FIFTH AMENDMENT TO FACILITY AGREEMENT

Exhibit 99.1

Execution Version

FIFTH AMENDMENT TO FACILITY AGREEMENT

This FIFTH AMENDMENT TO FACILITY AGREEMENT (this “Amendment”) dated as of January 15, 2018, is by and among MannKind Corporation, a Delaware corporation (the “Borrower”), MannKind LLC, a Delaware limited liability company (“Guarantor”, and together with the Borrower, collectively, the “Obligors”), Deerfield Private Design Fund II, L.P. (“DPDF”) and Deerfield Private Design International II, L.P. (“DPDI” and, together with DPDF, the “Purchasers”). Capitalized terms used herein which are defined in the Facility Agreement (as defined below), unless otherwise defined herein, shall have the meanings ascribed to them in the Facility Agreement.

RECITALS:

A.    The Borrower and the Purchasers have entered into that certain Facility Agreement, dated as of July 1, 2013, as amended by the First Amendment to Facility Agreement and Registration Rights Agreement, dated as of February 28, 2014, the Second Amendment to Facility Agreement, dated as of August 11, 2014, the Exchange and Third Amendment to Facility Agreement, dated as of June 29, 2017 and the Fourth Amendment to Facility Agreement (the “Fourth Amendment”), dated as of October 23, 2017 (as the same may be further amended, modified, restated or otherwise supplemented from time to time, the “Facility Agreement”).

B.    In connection with the Fourth Amendment, the Borrower, the Purchasers and U.S. Bank National Association entered into that certain Escrow Agreement, dated as of October 30, 2017, as amended by the First Amendment to Escrow Agreement (the “Escrow Amendment”), dated as of the date hereof (as the same may be further amended, modified, restated or otherwise supplemented from time to time, the “Escrow Agreement”).

C.    The Facility Agreement provides for the issuance of Notes in 4 Tranches of $40,000,000 per Tranche. Prior to the date hereof, the Purchasers have purchased the Tranche 1 Notes, the Tranche 2 Notes, the Tranche 3 Notes and the Tranche 4 Notes in the aggregate principal amount of $40,000,000 per Tranche.

D.    Prior to the date hereof, (i) the Purchasers have converted $20,000,000 in principal amount of the Tranche 1 Notes, $5,592,749.50 in principal amount of the Tranche 4 Notes and all of the Tranche 2 Notes and the Tranche 3 Notes into Common Stock, (ii) the Tranche 1 Notes have been amended and restated (and are hereinafter referred to as the “Amended and Restated Notes”), and (iii) the Borrower has repaid $10,000,000 in principal amount of the Amended and Restated Notes and (through the exchange of principal for shares of Common Stock) $5,000,000 in principal amount of the Tranche 4 Notes, leaving $10,000,000 in principal amount of the Amended and Restated Notes and $29,407,251 in principal amount of the Tranche 4 Notes outstanding.

E.    The Facility Agreement also provides for the issuance of Tranche B Notes. An aggregate of $20,000,000 in principal amount of Tranche B Notes have been issued to the Purchasers, and the Borrower has repaid $5,000,000 in principal amount of the Tranche B Notes, leaving $15,000,000 in principal amount of the Tranche B Notes outstanding.

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F.    Pursuant to this Amendment (and subject to the terms and conditions hereof), the parties hereto desire to amend the Facility Agreement to defer the October 2017 Tranche 4 Principal Payment (as defined below) upon the terms, and subject to the conditions, set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I.

AMENDMENT OF FACILITY AGREEMENT

Section 1.01.    Amendment of Facility Agreement; Deferral. Notwithstanding anything to the contrary contained in the Facility Agreement (including Section 2.3 thereof) or the Notes, the $4,407,250.50 in remaining principal amount of the Tranche 4 Notes (the “October 2017 Tranche 4 Principal Payment”) that, prior to the Fourth Amendment was due and payable on October 31, 2017 and, pursuant to the Fourth Amendment, was deferred to January 15, 2018 shall be further deferred to, and shall be due and payable on, January 19, 2018. The Facility Agreement shall be deemed amended to reflect such deferral.

