SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 8, 1995
UNIGENE LABORATORIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-16005 22-2328609
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(Commission File Number) (IRS Employer Identification Number)
110 Little Falls Road
Fairfield, New Jersey 07004
(Address of Principal Executive Offices) (Zip Code)
(201) 882-0860
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On May 8, 1995, the Company completed a $2,000,000 short-term debt
financing collateralized by the Company's assets.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
10.19 Securities Purchase Agreement, Warrant Agreement, Security
Agreement and Secured Promissory Note between the Company and The Microcap Fund,
Inc. dated May 8, 1995. The Company hereby agrees to provide the Commission,
upon request, copies of any omitted exhibits or schedules required by Item
601(b) (2) of Regulation S-K.
SIGNATURES
Pursuant to the requirements of the Securites Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
UNIGENE LABORATORIES, INC.
By /s/ Warren P. Levy
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Warren P. Levy, Ph.D.
President
Date: May 22, 1995
EXHIBIT 10.19
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of May 8, 1995, by and between
THE MICROCAP FUND, INC., a Maryland corporation (the "Fund" or "Purchaser"), and
UNIGENE LABORATORIES, INC., a Delaware corporation with a principal place of
business at 110 Little Falls Road, Fairfield, NJ 07004 ("Unigene").
R E C I T A L:
- - - - - - -
A. Unigene is engaged principally in research and development in the
field of biotechnology and plans to commence manufacturing peptide hormones. Its
common stock is traded on the NASDAQ stock market.
B. The Fund is a closed-end mutual fund registered under the Investment
Company Act of 1940.
C. Unigene proposes to issue and sell to the Fund, the "Note" and the
Fund desires to purchase (i) a Promissory Note in the aggregate principal amount
of $2,000,000 secured by a first lien on all of Unigene's assets; and (ii)
warrants to purchase shares of Unigene's common stock, $.01 par value (the
"Common Stock") on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Issuance of Notes and Warrants.
1.1 Closing. (a) At the closing (the "Closing"), which shall
occur simultaneously with the execution hereof at the offices of the Fund, 733
Third Avenue, New York, NY 10017, Unigene shall deliver to the Fund:
(i) the Note in the principal amount of $2,000,000
duly executed by Unigene, in the form of Exhibit A
hereto;
(ii) a warrant agreement (the "Warrant Agreement")
and warrant certificate ("Warrants") to purchase up
to 75,000 shares of Unigene's Common Stock duly
executed by Unigene, in the form of Exhibits B-1 and
B-2 hereto;
(iii) a security agreement (the "Security
Agreement") duly executed by Unigene in the form of
Exhibit C hereto;
(iv) a first mortgage on Unigene's real property
located at 110 Little Falls Road, Fairfield, NJ
07004 (the "Mortgage") and a collateral assignment
("Collateral Assignment") of Unigene's rights under
its lease for premises located at 83 Fulton Street,
Boonton, New Jersey in the form of Exhibits D and E
hereto together with Consent and Waiver from the
landlord substantially in the form of Exhibit F
("Landlord's Waiver"); and
(v) UCC-1 financing statements;
(vi) the favorable opinions of Becker Ross Stone
DeStefano & Klein; Ostrolenk Faber Gerb & Soffen;
and Sinisi VanDam & Sproviero, counsel to Unigene,
substantially in the forms of Exhibit G-1, G-2 and
G-3 hereto;
(vii) UCC-3 termination statements and subordination
agreements, and such other instruments of similar
effect, duly executed by any party (other than the
Fund) that has a lien or security interest in any of
Unigene's assets;
(viii) Patent Security Agreement and Trademark
Security Agreements and Related Documents in the
form of Exhibits H and I; and
(ix) Collateral Assignment of License Agreements in
the form of Exhibit J.
(b) At the Closing, upon delivery by Unigene of all of the
documents and instruments set forth in subparagraph (a) above, the Fund shall:
(i) make payment to Unigene, by wire transfer of
immediately available funds to an account designated
by Unigene of $2,000,000, less (x) the costs and
expenses set forth in Section 8.2 hereof and (y)
amounts necessary to satisfy the Dejufra loan; and
(ii) deliver the Opinion of Counsel for the Fund in
the Form attached hereto as Exhibit K.
The Notes and the Warrants are hereinafter referred to as the "Securities". The
Securities together with any other document executed pursuant to this Agreement
are hereinafter referred to collectively as the "Documents." The Security
Agreement, the Patent Security Agreement and the Trademark Security Agreement
are sometimes referred to as the "Security Agreements".
2. Definitions.
2.1 For purposes hereof, the following terms have the following
meanings:
2.1.1 "Affiliate" and "Associate" shall have the meaning
ascribed to such terms as is set forth in Rule 405 promulgated under the
Securities Act of 1933, as amended.
2.1.2 "Claim" means all actions, causes of action, suits,
liabilities, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law or equity.
2.1.3 "Encumbrance" means any title defect, conflicting claim
of ownership, order, decree, judgment, stipulation, settlement, attachment,
restriction, lien, pledge, right of first refusal, option, security interest,
mortgage, covenant, or any other encumbrance on Unigene's right to transfer the
Collateral (as defined in the Security Agreement) to Purchaser other than (i)
liens for taxes, assessments and other governmental charges or levies not due
and payable or which are currently being contested in good faith by appropriate
proceedings, and have been adequately reserved for in the Financial Statements
(hereinafter defined), (ii) mechanics', workmen's, repairmen's, materialmen's,
warehousemen's, vendors' and carriers' liens, and other similar liens arising in
the ordinary course of business for charges which are not delinquent, or which
are being contested in good faith by appropriate proceedings and have not
proceeded to judgment, and have been adequately reserved for, and (iii) liens in
respect of judgments or awards with respect to which there shall be a good faith
current prosecution of an appeal or proceedings for review which is secured by
an appropriate bond or a stay of execution pending such appeal or proceedings
for review and which have been adequately reserved for.
2.1.4 "Financial Statements" means the (i) financial
statements of Unigene as contained in its Form 10-K for its fiscal year ended
December 31, 1994, (ii) unaudited balance sheet of Unigene as of February 28,
1995 and, (iii) unaudited statements of operations, cash flows, shareholders'
equity for the months ended January 31 and February 28, 1995.
2.1.5 "Permits" means permits, licenses, orders,
authorizations, certification or approvals of any federal, state, local or
foreign governmental or regulatory body, including, without limitation, the DEA
and the FDA.
2.1.6 "Person" means an individual, partnership, corporation,
trust, unincorporated organization, government or any department or agency
thereof and any other entity.
2.1.7 "Right" means any right of benefit of any nature
whatsoever.
2.2 Accounting Terms. Any accounting terms used in this Agreement
shall, unless otherwise specifically provided, have the meanings customarily
given them in accordance with United States generally accepted accounting
principles applied on a consistent basis in accordance with Unigene's prior
practices ("GAAP").
3. Representations and Warranties of Unigene. Unigene hereby
represents and warrants to the Fund that:
3.1 Standing and Qualification. Unigene is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Unigene is not, nor is it required to be, qualified or licensed to
transact business as a foreign corporation under the laws of any State other
than the State of its incorporation and New Jersey in order to enable it to
conduct its business as it is presently being conducted, except where the
failure to be so qualified or licensed is not reasonably expected to have a
material adverse effect on its financial condition, assets, business or results
or operation or its ability to perform its obligations hereunder. Unigene has
full corporate power and authority to own or lease its properties and other
assets and to conduct its business as it is now being conducted.
3.2 Subsidiaries. Unigene does not own any capital stock or other
voting securities of any corporation, partnership or other organization. Unigene
is not a party to any joint venture or partnership except as set forth on
Schedule 3.2. Unigene is the sole vehicle through which Unigene and its
Affiliates conducts its and their business.
3.3 Capitalization. The authorized capital stock of Unigene
consists of 31,000,000 shares of Common Stock, of which, as of March 1, 1995,
20,999,149 shares are issued and outstanding. There are no outstanding
dividends, whether current or accumulated, due or payable on any of the capital
stock of Unigene.
3.4 Interests in Securities. Except as disclosed in Schedule 3.4
and Unigene's Form 10-K for the year-end December 31, 1994 (the "1994 Form
10-K"), there are no outstanding options, convertible securities, warrants or
other rights to subscribe for or purchase from Unigene, nor any plans, contracts
or commitments providing for the issuance by Unigene of, or for the granting by
Unigene of rights to acquire: (i) any capital stock in Unigene or (ii) any
securities convertible into or exchangeable for any capital stock or other
ownership interest in Unigene.
3.5 Authority. Unigene (i) has the full corporate right, power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to execute, deliver and perform its obligations under
the Documents, and (ii) has taken all necessary corporate actions to approve and
adopt this Agreement and such Documents and to authorize the performance of this
Agreement and such Documents. Upon execution and delivery, this Agreement and
each of the Documents to which Unigene is a party is the duly authorized, valid
and binding agreement of Unigene, enforceable against it, in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, or similar laws from time to time in
effect which affect the enforcement of creditors' rights generally and by legal
and equitable limitations on the availability of specific performance and other
equitable remedies against it, public policy, and with respect to the priority
of Purchasers' security interest, subject to applicable filing requirements.
3.6 Absence of Conflicts and Consents. Neither the execution and
delivery of this Agreement and the Documents nor the consummation of the
transactions contemplated hereby or thereby will (i) breach or violate any of
the terms and conditions of the Articles of Incorporation or Bylaws of Unigene,
or (ii) breach or violate any judgment, order, injunction, decree or ruling of
any court or any governmental authority, domestic or foreign, or any contract,
agreement or other instrument to which Unigene is a party or any of its
respective properties, Rights or assets is subject or which it is bound or with
any statute, law, ordinance, rule or regulation of any Federal, state, local or
foreign governmental authority or regulatory body, the breach or violation of
which (A) would have a material adverse effect on the properties, assets,
business, operations, prospects or financial condition or (B) would impair the
ability of Unigene to execute, deliver or perform its obligations under this
Agreement or any Document, (C) would terminate or result in the cancellation of
any payments under any such agreement, contract or instrument or (D) would
result in any material damages or result in or, except as contemplated by the
Documents, require the creation or imposition of any Encumbrance of any nature
upon or with respect to any of its properties or assets.
3.7 Title to; Condition of Assets; Real Property. All of
Unigene's assets, including the Premises (defined in the Mortgage) and
Collateral (as defined in the Security Agreement), are owned free and clear of
all Encumbrances except as set forth on Schedule 3.7, which shall be terminated
or subordinated to Purchasers' lien at the Closing. All such personal property
is in good operating condition and in a state of reasonable maintenance and
repair, fit for the purpose for which it is intended. Unigene is the leasee of
property located at 83 Fulton Street, Boonton, NJ pursuant to a lease dated May
20, 1993, as amended by First Amendment to Lease on that same day. Such lease is
in full force and effect and has not been further modified or amended, and no
event has occurred that, with the passage of time or notice, would constitute a
default thereunder.
3.8 Conduct of Business. (a) Since December 31, 1994, except as
set forth in its 1994 Form 10-K, Unigene has preserved substantially intact its
business organization.
