FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________ to_____________
For Quarter Ended___________ Commission file number 0-16005
Unigene Laboratories, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 22-2328609
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 Little Falls Road, Fairfield, New Jersey 07004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201)882-0860
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- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.01 Par Value--35,197,134 shares as of November 1, 1996
<PAGE>
INDEX
UNIGENE LABORATORIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed balance sheets-September 30, 1996 and December 31, 1995
Condensed statements of operations-Three months ended September 30,1996
and 1995; Nine months ended September 30, 1996 and 1995
Condensed statements of cash flows- Nine months ended September 30,
1996 and 1995
Notes to condensed financial statements- September 30, 1996
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
UNIGENE LABORATORIES, INC.
CONDENSED BALANCE SHEETS
September 30 December 31
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............. $ 489,537 $ 258,627
Accounts receivable ................... 100,954 --
Prepaid expenses and other
current assets ..................... 1,048,214 434,159
------------ ------------
Total current assets ............. 1,638,705 692,786
Property, plant and equipment-net
of accumulated depreciation and
amortization .......................... 10,643,923 11,513,019
Patents and other assets ................. 1,229,094 1,125,828
Unamortized debt issue costs ............. 166,000 --
------------ ------------
$ 13,677,722 $ 13,331,633
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................... $ 1,202,859 $ 2,859,264
Accrued expenses ...................... 674,020 644,663
Notes payable - stockholders .......... 1,190,000 1,250,000
------------ ------------
Total current liabilities ....... 3,066,879 4,753,927
Notes payable - stockholders .......... 655,000 655,000
Note payable - other .................. -- 3,300,000
9.5% convertible debentures ........... 2,350,000 --
10% convertible debentures ............ 1,450,000 --
Stockholders' equity:
Common stock-par value $.01 per share;
authorized 48,000,000 shares, issued
and outstanding 29,534,340 shares in
1996 and 23,813,171 shares in 1995 . 295,343 238,132
Additional paid-in capital ............ 47,021,741 38,110,512
Accumulated deficit ................... (41,160,210) (33,724,907)
Less: Treasury stock, at cost,
7,290 shares ....................... (1,031) (1,031)
------------ ------------
Total stockholders' equity ....... 6,155,843 4,622,706
------------ ------------
$ 13,677,722 $ 13,331,633
============ ============
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIGENE LABORATORIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------- ----------------------------------
1996 1995 1996 1995
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Licensing and
other revenue ............................ $ 1,719 $ 468 $ 307,528 $ 6,074
------------ ------------ ------------ ------------
Operating expenses:
Research and
development ........................... 2,285,977 1,771,791 5,836,932 5,214,464
General and
administrative ........................ 531,172 574,134 1,440,382 1,669,403
------------ ------------ ------------ ------------
2,817,149 2,345,925 7,277,314 6,883,867
------------ ------------ ------------ ------------
Operating loss .......................... (2,815,430) (2,345,457) (6,969,786) (6,877,793)
------------ ------------ ------------ ------------
Other income (expense):
Interest/other income ................... 24,461 10,463 161,253 13,983
Interest expense ........................ (166,129) (164,735) (626,771) (258,738)
------------ ------------ ------------ ------------
(141,668) (154,272) (465,518) (244,755)
------------ ------------ ------------ ------------
Net loss ................................... $ (2,957,098) $ (2,499,729) $ (7,435,304) $ (7,122,548)
============ ============ ============ ============
Net loss per share ......................... $ (.11) $ (.12) $ (.29) $ (.34)
============ ============ ============ ============
Weighted average
number of shares
outstanding 28,127,903 21,507,522 25,732,668 21,164,060
============ ============ ============ ============
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIGENE LABORATORIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1996 1995
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<S> <C> <C>
Cash used for operations........................ $(8,435,855) $(5,818,375)
----------- -----------
Investing activities:
Construction of leasehold improvements ......... (2,950) (379,834)
Purchase of property, plant & equipment ........ (228,954) (146,616)
Increase in patents and other assets ........... (506) (92,562)
----------- -----------
(342,410) (619,012)
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Financing activities:
Sales of stock, net of related expenses ..... 300,440 1,954,334
Proceeds from issuance of 10% convertible
debentures, net of related expenses ....... 8,137,000 --
Proceeds from issuance of notes payable ..... -- 3,755,000
Repayment of debt ........................... (60,000) --
Exercise of stock options and warrants ...... 631,735 150,922
----------- -----------
9,009,175 5,860,256
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Net increase (decrease) in cash and
cash equivalents ............................. 230,910 (577,131)
Cash and cash equivalents at
beginning of year ........................... 258,627 592,011
----------- -----------
Cash and cash equivalents at
end of period ............................... $ 489,537 $ 14,880
=========== ===========
Supplemental cash flow information:
Exchange of note payable for
9.5% convertible debentures ................. $ 3,300,000
===========
Conversion of 10% convertible
debentures into common stock ................ $ 7,630,000
===========
Conversion of 9.5% convertible
debentures into common stock ................ $ 950,000
===========
See notes to condensed financial statements.
</TABLE>
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for the nine month
period ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For further
information, please refer to the Company's financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 1995.
NOTE B - DEBT FINANCING
In March 1996, the Company completed a private placement of $9.08 million of 10%
Convertible Debentures. The Company received net proceeds of approximately $8.1
million as a result of this placement. These debentures mature March 4, 1999.
The debentures are convertible into Common Stock at a conversion rate equal to
the lower of $2.00 per share or 85% of the average market price per share of
Common Stock during the ten days preceding the date of conversion. Through
September 30, 1996, $7,630,000 of principal amount of these debentures, plus
accrued interest, had been converted into approximately 4,058,000 shares of
Common Stock. As of November 1, 1996, $8,230,000 of principal amount of these
debentures, plus accrued interest, has been converted into approximately
4,404,000 shares of Common Stock.
In March 1996, the Company exchanged secured indebtedness in the principal
amount of $3,300,000 for 9.5% Senior Secured Convertible Debentures of an equal
principal amount. These debentures mature November 15, 1998, are secured by
substantially all of the Company's assets, and are convertible into shares of
Common Stock at a conversion rate of $1.15 per share, subject to certain reset
provisions. Through September 30, 1996, $950,000 of principal amount of these
debentures had been converted into approximately 826,000 shares of Common Stock.
As of November 1, 1996, $1,869,000 of principal amount of these debentures has
been converted into approximately 1,625,000 shares of Common Stock.
NOTE C - CLASS B WARRANTS
The Company's Class B Warrants expired unexercised on September 10, 1996.
NOTE D - EQUITY FINANCING
In October 1996, the Company completed a private placement of 4,218,804 units at
a price of $1.75 per unit. Each unit consists of one share of Common Stock and
two warrants each of which entitles the holder to purchase 1/4 of a share of
Common Stock at a price of $3.00 per share. The fee paid to the placement agent
consisted of an additional 296,935 units in lieu of cash compensation. The net
proceeds to the Company were approximately $7.1 million.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Operating revenues for the first nine months of 1996 include a license fee of
$300,000 from the Company's joint venture in China. Other operating revenues are
from hormone and enzyme sales which were $7,000 and $6,000 for the nine months
ended September 30, 1996 and 1995, respectively.