Section 1.02.    Application of Conversions. For the avoidance of doubt, notwithstanding anything to the contrary contained in the Facility Agreement (including Section 2.3 thereof) or the Notes (or in any Conversion Notices (as defined in the Notes), from and after the date hereof until the October 2017 Principal Application Time (as defined in the Fourth Amendment, but giving effect to Section 1.01 of this Amendment), conversions of principal under the Notes shall be applied, and principal and interest payments shall be made, as set forth in Sections 1.01(b) and 1.01(c) of the Fourth Amendment. The reference in Section 1.01(b)(ii) of the Fourth Amendment to the October 2017 Tranche 4 Principal Amount is hereby corrected to the “October 2017 Tranche 4 Principal Payment.”

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

Section 2.01.    Representations and Warranties of the Purchasers. Each Purchaser hereby represents and warrants to the Borrower as of the date of this Amendment as follows:

(a)    Organization and Good Standing. Such Purchaser is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.

(b)    Authority. Such Purchaser has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Amendment, the Escrow Amendment and the Transaction Documents (as amended hereby) and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of this Amendment and the Escrow Amendment by such Purchaser and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of such Purchaser and no further action is required in connection herewith or therewith.

 

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(c)    Valid and Binding Amendment. Each of this Amendment and the Escrow Amendment has been duly executed and delivered by such Purchaser and constitutes the valid and binding obligations of such Purchaser, enforceable against such Purchaser in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(d)    Non-Contravention. The execution and delivery of this Amendment and the Escrow Amendment by such Purchaser and the performance by such Purchaser of its obligations hereunder, under the Escrow Agreement and under the Transaction Documents (as amended hereby) does not and will not (i) violate any provision of such Purchaser’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which such Purchaser is subject, or by which any of such Purchaser’s Notes is bound or affected.

(e)    Exemption. Such Purchaser has held such Purchaser’s Note of record and beneficially for a period of at least one year and is not, and during the three-month period prior to the date hereof has not been, an Affiliate of the Borrower.

(f)    Ownership of the Notes. Such Purchaser is the record and beneficial owner of, and has good and valid title to, such Purchaser’s Notes, free and clear of all Liens, and has full power to dispose thereof and to exercise all rights thereunder (other than as restricted by this Amendment, the Notes and the Facility Agreement), without the consent or approval of, or any other action on the part of, any other Person. There is no outstanding contract, vote, plan, pending proposal or other right of any Person to acquire such Purchaser’s Notes or any portion thereof.

(g) Stock Ownership. The execution and delivery of this Amendment and the consummation of the transactions contemplated hereby will not cause such Purchaser to own, or be treated as owning under the attribution rules of Section 871(h)(3)(C) of the Code, 10% or more of the total combined voting power of the outstanding common stock of the Borrower for purposes of Section 871(h)(3) of the Code.

Section 2.02.    Representations and Warranties of the Obligors. Each Obligor hereby represents and warrants to the Purchasers as of the date of this Amendment as follows:

(a)    Organization and Good Standing. Each Obligor is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.

(b)    Authority. Each Obligor has the requisite corporate or limited liability company power and authority, as applicable, to enter into and to consummate the transactions

 

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contemplated by this Amendment, the Escrow Amendment and the Transaction Documents (as amended hereby) and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Amendment, the Escrow Amendment and the Transaction Documents (as amended hereby) by each Obligor and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of each Obligor, and no further action of any Obligor, its board of directors, managers, members or stockholders, as applicable, is required in connection herewith or therewith.

(c)    Consents. No Obligor is required to obtain any consent from, authorization or order of, or make any filing or registration with any Governmental Authority or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by this Amendment, the Escrow Amendment or the Transaction Documents (as amended hereby), in each case, in accordance with the terms hereof or thereof.