(b) Except as set forth in Schedule 3.8 or the 1994 Form
10-K, since December 31, 1994 Unigene has conducted its business only in the
ordinary and usual course of business consistent with past practice and there
has not been:
(i) any increase in its indebtedness for borrowed
money incurred by or on behalf of Unigene or any incurrence of
any other material obligation or liability (fixed or
contingent) by or on behalf of Unigene, except for obligations
incurred in the ordinary course of business consistent with
past practice;
(ii) except for increased indebtedness and decrease
in stockholders equity, any material adverse change in its
assets, liabilities, properties, business, financial condition
or results of operations or any development of which its
management has knowledge which is reasonably likely to result
in any such change other than any such change resulting from
changes in general economic conditions;
(iii) any damage, destruction, loss or claim to or
against any of its property or other assets, whether or not
covered by insurance, which materially adversely affects its
assets, properties, business, profits or financial condition;
(iv) any sale, lease, transfer or other disposition
or mortgage or pledge of any of its properties or other
assets, or an imposition of any Encumbrance on any of its
properties or other assets, other than transactions in the
ordinary course of business consistent with past practice;
(v) any cancellation of any debts owed to or claims
held by or on behalf of Unigene, or any waiver or release of
any of its Rights of material value; or
(vi) any dividend or other distribution or payment
in respect of, any subdivision, consolidation or other
recapitalization of its capital stock or any declaration or
authorization of any of the foregoing.
3.9 Financial Statements; SEC Filings. The Financial Statements
(i) were prepared in accordance with the books of account and records of
Unigene, which accurately reflects all assets and transactions of Unigene, and
(ii) present fairly Unigene's financial condition as of the dates thereof and
its results of operations for the periods then ended in accordance with GAAP. As
of the Closing, except as set forth in Schedule 3.4, Unigene has no material
contingent liabilities, liabilities for taxes, unusual commitments or unrealized
or unanticipated losses not disclosed in such Financial Statements. Unigene has
delivered to the Fund its Forms 10-K for the fiscal years ended December 31,
1993 and 1994 and its Forms 10-Q for the first three fiscal quarters of 1994 as
filed with the Securities Exchange Commission. Such reports do not contain any
untrue statement or omission of any material fact.
3.10 Tax and Other Returns and Reports. (i) All federal, foreign,
state, provincial and local tax returns and tax reports (or extensions relating
thereto) required to be filed by or on behalf of Unigene or any affiliated,
combined or unitary group of which Unigene is or was a member have been filed on
a timely basis with the appropriate governmental agencies in all jurisdictions
in which such returns and reports are required to be filed and all such returns
and reports were true and correct in all material respects when filed; and (ii)
all federal, foreign, state, provincial and local income, profits, franchise,
sales, use, occupancy, property, severance, excise, withholding, value added and
other taxes as shown on such returns (including interest and penalties) due from
Unigene either directly, as part of the consolidated tax return of another
taxpayer, or otherwise, have been fully and timely paid, or where payment is not
required to have been made, Unigene has set up an adequate reserve or accrual
for such payment.
3.11 Intellectual Property. (a) Schedule 3.11(a) accurately lists
all registered United States and Foreign Patents and Trademarks, and all pending
United States Patent and Trademark applications that are owned or controlled by
Unigene.
(b) Schedule 3.11(b) accurately lists all intellectual
property owned or controlled by others besides Unigene, the use of which is
licensed to Unigene. Unigene is not aware of any other intellectual property
owned or controlled by others besides Unigene that is material to the ability of
Unigene to operate its business as it is currently conducted or as currently
contemplated.
(c) Schedule 3.11(c) accurately lists all intellectual
property rights licensed or granted by Unigene to third parties.
Unigene is the sole and exclusive owner of the entire right,
title and interest in and to the Intellectual Property identified on Schedule
3.11(a) and except for such licenses and rights identified on Schedule 3.11(c),
Unigene has not granted nor does there exist by implication or operation of law,
any license or other right in respect thereof which does or which will,
subsequent to the Closing, permit or enable any Person other than Unigene to use
the Intellectual Property and, moreover, except as set forth in Schedule
3.11(c), none of said Intellectual Property is subject to any Encumbrance. As of
the date of Closing, there is no pending or threatened claim against Unigene
asserting (A) that Unigene's use of any of said Intellectual Property infringes
or violates any Rights of third parties, (B) that the past or present conduct of
Unigene's business infringes or violates the Rights of third parties, (C) that
any third parties have any Rights to use any of said Intellectual Property or
(D) except as set forth in Schedule 3.14, that any third parties have or will
have any Right which could adversely affect Unigene's ability to use any of the
Intellectual Property after the Closing; and to the best knowledge of Unigene,
there is no basis for any claim of the foregoing types. Neither the Intellectual
Property nor Unigene's past or present conduct of its business infringes or
violates the Rights of third parties. During the past five (5) years, Unigene
has not given any notice to any third parties asserting infringement by such
third parties of any of said Intellectual Property. Unigene is not aware of any
bars or other restrictions with respect to its Rights to utilize any of said
Intellectual Property, and no bars or other restrictions on Unigene's Rights to
utilize any of said Intellectual Property will be created by, or will, by reason
of any action or inaction, by Unigene before the Closing, exist after the
consummation of the transactions contemplated hereby.
Nothing has come to the attention of Unigene which has led
Unigene to form the opinion that any of said Intellectual Property is invalid or
that its rights in any of said Intellectual Property are unenforceable in any
way, with the proviso that pending patent applications are merely requests for
patents, and there can be no guarantee that those requests will be granted and
that any patents will necessarily be issued based upon said pending
applications, and with the further proviso applications for trademark
registrations are merely requests for registration which may or may not
ultimately result in registration with the U.S. Patent and Trademark Office. The
Closing, in accordance with the terms of this Agreement, will not affect or
impair Unigene's right to continue to use all of said Intellectual Property
without the impairment or alteration thereof and without the payment of any
license or other fees (other than that the license fees payable under the
License Agreements identified in Schedule 3.11(b)).
All of the License Agreements identified on Schedule
3.11(b) are valid agreements, enforceable in accordance with their terms, except
that such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization, bulk sales or similar laws from time-to-time in
effect which affect the enforcement of creditors' rights generally and by legal
and equitable limitations on the availability of specific performance and other
equitable remedies. There is no pending or threatened claim against either
Unigene or, to the best knowledge of Unigene, the licensor of any Licensed
Intellectual Property asserting that any of the Licensed Intellectual Property
infringes or conflicts with the Rights of third parties, or that the present or
past conduct or Unigene's business infringes or violates the Rights of third
parties, and to the best knowledge of Unigene, no basis for any such claim
exists.
3.12 ERISA. It is in compliance with ERISA; no Reportable Event
has occurred and is continuing with respect to any Plan; and it has no unfunded
vested liability under any Plan.
3.13 Permits and Licenses. (a) List of Governmental Permits. Set
forth on Schedule 3.13(a) is a list and description of all Permits which are
issued to, held or used by Unigene, or for which Unigene has applied, and which
are material to the operation and development of its business. There are no
other Permits which are material to the operation of Unigene's business as now
conducted. Except as otherwise indicated, all Permits listed in Schedule 3.13(a)
are in good standing, valid and effective in accordance with their respective
terms. Unigene owns the Permits, free and clear of all Encumbrances and subject
to no Claims.
(b) Compliance with Permits. Except as set forth on
Schedule 3.13(b), Unigene is in material compliance with all Permits listed on
Schedule 3.13(a) and no governmental proceedings or investigations are pending
or threatened against it relating to noncompliance with such Permits.
3.14 Litigation and Proceedings. Except as set forth on Schedule
3.14, there are no causes of action or other litigations or arbitrations or
regulatory, administrative, zoning or other governmental proceedings or
investigations threatened or presently pending, before any court, governmental
agency or other forum either against Unigene or any of its properties or assets
which relate in any way to Unigene or any of its properties or assets.
3.15 FDA Status. The Unigene manufacturing process is undergoing
formal validation in order to obtain GMP (Good Manufacturing Practice) status.
Unigene has completed testing of the manufacturing equipment and is now
performing the various manufacturing process operations. Production of the first
batch of calcitonin is underway. The validation process is essentially complete
when three consecutive "consistency batches" (batches in which all of the
in-process and final product test specifications have been met) of product have
been prepared. Unigene has received no notice, and is not aware of any state of
facts that would lead it to believe, that its Boonton, New Jersey facility will
not receive United States Food and Drug Administration validation to allow
Unigene to produce its Calcitonin for human use in the United States. Finally,
Unigene has been advised verbally by the FDA that only brief clinical programs
designed to test safety and bioequivalence should be required for the approval
of Unigene's injectable Calcitonin product. Following validation, Unigene
intends to perform a stability study, file an IND (investigational new drug
application) and initiate clinical programs to support such product approval in
1995.
3.16 Environmental Laws. Unigene has received no notice, and is
not aware of any state of fact that would lead it to believe that there exists,
or has existed at any real property occupied by it, any hazardous material in
violation of any environmental law, rule or regulation.
3.17 Judgments, Orders and Consent Decrees. Unigene is not
subject to any judgment, order or decree of, or agreement with, any court,
arbitrator or regulatory authority limiting, restricting or adversely affecting
its conduct, financial condition or operating result, and no such judgment,
order, decree or agreement is pending.
3.18 No Omissions. No representation, warranty, covenant or
agreement of Unigene in this Agreement, any schedule or exhibit attached hereto,
or any Document contains nor shall contain any untrue statement of material fact
nor omits nor shall omit to state any material fact necessary to make the
statements contained herein and therein not misleading.
4. Representations and Warranties of the Purchasers. The Fund
represents and warrants to Unigene that:
4.1 Standing and Capacity. It has all requisite legal and
corporate power to execute and deliver this Agreement and the other Documents to
which it is a party, to purchase the Notes and the Warrants, and to perform its
obligations under this Agreement and the other Documents to which it is a party.
Each Purchaser has the capacity to enter into the transaction contemplated by
the Documents; neither the execution, delivery nor performance of this Agreement
or the Documents violates any law, rule or regulation, of any jurisdiction,
court or administrative judgment, order or decree or any agreement applicable to
or binding upon the Purchasers.
4.2 Authority. All action necessary for the purchase of the
Securities and the performance of its obligations under this Agreement and the
other Documents to which it is a party has been duly taken. The Agreement is
valid and binding upon the Fund and the Purchasers and enforceable in accordance
with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, bulk sales, or similar laws
from time to time in effect which affect the enforcement of creditors' rights
generally and by legal and equitable limitations on the availability of specific
performance and other equitable remedies against it, public policy.
4.3 Investment Representation. It is acquiring the Securities for
investment, for its own account as principal and not with the current view to
distribution or trade thereof, except as permitted under the Securities Act of
1933, as amended (the "Act"). It is an "accredited investor" as defined in Rule
501(a) and that the Questionnaire form executed and delivered by it to Unigene
in connection with the transaction is true and accurate in all material respects
and does not omit any material information. The Notes, Warrants and Shares
issued upon exercise of the Warrants shall bear restrictive legends referring to
the Act.
5. Affirmative Covenants. Unigene covenants that, until the
principal of, and interest on, the Notes and all other monetary obligations to
the Fund under the Notes have been paid in full, it will:
5.1 Corporate Existence. Do all things necessary to preserve and
keep in full force and effect its existence (corporate or other) and existing
name, rights and franchises, and qualify and remain qualified to do business in
each jurisdiction in which the failure so to qualify would have an adverse
effect on its business, operating results, assets or condition (financial or
otherwise) or prospects.
5.2 Insurance. Schedule 5.2 lists insurance coverage currently
maintained by the Company. No change in such insurance coverage will be made
without the Fund's consent, which will not be unreasonably withheld or delayed.