Research and development, the Company's largest expense, increased 29% from
$1,772,000 to $2,286,000 and 12% from $5,214,000 to $5,837,000 for the three
months and nine months ended September 30, 1996, respectively, as compared to
the same periods in 1995. The increases were primarily related to the Company's
oral clinical trials, its injectable clinical trials and the sponsorship of
collaborative research programs.
General and administrative expenses decreased 7% from $574,000 to $531,000, and
14% from $1,669,000 to $1,440,000 for the three months and nine months ended
September 30, 1996, respectively, as compared to the same periods in 1995. The
decreases were primarily due to a reduction in fees and related expenses related
to the Company's financing activities.
Interest and other income increased $14,000 and $147,000 for the three months
and nine months ended September 30, 1996, respectively, as compared to the same
periods in 1995. The increases were due to increased interest income earned on
the proceeds of financings which provided additional funds to be invested, as
well as gains on settlement of debt.
Interest expense increased $1,000 and $368,000 for the three months and nine
months ended September 30, 1996, as compared to the same periods in 1995.
This was due to increased borrowings by the Company.
As a result of increased research and development costs, partially offset by
increased interest income and decreased general and administrative expenses, net
loss increased $457,000 or 18% for the three months ended September 30, 1996, as
compared to the corresponding period in 1995. As a result of increased research
and development costs and interest expense, partially offset by increased
licensing and interest/other income, as well as decreased general and
administrative expenses, net loss increased $313,000 or 4% for the nine months
ended September 30, 1996, as compared to the corresponding period in 1995.
As of December 31, 1995, the Company had available for income tax reporting
purposes net operating loss carryforwards in the approximate amount of
$34,000,000, expiring from 1996 through 2010, which are available to reduce
future earnings which would otherwise be subject to federal income taxes. For
the nine months ending September 30, 1996, the Company had additional losses of
approximately $7,435,000. In addition, the Company has investment tax credits
and research and development credits in the amounts of $69,000 and $1,470,000,
respectively, which are available to reduce the amount of future federal income
taxes. These credits expire from 1996 through 2010.
The Company follows Statement of Financial Accounting Standards No. 109 ("FASB
109"), "Accounting for Income Taxes". Given the Company's past history of
incurring operating losses, any deferred tax assets that are recognizable under
FASB 109 have been fully reserved. As of January 1, 1996, under FASB 109, the
Company had deferred tax assets of approximately $15,100,000, subject to a
valuation allowance of $15,100,000. The deferred tax assets were generated
primarily as a result of the Company's net operating losses and available tax
credits. For the nine month period ended September 30, 1996, the Company's
deferred tax assets and valuation allowances each increased by approximately
$2,850,000.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During 1994, the Company completed construction of its peptide production
facility in Boonton, New Jersey. The facility was constructed in a shell
building that is being leased under a ten year net lease which began in February
1994. The Company has two ten year renewal options as well as an option to
purchase the facility. The total cost of leasehold improvements and process
equipment for this facility, including validation costs associated with the
facility's construction, is approximately $11.9 million.
In March 1996, the Company completed a private placement of $9.08 million of 10%
Convertible Debentures. The Company received net proceeds of approximately $8.1
million as a result of this placement. These debentures mature March 4, 1999.
The debentures are convertible into Common Stock at a conversion rate equal to
the lower of $2.00 per share or 85% of the average market price per share of the
Common Stock during the ten days preceding the date of conversion. The placement
agent received as a fee a five-year warrant to purchase 454,000 shares of Common
Stock at an exercise price of $2.10 per share.
In March 1996, the Company exchanged secured indebtedness in the principal
amount of $3,300,000 for 9.5% Senior Secured Convertible Debentures of an equal
principal amount. These debentures mature November 15, 1998, are secured by
substantially all of the Company's assets, and are convertible into shares of
Common Stock at a conversion rate of $1.15 per share, subject to certain reset
provisions.
For additional information on the aforementioned Convertible Securities, please
refer to Note B under Notes to Condensed Financial Statements.
The Company, at September 30, 1996, had cash and cash equivalents of $490,000,
an increase of $231,000 from December 31, 1995.
In October 1996, the Company completed a private placement of 4,218,804 units at
a price of $1.75 per unit. Each unit consists of one share of Common Stock and
two warrants each of which entitles the holder to purchase 1/4 of a share of
Common Stock at a price of $3.00 per share. The fee paid to the placement agent
consisted of an additional 296,935 units in lieu of cash compensation. The net
proceeds to the Company were approximately $7.1 million.
The Company's ability to generate additional cash from operations depends
primarily upon signing research or licensing agreements, achieving defined
benchmarks in such agreements, receiving regulatory approval for its products,
and marketing hormones and enzyme products. The Company has one joint venture
agreement in effect, which contributed $300,000 to 1996 revenues. However, there
can be no assurance that any additional revenues will be recognized or received
under this agreement.
Management believes that the Company has sufficient financial resources to
sustain its operations at the current level through the third quarter of 1997.
The Company requires additional funds through financing or licensing agreements
to ensure continued operations beyond that point. There can be no assurance that
these additional funds will be obtained.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(1) Registration Rights Agreement, dated October 11, 1996, among
Unigene Laboratories, Inc., BT Securities Corporation and the
Purchasers named therein; and
(2) Warrant Agreement, dated October 11, 1996, among Unigene
Laboratories, Inc., BT Securities Corporation and the Purchasers
named therein.
(b) Reports on Form 8-K:
(1) August 7, 1996 (extension of the expiration date of its Class B
Warrants to September 10, 1996);
(2) October 11, 1996 (completion of sale of units, including a pro
forma balance sheet as of August 31, 1996, showing the financial
effect of the offering).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIGENE LABORATORIES, INC.
-----------------------------
(Registrant)
November 11, 1996 /s/ Warren P. Levy
--------------
Warren P. Levy
President
(Chief Executive Officer)
November 11, 1996 /s/ Jay Levy
---------
Jay Levy
Treasurer
(Chief Financial Officer and
Chief Accounting Officer)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of October 11, 1996, by and among UNIGENE LABORATORIES, INC., a
Delaware corporation (the "Company"), each of the undersigned purchasers (the
"Purchasers"), which Purchasers are each executing a Subscription Agreement (the
"Purchase Agreements") relating to an offering (the "Offering") by the Company
of Units (the "Units"), each consisting of one share (the "Shares") of the
Company's common stock, par value $.01 per share (the "Common Stock"),
one-quarter (1/4) of a Class C Warrant (the "Class C Warrants"), each whole
Class C Warrant exercisable immediately to purchase one share of Common Stock
(the "Class C Warrant Shares"), and one-quarter (1/4) of a Class D Warrant (the
"Class D Warrants," and together with the Class C Warrants, and including the
Warrants contained in the Placement Agent Units (as defined below), the
"Warrants"), each whole Class D Warrant exercisable immediately to purchase one
share of Common Stock (the "Class D Warrant Shares," and together with the Class
C Warrant Shares, and including the shares of Common Stock issuable upon
exercise of the Warrants contained in the Placement Agent Units (as defined in
the Placement Agency Agreement relating to the Offering (the "Placement Agency
Agreement")), the "Warrant Shares"), and BT Securities Corporation (the
"Placement Agent"), to which the Company is issuing the Placement Agent Units.
