Exhibit 10.2
PROMISSORY NOTE

     
$150,000,000
  August 2, 2006
 
  Valencia, California

     FOR VALUE RECEIVED, MANNKIND CORPORATION, a Delaware corporation
(“Borrower”), hereby promises to pay to the order of ALFRED E. MANN (“Lender”),
in lawful money of the United States of America and in immediately available
funds, the principal sum of One Hundred and Fifty Million Dollars ($150,000,000)
or the aggregate principal amount of all Advances (as defined below) made
hereunder, whichever is less (the “Loan”) together with accrued and unpaid
interest thereon, each due and payable on the dates and in the manner set forth
below.
     1. Principal Repayment. The outstanding principal amount of each Advance
together with all accrued and unpaid interest thereon shall be due and payable
one year from the date of the Advance (the “Maturity Date”).
     2. Interest Rate. Borrower further promises to pay interest on the
outstanding principal amount of each Advance from the date thereof until payment
in full, which interest shall be payable at a rate equal to the one year London
Interbank Offered Rate (LIBOR) reported by the Wall Street Journal (or a
comparable periodical if such periodical is no longer published) on the day of
such Advance plus 3% per annum, or the maximum rate permissible by law (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans), whichever is
less. Interest shall be due and payable quarterly in arrears not later than the
first day of each calendar quarter for the preceding quarter, commencing on the
first day of the calendar quarter following the calendar quarter in which an
Advance is made, and shall be calculated on the basis of a 365/366-day year for
the actual number of days elapsed.
     3. Place of Payment. All amounts payable hereunder shall be payable in
lawful money of the United States of America at the office of Lender, 25129 Rye
Canyon Loop, Valencia, California, 91355, unless another place of payment shall
be specified in writing by Lender.
     4. Application of Payments; Prepayment.
          4.1 Payment on this Note shall be applied first to accrued interest,
and thereafter to the outstanding principal balance hereof.
          4.2 This Note may be prepaid in whole or in part without penalty or
premium.
          4.3 If a Financing Event (as defined below) occurs at any time when
there is any principal or interest outstanding under this Note, Borrower shall,
promptly following the closing of such Financing Event, prepay all or a portion
of the outstanding principal amount of this Note in an amount equal to the
difference between (i) the Borrower’s cash balance immediately following the
closing of such Financing Event and (ii) the Borrower’s projected cash
requirements (as determined by Borrower in its sole discretion) for the six
month period

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immediately following the closing of such Financing Event. A “Financing Event”
means (i) the closing of an equity or a debt financing, (ii) the entry into a
strategic transaction with a third party or third parties, including without
limitation, joint ventures, manufacturing, marketing or distribution
arrangements, collaborations, partnerships, technology transfer or development
arrangements, or (iii) any transaction involving a combination of (i) and (ii),
in each case of (i) through (iii), where the Borrower receives at least
$100 million in cash at the closing of such transaction. The closing of a
Financing Event shall not terminate Lender’s commitment to make Advances
pursuant to Section 5 hereof.
          4.4 Any partial prepayment shall be applied to interest first and then
to principal, and shall be applied to the oldest outstanding Advance first. At
the time of any prepayment of principal hereunder, Borrower shall also pay all
accrued and unpaid interest on the amount prepaid through the date of
prepayment. Any amount prepaid may not be reborrowed.
     5. Loan Requests. From the date of this Note and through the first
anniversary thereof, Lender shall at all times make available to Borrower the
principal amount indicated on the face of this Note for borrowings by Borrower
from time to time (each, an “Advance”). Borrower shall be entitled to no further
Advances hereunder after the first anniversary date hereof and the total maximum
amount of this Note shall be the total amount of the Advances taken by the
Borrower as of that date. Each Advance shall be in a minimum principal amount of
$50,000,000. The initial Advance shall be made on the date of execution and
delivery of this Note. Each subsequent Advance shall be made at any time when
Borrower’s cash balance is less than its projected cash requirements for the
three month period following such Advance (as determined by Borrower in its sole
discretion). Whenever Borrower desires an Advance hereunder, Borrower shall
notify Lender by facsimile with a transmission confirmation or by electronic
mail as long as a read receipt is requested and received no later than 4:00 p.m.
Pacific time, fourteen (14) calendar days prior to the date on which the Advance
is requested to be made. At the time of any borrowing under this Note (or at the
time of receipt of any payment of principal), Lender shall make or cause to be
made, an appropriate notation on the Exhibit A attached hereto reflecting the
amount of such borrowing (or the amount of such payment). The outstanding amount
of this Note set forth on such Exhibit A shall be prima facie evidence of the
principal amount thereof outstanding, but the failure to record, or any error in
so recording, shall not limit or otherwise affect the obligations of Borrower to
make payments of principal of or interest on this Note when due.
     6. Default. Each of the following events shall be an “Event of Default”
hereunder:
          (a) Borrower fails to pay timely any of the principal amount due under
this Note or any accrued interest or other amounts due under this Note on the
date the same becomes due and payable or within five (5) business days
thereafter;
          (b) Borrower files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, debtors, now or hereafter in effect, or makes any
assignment for the benefit of creditors or takes any corporate action in
furtherance of any of the foregoing; or