The Fund, in its individual capacity and as agent for the Purchasers, shall be
named as an additional insured on all such policies, certificates for which
shall be delivered to the Fund at the Closing. All such policies shall provide
that they are non-cancelable without at least ten days prior written notice to
the Fund. Unigene hereby directs all insurers under policies of insurance to pay
all proceeds up to the aggregate amount due under the Note payable thereunder
relating to the Collateral, directly to the Fund as Secured Party under the
Security Agreement. Provided no Event of Default has occurred, To the extent the
proceeds are less than $100,000, the Fund shall make such proceeds available to
Unigene solely to repair or replace any damaged Collateral. If the proceeds are
greater than $100,000, the Fund shall make such proceeds available to Unigene to
repair or replace the damaged Collateral only to the extent same may, in the
Fund's reasonable judgment, be repaired or replaced in sufficient time to permit
Unigene to repay the Notes. Any insurance proceeds retained by the Fund shall be
applied to reduce the Obligations (as defined in the Security Agreement).
Unigene irrevocably makes, constitutes and appoints the Fund (and all officers,
employees or agents designated by the Fund) as Unigene's true and lawful
attorney (and agent-in-fact) for the purpose of making, settling and adjusting
claims under such policies of insurance (provided that until an Event of Default
exists and the principal sum is due and payable, the Fund shall not exercise
such authority), endorsing the name of Unigene on any check, draft, instrument
or other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance.
5.3 Keeping of Records and Books of Account. Keep adequate
records and books of account, in which complete entries will be made reflecting
all of Unigene's financial transactions.
5.4 Inspection Rights. At any reasonable time, and from time to
time, permit representative of the Fund, and upon reasonable notice to Unigene,
to examine and make copies of and abstracts from its records and books of
account of, and visit its properties during normal business hours and to discuss
its affairs, finances and accounts with any of its officers and its independent
certified public accountants. The Fund and the Purchasers agree to keep in
confidence and not to utilize or disclose any confidential information provided
to them, including, without limitation, financial statements or information,
business plans, proposed financing or acquisition plans, information concerning
Unigene's products, patents, patent applications, trade secrets, secret
processes or other proprietary information unless and until such confidential
information is publicly disseminated by Unigene. This confidentiality provision
shall survive the Closing, but shall terminate if Unigene defaults on its
obligations and the Fund takes possession of, or sells, any of the Collateral.
In such event, the Fund may disclose or use any confidential information in a
manner as it deems necessary (in its sole judgment) to obtain payment of all
Obligations.
5.5 Compliance with Laws. Comply with the applicable requirements
of all laws and all rules, regulations and orders of any governmental authority,
the violation of which might be reasonably expected to have a material adverse
effect on its business, operating results, assets, condition (financial or
other) or prospects.
5.6 Reporting Requirements. Furnish to the Fund:
(a)(i) Commencing with the month of April, 1995, as soon as
practicable and in any event within 40 days after the close of each monthly
accounting period, unaudited financial statements, consisting of a balance sheet
as at the end of such monthly period and statements of operations, and cash
flows of Unigene for such monthly period and for the period from the beginning
of the fiscal year to the end of such monthly period;
(ii) Commencing with the quarterly period ending March 31,
1995, as soon as possible and in any event within 50 days after the close of
each of the first three quarterly accounting periods of each fiscal year,
unaudited financial statements, consisting of a balance sheet as at the end of
such quarterly period and statements of operations, cash flows, shareholders'
equity for such quarterly period and for the period from the beginning of the
fiscal year to the end of such quarterly period; and
(iii) Annually, as soon as available but in any event
within 95 days after the close of each fiscal year of Unigene, a balance sheet
of Unigene as at the end of such year and statements of income and retained
earnings and of cash flow of Unigene reflecting the results of its operations
during such year, which financial statements shall be used by Unigene's
certified public accountants in the preparation of Unigene's audited financial
statements for such year end, certified by the President and Treasurer of the
Unigene to fairly present its financial condition at such year end and the
results of its operations for such period in accordance with GAAP.
The financial statements required to be delivered under this Subsection (a)
shall contain reasonable detail and shall be certified by the Chief Executive
Officer of Unigene and, in the case of the financial statements required to be
delivered under clause (ii) above, as (x) having been prepared in accordance
with GAAP, subject to normal year-end audit adjustments (except that footnotes
shall not be required on monthly and quarterly financial statements), (y) being
complete and correct, and (z) presenting fairly the financial condition, results
of operations, shareholders' equity and cash flows which they purport to
present.
(b) Together with the quarterly financial statements
furnished pursuant to Section 5.6(a), there shall be delivered to the Fund a
certificate signed by the Chief Executive Officer of Unigene stating that they
have caused a review of the affairs of Unigene to be made and that based thereon
nothing has come to their attention which would lead them to believe that any
Event of Default or any event which, with the lapse of time or the giving of
notice or both could become an Event of Default has occurred or exists hereunder
or, if such is not the case, specifying the nature thereof and what action has
been taken or is being taken or is proposed to be taken with respect thereto.
(c) Promptly after Unigene discovers the occurrence of any
Event of Default or any event which, with the lapse of time or the giving of
notice or both, could become an Event of Default, a statement of Unigene's
President or Chief Financial Officer setting forth details of such Event of
Default or other event and the action taken, or proposed to be taken, with
respect thereto.
(d) Promptly after Unigene has knowledge thereof, notice of
any action, suit or proceeding known to it before any court or governmental
authority, domestic or foreign, which might reasonably be expected to have a
material adverse effect on its business, earnings, assets condition (financial
or other), or prospects.
(e) Promptly after the sending or filing thereof, copies of
all proxy statements, financial statements and reports which Unigene sends to
its shareholders, and copies of all reports, and all registration statements it
files with the U.S. Securities and Exchange Commission or the National
Association of Securities Dealers, and all federal, state and local income tax
returns filed with the appropriate taxing authorities.
(f) Such other information respecting the business,
operating results, assets, condition (financial or other) or prospects of
Unigene as the Fund may reasonably request from time to time.
(g) Promptly, but in any event not later than three
business days after the receipt of a reasonable written demand from the Fund, a
certificate of its Chief Executive Officer or the Chief Financial Officer, in
form satisfactory to the Fund, stating and acknowledging (a) the then
outstanding principal balance of the Notes, (b), the fact that there are no
defenses, offsets or counterclaims thereto (or stating such defenses, offsets or
counterclaims, if any); (c) that no Event of Default and no event which, with
the giving of notice or the lapse of time or both, would constitute such an
Event of Default exists, or if such is not the fact, the facts and circumstances
relating to such Event of Default or other event; and (d) that no litigation or
administrative proceeding has been instituted by or against Unigene if
determined would have a material adverse effect on its business, operating
results, assets, condition (financial or other ) or prospects or, if such is not
the fact, the facts and circumstances relating to such litigation or proceeding.
5.7 Use of Proceeds. The proceeds from the sale of Securities
will be used by it only to repay the indebtedness to DeJufra, Inc. in the
principal amount of $1,000,000 plus accrued interest, closing costs and counsel
fees and disbursements, and for working capital.
5.8 Further Assurances. At and after the Closing, without further
consideration, Unigene shall take all such other action and shall procure or
execute, acknowledge, and deliver all such further certificates, conveyance
instruments, consents, and other documents the Fund or their counsel may
reasonably request to perfect and protect Purchaser rights contemplated by this
Agreement including, without limitation, its security interest in and to the
collateral under the Notes.
6. Negative Covenants. Unigene covenants that until all amounts due
under the Notes have been fully paid, unless otherwise expressly consented to in
writing by the Purchasers, it will not:
6.1 Intentionally Omitted.
6.2 Investments. Make or permit to exist any investment in
securities or other financial instruments (including loans and advances),
except:
(a) Accounts receivables arising in the ordinary course of
business;
(b) Notes or other securities in connection with any bona
fide settlement of account receivables owing in the ordinary course of business;
(c) Direct obligations of the United States of America or
any agency thereof, solely for investment purposes, provided the same shall
mature within three months; and
(d) Certificates of deposit, time deposits, money market
deposits, bankers' acceptances, commercial paper and similar short term bank
deposits or instruments having a maturity of not more than three months of a
commercial bank.
6.3 Impair Value. Take any action which, in the Fund's reasonable
judgment, would result in a material impairment of the overall value of any
property on which the Purchasers shall have a lien.
6.4 Change of Business. Conduct any business, the nature of which
would differ in any material respect from that currently conducted by it or
contemplated as set forth in its 1994 Annual Report and 1994 Form 10-K or which
does not complement such business.
6.5 No New Entities. Except as set forth in Schedule 3.2, form or
acquire any corporation, partnership, joint venture or other kind of entity for
the purpose of transferring to such person or entity any of its assets or
business of the type presently conducted by it, unless the assets so transferred
remain subject to the Purchasers' lien and Unigene's interest in such entity is
pledged to the Fund.
6.6 Merger; Sale of Assets. (a) Enter into any merger or
consolidation in which it is not the surviving entity, (b) liquidate, wind up
its affairs or dissolve, or (c) sell, lease, transfer, convey or otherwise
dispose of all or substantially all of its assets or capital stock.
6.7 Dividends. Directly or indirectly, declare or pay dividends
in respect of any of its capital stock or capital shares or otherwise make any
distribution in respect of its capital stock or capital shares, or redeem or
repurchase any shares of its capital stock or capital shares.
6.8 Increase in Compensation. Directly or indirectly, increase
compensation paid to any person who is or was an officer, director or Affiliates
of Unigene.
6.9 No Amendment. Make any material amendment, modification or
change to any agreement or instrument respecting indebtedness for money
borrowed, or waive any of its rights or privileges thereunder, without the
Fund's prior written consent which will not be unreasonably withheld or delayed.
6.10 Transaction with Affiliates and/or Associates.
(a) Enter into any transactions with an Affiliate or
Associate (each within the meaning under Rule 405 of the Securities Act of 1933,
as amended) of Unigene, except in the ordinary course and pursuant to the
reasonable requirements of its business, and in good faith and upon commercial
reasonable terms or conditions that are no less favorable to such person or
entity than would be obtainable at the time in a comparable arm's length
transaction with a person or entity other than an Affiliate and/or an Associate.
(b) Except as expressly permitted by any other provision of
this Section 6, make any loan of money or property to any Affiliate, or become
contingently liable (through guarantee or otherwise) to any person with respect
to any indebtedness of an Affiliate and/or Associate.
6.11 Disposition of Collateral. Sell, assign, exchange or
otherwise dispose of any Collateral except in the ordinary course of business.
6.12 Loans. Make any loans or advances to any Person, including
without limitation Unigene's directors, officers and employees, except (i)
advances to officers or employees with respect to expenses incurred by them in
the ordinary course of their duties which are properly reimbursable by Unigene;
and (ii) loans to employees not exceeding $20,000 in the aggregate during any
fiscal year of Unigene; and (iii) advances to collaborators, suppliers, material
men and with respect to research and development projects made in the ordinary
course of Unigene's business, but not to exceed $100,000 to any one Person.
6.13 Guarantees. Assume, guaranty, endorse or otherwise become
directly or contingently liable in respect to (including without limitation by
way of agreement, contingent or otherwise, to purchase, provide funds to or
otherwise invest in a debtor or otherwise to assure a creditor against loss),
any Indebtedness of any Person (except guarantees by endorsement of instruments
for deposit or collection in the ordinary course of business.