In addition, if within 30 days after the date hereof, either or both of Olympus
Securities, Ltd. or Nelson Partners shall execute a counterpart to this
Agreement, such entity shall be a Purchaser for all purposes hereunder with
respect to the number of Units purchased by such entity pursuant to a
Subscription Agreement between such entity and the Company (provided that the
aggregate number of such additional Units covered by this Agreement shall not
exceed the number of Units that such entities would be entitled to purchase by
reason of the Offering pursuant to Section 2.2.5 of an Amended and Restated
Securities Purchase Agreement, dated as of March 6, 1996, by and among such
entities and the Company).
In order to induce the Purchasers to enter into the Purchase Agreements
and the Placement Agent to enter into the Placement Agency Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. Capitalized terms used herein without definition shall have the
meanings set forth in the Purchase Agreements.
The parties hereby agree as follows:
1. Definitions.
(a) "Closing" means the closing of the Offering.
(b) "Closing Date" means the date of the Closing.
(c) "Registrable Securities" means (i) the Shares included in the Units
to be sold to the Purchasers pursuant to the Purchase Agreements and included in
the Placement Agent Units to be issued to the Placement Agent pursuant to the
Placement Agency Agreement, (ii) the Warrant Shares issuable upon exercise of
the Warrants and (iii) any securities of the Company or any successor
corporation issued as, or issuable upon the conversion or exercise of any
warrant, right or other security that is issued as a dividend or other
distribution with respect to, or in exchange for, the Shares or Warrant Shares.
<PAGE>
(d) "Restricted Registrable Securities" means the Registrable
Securities until (i) a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), covering such Registrable Securities has been
declared effective and they have been disposed of pursuant to such effective
registration statement, (ii) they are eligible for distribution to the public
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act or (iii) they have been otherwise transferred and the Company has
delivered new certificates or other evidences of ownership for them not subject
to any stop transfer order or other restriction on transfer (including, without
limitation, sale) by reason of any requirements of the Securities Act.
2. Shelf Registration.
(a) Shelf Registration Statement. The Company shall prepare and file
with the Securities and Exchange Commission (the "Commission") a registration
statement for an offering to be made on a continuous basis pursuant to Rule 415
under the Securities Act covering the resale of all of the Restricted
Registrable Securities (the "Shelf Registration Statement") as soon as
practicable after the date of closing of the Offering. The Shelf Registration
Statement shall be on Form S-3 or another appropriate form permitting
registration of such Restricted Registrable Securities for resale by the holders
thereof in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). Except for securities which the
holders thereof are entitled to have included pursuant to (i) the Registration
Rights Agreement, dated as of March 12, 1996, among the Company, Swartz
Investments, LLC, and the purchasers of the Company's 10% Convertible Debentures
due March 4, 1999, (ii) Warrant No. DU100, dated March 15, 1995, issued by the
Company to Dejufra, Inc. and (iii) Warrant No. DU101, dated April 15, 1995,
issued by the Company to Dejufra, Inc., the Company shall not permit any
securities other than the Restricted Registrable Securities to be included in
the Shelf Registration Statement.
The Company shall use its best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act within 90 days after
the date of the closing of the Offering and to keep the Shelf Registration
Statement continuously effective under the Securities Act until all the Warrants
have been exercised or expired and all Registrable Securities shall have ceased
to be Restricted Registrable Securities (the "Effectiveness Period"). The
Company shall be deemed not to have used its best efforts to keep a registration
statement effective during the Effectiveness Period if it voluntarily takes any
action that would result in selling holders of the Restricted Registrable
Securities covered thereby not being able to sell such Restricted Registrable
Securities during that period unless such action is required by applicable law
or unless the Company complies with the provisions of Section 4(A)(i) hereof
solely as it relates to a matter covered by Section 4(A)(c)(v) hereof.
(b) Selection of Investment Bankers and Managers. If one or more
holders of Restricted Registrable Securities covered by the Shelf Registration
Statement desire to sell such Restricted Registrable Securities in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the holders of
a majority of the Restricted Registrable Securities to be included in such
offering. If any holder of Restricted Registrable Securities requests an
underwritten offering, the Company shall notify all holders of Restricted
Registrable Securities thereof at least ten days prior to the filing of a
supplemental prospectus.
<PAGE>
(c) Expenses. The Company shall pay all Registration Expenses (as
hereinafter defined) incurred in connection with the Company's registration
obligations pursuant to this Section 2.
3. Holdback Agreement.
If and to the extent requested by the managing underwriter or
underwriters, the Company agrees not to effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such equity securities, during the seven days prior to, and
during the 90-day period beginning on, the effective date of any underwritten
offering pursuant to the Shelf Registration Statement (except pursuant to
registrations on Form S-8 or any successor form to Form S-8).
4. Registration Procedures.
(A) In connection with the registration provided for in Section 2, the
Company will promptly:
(a) furnish each holder of Restricted Registrable Securities, at least
three business days prior to filing the Shelf Registration Statement or any
amendment thereto with the Commission, copies of such registration statement and
amendments as proposed to be filed and all exhibits thereto, and thereafter
furnish such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the prospectus
included in such registration statement and amendments thereto (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Restricted Registrable
Securities owned by such seller. The Company shall not file the Shelf
Registration Statement or any amendment thereto if the holders of a majority of
the Restricted Registrable Securities covered by such registration statement,
their counsel, or the managing underwriters, if any, shall reasonably object;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep such registration statement continuously effective for the
Effectiveness Period; cause the prospectus in the Shelf Registration Statement
to be supplemented by any prospectus supplement required by applicable law, and,
if required, as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), applicable to it with respect to the disposition
of all securities covered by such registration statement as so amended or such
prospectus as so supplemented;
<PAGE>
(c) notify the selling holders of Restricted Registrable Securities,
their counsel and the managing underwriters, if any, promptly (but in any event
within three business days), and confirm such notice in writing, (i) when a
prospectus or any prospectus supplement or post-effective amendment thereto has
been filed, or any post-effective amendment thereto, when the same has become
effective under the Securities Act (including in such notice a written statement
that any holder may, upon request, obtain, at the sole expense of the Company,
such number of copies as are requested of the Shelf Registration Statement or
post-effective amendment thereto including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales of the Restricted
Registrable Securities the representations and warranties of the Company
contained in any agreement contemplated by Section 4(A)(j) hereof cease to be
true and correct, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of a registration statement or any of the Restricted Registrable Securities for
offer or sale in any jurisdiction, or the initiation of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition or
any information becoming known that makes any statement made in the Shelf
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in or amendments or supplements to the
Shelf Registration Statement, prospectus or documents so that it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
determination by the Company that a post-effective amendment to the Shelf
Registration Statement would be appropriate;
(d) use its best efforts to prevent the issuance of any order
suspending the effectiveness of the Shelf Registration Statement or of any order
preventing or suspending the use of a prospectus or suspending the qualification
(or exemption from qualification) of any of the Restricted Registrable
Securities for sale in any jurisdiction, and, if any such order is issued, to
use its best efforts to obtain the withdrawal of any such order as soon as
practicable;
(e) upon and after the filing of the Shelf Registration Statement and
if requested by the managing underwriter or underwriters (if any) or the holders
of a majority of the Restricted Registrable Securities being sold, (i) promptly
include in a prospectus supplement or post-effective amendment thereto such
information as the managing underwriter or underwriters (if any), such holders,
or counsel for any of them reasonably request to be included therein and (ii)
make all required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be included in such prospectus supplement or post-effective
