Item 1.01 Entry into a Material Definitive Agreement.
Issuance of New 5.75% Convertible Senior Subordinated Exchange Notes due 2021 and Common Stock in Exchange for Existing Convertible Senior
Subordinated Exchange Notes due 2018
On October 23, 2017, MannKind Corporation (the Company) entered into a privately-negotiated
exchange agreement (the Note Exchange Agreement) with the holders of its outstanding 5.75% Convertible Senior Subordinated Exchange Notes due 2018 (the 2018 notes), pursuant to which the Company agreed to issue to such
holders in exchange for all of the outstanding 2018 notes in aggregate principal amount of $23,670,000 (i) $23,670,000 aggregate principal amount of new 5.75% Convertible Senior Subordinated Exchange Notes due 2021 (the 2021 notes) and
(ii) an aggregate of 973,236 shares of its common stock, par value $0.01 per share (the Exchange Shares).
The 2021 notes will be the
Companys general, unsecured, senior obligations, except that the 2021 notes will be subordinated in right of payment to the outstanding notes issued pursuant to the Companys Facility Agreement, dated July 1, 2013, as amended (the
Facility Agreement), with Deerfield Private Design Fund II, L.P. and Deerfield Private Design International II, L.P. (Deerfield). The 2021 notes will rank equally in right of payment with the Companys other unsecured
senior debt. The 2021 notes will bear interest at the rate of 5.75% per year on the principal amount, payable semiannually in arrears in cash or, at the option of the Company if certain conditions are met, in shares of the Companys common
stock (the Interest Shares), on February 15 and August 15 of each year, beginning February 15, 2018, with interest accruing from August 15, 2017. The aggregate number of Interest Shares that the Company may issue may
not exceed 13,648,300, unless the Company receives stockholder approval to issue Interest Shares in excess of such number in accordance with the listing standards of The NASDAQ Global Market. The 2021 notes will mature on October 23, 2021.
The 2021 notes will be convertible, at the option of the holder, at any time on or prior to the close of business on the business day immediately preceding
the stated maturity date, into shares of the Companys common stock at a conversion rate of 194.1748 shares per $1,000 principal amount of 2021 notes, which is equal to a conversion price of approximately $5.15 per share. The conversion rate
will be subject to adjustment under certain circumstances to be described in an indenture governing the 2021 notes (the Indenture).
If the
Company undergoes certain fundamental changes, except in certain circumstances, each holder of 2021 notes will have the option to require the Company to repurchase all or any portion of that holders 2021 notes. The fundamental change
repurchase price will be 100% of the principal amount of the 2021 notes to be repurchased plus accrued and unpaid interest, if any.
The Company may elect
at its option to cause all or any portion of the 2021 Notes to be mandatorily converted in whole or in part at any time prior to the close of business on the business day immediately preceding the maturity date, if the last reported sale price of
its common stock equals or exceeds 120% of the conversion price then in effect for at least 10 trading days in any 20 trading day period, ending within five business days prior to the date of the mandatory conversion notice.
The foregoing descriptions of the Note Exchange Agreement, the Indenture and the 2021 notes do not purport to be complete and are qualified in their entirety
by reference to the final documents or forms thereof, copies of which the Company expects to file as exhibits to a subsequent filing with the Securities and Exchange Commission (the SEC).
Fourth Amendment to Facility Agreement with Deerfield and Amendment and Restatement of Deerfield Notes
On October 23, 2017, the Company and MannKind LLC, the Companys wholly owned subsidiary, entered into a Fourth Amendment to Facility Agreement (the
Deerfield Amendment), pursuant to which the parties amended the Facility Agreement, to, among other things, (i) defer the payment of $10.0 million in principal amount (the October Payment) of the Companys
9.75% Senior Convertible Notes due 2019 thereunder (the Tranche 4 Notes) from October 31, 2017 to January 15, 2018, conditioned upon, among other things, the Company depositing an amount of cash equal to the October Payment
into an escrow account until the October Payment has been satisfied in full (subject to early release to the extent that portions of the October Payment are satisfied through the exchange of principal for shares of the Companys common stock).
In addition, pursuant to the Deerfield Amendment, the outstanding Tranche 4 Notes, the Amended and Restated 9.75%
Senior Secured Convertible Note due 2019 under the Facility Agreement (the A&R Notes) and the 8.75% Senior Secured Convertible Note due 2019 under the Facility Agreement (the Tranche B Notes, together with the Tranche 4
Notes and the A&R Notes, the Deerfield Notes) were amended and restated to provide that Deerfield may, subject to the terms of the Deerfield Amendment, convert the principal amount under the Deerfield Notes from time to time into an
aggregate of up to 4,000,000 shares of the Companys common stock after the effective date of the Deerfield Amendment. The conversion price will be the greater of (i) the average of the volume weighted average price per share of the
Companys common stock for the three trading day period immediately preceding the date of any election by Deerfield to convert principal amounts of the Deerfield Notes and (ii) $3.25 per share, subject to adjustment under certain circumstances
described in the Deerfield Notes. Any conversions of principal by Deerfield under the Deerfield Notes will be applied first to reduce the October Payment, and after the October Payment has been satisfied, to reduce other principal payments due under
the Deerfield Notes.
The foregoing description of the Deerfield Amendment and the amended and restated Deerfield Notes does not purport to be complete
and is qualified in its entirety by reference to the Deerfield Amendment and form of amended and restated Deerfield Notes, copies of which are attached as Exhibit 99.1 to this report; the Facility Agreement, a copy of which is attached as Exhibit
99.1 to the Companys Current Report on Form
8-K
filed with the SEC on July 1, 2013; the First Amendment to Facility Agreement and Registration Rights Agreement, dated as of February 28, 2014, a
copy of which is attached as Exhibit 10.39 to the Companys Annual Report on Form
10-K
filed with the SEC on March 3, 2014; the Second Amendment to Facility Agreement and Registration Rights
Agreement, dated as of August 11, 2014, a copy of which is attached as Exhibit 4.14 to the Companys Quarterly Report on Form
10-Q
filed with the SEC on November 10, 2014; and the Exchange and
Third Amendment to Facility Agreement, dated as of June 29, 2017, a copy of which is attached as Exhibit 99.2 to the Companys Current Report on Form
8-K
filed with the SEC on June 29, 2017.
On October 23, 2017, the Company issued a press release announcing its entry into the Note Exchange Agreement, the issuance of the 2021 notes, its entry
into the Deerfield Amendment and the issuance of the amended and restated Deerfield Notes. A copy of the press release is attached as Exhibit 99.2 to this report.