6.14 Removal of Hazardous Substances. Should Unigene cause or
permit any intentional or unintentional act or omission resulting in the
discharging of hazardous substances or wastes into the atmosphere or waters, or
onto lands, resulting in damage to the natural resources without having obtained
a permit issued by the appropriate governmental authorities, Unigene shall
promptly clean up same in accordance with all applicable federal, state and
local orders, statutes, laws, ordinances, rules and regulations.
6.15 Intent and Purpose. It is the intent of the parties that,
subject to this Article 6, until an Event of Default and the principal sum under
the Notes has become due and payable by acceleration or otherwise, Unigene may
conduct its business in the ordinary course, may use its cash, cash equivalents,
royalties, licensing fees, milestone payments, research sponsorship payments,
interest, dividends income, proceeds of loans and sales of securities, sales of
inventory, joint venture distributions for general corporate purposes.
7. Events of Default.
7.1 Event of Default. Each of the following shall constitute an
Event of Default under this Agreement, the Notes and Security Agreements:
(a) Unigene shall default in the payment of principal of,
or any interest on, the Notes, when and as the same shall become due and
payable; or
(b) Unigene shall incur an Event of Default in the
performance of its payment obligations for borrowed money under any note or
other obligation for borrowed money which has become due and payable by
acceleration or otherwise.
(c) any representation or warranty made by Unigene in this
Agreement, the Notes, the Warrant Agreement or the Security Agreement or in any
other Document shall prove to be false or inaccurate in any material respect; or
(d) Unigene shall default in the performance or compliance
with any covenant, condition or agreement to be performed or complied with by it
under this Agreement or any Documents delivered in connection herewith, and such
default shall continue unremedied for a period of 14 consecutive days after
Unigene receives notice from the Fund or becomes aware, or with the exercise of
reasonable diligence should have been aware, of the Event, provided, however, if
Unigene shall have commenced to remedy such default during such 14 day period
and is diligently seeking to remedy such default at the expiration of such
period, then if the Fund is satisfied that, with the exercise of due diligence
in the circumstances, Unigene could not have remedied such default in such 14
day period and that, with the exercise of due diligence, such default is capable
of being remedied by Unigene within a further period of 10 consecutive days, and
the Fund so informs Unigene in writing within five business days after the
expiration of such initial 14 day period, no Event of Default shall be deemed to
have occurred under this Section 7.1(d), unless such default is not remedied to
the satisfaction of the Fund by the expiration of such second 10 day period; or
(e) a final judgment for the payment of money which,
together with all other such undischarged judgments, against Unigene exceeds an
aggregate of $200,000 (after taking into account any proceeds from third party
indemnifications and insurance proceeds which are paid to Unigene with respect
to such liability) shall have been entered against Unigene if, within 14 days
after the entry thereof, such judgment shall not have been discharged or
execution thereon stayed pending appeal, or if, within 14 days after the
expiration of any such stay, such judgment shall not have been discharged; or
(f) A proceeding shall have been instituted or order for
relief shall have been made in respect of Unigene in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Unigene or for any substantial
part of its property, or for the winding-up or liquidation of its affairs, and
such proceeding shall remain undismissed or unstayed and in effect for a period
of 60 consecutive days or such court shall enter a decree of order granting the
relief sought in such proceeding; or
(g) Unigene shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
(or other similar official) of Unigene or for any substantial part of its
property, or shall make a general assignment for the benefit of creditors, or
shall take any action in furtherance of any of the foregoing;
(h) Any material provision of any Document shall, after
execution and delivery of such Document, for any reason cease to be valid and
binding on Unigene, or Unigene shall so state in writing or shall contest the
validity or enforceability thereof, or any Document shall otherwise cease to be
in full force and effect, and, in such case, the Purchasers shall be adversely
affected as a result thereof.
(i) If Warren Levy and Ronald Levy cease to be officers of
Unigene.
7.2 Consequences of an Event of Default.
(a) If an Event of Default specified in Section 7.1(a),
(g), or (h) shall occur, the outstanding principal of, and interest accrued on,
the Notes and all other obligations of Unigene to the Purchasers hereunder or
under the Documents shall be immediately due and payable, upon written notice
from the Fund.
(b) If an Event of Default, other than under Section
7.1(a), (g) or (h) shall occur and continue, the Fund, at its option, on 14 days
prior written notice to Unigene, may declare the outstanding principal of, and
interest accrued on, the Notes and all other obligations of Unigene to the
Purchasers hereunder and under the Documents to be forthwith due and payable,
and the same shall thereupon become and be immediately due and payable, without
further notice of any kind.
(c) Upon an Event of Default and the principal sum of the
Notes is due and payable, the Fund may exercise any one of its rights provided
to a secured party under the Uniform Commercial Code or other applicable law or
under this Agreement, the Security Agreement or any one or more of the Documents
delivered in connection with or pursuant to this Agreement.
8. Miscellaneous.
8.1 Notices. All notices and other communications given to or
made upon any party hereto in connection with this Agreement shall, except as
otherwise expressly herein provided, be in writing (including telecopied
communications) and personally delivered, mailed, telecopied or sent by express
courier to the respective parties as follows:
if to Unigene, to:
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, NJ 07004
Attn: Warren Levy
with a copy to:
Becker, Ross, Stone, DeStefano & Klein, Esq.
317 Madison Avenue
New York, NY 10017
Attn: Jesse Margolin, Esq.
Telecopier No.: (212) 490-0720
if to the Fund, to:
The Microcap Fund, Inc.
733 Third Avenue
New York, NY 10117
Attention: Joseph Lucchese
Telecopier No.: (212) 297-5696
with a copy to:
Greenberger & Forman
1370 Avenue of the Americas
New York, NY 10019-4602
Attention: Robert W. Forman, Esq.
Telecopier No.: (212) 757-4054
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery, if delivered by
hand; two days after deposit in the mail, if sent by registered mail, return
receipt requested, postage prepaid; in the case of telecopy, when the answer
back is received; or if sent by express courier providing guaranteed next day
delivery, on the next succeeding Business Day.
8.2 Costs. Unigene will pay (i) the reasonable fees and expenses
of counsel for the Fund in connection with the preparation of the Documents and
any waiver, consent or release by the Purchasers under any of the Documents, any
amendment thereof, or any Event of Default, and (ii) if the Purchasers shall
incur costs and/or expenses to collect, enforce or protect its rights under this
Agreement or any of the Documents, Unigene shall pay all of the reasonable costs
and expenses of such collection, enforcement and protection, including
reasonable attorneys' fees, of the Purchasers. Whenever counsel fees are
provided for in this Agreement or any of the Documents, it is understood and
agreed that the interests of the Fund and the Purchasers (and/or Holders) are
substantially similar and that there shall be no allowance of counsel fees for
separate counsel of the Purchasers (and/or Holders).
8.3 Representations to Survive. All representations and
warranties contained herein or in any other Document made or delivered pursuant
hereto or thereto or to be executed and delivered hereunder or thereunder, shall
be deemed to survive (a) the execution and delivery of this Agreement and the
Documents and (b) any investigation made by or on behalf of the Purchasers at
any time while any amounts under the Notes are outstanding.
8.4 Successors and Assigns. All representations, warranties and
covenants in this Agreement by or on behalf of, or for the benefit of any of the
parties hereto, shall be binding on and inure to the benefit of such party, its
successors and assigns. The foregoing notwithstanding, this Agreement, the Note,
and the other agreements, documents and instruments entered in or delivered in
connection herewith or therewith may not be assigned, in whole or in part and in
fact or by operation of law, by Unigene without the prior written approval of
the Fund.
8.5 Stamp or Other Tax. Should any stamp, recording tax or fee or
other similar tax become payable with respect to this Agreement, the Note, the
Security Agreement, the Warrants or any other document, Unigene promptly
following demand therefor will pay the same. This section shall not apply to any
income or withholding taxes or transfers by Purchasers or Holders.
8.6 Cumulative Remedies. No failure on the part of any Purchaser
to exercise, and no delay in exercising, any remedy, right, power or privilege
hereunder, or under any other agreement, security or instrument delivered
pursuant hereto, shall operate as a waiver thereof; nor shall any single or
partial exercise of any such remedy, right, power or privilege preclude any
other or further exercise of any other such remedy, right, power or privilege,
and no waiver whatsoever shall be valid unless in writing signed by the Fund and
then only to the extent specifically set forth in such writing. All remedies,
rights, powers and privileges afforded the Purchasers under this Agreement, the
Note and any other agreements, documents or instruments delivered in connection
herewith or therewith shall be cumulative and not be exclusive of any remedies,
rights, powers and privileges available by law and shall be available until the
Note and all interest thereon and all other indebtedness of Unigene to the
Purchasers have been paid in full. The Purchasers may exercise any such
remedies, rights, powers and privileges in any order or priority.
8.7 Severability. In case any one or more of the provisions of
this Agreement or the Documents shall be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions hereof and thereof shall not be affected or impaired thereby.
8.8 Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, except that the Security Agreement and Mortgage
shall be governed by the laws of the state of New Jersey.
8.9 Sole Agreement; Amendments. It is the intention of the
parties that this Agreement and the Documents shall supersede any prior
negotiations, discussions, commitments, representations or agreements, written
or oral, other than as specified herein, including but not limited to any
correspondence, conversations, discussions, representations or other means of
communication not specified or set forth herein. No amendment, modification or
waiver of any provision of this Agreement, nor consent to any departure by any
party herefrom, shall in any event be effective unless the same shall be in
writing and signed by the party to be charged and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. Except as set forth in Section 5.4, the Confidentiality
Agreement between Unigene and the Fund dated March 21, 1995 shall survive
Closing.
8.10 Captions. The headings of the Sections of this Agreement
have been inserted solely for convenience of reference and shall not modify,
define or limit the express provisions of this Agreement.
8.11 Waiver. The waiver by a party of a breach of any provision
of this Agreement or any Document shall not operate or be construed as a waiver
of any subsequent breach by any party.
8.12 Right of the Fund to Perform Covenants. If Unigene fails or
refuses to perform or comply with any covenant, condition or agreement to be
performed or complied by it under any provision of this Agreement or any other
Document to which it is a party, Purchasers may, but shall not be obligated to,
perform or comply with such provision for the account of and at the expense of
such Person, and Unigene will, jointly and severally, on demand, reimburse
Purchasers for all costs and expenses paid or incurred by them in performing or
complying with such provision, together with accrued interest thereon at the
Default Rate from the time such cost or expense was paid or incurred and payment
demanded until the same is reimbursed in full to Purchasers.
8.13 Brokerage. Each party represents and warrants that it has
dealt with no broker or finder other than Commonwealth Associates in connection
with the transaction contemplated hereby. Each party shall indemnify and save
the other harmless from any and all claims for broker's or finder's fees or
commissions which arise out of any agreement made by such indemnifying party
with respect to the subject matter of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
UNIGENE LABORATORIES, INC.
By: /s/ Warren P. Levy
----------------------------
Name: Warren P. Levy
Title:President
THE MICROCAP FUND, INC.