amendment;
<PAGE>
(f) prior to any public offering of Restricted Registrable Securities,
to use its reasonable best efforts to register or qualify such Restricted
Registrable Securities (and to cooperate with selling holders of Restricted
Registrable Securities, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Restricted
Registrable Securities) for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any selling holder, or the
managing underwriter or underwriters reasonably request in writing; provided,
however, that where Restricted Registrable Securities are offered other than
through an underwritten offering, the Company agrees to cause its counsel to
perform Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 4(A)(f); use reasonable best
efforts to keep any effective registration or qualification (or exemption
therefrom) effective during the period such registration statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Restricted Registrable Securities covered by the applicable registration
statement; provided, however, that the Company shall not be required to (A)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject;
(g) cooperate with the selling holders of Restricted Registrable
Securities and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing Restricted
Registrable Securities that are sold, which certificates shall not bear any
restrictive legends; and enable such Restricted Registrable Securities to be
registered in such names as the managing underwriter or underwriters, if any, or
holders may reasonably request;
(h) use reasonable best efforts to cause the Restricted Registrable
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be reasonably
necessary to enable the holders thereof or the underwriter or underwriters, if
any, to dispose of such Restricted Registrable Securities, except as may be
required solely as a consequence of the nature of a selling holder's business,
in which case the Company will cooperate in all reasonable respects with the
filing of such registration statement and the granting of such approvals;
(i) upon the occurrence of any event contemplated by Section 4(A)(c)(v)
or 4(A)(c)(vi) hereof, as promptly as practicable prepare (but in no event later
than 30 days) and (subject to Section 4(A)(a) hereof) file with the Commission,
at the sole expense of the Company, a supplement or post-effective amendment to
the Shelf Registration Statement or a supplement to the related prospectus or
any document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of such Restricted Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
<PAGE>
(j) in connection with any underwritten offering of Restricted
Registrable Securities pursuant to the Shelf Registration Statement, enter into
an underwriting agreement as is customary in underwritten offerings of equity
securities similar to the Common Stock and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
facilitate the registration or the disposition of such Restricted Registrable
Securities and, in such connection, (i) make such representations and warranties
to, and covenants with, the underwriters with respect to the business of the
Company and its subsidiaries and the registration statement, prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of equity securities similar to the Common Stock, and
confirm the same in writing if and when requested; (ii) obtain the written
opinion of counsel to the Company, dated the effective date of the Shelf
Registration Statement, and customary written updates thereof in form, scope and
substance reasonably satisfactory to the holders of a majority of the
Registrable Securities and their counsel, and to the managing underwriter or
underwriters, addressed to such holders and the underwriters, and covering the
matters customarily covered in opinions requested in underwritten offerings of
equity similar to the Common Stock and such other matters as may be reasonably
requested by such holders and the managing underwriter or underwriters; (iii)
obtain "cold comfort" letters and updates thereof in form, scope and substance
reasonably satisfactory to the holders of a majority of the Registrable
Securities and their counsel, and to the managing underwriter or underwriters
from the independent public accountants of the Company (and, if necessary, any
other independent public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included or incorporated by reference in the
registration statement), addressed to the holders of the Registrable Securities
and each of the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings of equity similar to the Common Stock and such other
matters as reasonably requested by a majority of the Registrable Securities and
their counsel, and by the managing underwriter or underwriters; and (iv) if an
underwriting agreement is entered into, the same shall contain customary
indemnification provisions and procedures with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required thereunder;
(k) upon the filing of the Shelf Registration Statement and after entry
into a confidentiality agreement in customary form, make available for
inspection by any selling holder of such Restricted Registrable Securities being
sold, any underwriter participating in any such disposition of Restricted
Registrable Securities, if any, and any attorney, accountant or other agent
retained by any such selling holder or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable business
hours and upon reasonable advance notice to the Company, all financial and other
records, pertinent corporate documents and instruments of the Company and its
respective subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and its subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such registration statement and any road show.
<PAGE>
Records which the Company determines, in good faith, to be confidential and any
Records which it notifies the Inspectors are confidential shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a material misstatement or material omission in the
registration statement, including the prospectus included therein, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, (iii) disclosure of such information is, in the
reasonable opinion of counsel for any Inspector, necessary or advisable in
connection with any action, claim, suit or proceeding, directly or indirectly
involving such Inspector and arising out of, based upon, relating to, or
involving this Agreement, or any transactions contemplated hereby or arising
hereunder, or (iv) the information in such Records has been made generally
available to the public. Each selling holder of such Restricted Registrable
Securities will be required to agree that information obtained by it as a result
of such inspections shall be deemed and kept confidential and shall not be used
by it as the basis for any market transactions in the securities of the Company
unless and until such information is generally available to the public. Each
selling holder of such Restricted Registrable Securities will be required to
further agree that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction or by any regulatory authority, give
prompt notice to the Company and allow the Company to undertake appropriate
action to prevent disclosure of the Records deemed confidential at the Company's
sole expense;
(l) make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the registration statement (as defined in Rule 158(c) under the
Securities Act), an earnings statement of the Company (which need not be
audited) complying with Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);
(m) cooperate with each seller of Restricted Registrable Securities
covered by the Shelf Registration Statement and each underwriter, if any,
participating in the disposition of such Restricted Registrable Securities and
their respective counsel in connection with any filings required to be made by
the member of the National Association of Securities Dealers, Inc. (the "NASD")
with the NASD;
(n) use its best efforts to list the Restricted Registrable Securities
for trading on the NASDAQ National Market System if the Common Stock is then
listed on the NASDAQ National Market System, and such other markets or exchanges
on which the Common Stock is then listed for trading, prior to their sale
pursuant to the Shelf Registration Statement; and
(o) use its best efforts to take all other reasonable steps necessary
or advisable to effect the registration under the Securities Act of the
Restricted Registrable Securities covered by the Shelf Registration Statement.
(B) The Company may require each seller of Restricted Registrable
Securities covered by the Shelf Registration Statement to furnish in writing to
the Company such information regarding such seller and the distribution of such
Restricted Registrable Securities as the Company may, from time to time,
reasonably require in connection with filings with the Securities and Exchange
Commission or state securities authorities. The Company may exclude from such
<PAGE>
registration the Restricted Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each such seller agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
(C) Each holder of Restricted Registrable Securities agrees by
acquisition of such Restricted Registrable Securities, upon actual receipt of
any notice from the Company of the happening of any event of the kind described
in Section 4(A)(c)(ii), 4(A)(c)(iv), 4(A)(c)(v), or 4(A)(c)(vi) hereof, to
forthwith discontinue disposition of such Restricted Registrable Securities
pursuant to the Shelf Registration Statement until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 4(A)(i)
hereof, or until it is advised in writing (the "Advice") by the Company that the
use of the applicable prospectus may be resumed.
5. Registration Expenses.
(a) Registration Expenses shall be borne as set forth in Section 2(c).
