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FACILITY AGREEMENT (this
Agreement ), dated as of July 1, 2013, between MannKind Corporation, a Delaware corporation (the Borrower ), and the purchasers set forth on the signature page of this Agreement (the
Purchasers , and together with the Borrower, the Parties ).
W I T N E S S E T H:
WHEREAS, the Borrower wishes to issue and sell to the Purchasers, and the Purchasers wish to purchase from the Borrower,
Notes in the aggregate principal amount of up to One Hundred Sixty Million Dollars ($160,000,000) for the purposes described in Section 2.1;
NOW, THEREFORE, in consideration of the mutual agreements set forth in this Agreement, the Parties agree as follows:
Section 1.1 General Definitions. Wherever used in this Agreement, the Exhibits or the Schedules attached hereto, unless the
context otherwise requires, the following terms have the following meanings:
Affiliate means any Person or
entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a
Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. As used in this definition of Affiliate, the
term control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or partnership or other ownership
interest, by contract, or otherwise.
Agreement Date means the date of this Agreement.
Applicable Laws means all statutes, rules and regulations of the FDA and of other Governmental Authorities in the
United States or elsewhere exercising regulatory authority similar to that of the FDA 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 manufactured or distributed by or on behalf of the Borrower or its Subsidiaries applicable to the Borrower or its Subsidiaries.
Authorizations has the meaning given to it in Section 3.1(s).
Business Day means a day on which banks are open for business in The City of New York and Los Angeles.
CA Deed of Trust means that certain Deed of Trust, Security Agreement,
Fixture Filing, Financing Statement and Assignment of Leases and Rents dated the Agreement Date made by the Borrower to Fidelity National Title Company, as Trustee, for the benefit of the Purchasers.
Cash and Cash Equivalents means, with respect to any date of determination, cash, cash equivalents and marketable
securities as set forth on the Borrower s consolidated balance sheet as of such date and cash available for borrowing under the Mann Debt.
Code means the Internal Revenue Code of 1986, as amended, and any Treasury Regulations promulgated thereunder.
Collateral has the meaning ascribed to such term in the Security Agreements.
Common Stock means the common stock, par value $0.01 per share, of the Borrower.
CT Mortgage means that certain Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated the Agreement Date, made by the Borrower in favor of the
Default means any event which, at the giving of notice, lapse of time or fulfillment of any
other applicable condition (or any combination of the foregoing), would constitute an Event of Default.
Letter means the disclosure letter dated the Agreement Date made by Borrower in favor of Purchasers.
Dollars and the $ sign mean the lawful currency of the United States of America.
Event of Default has the meaning given to it in Section 5.4.
Exchange Act means the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated
Excluded Taxes means with respect to any Purchaser, (a) income or franchise Taxes imposed
on (or measured by) such Purchaser s net income by the United States, or by the jurisdiction (or any political subdivision thereof) under the laws of which such Purchaser is organized or incorporated or in which the applicable lending office of
such Purchaser is located, or a result of a present or former connection between such Purchaser and the jurisdiction (or any political subdivision thereof) of the Government Authority imposing such Tax (other than a connection arising solely from
such Purchaser having executed, delivered, performed its obligations or received a payment under, received or perfected a security interest under, having been a party to, having enforced, or having engaged in any other transaction pursuant to this
Agreement or any other Transaction Document), (b) any branch profits Taxes imposed by the United States, (c) any withholding Tax imposed by the United States under FATCA as a direct result of such Purchaser s failure to deliver the
required IRS forms certifying as to its exemption from withholding under FATCA, or (d) any withholding Tax imposed by the United States on amounts payable to Purchaser under the laws in effect at the time such Purchaser becomes a
party to this Agreement or as a direct result of such Purchaser s failure to comply with Section 2.5(d), in either case except to the extent that (x) such Purchaser s assignor
(if Purchaser is an assignee) was entitled, at the time of the assignment to receive additional amounts from the Borrower with respect to such withholding Tax pursuant to Section 2.5(a) or (y) such Purchaser is legally unable to comply
with Section 2.5(d) as a result of any change in law occurring subsequent to the date such Purchaser becomes a party to this Agreement.