By: /s/ Kamal Mustafa
----------------------------
Name: Kamal Mustafa
Title:President
<PAGE>
WARRANT AGREEMENT
WARRANT AGREEMENT made as of May 8, 1995 by and between
Unigene Laboratories, Inc., a Delaware corporation (the "Company"), The Microcap
Fund, Inc., a Maryland corporation (the "Fund").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue to the Fund warrants to
initially purchase up to 75,000 shares (subject to adjustment) of common stock
(the "Shares") of the Company (the "Common Stock"); and
WHEREAS, the warrants are being issued as an inducement to the
Fund to loan to the Company $2,000,000 evidenced by a secured promissory note
(the "Note") pursuant to the terms and conditions of a certain securities
purchase agreement of even date herewith (the "Purchase Agreement"). Unless
otherwise indicated, all capitalized terms used herein shall have the meaning
ascribed to them in the Purchase Agreement. The term "Registered Holder" shall
mean the registered holder of the Warrants.
NOW, THEREFORE, in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Warrants.
1.1 Initial Warrants. The Fund is hereby granted warrants (the
"Initial Warrants") to purchase, at any time from the date hereof until 5:00
P.M., New York City time, on May 7, 2000 (the "Initial Warrant Exercise Term"),
up to 75,000 Shares (subject to adjustment). Each Initial Warrant represents the
right to acquire one Share at an exercise price of $1.80 per share (the "Initial
Exercise Price"), subject to adjustment as hereinafter provided.
1.2 Additional Warrants (a) For each thirty day period that the
principal balance of the Note is outstanding, the Company will deliver to the
Fund, additional warrants (the "Additional Warrants") to purchase, at any time
from the grant thereof until 5:00 P.M., New York City time, on May 7, 2000 up to
an aggregate of 100,000 Shares (subject to adjustment). Each Additional Warrant
shall represent the right to acquire one Share at the Initial Exercise Price,
subject to adjustment as hereinafter provided.
1.3 The Initial Warrants and the Additional Warrants are
hereinafter collectively referred to as the "Warrants".
1.4 All Warrants shall become void and shall not be exercisable
from and after the end of their respective Warrant Exercise Terms. If the date
of expiration of any Warrant Exercise Term above set forth falls on a
non-business day at the offices of the Company, such expiration date shall be
extended to the next succeeding business at the offices of the Company.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") to be delivered pursuant to this Agreement shall be in the form
set forth as Exhibit A, attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement. All Warrants shall be subject to the
terms and conditions of the Warrant Agreement.
3. Exercise of Warrants. The Warrants initially are exercisable at
the Exercise Prices set forth in Article 1 above, payable in cash or by
certified or bank check to the order of the Company, subject to adjustment as
provided in Article 7 hereof. As payment for any Shares purchased upon the
exercise of any Warrants hereunder, the Purchasers may elect to reduce the
principal amount then outstanding under the Notes by an amount equal to the
product of (x) the number of Warrants exercised and (y) their respective
Exercise Price. Upon surrender of the Warrant Certificate with the annexed Form
of Election to Purchase duly executed, together with payment of the appropriate
Exercise Price for the Shares purchased, at the Company's principal offices, the
Registered Holders shall be entitled to receive a certificate or certificates
for the Shares so purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Registered Holders, in whole or
in part (but not as to fractional shares of the Common Stock). In the case of
the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
4. Issuance of Certificates.
Upon the exercise of any of the Warrants, the issuance of
certificates for the Shares issued upon exercise thereof shall be made
forthwith. The Warrant Certificates and certificates representing the Shares
shall, (unless in the opinion of counsel to the Company the legend is no longer
required) bear a legend substantially similar to the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY. NEITHER THE WARRANT NOR THE COMMON SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED,
DIRECTLY OR INDIRECTLY, OR DELIVERED, UNLESS REGISTERED OR QUALIFIED
UNDER THE ACT AND OTHER APPLICABLE LAWS OF ANY SUCH STATE UNLESS THE
COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT OR
OTHER EVIDENCE SATISFACTORY TO IT THAT AN EXEMPTION FROM SUCH
REGISTRATION OR QUALIFICATION IS AVAILABLE.
In the event that the number of Warrants and/or the Exercise Price are adjusted
as provided for herein, the Registered Holder may surrender any Warrant
Certificate held by it to the Company for cancellation, and upon such
cancellation, the Company shall issue to the Registered Holder a new Warrant
Certificate representing the adjusted number of Shares purchasable thereunder,
and reflecting the adjusted Exercise Price, but until such new Warrant
Certificate is issued, the old Warrant Certificate shall be deemed to reflect
the appropriate adjustments.
5. Investment Intent. By its acceptance of a Warrant Certificate and
Certificates for Shares (if not registered), the Registered Holder covenants and
agrees that the Warrants are being acquired for its own account as an investment
and not with a view to the distribution thereof.
6. Intentionally Omitted.
7. Adjustments.
7.1 Computation of Adjusted Price. Except as hereinafter
provided, in case the Company shall, at any time after the date hereof, issue or
sell without consideration or solely for a cash consideration less than the then
Exercise Price, any shares of Common Stock, including shares held in the
Company's treasury) then forthwith upon such issuance or sale, the Exercise
Price shall (until another such issuance or sale) be reduced to the price
calculated by multiplying it by a fraction, the numerator of which shall be the
sum of (a) the number of Shares outstanding prior to the issuance, and (b) the
number of Shares which the aggregate cash consideration received by the Company
for such issuance would have purchased at the Exercise Price then in effect, and
the denominator of which shall be the number of shares outstanding immediately
following such issuance.
7.2 Options, Rights, Warrants and Convertible and Exchangeable
Securities. Except with respect to rights described in Section 7.7, if the
Company shall at any time after the date hereof issue, without consideration or
solely for cash consideration less than the Exercise Price then in effect,
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock
(collectively, the "Convertible Securities"), the Exercise Price in effect
immediately prior to the issuance of such Convertible Securities shall be
reduced to a price determined by making a computation in accordance with the
provisions of Section 7.1 hereof. For such purposes, all cash consideration
received by the Company upon issuance thereof and which the Company would be
entitled to receive upon exercise of such Convertible Securities shall be deemed
to have been received upon issuance of such Convertible Securities and the
maximum number of Shares (without regard to anti-dilution adjustments) issuable
upon full exercise thereof shall be deemed outstanding Shares for all purposes
after the issuance of such Convertible Securities for which adjustment has been
made hereunder. No adjustment shall be made for the issuance of shares upon the
exercise or conversion of any Convertible Security if any adjustment was made
with respect to such Convertible Security. Notwithstanding the foregoing, upon
expiration thereof, the Exercise Price and number of Shares subject to the
Warrants shall be appropriately readjusted.
7.3 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
7.4 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.5 Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Registered Holders shall thereafter have the right
to purchase the kind and number of shares of stock and other securities and
property receivable upon such reclassification, change, consolidation, merger,
sale or conveyance as if the Registered Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Warrants and (y) the Exercise Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Registered Holders had exercised the Warrants.
7.6 Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall, except as set forth in Section
7.5, at any time prior to the exercise of all Warrants declare a dividend (other
than a dividend consisting solely of shares of Common Stock or a cash dividend
or distribution payable out of current or retained earnings) or otherwise
distribute without consideration payable by the Company's shareholders, to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Registered Holders
shall thereafter be entitled, in addition to the shares of Common Stock or other
securities receivable upon the exercise thereof, to receive, upon the exercise
of such Warrants, the same monies, property, assets, rights, evidences of
indebtedness, securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution. At the time of
any such dividend or distribution, the Company shall make appropriate reserves
to ensure the timely performance of the provisions of this Subsection 7.6.
7.7 Subscription Rights for Shares of Common Stock or Other
Securities. In the case the Company or an affiliate of the Company shall at any
time after the date hereof and prior to the exercise of all the Warrants issue,
without consideration payable by the Company's shareholders, any rights to
subscribe for shares of Common Stock or any other securities of the Company or
of such affiliate to all the shareholders of the Company, the Registered Holders
of the unexercised Warrants shall be entitled, in addition to the shares of
Common Stock or other securities receivable upon the exercise of the Warrants,
to receive such rights at the time such rights are distributed to the other
shareholders of the Company.
7.8 Adjustments of Less than $.10. No adjustment of the Exercise
Price shall be made unless such adjustment would require an increase or decrease
of at least $.10 in such price; provided that any adjustments which by reason of
this Section 7.8 are not required to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which,
together with any adjustment(s) so carried forward, shall require an increase or
decrease of at least $.10 in the Exercise Price then in effect hereunder. Actual
price adjustments shall be rounded to the nearest one-thousandths of a cent.
7.9 Consideration; Expenses, etc. For the purposes hereof, the
consideration received by the Company in any transaction shall be deemed to be
the gross amount received therefor, before deducting underwriters' discounts,
legal fees, finders fees and other costs and expenses incurred in connection
with such issuance or sale determined as of the date not later than 45 days
after the date of the close of the offering with respect to such issuance or
sale.
7.10 Exceptions to Adjustments. Notwithstanding anything to the
contrary herein set forth, no adjustment shall be required to be made:
(a) upon the issue or exercise of any Warrants issued
pursuant to the Purchase Agreement or to any finders or intermediaries in
connection therewith; or
(b) upon the exercise of any option heretofore granted to
employees, outside directors or consultants to the Company pursuant to any
existing benefit plan of the Company; or
(c) upon the issuance or sale of Common Stock or other
securities upon the exercise or exchange of any Convertible Securities to
subscribe for or purchase Common Stock which were outstanding on the date of the
original issue of the Warrants; or
(d) upon the issuance of up to 100,000 additional shares of
Common Stock to currently existing subscribers pursuant to the Company's 1994
Regulation S offering.
8. Registration Rights.
8.1 Registration Under the Securities Act of 1933. The Warrants
and the Shares have not been registered for purposes of public distribution
under the Act.
8.2 Registrable Securities. As used herein the term "Registrable
Security" means the Shares and any shares of Common Stock issued upon any stock
split or stock dividend in respect of such Shares. In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Section 8.
8.3 Piggyback Registration. If, at any time before 6 months after
expiration of the last Warrant Exercise Term, the Company proposes to prepare
and file one or more registration statements or post-effective amendments
thereto covering equity or debt securities of the Company, or any such
securities of the Company held by its shareholders (in any such case, other than
in connection with a merger, acquisition or pursuant to Form S-8 or successor
form), (for purposes of this Section 8, collectively, a "Registration
Statement"), it will give written notice of its intention to do so by registered
mail ("Notice"), at least thirty days prior to the filing of each such
Registration Statement, to each Registered Holder. Upon the written request of a
Registered Holder, made within thirty days after receipt of the Notice, that the
Company include such Holder's Registrable Securities in the proposed
Registration Statement, the Company shall use all reasonable efforts to effect
the registration under the Act of the Registrable Securities which it has been
so requested to register ("Piggyback Registration"), at the Company's sole cost
and expense and at no cost or expense to the Holders, except for underwriting
commissions and discounts and the expenses and fees of their personal counsel,
if any, which shall be payable by the Holders. The Company shall not be required
to effect more than one registration for each Holder of Warrants in accordance
with this Section 8.3 unless the Company is unable to include all of the number
of Shares requested by a Registered Holder to be registered in the Registration
Statement for which a Piggyback Request is made. The Holders agree to cooperate
in a timely manner in connection with all such registrations.