Registration Expenses ("Registration Expenses") shall consist of all expenses
incidental to the Company's performance of or compliance with this Agreement,
including without limitation (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Restricted Registrable Securities), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Restricted Registrable Securities and of printing prospectuses if the printing
of prospectuses is requested by the managing underwriter or underwriters, if
any, or by the holders of the Restricted Registrable Securities included in the
Shelf Registration Statement, (iii) messenger and delivery expenses, (iv) fees
and disbursements of counsel for the Company, (v) fees and disbursements of all
independent public accountants referred to in Section 4(A)(j)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) fees
associated with making the Restricted Registrable Securities eligible for
trading through The Depository Trust Company, (vii) Securities Act liability
insurance, if the Company desires such insurance, (viii) fees and expenses of
all other persons retained by the Company, (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company performing legal or accounting duties), (x) the expense
of any annual audit, (xi) the fees and expenses incurred in connection with the
listing of the securities to be registered on NASDAQ or any securities exchange
on which the Common Stock is then listed, and (xii) the expenses relating to
printing, word processing and distributing all registration statements,
underwriting agreements, securities sales agreements and any other documents
necessary in order to comply with this Agreement. Registration Expenses do not
include any underwriting discounts or sales commissions.
(b) The Company shall reimburse the holders of the Restricted
Registrable Securities being registered under the Shelf Registration Statement
for the reasonable fees and disbursements of not more than one counsel chosen by
the holders of a majority of the Restricted Registrable Securities to be
included in the Shelf Registration Statement.
<PAGE>
6. Indemnification.
(p) The Company agrees to indemnify and hold harmless each holder of
Restricted Registrable Securities, its affiliates, and its and their respective
officers, directors, employees and agents, and each person, if any, who controls
any such person (each, a "Control Person") within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon (A) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement (or any amendment thereto) or upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (B) any untrue
statement or alleged untrue statement of a material fact contained in any
related prospectus (or any amendments or supplements thereto) or upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company will not be required to indemnify a Participant if (i) such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Company
in writing by or on behalf of such Participant expressly for use therein or (ii)
if such Participant sold to the person asserting the claim the Restricted
Registrable Securities which are the subject of such claim and such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the prospectus or any
amendment or supplement thereto and the prospectus does not contain any other
untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and it is
established by the Company in the related proceeding that such Participant
failed to deliver or provide a copy of the prospectus (as amended or
supplemented) to such person with or prior to the confirmation of the sale of
such Restricted Registrable Securities sold to such person if required by
applicable law, unless such failure to deliver or provide a copy of the
prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 4 of this Agreement.
(q) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, officers, employees and agents and
each person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Participant, but only with respect
to information relating to such Participant furnished to the Company in writing
by or on behalf of such Participant expressly for use in any registration
statement or prospectus, any amendment or supplement thereto, or any preliminary
prospectus. Notwithstanding the foregoing, under no circumstances shall any
Purchaser (including all Participants with respect thereto) or the Placement
Agent (including all Participants with respect thereto) be responsible for
amounts that in the aggregate exceed the value of, in the case of each
Purchaser, the Units purchased by such Purchaser or, in the case of the
Placement Agent, the Placement Agent Units delivered to it pursuant to the
Placement Agency Agreement, determined by multiplying such number of Units or
Placement Agent Units, as applicable, by the Offer Price (as defined in the
Confidential Private Placement Memorandum relating to the Offering).
<PAGE>
(r) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any other Indemnified
Person in such proceeding and shall pay the reasonable fees and expenses
actually incurred by such counsel related to such proceeding; provided, however,
that the failure to so notify the Indemnifying Person shall not relieve it of
any obligation or liability which it may have hereunder or otherwise (unless and
only to the extent that such failure directly results in the loss or compromise
of any material rights or defenses by the Indemnifying Person and the
Indemnifying Person was not otherwise aware of such action or claim). In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person shall have failed within a reasonable period of time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that, unless there
exists a conflict among Indemnified Persons, the Indemnifying Person shall not,
in connection with any one such proceeding or separate but substantially similar
related proceedings in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be paid promptly as they are incurred. Any such
separate firm for the Participants and such control persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Restricted Registrable Securities sold by all such Participants and any such
separate firm for the Company, its directors, its officers and such control
persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not have any indemnification obligation with respect
to any settlement of any proceeding effected without its prior written consent
(which consent shall not be unreasonably withheld), but if settled with such
consent or if there be a final non-appealable judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, the Indemnifying Person agrees to indemnify and hold harmless each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such settlement, (B) does not include any statement as to
an admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person and (C) the sole relief provided is monetary damages that are
paid in full by the Indemnifying Party.
<PAGE>
(s) If the indemnification provided for in the first and second
paragraphs of this Section 6 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Persons on the one hand and the
Indemnified Persons on the other hand in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Participant on the other, the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
(t) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(u) The indemnity and contribution agreements contained in this Section
6 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
7. Participation in Underwritten Registrations.
No owner of Restricted Registrable Securities may participate in any
underwritten offering of Common Stock of the Company pursuant to the Shelf
Registration Statement unless such owner completes and executes all
questionnaires, powers of attorney (coupled with a custody agreement),
indemnities, underwriting agreements and such other documents reasonably
required under the terms of customary underwriting arrangements.
8. Rules 144 and 144A.
The Company covenants that it will use its best efforts to file timely
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder, and it
will take such further action as any record owner of Restricted Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such owner to sell Restricted Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
<PAGE>
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar or successor rule or regulation hereafter
adopted by the Commission. If and when Rule 144A under the Securities Act (or
any similar or successor rule or regulation hereafter adopted by the Commission)
is applicable to a sale of Restricted Registrable Securities, the Company agrees
to make available to any record owner of Restricted Registrable Securities the
information required by Rule 144A(d)(4) under the Securities Act, if applicable,
in order to permit resales of Restricted Registrable Securities pursuant to Rule
144A. Upon the request of any record owner of Restricted Registrable Securities,
the Company will deliver to such owner a written statement as to whether it has
complied with such requirements.
9. Liquidated Damages.
(a) Each of the Company, the Purchasers and the Placement Agent agrees
that the holders of Restricted Registrable Securities will suffer damages if the
Company fails to fulfill its obligations under Section 2 (irrespective of
whether the Company uses its best efforts) and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, if the Shelf
Registration Statement has not become effective on or prior to the 90th day
after the closing of the Offering, then the Company agrees that, as liquidated
damages and not as a penalty, the exercise price of each Warrant shall be
reduced automatically by $.20. The exercise price of each Warrant will be
further adjusted downward at the rate of $.00667 per day for each day after such
90th day until the Shelf Registration Statement is declared effective, but in no
event shall the exercise price be reduced to less than the par value of the
Common Stock on the date hereof. In addition, if holders of Restricted
Registrable Securities are required to discontinue disposition thereof pursuant
to Section 4(C) hereof for more than an aggregate of 120 days after the date
that the Shelf Registration Statement is initially declared effective, then the
Company agrees that, as liquidated damages and not as a penalty, the exercise
price of each Warrant shall be reduced automatically at the rate of $.00667 per
day for each day after the 120th day on which holders of Restricted Registrable
Securities are required to discontinue disposition thereof, but in no event
shall the exercise price be reduced to less than the par value of the Common
Stock on the date hereof.
(b) The parties hereto agree that the liquidated damages provided for
in this Section 9 constitute a reasonable estimate of the damages that may be
incurred by holders of Restricted Registrable Securities by reason of the
failure of the Shelf Registration Statement to be declared effective.
10. Termination.
This Agreement shall terminate on the later of (i) the fifth
anniversary of the date of this Agreement and (ii) the expiration of the
Effectiveness Period. The provisions of Section 6 hereof shall survive such
termination.