(d)    Valid and Binding Amendment. Each of this Amendment and the Escrow Amendment has been duly executed and delivered by each Obligor and constitutes the valid and binding obligation of each Obligor, enforceable against each Obligor in accordance with their respective terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(e)    Non-Contravention. The execution and delivery of this Amendment, the Escrow Amendment and the Transaction Documents (as amended hereby) and the performance by each Obligor of its obligations hereunder and thereunder does not and will not (i) violate any provision of any Obligor’s organizational documents, (ii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which any Obligor is subject, or by which any property or asset of any Obligor is bound or affected, (iii) require any permit, authorization, consent, approval, exemption or other action by, notice to or filing with, any court or other federal, state, local or other governmental authority or other Person, (iv) violate, conflict with, result in a material breach of, or constitute (with or without notice or lapse of time or both) a material default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under, any permit or contract to which any Obligor is a party or by which any of its properties or assets are bound, or (v) result in the creation or imposition of any Lien on any part of the properties or assets of any Obligor. No Event of Default exists.

(f)    Issuance of Conversion Shares. The Conversion Shares (as defined in the Notes) issuable upon conversion of the Notes (as amended hereby), subject to the Conversion Cap (as defined in the Notes), are duly authorized and, when issued in accordance with the Notes (as amended hereby), will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Borrower, and will not be issued in violation of, or subject to, any preemptive or similar rights of any Person. The Borrower has reserved from its duly authorized capital stock 4,000,000 shares of Common Stock for issuance upon conversion of the Notes.

 

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(g)    SEC Reports; NASDAQ. The Borrower has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”). None of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted 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. The Borrower is not in violation of the requirements of the NASDAQ Stock Market (“NASDAQ”) and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

(h)    Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Borrower or any of its affiliates or representatives to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Amendment. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 2.02(h) that may be due in connection with the transactions contemplated hereby.

(i)    Exemption from Registration. No registration under the Securities Act or any state securities laws is required for the offer and issuance of the Notes (as amended hereby) or the issuance of the Conversion Shares by the Borrower to the Purchasers as contemplated hereby and by the Notes. The amendments and transactions contemplated hereby, including the issuance and sale of the Conversion Shares under the Notes and subject to the Conversion Cap, does not contravene, or require stockholder approval pursuant to, the rules and regulations of NASDAQ. Assuming the Purchaser to which Conversion Shares are to be issued is not as of the date of issuance, and for a period of three months prior to the date of issuance has not been, an Affiliate of the Borrower (which the Borrower shall assume (and the applicable Purchaser shall be deemed to represent) unless such Purchaser has otherwise advised the Borrower, in writing), the Conversion Shares (i) will be freely tradeable by such Purchaser without restriction or limitation (including volume limitation) pursuant to Rule 144 under the Securities Act will not contain or be subject to any legend or stop transfer instructions restricting the sale or transferability thereof.

(j)    No Integrated Offering. Neither the Borrower, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, has made or will make any offers or sales of any security, or has solicited or will solicit any offers to buy any security, under circumstances that would cause the offering and issuance of the Conversion Shares to be integrated with prior offerings by the Borrower (i) for purposes of the Securities Act and which would require the registration of any such securities under the Securities Act, or (ii) for purposes of any applicable stockholder approval provisions of NASDAQ and which would require stockholder approval for the issuance of any Conversion Shares.

 

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ARTICLE III.

COVENANTS

Section 3.01.    Reservation of the Common Stock. On and after the date hereof, the Borrower shall at all times reserve and keep available, free of preemptive or similar rights, a sufficient number of shares of Common Stock for the purpose of enabling the Borrower to issue Conversion Shares pursuant to the Notes and subject to the Conversion Cap.

Section 3.02.     Listing. The Borrower represents, warrants and covenants that it has secured the listing of all of the Conversion Shares up to the Conversion Cap upon NASDAQ and shall at all times maintain such listing on NASDAQ of all Conversion Shares issuable pursuant to the Notes and subject to the Conversion Cap. For so long as any Notes remain outstanding, the Borrower shall use commercially reasonable efforts to maintain the Common Stock’s listing on NASDAQ. The Borrower shall not take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on NASDAQ. The Borrower shall pay all fees and expenses in connection with satisfying its obligations under this Section 3.02.

