Exhibit 10.1



 




Exhibit 10.1



PROMISSORY NOTE




			
	$150,000,000
	 	August 1, 2007

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, 28903 North Avenue Paine, Valencia, CA 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. Any amount
prepaid pursuant to this Section 4.2 may be reborrowed in accordance with Section 5 hereof except
to the extent that said prepayment is made pursuant to the provisions of Section 4.3 hereof.




          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


1.









 







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
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 $300 million in cash at the closing of such
transaction. The closing of a Financing Event shall terminate Lender’s commitment to make further
Advances pursuant to Section 5 hereof. Any amount prepaid pursuant to this Section 4.3 may not be
reborrowed.




          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.




     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 $10,000,000. Each Advance shall
be made at such 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,


2.









 







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




          (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, heirs 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



3.









 







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



     13. Amendment and Restatement of Original Note. This Note amends, re-evidences, restates, and
supersedes in full, but does not in any way satisfy or discharge the outstanding indebtedness, if
any, owed under that Note dated August 2, 2006 in the original principal amount of One Hundred and
Fifty Million Dollars ($150,000,000), made by the undersigned in favor of Lender, as amended by
Allonge # 1 dated October 30, 2006 (the “Original Note”). Lender agrees to return the Original
Note to Borrower promptly after the execution and delivery of this Note, and Borrower agrees to
promptly cancel the Original Note upon receipt thereof.



	 	 	 	 	 
	Borrower	MannKind Corporation

 	 
	 	By:  	
/s/ Richard Anderson 	 
	 	 	Richard Anderson 	 
	 	 	Chief Financial Officer 	 
	 
	Acknowledged and Agreed:


	 	 
	Lender	
/s/ Alfred E. Mann 	 
	 	Alfred E. Mann

 	 
	 	 	 
	 	 	 
	 	 	 



4.









 






	 	 	 	 	 



EXHIBIT A




Principal Borrowings Schedule




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date	 	Borrowing	 	Repayment	 	Principal Balance
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 







5.