11. Miscellaneous.
(v) No Inconsistent Agreements. The Company has not, as of the date
hereof, and the Company shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the holders of Restricted Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof. The Company will
not enter into any agreement which will grant any such rights that are in
conflict with the rights afforded by this Agreement.
<PAGE>
(w) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of the Company and the holders of not less than a majority of the
Restricted Registrable Securities, for which purpose each holder of a Warrant
will be deemed the holder of the number of Restricted Registrable Securities for
which such Warrant is then exercisable. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of holders of Restricted Registrable
Securities whose securities are being sold pursuant to the Shelf Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other holders of Restricted Registrable Securities may
be given by holders of at least a majority of the Restricted Registrable
Securities being sold by such holders pursuant to such registration statement.
(x) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and be delivered by hand or sent by
registered or certified mail, return receipt requested and postage prepaid, or
by facsimile transmission, followed by a confirmation copy sent by either
overnight or two (2) day courier):
(i) if to a holder of Restricted Registrable Securities other than the
Placement Agent, at the most current address given by such holder to the Company
in writing;
(ii) if to the Placement Agent, at its address set forth in the
Placement Agency Agreement; and
(iii) if to the Company, at its address set forth in the Purchase
Agreements.
All such notices and communications shall be deemed to have been duly given when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; upon receipt, if sent by
facsimile (followed by a confirmation copy sent by either overnight or two (2)
day courier).
(d) Third Party Beneficiaries. Each registered holder of Restricted
Registrable Securities, whether or not such holder is a party to this Agreement,
is an intended beneficiary of this Agreement, and this Agreement may be enforced
by such person. Nothing in this Agreement shall be construed to give any person
or entity, other than the Company, the registered holders of the Warrants and
the registered holders of Restricted Registrable Securities, any legal or
equitable right, remedy or claim under this Agreement.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties hereto and the registered holders of the Restricted Registrable
Securities; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign unless and to the extent
such successor or assign holds Restricted Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES, AND EACH BENEFICIARY
SHALL BE BOUND, TO SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall to the extent permitted by law
remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such invalid, illegal, void or unenforceable term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any term, provision,
covenant or restriction that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Restricted Registrable Securities Held by the Company or its
Affiliates. Whenever the consent or approval of holders of a specified
percentage of Restricted Registrable Securities is required hereunder,
Restricted Registrable Securities held by the Company or its affiliates (as such
term is defined in Rule 405 under the Securities Act) shall not be taken into
account in determining whether such consent or approval was given by the holders
of such required percentage.
(k) Entire Agreement. This Agreement, the Warrant Agreement governing
the Warrants (the "Warrant Agreement"), the Purchase Agreements and, with
respect to the Placement Agent, the Placement Agency Agreement are intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement of the parties hereto in
respect of the subject matter contained herein. This Agreement, the Warrant
Agreement, the Purchase Agreements and, with respect to the Placement Agent, the
Placement Agency Agreement supersede all prior agreements between the parties
with respect to such subject matter. There are no representations, promises,
warranties or undertakings between the parties hereto with respect to the
subject matter hereof, other than those set forth or referred to herein or
therein or in the Confidential Private Placement Memorandum dated September 27,
1996, as it may be amended or supplemented to the date hereof, relating to the
Offering.
[signature pages follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
UNIGENE LABORATORIES, INC.
By: /s/Ronald S. Levy
-----------------
Ronald S. Levy
Vice President
BT SECURITIES CORPORATION
By: /s/Peter R. Barry
-----------------
Peter R. Barry
Vice President
[additional signature pages follow]
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
Jeffrey Dobbs
Name of Purchaser Name of Purchaser
(Please print or type) (Please print or type)
/s/Jeffrey Dobbs
- ----------------
Signature Signature
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
William J. Jacobs
Name of Purchaser Name of Purchaser
(Please print or type) (Please print or type)
/s/William J. Jacobs
- --------------------
Signature Signature
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
Stephen J. Mazur
Name of Purchaser Name of Purchaser
(Please print or type) (Please print or type)
/s/Stephen J. Mazur
- -------------------
Signature Signature
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
Vincent A. Rossi, Jr.
Name of Purchaser Name of Purchaser
(Please print or type) (Please print or type)
/s/Vincent A. Rossi, Jr.
- ------------------------
Signature Signature
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Annapurna Partners, L.P.
Name of Partnership (Please print or type)
By /s/Hope Taitz
-------------
Signature of a General Partner
Name: Hope Taitz
Title: President
Ely Capital Advisors, LLC (authorized representative)
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
By _____________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Catalyst Partners, L.P.
Name of Partnership (Please print or type)
By /s/Allison J. Rosen
-------------------
Signature of a General Partner
Name: Allison J. Rosen
By /s/
Signature of Additional General Partner
Name: Hope Taitz
By _____________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
CL Investment Partnership II, L.P.
Name of Partnership (Please print or type)
By /s/Ted Ammon
------------
Signature of a General Partner
Name: Ted Ammon
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
By _____________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Turnberry Capital Partners, L.P.
Name of Partnership (Please print or type)
By /s/
Name: Turnberry Capital Management, L.P.
Its General Partner
By /s/Vincent A. Rossi, Jr.
------------------------
Signature of Additional General Partner
Name: Vincent A. Rossi, Jr.
Title: Managing Director
By _____________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Woodstead Associates II, L.P.
Name of Partnership (Please print or type)
By: RDS Woodstead, Inc., its General Partner
By /s/David A. Persing
-------------------
Signature of a General Partner
Name: David A. Persing
Title: Senior Vice President
By _____________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Nelson Partners
Name of Partnership (Please print or type)
By /s/Cre Dupuy
------------
Signature of Officer
Name: Cre Dupuy
By ---------------------------------------------
Signature of Additional General Partner
(if required by partnership agreement)
By _____________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR CORPORATE PURCHASERS
Continental Casualty Company
Name of Corporation (Please print or type)
By /s/Richard Dubberke
-------------------
Signature of Authorized Agent
Name: Richard Dubberke
Title: Vice President
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR CORPORATE PURCHASERS
Legg Mason High Yield Fund
Name of Corporation (Please print or type)
By /s/Trudie Whitehead
-------------------
Signature of Authorized Agent
Name: Trudie Whitehead
Title: Portfolo Manager/Principal
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
FOR CORPORATE PURCHASERS
Olympus Securities, Ltd.
Name of Corporation (Please print or type)
By /s/Cre Dupuy
------------
Signature of Authorized Agent
Name: Cre Dupuy
Title: Alternate Director
<PAGE>
WARRANT AGREEMENT
This Agreement (the "Agreement"), dated as of October 11, 1996, is
entered into among Unigene Laboratories, Inc., a Delaware corporation (the
"Company"), those individuals and entities purchasing Units (as defined below)
in a private offering (the "Offering") by the Company who have executed a
signature page hereto, and BT Securities Corporation, the Placement Agent for
the Offering (the "Placement Agent"). In addition, if within 30 days after the
date hereof, either or both of Olympus Securities, Ltd. or Nelson Partners shall
execute a counterpart to this Agreement, such entity shall be deemed a purchaser
of Units for all purposes hereunder with respect to the number of Units
purchased by such entity (provided that the number of such additional Units
covered by this Agreement shall not exceed the number of Units that such
entities would be entitled to purchase by reason of the Offering pursuant to
Section 2.2.5 of an Amended and Restated Securities Purchase Agreement, dated as
of March 6, 1996, by and among such entities and the Company).