8.4 Demand Registration. At any time before six months after
expiration of the last Warrant Exercise Term, the Fund shall have the right
(which right is in addition to the registration rights provided for under
Section 8.3), exercisable by written notice to the Company (the "Demand
Registration Request"), to have the Company prepare and file with the Securities
and Exchange Commission (the "Commission"), on one occasion, at the sole expense
of the Company except that the Holders shall pay underwriting commissions and
discounts and the fees and expenses of their personal counsel, a Registration
Statement and such other documents, including a prospectus, as may be necessary
(in the opinion of both counsel for the Company and counsel for the Fund), in
order to comply with the provisions of the Act and applicable state securities
laws, limited to New York, New Jersey and no more than 3 additional non-merit
states, as may be reasonably requested by such counsel, so as to permit a public
offering and sale of the Registrable Securities by the participating Holders,
and to take all steps necessary to keep such registration statement effective
for one year after the effective date thereof. The Company shall not be
obligated to effect more than one registration hereunder for all Holders in the
aggregate. The Holder agrees to cooperate in a timely manner in connection with
such registration. In no event shall the Company be required to file a demand
registration statement for less than 75,000 Shares.
8.5 Miscellaneous Registration Provisions. The Company and the
Registered Holders agree as follows:
(a) In connection with any registration under Section 8.4
hereof, the Company shall file the Registration Statement as expeditiously as
possible, but in no event later than forty-five (45) days following receipt of
any Demand Request, shall use its best efforts to have any such Registration
Statements declared effective at the earliest possible time.
(b) The Company shall pay all costs, fees and expenses in
connection with all Registration Statements filed pursuant to Sections 8.3 and
8.4 hereof including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses, except for underwriting
commissions and discounts, and the fees and expenses of Holders' personal
counsel, if any, which shall be paid by each participating Holder, and shall
furnish each participating Holder with such number of prospectuses as shall
reasonably be requested. The Holders agree not to sell any Shares except
pursuant to an effective registration statement and shall cease such sales if
notified that such Registration Statement has been amended or requires
amendment.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Registrable Securities included in a
Registration Statement for offering and sale under the securities or blue sky
laws of such states as are reasonably requested by each participating Registered
Holder, but limited to no more than New York, New Jersey and 3 additional non-
merit states.
(d) The Company will indemnify and hold harmless each
participating Registered Holder and any underwriter (as defined in the Act) for
such Registered Holder and each person, if any, who controls such Registered
Holder or underwriter within the meaning of the Act against any losses, claims,
damages or liabilities (or actions in respect thereof), joint or several, to
which a Registered Holder or underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) are caused by any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in any Registration Statement under which the securities were
registered under the Act, any prospectus contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will reimburse any
such Registered Holder, underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Registered Holder,
underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, damage, expense or liability arises out of or is based upon an untrue
statement, alleged untrue statement, omission or alleged omission so made in
conformity with written information furnished by such Registered Holder or
underwriter specifically for inclusion in the Registration Statement.
(e) Each participating Registered Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company, within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company, or any such director, officer or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) are caused by any
untrue statement of any material fact contained in said Registration Statement,
said prospectus, or amendment or amendments or supplement thereto, or arise out
of or are based upon the omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and will reimburse any legal or other expenses, reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action; in
each case only to the extent, that such untrue statement or omission was so made
in reliance upon and in conformity with written information furnished by such
Registered Holder specifically for inclusion in the Registration Statement.
(f) Promptly after receipt by an indemnified party pursuant
hereto of notice of any claim to which indemnity would apply or the commencement
of any action, such indemnified party will, if a claim thereof is made against
the indemnifying party pursuant hereto, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than hereunder. In case such action is brought against any indemnified
party, and it notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party.
(g) Nothing contained in this Agreement shall be construed
as requiring any Registered Holder to exercise its Warrants prior to the initial
filing of any Registration Statement or the effectiveness thereof.
(h) Each Registered Holder agrees to use its reasonable
best efforts to cooperate with the Company in connection with any registration
effected pursuant to this Section 8 and any listing on a national securities
exchange (including NASDAQ), including furnishing the Company with such
information concerning it and executing and delivering such documents as may be
required by applicable securities laws or any national securities exchange.
(i) In connection with any registration pursuant to Section
8.3, if securities are proposed to be offered for sale pursuant to a
Registration Statement by other security holders of the Company and the total
number of securities to be offered by the Registered Holders and such other
selling security holders is required to be reduced pursuant to a written opinion
from the Company's managing underwriter, if any, for such offering, to the
effect that the inclusion of all or a portion of the Registrable Securities
requested to be registered, when added to the securities being registered by the
Company or the selling shareholder(s), will exceed the maximum amount of the
Company's securities which can be marketed (i) at a price reasonably related to
their fair market value, or (ii) without otherwise materially adversely
affecting the entire offering, then the aggregate number of Registrable
Securities to be offered by the Registered Holders shall equal the number which
bears the same ratio to the maximum number of securities that the underwriter
believes may be included for all the selling security holders (including the
Registered Holders) as the original number of Registrable Securities proposed to
be sold by the Registered Holders bears to the total original number of
securities proposed to be offered by the Registered Holders and the other
selling security holders.
(j) If the Fund is granted registration rights pursuant to
a subsequent loan, the Warrants issued under this Agreement may be registered
pursuant to the subsequent grant, and the registration rights granted herein
shall terminate.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon
the surrender thereof by such Registered Holder at the principal executive
office of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of Shares in
such denominations as shall be designated by the Registered Holder thereof at
the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof. The holder shall pay all transfer
taxes payable in connection with any transfer of a Warrant.
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates
representing fractions of shares of Common Stock and shall not be required to
issue scrip or pay cash in lieu of fractional interest, it being the intent of
the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock.
11. Reservation of Securities.
The Company shall at all times authorize, allot, reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the exercise of the Warrants, such number of shares of
Common Stock as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, all shares of Common Stock issuable upon such exercise
shall be duly and validly allotted and issued as fully paid and non-assessable
shares and not subject to the preemptive rights of any shareholder and fee and
clear of all liens, claims and encumbrances of any nature whatsoever.
12. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested
or by facsimile or overnight courier (with signature of recipient required):
(a) If to the Fund, to the following address:
The Microcap Fund, Inc.
733 Third Avenue
New York, New York 10017
Attention: Joseph Lucchese
Telecopier No.: (212) 297-5696
with a copy to:
Greenberger & Forman
1370 Avenue of the Americas
New York, NY 10019-4602
Attention: Robert W. Forman, Esq.
Telecopier No.: (212) 757-4054
or
(b) If to the Company, to the following address:
Unigene Laboratories, Inc
110 Little Falls Road
Fairfield, NJ 07004
Attention: Warren Levy
Telecopier No.: (201) 227-6088
with a copy to:
Becker, Ross, Stone, DeStefano & Klein, Esq.
317 Madison Avenue
New York, NY 10017
Attn: Jesse Margolin, Esq.
Telecopier No.: (212) 490-0720
or such other address as the Fund or the Company may designate in a notice to
the other party in accordance with the foregoing.
13. Supplements and Amendments.
The Company and the Registered Holders may from time to time
supplement or amend this Agreement in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Registered Holders may
deem necessary or desirable and which the Company or the Registered Holders deem
not to adversely affect the interest of the Registered Holders.
14. Successors; Restrictions on Transfer.
All the covenants and provisions of this Agreement by or for
the benefit of the Company and the Registered Holders shall inure to the benefit
of their respective heirs, legal representatives, successors and permitted
assigns. Each Registered Holder's rights under this Agreement and to the
Warrants may be assigned or transferred by the Registered Holders or any
Subsequent Holder in whole (but not in part), provided such transfers comply
with all applicable securities laws and the Company receives an opinion from
either its counsel or counsel to the transferor to that effect.
15. Governing Law.
This Agreement and each Warrant Certificate(s) issued
hereunder shall be deemed governed by the laws of the State of New York.
16. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Registered Holders any
legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Registered Holders.
17. Counterparts.
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
UNIGENE LABORATORIES, INC.
By: /s/ Warren P. Levy
----------------------------
Name: Warren P. Levy
Title:President
THE MICROCAP FUND, INC.
By: /s/ Kamal Mustafa
----------------------------
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 8, 1995, between Unigene
Laboratories, Inc., a Delaware corporation, with an address at 110 Little Falls
Road, Fairfield, NJ 07004 ("Unigene" or the "Debtor"), and The Microcap Fund,
Inc., a Maryland corporation, with an address at 733 Third Avenue, New York, New
York 10017 (the "Secured Party").
WHEREAS, the Fund has extended credit or will extend credit to Debtor
represented by a Note in the principal amount of $2,000,000 which was executed
by Debtor in favor of the Fund pursuant to a Securities Purchase Agreement of
even date herewith (the "Purchase Agreement"); and
WHEREAS, in consideration of the extension of credit under the Note,
the Debtor wishes to grant a security interest in certain collateral to the
Secured Party.
NOW, THEREFORE, the parties hereby agree as follows:
1. Grant of a Security Interest. To secure the prompt payment,
observance and performance in full of each and every obligation (the
"Obligations") of Debtor under the Purchase Agreement and Note, Debtor hereby
grants to Secured Party a continuing first priority security interest in, and
lien upon, the Collateral (as defined in Section 2) which shall terminate on
full payment of amounts owed under the Note.
2. Collateral. (a) The Collateral covered by this Agreement consists of
all property (tangible or intangible) of every kind and nature, wherever located
and whether now owned or hereafter owned or acquired by Debtor, whether or not
affixed to realty including, without limitation, Accounts, Chattel Paper,
Documents, Instruments and General Intangibles including all books, records,
documents and manuals relating to Debtor's process of making calcitonin, all
Proceeds and Products thereof in any form, all parts, accessories, attachments,
special tools, additions, replacements, substitutions and accessions thereto or
therefor, and all increases or profits received therefor. All capitalized terms
used herein and not otherwise defined shall have the meanings as defined in the
Uniform Commercial Code as in effect in the State of New Jersey (the "UCC") or
the Purchase Agreement, where applicable.
(b) Any and all Collateral described or referred to in this
Agreement which is hereafter acquired shall, and without any further conveyance,
assignment or act on the part of the Debtor or the Secured Party, become and be
subject to the security interests created hereby as fully and completely as
though specifically described herein.
3. Debtor's Representations and Warranties. Except as set forth in
Schedule 3, Debtor represents and warrants, that:
(a) Debtor owns the Collateral free and clear of any
Encumbrances (other than those permitted under the Purchase Agreement).
(b) Debtor has all necessary corporate power and authority and
has taken all corporate action necessary to execute, deliver and perform this
Agreement and the Note and to encumber and grant a security interest in the
Collateral.
(c) There is no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral on file
in any recording office except as may have been filed in favor of the Secured
Party.
(d) This Agreement creates a valid security interest of
Secured Party in the Collateral securing payment of the Obligations. Upon the
filing of the financing statements and the Patent Security Agreement and
Trademark Security Agreement and the other instruments similar in effect, the
Secured Party will have a valid and perfected first priority lien on and
security interest in the Collateral except as to purchase money security
interests created after the date of this Agreement.
(e) No consent, authorization, approval or other action by,
and no notice to or filing with, any governmental authority, regulatory body,
lessor, franchisor or other person or entity is required for the grant by Debtor
of the security interest granted hereby or for the execution, delivery or
performance of this Agreement by Debtor or for the perfection or exercise by
Secured Party of its rights and remedies hereunder, except filings of financing
documents in accordance with Sections 4(b) and 4(c) hereof.
(f) Debtor does not transact any part of its business under
any tradenames, division names, assumed names or other name, except for its name
set forth in the preamble hereto; Debtor's principal business address and chief
executive office is as set forth in the preamble hereto; and Debtor's records
concerning the Collateral are kept at such address.