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          (c) An involuntary petition is filed against Borrower (unless such
petition is dismissed or discharged within sixty (60) days) under any bankruptcy
statute now or hereafter in effect, or a custodian, receiver, trustee, assignee
for the benefit of creditors (or other similar official) is appointed to take
possession, custody or control of any property of Borrower.
Upon the occurrence of an Event of Default hereunder, all unpaid principal,
accrued interest and other amounts owing hereunder shall, at the option of
Lender, and, in the case of an Event of Default pursuant to (b) or (c) above,
automatically, be immediately due, payable and collectible by Lender pursuant to
applicable law and the interest rate upon an Event of Default shall increase to
LIBOR calculated on the date of the initial Advance or the date of the Event of
Default (whichever is greater) plus 5% per annum for the period after said Event
of Default until payment, or the maximum rate permissible by law as defined
above, whichever is less.
     7. Waiver. Borrower waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note, and shall pay all costs of
collection when incurred, including, without limitation, reasonable attorneys’
fees, costs and other expenses.
     The right to plead any and all statutes of limitations as a defense to any
demands hereunder is hereby waived to the full extent permitted by law.
     8. Governing Law. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction. Borrower consents to in personam jurisdiction for any legal
action or proceeding with respect to this Note in the Los Angeles Superior
Court. Borrower, by execution and delivery of this Note, hereby irrevocably
accepts in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid court.
     9. Successors and Assigns. This Note shall be binding upon and inure to the
benefit of the Borrower and Lender and their respective successors and assigns.
Lender may assign to one or more other persons all or a portion of its rights
(but not his obligations) under this Note with respect to all or a portion of
the Advances made by him.
     10. Integration. This Note reflects the entire understanding of the parties
with respect to the transactions contemplated hereby and shall not be
contradicted or qualified by any other agreement or instrument, oral or written,
before the date hereof.
     11. Amendments, Modification, Etc. No amendment, modification or waiver of
any provision of this Note, and no consent to any departure by Lender or
Borrower and their assigns therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lender and Borrower, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
     12. No Waiver. No failure on the part of the Lender to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right under this Note preclude any
other or further exercise thereof or the exercise of any other right. The rights
of the Lender under this Note against Borrower are not

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conditional or contingent on any attempt by the Lender to exercise any of his
rights under this Note against Borrower or any other person.

       
BORROWER
  MANNKIND CORPORATION
 
   
 
   
 
  By: /s/ RICHARD ANDERSON
 
     
 
   
 
  Printed Name: Richard Anderson
 
     
 
   
 
  Title: Chief Financial Officer
 
     

Acknowledged and Agreed:

     
 
   
 
   
 
   
/s/ ALFRED E. MANN
   
 
ALFRED E. MANN
   

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EXHIBIT A
Principal Borrowings Schedule

                                            Date     Borrowing     Repayment    
Principal Balance