W I T N E S S E T H:
WHEREAS, the Company shall issue in the Offering 3,945,000 Units (the
"Units"), each Unit to consist of one share of the Company's common stock, par
value $.01 per share (the "Common Stock"), one-quarter (1/4) of a Class C
warrant (the "Class C Warrants"), each whole Class C Warrant exercisable to
purchase one share of Common Stock (the "Class C Warrant Shares"), and
one-quarter (1/4) of a Class D warrant (the "Class D Warrants," and together
with the Class C Warrants, the "Warrants"), each whole Class D Warrant
exercisable to purchase one share of Common Stock (the "Class D Warrant Shares,"
and together with the Class C Warrant Shares, the "Warrant Shares");
WHEREAS, pursuant to the Placement Agency Agreement relating to the
Offering, the Company has agreed to issue to the Placement Agent 296,935
additional Units (the "Placement Agent Units"), the Placement Agent Units to be
identical to the Units issued in the Offering. For purposes of this Agreement,
the term "Class C Warrants" shall include the Class C Warrants included in the
Placement Agent Units, the term "Class D Warrants" shall include the Class D
Warrants included in the Placement Agent Units, the term "Warrants" shall
include the Warrants included in the Placement Agent Units, and the term
"Warrant Shares" shall include the Warrant Shares issuable upon exercise of the
Warrants included in the Placement Agent Units; and
WHEREAS, the Company desires to set forth herein the terms of the
Warrants and to provide for the issuance of certificates representing the
Warrants.
<PAGE>
NOW, THEREFORE, in consideration of the above and foregoing premises
and the mutual promises and agreements hereinafter set forth, it is agreed that:
1. Warrant Certificates.
(a) (i) Each Warrant shall entitle the holder in whose name
the certificate shall be registered on the transfer books of the Company (a
"Warrant Holder") to purchase one share of Common Stock at the exercise price
set forth in Section 3(a), subject to modification and adjustment as provided in
Section 8 hereof. The Warrant certificates shall be detached from certificates
representing shares of Common Stock comprising the Units and shall be
distributed to the purchasers thereof and the Placement Agent at the closing of
the Offering (the "Closing Date"). The Class C Warrant certificates shall be
detached from the Class D Warrant certificates.
(b) Warrants shall be issuable only in whole number
denominations or in quarterly fractions thereof both upon initial issuance and
in connection with any exercise, transfer or exchange. Following their initial
issuance, no Warrant certificates shall be issued except for: (i) certificates
issued upon the exercise of any Warrant to evidence the unexercised Warrants
held by the exercising Warrant Holder, (ii) certificates issued upon any
transfer or exchange of certificates or as replacements for mutilated, lost,
stolen or destroyed certificates or (iii) certificates issued to reflect an
adjustment or change in the kind or amount of securities issuable upon exercise,
or the exercise price thereof, pursuant to Section 8.
2. Form and Execution of Certificates.
(a) The Warrants shall be issued in registered form only. The
forms of Warrant certificates shall be substantially as attached hereto as
Exhibits A and B and shall include any such other terms and legends as may be
required to comply with any applicable law or the rules and regulations of any
stock exchange or market.
(b) Each Warrant certificate shall be sequentially numbered.
Each Warrant certificate representing Class C Warrants shall have set forth
thereon the designation "WC" and each Warrant certificate representing Class D
Warrants shall have set forth thereon the designation "WD." The Warrant
certificates shall be dated the date of their issuance.
(c) The Company shall act as its own warrant agent in
connection with the issuance, registration, transfer, exchange and exercise of
Warrants, or in its sole discretion, upon notice to the Warrant Holders, may
appoint an entity that is registered as "transfer agent" under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to perform any one or
more of such transactions (the "Warrant Agent").
(d) The Warrant certificates shall be manually signed on
behalf of the Company by proper officers thereof (or, in the case of the
appointment of a Warrant Agent other than the Company, by the facsimile
signatures of the proper officers of the Company and countersigned by the
Warrant Agent) and shall not be valid for any purpose unless so signed. In the
event any officer of the Company who executed certificates (whether manually or
by facsimile) shall cease to be an officer of the Company, such certificates
shall have the same force and effect as though the person who signed such
certificate had not ceased to be an officer of the Company.
<PAGE>
3. Exercise; Expiration.
(a) Subject to the provisions of this Agreement, each Warrant
may be exercised at a price (the "Exercise Price") of $3.00 per Warrant Share,
subject to adjustment as provided herein, at any time during the period (the
"Warrant Exercise Period") commencing on the Closing Date and, subject to
Section 3(b) hereof, terminating on a date (the "Warrant Expiration Date") that
(i) in the case of the Class C Warrants is the third anniversary of the Closing
Date or such earlier date as is provided for in Section 3(b) and (ii) in the
case of the Class D Warrants is the third anniversary of the Closing Date or if
the Warrant Expiration Date is a Saturday, Sunday, or a day on which banks in
New York are not open for business (a "Business Day"), then the Warrant
Expiration Date shall be the next Business Day; provided, however, that if the
Shelf Registration Statement (as defined in the Registration Rights Agreement
(as defined below)) has not become effective within 90 days after the Closing
Date, or if the Shelf Registration Statement, regardless of when it is declared
effective, does not remain effective through the Warrant Expiration Date, then
the Warrant Exercise Period shall be extended for, respectively, (A) the number
of days elapsed from the 90th day after the Closing Date through the date that
the Shelf Registration Statement becomes effective and (B) such number of days
as is necessary to provide that the Warrants are exercisable for the same number
of trading days for which they would have been exercisable had the Shelf
Registration Statement not ceased to be effective. Except as provided in Section
3(b) hereof, any such extension of the Warrant Exercise Period shall not extend
the 30-day period referred to in Section 3(b).
(b) The Company shall have the right, in its sole discretion,
on or after June 30, 1997, (i) to reduce the Exercise Price of the Warrants to a
price that is 25% or more below the average Closing Price (as defined below)
over the 10 consecutive trading days prior to the effective date of the price
reduction (the "Price Reduction Date") (or if the Closing Price is based on the
fair market value, the Closing Price on the trading day prior to the Price
Reduction Date), and (ii) simultaneously accelerate the Warrant Expiration Date
with respect to the Class C Warrants to the date that is 30 trading days after
the date notice is given to the Warrant Holders of the price reduction (the
"Notice Date") or, if such 30th trading day is not a Business Day, then the next
Business Day. The Company may exercise its discretion under this Section 3(b)
only if the Shelf Registration Statement is then effective. If after the Price
Reduction Date and prior to the accelerated Warrant Expiration Date, the Shelf
Registration Statement ceases to be effective, then the Warrant Expiration
Period with respect to the Class C Warrants shall be extended for such number of
days as is necessary to provide that the Shelf Registration Statement is
effective for 30 trading days following the Notice Date.
