Explanation of Responses:
1. This Form 4 is filed by 21 April Fund, L.P. (“April LP”), 21 April Fund, Ltd. (“April Ltd.”), First Eagle Investment Management, LLC (“FEIM”) and First Eagle Value in
Biotechnology Master Fund, Ltd. (“FEVIBM” and, collectively with April LP, April Ltd. and FEIM, the “Entities”). The Entities disclaim status as a “group” for purposes of this Form 4.
2. The 9.0% Senior Convertible Notes due 2021 (the “Convertible Notes”) to which this Form 4 relates are held directly by certain of the Entities, and certain managed accounts
(collectively, the “Accounts”).
3. The Convertible Notes reported herein are indirectly beneficially owned by FEIM, by virtue of its service as investment manager to certain of the Entities and Accounts, which
are under FEIM's management and control. Each of the reporting persons disclaims beneficial ownership of the securities to which this Form 4 relates for the purposes of Section 16 of the Securities
and Exchange Act of 1934, as amended, except as to such extent of the reporting person's pecuniary interest in the securities.
4. The Convertible Notes were issued pursuant to the Securities Purchase Agreement, dated April 21, 2016, by and among Aradigm Corporation (the “Company”) and the Purchasers
listed on Schedules A and B thereto, and an Indenture, dated April 25, 2016 (the “Indenture”), by and between the Company and U.S. Bank National Association (“U.S. Bank”). The Company entered
into a Supplemental Indenture, dated April 18, 2018 (the “Supplemental Indenture”), by and between the Company and U.S. Bank that permitted, among other things, the Company to make future payments of
interests on the Convertible Notes, including the interest payment due May 1, 2018, by increasing the outstanding principal amount of the Convertible Notes in the amount of the accrued interest being
so paid. The Convertible Notes accrue interest at a rate of 9.0% per annum payable semi-annually in arrears in equal installments on May 1 and November 1 of each year, beginning on November 2,
2016. The Convertible Notes will mature on April 30, 2021 (the “Maturity Date”), unless earlier redeemed, repurchased or converted.
5. Represents the additional principal amount of the Convertible Notes acquired. The conversion rate for the Convertible Notes is initially 191.9386 shares of common stock of the
Company per $1,000 principal amount of Convertible Notes, which is an initial conversion price of approximately $5.21 per share of the Company's common stock, and is subject to adjustment in certain
circumstances pursuant to the Indenture.
6. Unless previously redeemed, or repurchased and cancelled, each Convertible Note will be convertible into common stock of the Company at the option of the noteholder at any time
from and after the date of the Indenture up to close of business on the second business day immediately prior to the Maturity Date. However, in no event will the aggregate number of common stock of
the Company issued to investors at any time exceed 19.99% of the total number of shares of common stock of the Company outstanding on the date of the Purchase Agreement (the “Conversion Share Cap”)
unless the Company has obtained stockholder approval for the issuance of more than such number of shares of common stock of the Company pursuant to NASDAQ Listing Rule 5635(d). Notwithstanding the
foregoing, unless and until such stockholder approval is obtained, if the number of shares of common stock of the Company deliverable for conversion is greater than the Conversion Share Cap, then the
number of shares of common stock the Company delivers shall be capped at the Conversion Share Cap and the Company will pay cash in lieu of such shares that would otherwise be deliverable above the
Conversion Share Cap. Such cash amount will be determined based on the daily VWAP over the five trading day period commencing on the second trading day following the applicable conversion date. The
Company may call the Convertible Notes for redemption if the last reported sale price of the common stock is equal to or greater than 200% of the conversion price then in effect for at least 20
trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending within the five trading days immediately preceding the
date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date.
7. On February 15, 2019, the Company filed a petition for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court
for the Northern District of California and, therefore, did not include in the interest payment due May 1, 2019 any amounts that accrued on the Convertible Notes following February 15, 2019. Pursuant
to the Supplemental Indenture, the interest payment due May 1, 2019 on the Convertible Notes was made by the Company by increasing the outstanding principal amount of the Convertible Notes in the
amount of the accrued interest (other than the accrued interest that was not included as described in the preceding sentence) being so paid.