extent of any such delivery or performance.
Section 15. Transfer and Assignment of the Agreement. Neither party shall transfer or assign
its rights or obligations under this Agreement without the prior written consent of the other
party, and any attempt to transfer or assign any rights or obligations arising under this Agreement
without such consent shall be void; provided that notwithstanding the foregoing and anything to the
contrary herein, Borrower shall have the right to assign its rights and obligations under this
Agreement to any of Borrower’s affiliates or any other person of equal or better credit rating as
Borrower, or guaranteed by Borrower or an entity with equal or better credit rating as Borrower.
Section 16. Communications; Hedging. Lender acknowledges and agrees that (A) any purchases
or sales made by Borrower in respect of the Agreement shall be made in Borrower’s sole judgment and
for Borrower’s own account and (B) Lender does not have, and shall not attempt to exercise, any
influence over how, when or whether to effect such purchases or sales, including, without
limitation, the price paid or received per share pursuant to such transactions whether such
transactions are made on any securities exchange or privately. In addition, Lender shall not
communicate any material non-public information relating either to Lender or the Common Stock to
any employee of Borrower or its affiliates if Lender knows, or Borrower has notified Lender, that
such employee is involved in hedging Borrower’s market and price risk with respect to the Agreement
until the fifth Business Day following the termination of the Agreement.
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Section 17. Notices.
(a) All notices and other communications hereunder shall be in writing and shall be deemed to
have been duly given when received.
(b) All such notices and other communications shall be directed to the following address:
| (i) | If to Borrower to: | ||
| Bank of America, N.A. ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ |
|||
| (ii) | If to Lender to: | ||
| MannKind Corporation ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ |
(c) In the case of any party, at such other address as may be designated by written notice to
the other parties.
Section 18. Governing Law; Submission To Jurisdiction; Severability.
(a) This Agreement, and each claim, controversy or dispute arising hereunder or relating
hereto, shall be governed by and construed in accordance with the laws of the State of New York,
but excluding any choice of law provisions that would require the application of the laws of a
jurisdiction other than New York.
(b) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING
BROUGHT TO ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR THE LOAN
HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY
18
RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(d) To the extent permitted by law, the unenforceability or invalidity of any provision or
provisions of this Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
Section 19. Counterparts. This Agreement may be executed in any number of counterparts, and
all such counterparts taken together shall be deemed to constitute one and the same agreement.
Section 20. Amendments. No amendment or modification in respect of this Agreement shall be
effective unless it shall be in writing and signed by the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Share Lending Agreement as of the
date and year first above written.
| MANNKIND CORPORATION | BANK OF AMERICA, N.A. | |||||||||||||
| as Lender | as Borrower | |||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||||||
| Title: | Chief Financial Officer | Title: | Director | |||||||||||
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