(g) Debtor will deliver to Secured Party a schedule of all
Accounts, General Intangibles and Chattel Paper from time to time as Secured
Party may reasonably request. The amounts represented on such schedules by
Debtor to Secured Party as owing by each Account Debtor or by all Account
Debtors are and will be, to the best of the Company's knowledge, the correct
amounts actually and unconditionally owing by such Account Debtor or Account
Debtors individually and in the aggregate, except for normal cash discounts
where applicable.
(h) Each Instrument and each Document constituting Collateral
is genuine and in all respects what it purports to be.
(i) Schedule 3(i) lists and describes the location of all
tangible Collateral and all records relating to intangible Collateral. Debtor
shall not remove any such Collateral or records from said locations without 5
days prior written notice to the Secured Party.
4. Debtor's Covenants. Debtor agrees and covenants that:
(a) The Collateral will be used solely for business purposes
of Debtor and will remain in the possession or under the control of Debtor (sale
or replacement in the ordinary course excepted) and will not be used for any
unlawful purpose. The Collateral will not be misused, abused, wasted or allowed
to deteriorate (ordinary wear and tear excepted). Debtor will keep the
Collateral, as appropriate and applicable, in good condition and repair
(ordinary wear and tear excepted), and will clean, shelter, and otherwise deal
with the Collateral in all such ways as are considered good practice by owners
of like property.
(b) Debtor has executed and will promptly file with the
appropriate governmental authorities, or deliver to Secured Party for filing,
UCC-1 Financing Statements with respect to the Collateral. Debtor shall, at no
cost to Secured Party, execute, acknowledge and deliver all such other documents
and instruments as Secured Party reasonably deems necessary to create, perfect
and continue the security interest in the Collateral contemplated hereby. Debtor
will pay all costs of title searches and filing of financing statements,
assignments or other documents in all public offices reasonably requested by
Secured Party, and will not, without the prior written consent of Secured Party,
file or authorize or permit to be filed in any public office any financing
statement, assignment or other document naming Debtor as debtor and not naming
Secured Party, as agent for the Holders, as secured party.
(c) Debtor shall concurrently herewith deliver to Secured
Party the Patent Security Agreement and Trademark Security Agreement, executed
by the Debtor in favor of the Secured Party, and all other Documents,
instruments and other items as may be necessary for Secured party to file such
Agreements with the United States Patent and Trademark Office. Debtor represents
and warrants to Secured Party that the execution, delivery and performance of
this Agreement by Debtor will not violate or cause a default under any agreement
relating to the patents and trademarks described therein.
(d) Debtor will defend the Collateral against the claims and
demands of all other parties, will keep the Collateral free from all security
interests or other encumbrances; and will not sell, transfer, lease, assign,
deliver or otherwise dispose of any Collateral or any interest therein without
the prior written consent of Secured Party, except that Debtor may sell or lease
Inventory in the ordinary course of Debtor's business and as otherwise permitted
under the Purchase Agreement.
(e) Debtor will, at Secured Party's request, mark any and all
books and records to indicate the security interest created hereby.
(f) Debtor will notify Secured Party promptly in writing of
any change in Debtor's business address or chief executive office, any change in
the address at which records concerning the Collateral are kept and any change
in Debtor's name, identity or corporate or other structure.
(g) Debtor will prevent the Collateral or any part thereof
from being or becoming an accession to other goods not covered by this Security
Agreement.
(h) Debtor shall pay all reasonable expenses, including
reasonable attorneys' fees and costs, incurred by Secured Party in the
preservation, realization, enforcement or exercise of any of Secured Party's
rights under this Agreement.
5. Certain Provisions Concerning Collateral.
(a) Upon the occurrence of an Event of Default (defined below)
and the principal sum under the Note being due and payable by acceleration or
otherwise, Secured Party may notify any or all Account Debtors of the security
interest created hereby and may also direct such Account Debtors to make all
payments on Collateral to Secured Party. In such event, all payments on and from
Collateral received by Secured Party directly or from Debtor shall be applied to
the Obligations in accordance with Section 7 and Secured Party may demand of
Debtor in writing, before or after notification to Account Debtors and without
waiving in any manner the security interest created hereby, that any payments on
and from the Collateral: (i) shall be held by Debtor in trust for Secured Party
in the same medium in which received; (ii) shall not be commingled with any
assets of Debtor; and (iii) shall be delivered to Secured Party in the form
received, properly indorsed to permit collection, not later than the next
business day following the day of their receipt; and Debtor shall comply with
such demand. Debtor shall also promptly notify Secured Party of the return to or
repossession by Debtor of Goods underlying any Collateral, and Debtor shall hold
the same in trust for Secured Party and shall dispose of the same as Secured
Party directs.
(b) Debtor hereby assigns, transfers and conveys to Secured
Party effective upon the occurrence of any Event of Default hereunder, the
nonexclusive right and license to use all Intellectual Property (as defined in
the Purchase Agreement) owned or used by Debtor together with any goodwill
associated therewith, all to the extent necessary to enable Secured Party to
realize on the Collateral and any successor or assign to enjoy the benefits of
the Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Secured Party and its successors, assigns
and transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise.
(c) Until the occurrence of an Event of Default and the
principal sum under the Note is due and payable by acceleration or otherwise,
Debtor reserves the right to receive all income from or interest on the
Collateral consisting of Instruments. Upon such an Event, Debtor will not demand
or receive any income from or interest on such Collateral other than from
Inventory, royalties, licensing fees, milestone payments, research sponsorship
payments, joint ventures or loan proceeds and, if Debtor receives any such
income or interest without any demand by it, the same shall be held by Debtor in
trust for Secured Party in the same medium in which received, shall not be
commingled with any assets of Debtor and shall be delivered to Secured Party in
the form received, properly indorsed to permit collection, not later than the
next business day following the day of its receipt. Secured Party may apply the
net cash receipts from such income or interests to payment of the Obligations,
provided that Secured Party shall account for and pay over to Debtor any such
income or interest remaining after payment in full of the Obligations. Until an
Event of Default and the principal sum under the Note become due and payable by
acceleration or otherwise, notwithstanding any provision of this Agreement and
the Documents to the contrary, Unigene may conduct its business in the ordinary
course, may use its cash, cash equivalents, royalties, licensing fees, milestone
payments, research sponsorship payments, interest, dividends, income, proceeds
of loans and sales of securities, sales of inventory, joint venture
distributions for general corporate purposes.
(d) If an Event of Default has occurred and the principal sum
under the Note is due and payable, Debtor authorizes Secured Party to (i)
receive any increase in or profits on the Collateral (other than Inventory and
Intellectual Property, (including, without limitation, any stock issued as a
result of any stock split or dividend, any capital distributions and the like),
and to hold the same as part of the Collateral, (ii) receive any payment or
distribution on the Collateral upon redemption by, or dissolution and
liquidation of, the issuer thereof, (iii) surrender such Collateral or any part
thereof in exchange therefor, and (iv) hold the net cash receipts from any such
payment or distribution described in clause (ii) hereof as part of the
Collateral. If Debtor receives any such increase, profits, payments or
distributions, Debtor will receive and deliver same promptly to Secured Party on
the same terms and conditions set forth in Section 5(c) hereof respecting income
or interest, to be held by Secured Party as part of the Collateral.
(e) Unigene hereby grants to the Secured Party, for a term
commencing on the Closing Date and continuing so long as any of the Obligations
remain outstanding, at a rental of $1.00 for such entire term, the right to the
use of all premises or places of business which Unigene now or hereafter may
have and where any Collateral may be located; provided that the Secured Party
agrees not to exercise such right unless and until an Event of Default occurs
and is continuing and the Secured Party determines to exercise its rights
against Collateral hereunder.
(f) Subject to the provisions of Section 5.2 of the Purchase
Agreement, Debtor hereby assigns to the Secured Party all sums, including
without limitation return of premiums, which may become payable under any and
all of Debtor's policies of insurance which insure the Collateral, and directs
each insurance company issuing any such policy to make payment thereof directly
to the Secured Party.
6. Events of Default. The occurrence of any "Event of Default" under
the Purchase Agreement or the Note shall constitute an "Event of Default" under
this Security Agreement.
7. Remedies on Default. Upon the occurrence of an Event of Default, the
Secured Party, for the benefit of the Holders, shall have all rights,
privileges, powers and remedies provided a secured party under the UCC and any
other applicable law and such additional rights, privileges, powers and remedies
as are set forth herein and in the Purchase Agreement. Without limiting the
foregoing, upon the existence or occurrence of any Event of Default and the
principal sum under the Note is due and payable by acceleration or otherwise:
(a) Secured Party may require Debtor to assemble the
Collateral and make it available to Secured Party at a place or places
designated by Secured Party, and Secured Party may use and operate the
Collateral. At any time following the occurrence of an Event of Default and the
principal sum under the Note is due and payable and during the continuation
thereof, the Secured Party shall have full power, in its own name or that of
Debtor, to collect, endorse, compromise, settle, sell or otherwise deal with any
or all of the Collateral or proceeds thereof in a commercially reasonable
manner.
(b) Secured Party may, in a commercially reasonable manner,
sell, lease or otherwise dispose of and deliver any or all Collateral at public
or private sale, for cash, upon credit or otherwise, at such prices and upon
such terms as Secured Party deems advisable in its sole discretion. Any
requirement of reasonable notice shall be met if such notice is given to Debtor
at its address set forth herein at least ten (10) days before the time of sale
or other disposition. Secured Party may be the purchaser at any such sale, if it
is public, and in such event Secured Party shall have all rights of a good
faith, bona fide purchaser for value from a secured party after a default. The
proceeds of any sale may be applied (in whatever order and manner Secured Party
elects in its sole discretion) to all costs and expenses of sale (including
without the payment of Obligations, and any remaining proceeds shall be applied
in accordance with Article 9, Part 5, of the Uniform Commercial Code. The Debtor
shall remain liable to Secured Party for any deficiency.
(c) Without in any way requiring notice to be given in the
following time and manner, Debtor agrees that any notice by Secured Party of
sale, disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable notice to
Debtor if such notice is given, at least ten days prior to such action, to
Debtor's address specified above or to any other address which Debtor has
specified in writing to Secured Party as the address to which notices hereunder
shall be given to Debtor.
(d) After an Event of Default and the principal sum under the
Note is due and payable, Secured Party may demand, collect and sue on any of the
Accounts, Chattel Paper, Instruments and General Intangibles (in either Debtor's
or Secured Party's name at the latter's option); may enforce, compromise, settle
or discharge such Collateral without discharging the Obligations or any part
thereof; and may indorse Debtor's name on any and all checks commercial paper,
and any other Instruments pertaining to or constituting Collateral.
(e) Debtor will deliver to Secured Party, upon demand, all
Documents and all Chattel Paper (duly indorsed to the Secured Party)
constituting, representing or relating to the Collateral or any part thereof,
and any schedules, invoices, shipping documents, delivery receipts, purchase
orders, contracts or other documents representing or relating to the Collateral
or any part thereof.
8. Payments After an Event of Default. All payments received and
amounts realized by the Secured Party pursuant to Section 7, including all such
payments and amounts received after the entire unpaid principal and interest
amount of the Note has been declared due and payable, as well as all payments or
amounts then held or thereafter received by the Secured Party as part of the
Collateral while an Event of Default shall be continuing, shall be promptly
applied and distributed by the Secured Party in the following order of priority:
(a) first, to the payment of all reasonable costs and
expenses, including legal expenses and reasonable attorneys' fees, incurred or
made hereunder by the Secured Party, and/or by any other Holder or Holders,
including any such costs and expenses of foreclosure or suit, if any, and of any
sale or the exercise of any other remedy under Section 7, and of all taxes,
assessments or liens superior to the lien granted under this Security Agreement,
except any taxes, assessments or other superior lien subject to which any said
sale under Section 7 hereof may have been made; and
(b) second, to the payment to the Fund of the amount then
owing or unpaid on the Note; and
(c) third, to the payment of the balance or surplus, if any,
to the Debtor, its successors and assigns, or to whomsoever may be lawfully
entitled to receive the same.