Excluded Transaction means any of the following transactions:
(a) The entering into any collaborative arrangement, licensing, joint venture, partnership, royalty agreement or similar agreements or
other research, development, manufacturing or other commercial exploitation arrangements of the Product, the Borrower s or any Subsidiary s Intellectual Property or other assets (provided, that the Borrower has a reasonable basis
for believing that the downstream economics potentially to be received by the Borrower and its Subsidiaries in connection with such collaborative arrangement, licensing, joint venture, partnership, royalty agreement or similar agreements or other
research, development, manufacturing or other commercial exploitation arrangements involving the Product or the IP, other than those described in clauses (4) and (5) below, when combined with the potential downstream economics of rights in
the Product and the IP retained by the Borrower and its Subsidiaries are adequate to enable the Borrower to timely satisfy all obligations of the Borrower and its Subsidiaries under this Agreement and the Milestone Agreement), including, without
limitation (1) any grant to any entity engaged in, or owned by an entity engaged in, the pharmaceutical or biotechnology industry of a license or option to obtain a license to any of the Borrower s or any Subsidiary s Intellectual
Property or other assets, provided that the Borrower or a Wholly-Owned Subsidiary (and not any third party or any of the Borrower s or a Subsidiary s equity holders) directly receives from such entity all consideration paid or
payable by such entity in consideration of such grant (other than any payments made by such third party in satisfaction of obligations of the Borrower or its Wholly-Owned Subsidiaries), which consideration may, but need not, include (without
limitation) upfront, milestone, royalty and profit-sharing payments, (2) any grant of a license or option to obtain a license to any entity that intends to research, develop, commercialize or manufacture products or services covered by such
Intellectual Property or other assets whether directly or through the Borrower, any Subsidiary or another entity, (3) any arrangement or transfers of assets for the manufacture, research, promotion and development of the Borrower s or any
Subsidiary s products and clinical trial management, and data analysis and similar activities in support of Borrower s or any Subsidiary s development programs, (4) any arrangement or transfers solely relating to the
Borrower s and the Subsidiary s oncology assets or other assets that are excluded from the Collateral, and (5) the transfer of the Danbury facility to a joint venture or partnership in connection with any collaborative arrangement or
to any collaborative partner, in each case in connection with the Product; and
(b) The incurrence, grant or existence of, or
the sale or transfer of any assets in connection with the enforcement of any Permitted Lien.
Surveys means (a) that certain Survey made by Sydney A. Rapp, Jr., dated August 17, 1978 and last revised November 19, 1983, and (b) that certain Survey prepared by Thienes Engineering Inc., in November, 2000, and
designated as Job No. 1746.
FATCA means Section 1471 through 1474 of the United States Internal
Revenue Code of 1986, as amended, or any amended or successor version thereof, any Treasury Regulations or other official interpretations thereof, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental
agreement entered into in connection with the implementation of such Section of the Code.
United States Food and Drug Administration.
Final Payment means the amount necessary to repay the
Foreign Subsidiary means any Subsidiary that is not organized under the laws of a
jurisdiction of the United States.
Foreign Subsidiary Holding Company means any Subsidiary if all of the
assets of such Subsidiary (other than de minimus cash and assets required to operate) consist of equity interests in a Foreign Subsidiary.
Final Payment Date means the earlier of (i) with respect to any tranche of Notes, the sixth anniversary of the issue date thereof, (ii) the date on which the Borrower makes
the Final Payment, and (iii) December 31, 2019.
Freely Tradable means, with respect to any tranche of
Notes and any shares of Common Stock issuable upon conversion of such tranche of Notes, either (a) a registration statement covering the resale of such shares of Common Stock issuable upon conversion of such tranche of Notes has been declared
effective by the SEC and is available for the immediate disposition of such shares of Common Stock, or (b), assuming that the Purchasers are not, and have not been during the preceding three months, affiliates (as such term is defined in Rule 144
under the Securities Act) of the Borrower, all such shares of Common Stock are eligible for immediate disposition by the Purchasers for their own account without volume restriction pursuant to Rule 144(b)(1) under the Securities Act and without
registration under the Securities Act; provided that such shares of Common Stock will be deemed to be Freely Tradable to the extent a registration statement has not been declared effective or is not available solely due to a breach by any Purchaser
of Section 4 of the Registration Rights Agreement.
GAAP means generally accepted accounting
principles consistently applied as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and authority within the accounting profession).
Government Authority means any government, governmental department, ministry, cabinet, commission, board, bureau,
agency, tribunal, regulatory authority, instrumentality, judicial, legislative, fiscal, or administrative body or entity, whether domestic or foreign, federal, state or local, having jurisdiction over the matter or matters and Person or Persons in
Guaranty and Security Agreement means that certain Guaranty and Security Agreement, dated as of
the Agreement Date, among the Borrower, the other grantors and guarantors from time to time party thereto, the Purchasers and the Milestone Purchasers.
Hedging Obligations means all liabilities under take-or-pay or similar
arrangements or under any interest rate swaps, caps, floors, collars and other interest hedge or protection agreements, treasury locks, equity forward contracts, currency agreements or commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements and any other derivative instruments, in each case, whether the Borrower and its Subsidiaries are liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which
liabilities the Borrower or its Subsidiaries otherwise assures a creditor against loss.
Subsidiary means any direct or indirect Subsidiary of the Borrower that has assets and annual revenues less than $1,000,000 and does not have assets that relate to the development or commercialization of the Product.
Indebtedness means the following:
(i) all indebtedness for borrowed money;
(ii) the deferred purchase price of
assets or services (other than trade payables, obligations in respect of benefit plans and employment and severance arrangements, and other deferred compensation obligations to employees and directors arising in the ordinary course of business and
not related to any financing) which in accordance with GAAP would be shown to be a liability (or on the liability side of a balance sheet);
(iii) all guarantees of Indebtedness;
(iv) the maximum amount of all letters of
credit issued or acceptance facilities established for the account of the Borrower and any of its Subsidiaries, including without duplication, all drafts drawn thereunder (other than letters of credit supporting other indebtedness of the Borrower
and any of its Subsidiaries which are otherwise permitted hereunder);
(v) all capitalized lease obligations;