Section 3.03.    Disclosure; Confidentiality. Notwithstanding anything contained in this Amendment to the contrary and without implication that the contrary would otherwise be true, other than with respect to a proposed sixth amendment to the Facility Agreement, the Borrower expressly acknowledges and agrees that no Purchaser shall have (unless expressly agreed to by a particular Purchaser after the date hereof in a written definitive and binding agreement executed by the Borrower and such particular Purchaser or customary oral (confirmed by e-mail) “wall-cross” agreement (it being understood and agreed that no Purchaser may bind any other Purchaser with respect thereto)), any duty of trust or confidence with respect to, or a duty not to trade on the basis of, any information regarding the Borrower.

Notwithstanding any affirmative disclosure obligations of the Borrower or Guarantor pursuant to the terms of this Amendment or any of the other Transaction Documents or anything else to the contrary contained herein or therein, other than with respect to a proposed sixth amendment to the Facility Agreement, (a), subject to clause (b) below, each of the Borrower and Guarantor shall not, and shall cause each of its officers, directors, employees and agents to not on behalf of the Borrower, provide any Purchaser with any material non-public information with respect to the Borrower without the express prior written consent of such Purchaser, and (b) in the event that the Borrower or Guarantor believes that a notice or communication to any Purchaser contains material, nonpublic information with respect to the Borrower, the Borrower shall so indicate to such Purchaser prior to the delivery of such notice or communication, and such indication shall provide such Purchaser the means to refuse to receive such notice or communication (in which case any time period to deliver such notice or communication to any Purchaser shall automatically be deemed tolled with respect to each Purchaser until one Business Day after such Purchaser has advised the Borrower whether it wishes to receive or refuse such notice or communication and any obligation of the Borrower to provide such notice to such Purchaser under the Facility Agreement or this Amendment shall be deemed waived if such Purchaser fails to advise the Borrower that it wishes to refuse such notice or communication). In the absence of any such indication by Borrower to a Purchaser, such Purchaser shall be allowed to presume that all matters relating to such notice or communication do not constitute material nonpublic information with respect to the Borrower.

 

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Section 3.04.    Taxes. The Borrower shall be responsible for paying all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment or issuance made under, from the execution, delivery, performance or enforcement of, or otherwise with respect to, this Amendment.

Section 3.05.    Fees and Expenses. The Borrower shall promptly reimburse the Purchasers for all of their reasonable and documented out-of-pocket, costs, fees and expenses, including legal fees and expenses, incurred in connection with the negotiation and drafting of this Amendment, the Escrow Amendment and a proposed sixth amendment to the Facility Agreement (whether or not executed) and the consummation of the transactions contemplated hereby and thereby.

ARTICLE IV.

ACKNOWLEDMENT OF THE BORROWER AND THE GUARANTOR

Section 4.01.    The Borrower and the Guarantor irrevocably and unconditionally acknowledge, affirm and covenant to each Purchaser that:

(a)    such Purchaser is not in default under any of the Transaction Documents and has not otherwise breached any obligations to the Borrower or the Guarantor; and

(b)    there are no offsets, counterclaims or defenses to the Obligations, including the liabilities and obligations of the Borrower under the Notes and other Transaction Documents (as amended hereby), or to the rights, remedies or powers of such Purchaser in respect of any of the Obligations or any of the Transaction Documents, and the Borrower and the Guarantor agree not to interpose (and each does hereby waive and release) any such defense, set-off or counterclaim in any action brought by such Purchaser with respect thereto.

ARTICLE V.

MISCELLANEOUS

Section 5.01.    Entire Agreement. This Amendment and the Transaction Documents (as amended hereby) constitute the entire agreement, and supersede all other prior and contemporaneous agreements and understandings, both oral and written, among the Purchasers, the Borrower and Guarantor with respect to the subject matter hereof.

Section 5.02.    Amendments and Waivers. No provision of this Amendment may be waived or amended except in a written instrument signed by the parties hereto.

Section 5.03.    Successors and Assigns. All of the covenants and provisions of this Amendment by or for the benefit of the Purchasers or the Obligors shall bind and inure to the benefit of their respective successors and assigns. No party hereunder may assign its rights or obligations hereunder without the prior written consent of the other parties hereto.