9. Power of Attorney. Debtor hereby appoints Secured Party the
attorney-in-fact of Debtor to (i) prepare, sign and file or record, for Debtor
in Debtor's name, any financing statement and to take any other action
reasonably deemed by Secured Party necessary or desirable to perfect and
continue the security interest of Secured Party hereunder, and to perform any
obligations of Debtor hereunder, at Debtor's expense, but without obligation to
do so; and (ii) after an Event of Default and the principal sum under the Note
is due and payable to take any and all actions necessary or appropriate to
collect, compromise, settle, sell or otherwise deal with any or all of the
Collateral or proceeds thereof and to obtain, adjust, settle and cancel any
policies of insurance referred to herein or in the Purchase Agreement. Such
power of attorney is coupled with an interest and is irrevocable so long as any
monetary obligations under the Note remains outstanding.
10. Secured Party's Right to Cure; Reimbursement. In the event Debtor
should fail to do any act as herein provided, Secured Party may, but without
obligation to do so, with reasonable notice to Debtor, and without releasing
Debtor from any obligation hereof, make or do the same in such manner and to
such extent as Secured Party may deem necessary to protect the Collateral,
including without limitation, the defense of any action purporting to affect the
Collateral or the rights or powers of Secured Party hereunder, at Debtor's
expense. Debtor shall reimburse Secured Party for expenses reasonably incurred
under this Section 10.
11. Miscellaneous.
(a) This Agreement, together with the covenants and warranties
contained in it, shall inure to the benefit of Secured Party, the Holders
(subject to the agency of Secured Party) and their respective permitted
successors, assigns, heirs and personal representatives, and shall be binding
upon Debtor, its successors and assigns.
(b) Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered against receipt to the party
to whom it is to be given at the address of such party and in the manner set
forth in the Purchase Agreement.
(c) This Agreement shall terminate on the satisfaction in full
of all of the Obligations for the payment of money under the Note and, on such
termination, Secured Party shall release to Debtor the security interest granted
in the Collateral hereunder; provided, that if, after receipt of any payment of
all or any part of the Obligations, Secured Party is for any reason compelled to
surrender such payment to any person or entity, because such payment is
determined to be void or voidable as a preference, an impermissible setoff, or a
diversion of trust funds, or for any other reason relating to Debtor's status,
this Agreement shall continue in full force notwithstanding any contrary action
which may have been taken by Secured Party in reliance upon such payment, and
any such contrary action so taken shall be without prejudice to Secured Party's
rights under this Agreement and shall be deemed to have been conditioned upon
such payment having become final and irrevocable.
(d) If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
(e) The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
(f) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
(h) No course of dealing and no delay or omission on the part
of the Secured Party in exercising any right or remedy shall operate as a waiver
thereof or otherwise prejudice the Secured Party's rights, powers or remedies.
No right, power or remedy conferred by this Agreement upon the Secured Party
shall be exclusive of any other right, power or remedy referred to herein or now
or hereafter available at law, in equity, by statute or otherwise, and all such
remedies may be exercised singly or concurrently.
(i) This Agreement together with the Purchase Agreement, Note
and Documents sets forth the entire understanding of the parties with respect to
the subject matter hereof, supersedes all existing agreements among them
concerning such subject matter, and may be modified only by a written instrument
duly executed by the party intended to be bound thereby, except as set forth in
paragraph 8 of the Purchase Agreement.
(j) In the absence of willful misconduct taken or omitted in
bad faith, gross negligence or other action which, by clear and convincing
evidence, substantially departs from commercially reasonable conduct, neither
the Fund nor any attorney-in-fact pursuant to this Agreement or any Document
shall be liable to Debtor or any other person for any act or omission, any
mistake of fact or any error of judgment in exercising any right or remedy
granted herein.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Security Agreement
on the date set forth above.
UNIGENE LABORATORIES, INC.
By: /s/ Warren P. Levy
----------------------------
Name: Warren P. Levy
Title:President
THE MICROCAP FUND, INC.
By: /s/ Kamal Mustafa
----------------------------
<PAGE>
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY. THIS NOTE HAS NOT BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, OR DELIVERED, UNLESS
REGISTERED OR QUALIFIED UNDER THE ACT AND OTHER APPLICABLE LAWS OF ANY SUCH
STATE UNLESS THE PAYOR SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
IT OR OTHER EVIDENCE SATISFACTORY TO IT THAT AN EXEMPTION FROM SUCH REGISTRATION
OR QUALIFICATION IS AVAILABLE.
SECURED PROMISSORY NOTE
$2,000,000 May 8, 1995
New York, New York
FOR VALUE RECEIVED, the undersigned, UNIGENE LABORATORIES,
INC., a Delaware corporation ("Unigene" or "Payor") hereby promises to pay to
the order of Microcap Fund, Inc., a Delaware corporation, with an address at 733
Third Avenue, New York, New York (the "Holder"), the principal amount of
$2,000,000 with interest thereon at the rate of 13% per annum, on July 7, 1995
(the "Maturity Date") at such Holder's above address, or such other place as the
Holder may designate in writing. From and after an Event of Default and the
principal amount being due by acceleration or otherwise all unpaid amounts due
hereunder shall bear interest at the rate of 18% per annum. Unless otherwise
defined herein, capitalized terms used herein shall have the meaning ascribed to
them in the Purchase Agreement.
1. Interest and Payment.
1.1 In the event that a court of competent jurisdiction
shall finally determine that Payor shall have paid or agreed to pay hereunder or
under the Purchase Agreement or any of the Documents referred to therein
interest or other charges in excess of the maximum rate permitted by law, it is
the express intent of the Payor and the Holder that all such excess amounts
shall, at the option of the Holder, be held as cash collateral to secure the
payment of this Note, and the provisions of this Note shall be immediately
deemed reformed and amounts thereafter collectible hereunder reduced, without
necessity of execution of a new document, so as to comply with the determination
of such court, but so as to permit the recovery of the fullest amount otherwise
provided for in this Note.
1.2 If the Maturity Date or any extension thereof falls on
a day which is not a business day, then such Maturity Date shall be extended to
the next succeeding business day and interest at the applicable rate on any
principal then due shall continue to accrue until such principal amount is fully
paid.
2. Prepayment. Payor may prepay the outstanding principal
amount of this Note in whole or in part at any time, without payment of any
premium or penalty. All payments on this Note shall be applied first to accrued
interest hereon and the balance to the payment of principal hereof. Any
prepayment shall be made pro-rata with the other Notes in proportion to their
respective outstanding balance. If Payor prepays this Note during any period
that the Maturity Date has been extended, it shall receive a pro rata rebate of
any prepaid interest.
3. Benefits Under Other Documents. This Note is the $2,000,000
Note referred to in the Purchase Agreement pursuant to which it was issued, and
is subject to, and entitled to the benefits of, the Purchase Agreement (as the
same may be amended, modified or supplemented from time to time) and the other
Documents referred to therein (as the same may be amended, modified or
supplemented from time to time). The Purchase Agreement, among other things,
contains provisions for acceleration of the Maturity Date hereof upon the
occurrence of certain stated Events of Default.
4. Security Interest. This Note is collateralized by a first
security interest in all of Payor's assets pursuant to the Security Agreement,
Fee Mortgage, Collateral Assignment of Leasehold Interest, Patent Security
Agreement and Trademark Security Agreement between the Payor and the Fund, as
Secured Party.
5. Unconditional Obligation; Fees, Waivers, Other.
5.1 The obligations to make the payments provided for in
this Note are absolute and unconditional.
5.2 The Payor agrees to pay, on demand, all costs and
expenses paid or incurred by the Holder in seeking to collect this Note,
including, without limitation, reasonable attorneys' fees and disbursements paid
or incurred by Holder, with interest thereon at the rate of 18% per annum until
paid in full.
5.3 No forbearance, indulgence, delay or failure to
exercise any right or remedy with respect to this Note shall operate as a waiver
thereof, nor as an acquiescence in any default, nor shall any single or partial
exercise of any right or remedy preclude any other or further exercise thereof
or the exercise of any other right or remedy.
5.4 This Note may not be modified or discharged (other than
by payment of this Note), except by a writing duly executed by the Payor and the
Fund.
5.5 Payor hereby expressly waives demand and presentment
for payment, notice of nonpayment, notice of dishonor, protest, notice of
protest, and diligence in taking any action to collect amounts called for
hereunder, and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereon, regardless of and, subject to and as provided
in the Purchase Agreement, the Security Agreement and Patent Security Agreement
and Trademark Security Agreement provided for therein, without any notice,
diligence, act or omission with respect to the collection of any amount called
for hereunder or in connection with any right or Lien at any and all times which
the Payee had or is existing as security for any amount called for hereunder.
6. Miscellaneous.
6.1 The headings of the various paragraphs of this Note are
for convenience of reference only and shall in no way modify any of the terms or
provisions of this Note.
6.2 All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent in the manner provided in, and to the address of the intended
recipient set forth in, the Purchase Agreement or at such other address as the
intended recipient shall have hereafter given to the other party hereto pursuant
to the provisions of the Purchase Agreement.
6.3 THIS NOTE AND THE OBLIGATIONS OF THE PAYOR, AND THE
RIGHTS OF THE HOLDER, HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
6.4 PAYOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY ACTION OR
PROCEEDING ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, AND IN
CONNECTION WITH ANY CLAIM, OFFSET OR DEFENSE ARISING IN CONNECTION WITH SUCH
ACTION OR PROCEEDING, WHETHER ARISING UNDER ANY STATUTE (INCLUDING ANY FEDERAL
OR STATE CONSTITUTION) OR UNDER THE LAW OF CONTRACT, TORT OR OTHERWISE AND,
INCLUDING, WITHOUT LIMITATION, ANY CHALLENGE TO THE LEGALITY, VALIDITY, BINDING
EFFECT OR ENFORCEABILITY OF THIS PROVISION OR THIS NOTE. PAYOR FURTHER WAIVES
THE RIGHT TO INTERPOSE A COUNTERCLAIM OF ANY NATURE IN ANY ACTION BROUGHT BY
HOLDER TO ENFORCE ITS RIGHTS HEREUNDER OR UNDER THE SECURITY AGREEMENT. FURTHER,
PAYOR HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE HOLDER OF THIS
NOTE HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE HOLDER WOULD NOT, IN THE
EVENT OF ANY SUCH ACTION OR PROCEEDING, SEEK TO ENFORCE THIS WAIVER OF JURY
TRIAL PROVISION. PAYOR HEREBY ACKNOWLEDGES THAT THE HOLDER HAS BEEN INDUCED TO
ACCEPT THIS NOTE BY, INTER ALIA, THE PROVISIONS OF THIS SECTION.
6.5 This Note shall bind the Payor and its successors and
assigns and may be assigned by the Holder in whole but not in part.
UNIGENE LABORATORIES, INC.
By: /s/ Warren P. Levy
----------------------------
Name: Warren P. Levy
Title:President