 

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Section 5.04.    Applicable Law. As part of the consideration and mutual promises being exchanged and given in connection with this Amendment, the parties hereto agree that all claims, controversies and disputes of any kind or nature arising under or relating in any way to the enforcement or interpretation of this Amendment or to the parties’ dealings, rights or obligations in connection herewith, including disputes relating to the negotiations for, inducements to enter into, or execution of, this Amendment, and disputes concerning the interpretation, enforceability, performance, breach, termination or validity of all or any portion of this Amendment shall be governed by the laws of the State of New York without regard to its choice or conflicts of laws principles.

Section 5.05.    Counterparts; Effectiveness. This Amendment may be executed and delivered in any number counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. In the event that any signature to this Amendment is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file or other reproduction of this Amendment to deliver a signature to this Amendment or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract, and each party hereto forever waives any such defense.

Section 5.06.    Effect of Headings. The section and subsection headings herein are for convenience only and not part of this Amendment and shall not affect the interpretation thereof.

Section 5.07.    Avoidance of Doubt. The parties hereto hereby agree, for the avoidance of doubt, that this Amendment, the Escrow Amendment and the Escrow Agreement (as amended by the Escrow Amendment) constitute “Transaction Documents,” the terms “Liabilities” and “Obligations” as used in the Transaction Documents shall include all liabilities and obligations of the Borrower under this Amendment, under the Escrow Amendment, under the Escrow Agreement (as amended by the Escrow Amendment), under the Facility Agreement (as amended hereby) and under the other Transaction Documents, and all references herein to “as amended hereby” means “as amended by this Amendment and the Escrow Amendment (as applicable),” and each of the parties hereto agrees not to take any contrary positions.

Section 5.08.    Reservation of Rights. Neither of the Purchasers has hereby waived (a) any breach, default or Event of Default that may be continuing under any of the Transaction Documents or (b) any of such Purchaser’s rights or remedies arising from any such breach, default or Event of Default or otherwise available under the Transaction Documents or at law or in equity. Each of the Purchasers expressly reserves all such rights and remedies.

Section 5.09.    Further Assurances. The Borrower hereby agrees, from time to time, as and when requested by any Purchaser, to execute and deliver or cause to be executed and delivered, all such documents, instruments and agreements, including secretary’s certificates, stock powers and irrevocable transfer agent instructions, and to take or cause to be taken such

 

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further or other action, as any Purchaser may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Amendment and the Transaction Documents (as amended hereby).

Section 5.10.    No Strict Construction. The language used in this Amendment will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.

Section 5.11.    Interpretative Matters. Unless otherwise indicated or the context otherwise requires, (i) all references to Sections, Schedules, Appendices or Exhibits are to Sections, Schedules, Appendices or Exhibits contained in or attached to this Amendment, (b) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (c) the words “hereof,” “herein” and words of similar effect shall reference this Amendment in its entirety, and (d) the use of the word “including” in this Amendment shall be by way of example rather than limitation.

Section 5.12.    Reaffirmation. Each of the Obligors, as issuer, debtor, grantor, pledgor, mortgagor, guarantor or assignor, or in other any other similar capacity in which such Person grants Liens or security interests in its property or otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) acknowledges and agrees that it has reviewed this Amendment and the Escrow Amendment, (ii) ratifies and reaffirms all of its obligations, contingent or otherwise, under each of the Transaction Documents (as amended hereby) to which it is a party (after giving effect hereto), and (iii) to the extent such Person granted Liens on or security interests in any of its property pursuant to any such Transaction Document as security for or otherwise guaranteed the Obligations under or with respect to the Transaction Documents, ratifies and reaffirms such guarantee and grant of security interests and Liens and confirms and agrees that such security interests and Liens hereafter secure all of the Obligations (as amended hereby). Each Obligor hereby consents to this Amendment and acknowledges that this Amendment is a Transaction Document and each of the other Transaction Documents (as amended hereby) remains in full force and effect and is hereby ratified and reaffirmed.

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IN WITNESS WHEREOF, each party hereto has caused this Fifth Amendment to Facility Agreement to be duly executed as of the date first written above.

 

 

[Signature page to Fifth Amendment to Facility Agreement]

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[Signature page to Fifth Amendment to Facility Agreement]