(c) The Exercise Price of the Warrants shall be reduced
automatically if (i) the Shelf Registration Statement has not become effective
on or prior to the 90th day after the Closing Date or (ii) holders of shares of
Common Stock or Warrant Shares are required pursuant to Section 4(C) of the
Registration Rights Agreement to discontinue disposition of such shares or
Warrant Shares for more than an aggregate of 120 days after the date that the
Shelf Registration Statement is initially declared effective, to the extent and
as more fully described in the Registration Rights Agreement.
<PAGE>
(d) A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date (an "Exercise Date") that
the Warrant Holder has delivered to the Company at its corporate offices located
at 110 Little Falls Road, Fairfield, NJ 07004 (the "Corporate Office"), or at
any such other office or agency as the Company may designate, (i) the Warrant
certificate with the Election to Purchase certification duly executed (the
"Exercise Form") and (ii) payment in full of the aggregate Exercise Price. An
Exercise Form shall be executed by the Warrant Holder thereof or his attorney
duly authorized in writing. Payment of the Exercise Price of each Warrant shall
be in cash or by official bank or certified check, money order or wire transfer
of an amount equal to the Exercise Price then in effect, in lawful money of the
United States of America. In addition, if at any time of exercise the Warrant
Shares deliverable upon exercise of a Warrant have not been registered for sale
by the Company under the Securities Act of 1933, as amended (the "Act"), the
Company may require a written representation from the Warrant Holder to the
effect that (i) the holder is an "accredited investor" as defined by Rule 501
under the Act (or such other reasonable representations as shall be necessary
for the Company to conclude that the sale of the Warrant Shares to the Warrant
Holder is an exempt transaction under the Securities Act), (ii) the Warrant
Shares being acquired upon exercise are being purchased for investment and not
for distribution in violation of the Act, (iii) acknowledging that such Warrant
Shares have not been registered under the Act and (iv) agreeing that such
Warrant Shares may not be sold or transferred unless there is an effective
registration statement relating thereto under the Act or such sale or transfer
is not in violation of the Act. The person entitled to receive the Warrant
Shares deliverable on exercise shall be treated for all purposes as the holder
of such Warrant Shares as of the close of business on the Exercise Date.
(e) The Company shall not be obligated to issue any fractional
shares of Common Stock in connection with the exercise of any Warrant. In lieu
of issuing any fractional Warrant Shares, the Company shall pay to any Warrant
Holder who otherwise would have been entitled to a fractional Warrant Share cash
(without interest) in an amount determined by multiplying the fractional
interest to which such Warrant Holder would otherwise be entitled by the average
of the closing sale prices for the Common Stock as reported on the NASDAQ
National Market (or, if the Common Stock is not then listed for trading thereon,
on such other principal market or exchange on which the Common Stock is then
traded or, if no closing sale price is reported by the principal market or
exchange on which the Common Stock is then traded, then the average of the
closing bid and asked prices as reported) over the 10 consecutive trading days
immediately prior to (but not including) the Exercise Date (or if no bid and
asked prices are reported, then the fair market value of the Common Stock as
determined by an investment banking firm mutually acceptable to the Company and
the holders of a majority of the then-outstanding Warrants, based on the fair
market value on the trading day immediately prior to the Exercise Date) (such
average daily price over such ten-day period or fair market value being referred
to herein as the "Closing Price").
(f) No Warrant may be exercised by the Warrant Holder, nor may
any Warrant Shares be issued or delivered by the Company, unless on the Exercise
Date (i) there is an effective registration statement covering the offer and
sale of the applicable Warrant Shares under the Act and the Warrant Shares are
registered or qualified for sale under applicable securities or "Blue Sky"
statutes; or (ii) an exemption from registration or qualification thereunder is
applicable.
<PAGE>
(g) Within two Business Days after the Exercise Date, the
Company, at its own expense, shall cause to be issued and sent for next Business
Day delivery to the person or persons entitled to receive the same, a
certificate or certificates in the name of the Warrant Holder for the number of
Warrant Shares deliverable on such exercise. All Warrant Shares delivered upon
the exercise of the Warrants shall be validly issued, fully paid and
nonassessable.
(h) The Company may deem and treat the Warrant Holder as the
absolute owner thereof for all purposes, and the Company shall not be affected
by any notice to the contrary. No Warrant shall entitle the holder thereof to
any of the rights of shareholders or to any dividend declared on the Common
Stock unless such holder shall have exercised the Warrant on or prior to the
record date fixed by the Board of Directors for the determination of holders of
Common Stock entitled to such dividends or other rights.
4. Registration Rights.
The holders of Warrants and Warrant Shares shall have the
registration rights provided for in the Registration Rights Agreement executed
by the Company, the Placement Agent and the Warrant Holders on the date hereof
(the "Registration Rights Agreement"). The Registration Rights Agreement is
incorporated herein by reference as if set forth fully herein.
5. Reservation of Shares and Payment of Taxes.
(a) The Company covenants that it shall at all times reserve
and have available from its authorized Common Stock such number of shares of
Common Stock as shall then be issuable on the exercise of all outstanding
Warrants. The Company covenants that all Warrant Shares shall be free from all
taxes, liens and charges with respect to the issuance thereof.
(b) The Company shall pay all documentary, stamp or similar
taxes and other government charges that may be imposed with respect to the
issuance of the Warrants, and the issuance or delivery of any Warrant Shares
upon the exercise of the Warrants, except that in the event that the Warrant
Shares are to be delivered in a name other than the name of the Warrant Holder
reflected on the certificate for the Warrant, no such delivery shall be made
unless the person requesting the same has paid to the Company the amount of any
such taxes, charges, or transfer fees incident thereto.
6. Registration of Transfer.
(a) The Warrant certificates may, subject to provisions of the
Federal securities and state securities laws and the provisions of this
Agreement, be transferred in whole or in part. Certificates to be transferred
shall be surrendered to the Company at its Corporate Office or such other office
or agency as the Company may designate.
<PAGE>
(b) The Company shall keep transfer books which shall register
Warrant certificates and the transfer thereof. On due presentment for
registration of transfer of any certificate, the Company shall execute, issue
and deliver to the transferee or transferees a new certificate or certificates
representing an equal aggregate number of securities. All such certificates
shall be duly endorsed or be accompanied by a written instrument or instruments
of transfer in form reasonably satisfactory to the Company, together with an
opinion of counsel, reasonably satisfactory in form and substance to counsel for
the Company, that an exemption from registration under the Act for the transfer
exists and a written representation from the transferee that (i) the Warrant is
being acquired for investment and not for distribution otherwise than in
compliance with the Act, (ii) acknowledging that the Warrant has not been
registered under the Act and (iii) agreeing that the Warrant, if not registered
under the Act, may not be transferred unless there is an effective registration
statement with respect thereto or in the opinion of counsel, which shall be
satisfactory in form and substance to counsel for the Company, such transfer is
an exempt transaction under the Act.
(c) Prior to due presentment for registration of transfer
thereof, the Company may treat the Warrant Holder as the absolute owner thereof
(notwithstanding any notations of ownership or writing thereon made by anyone),
and the Company shall not be affected by any notice to the contrary.
7. Loss or Mutilation.
On receipt by the Company of satisfactory evidence of the
loss, theft, destruction or mutilation of any Warrant certificate, the Company
shall execute and deliver to a Warrant Holder in lieu thereof a new Warrant
certificate representing an equal number of Warrants. In the case of loss, theft
or destruction of any certificate, the Warrant Holder shall be required to
indemnify the Company and, in the case of a Warrant Holder that is not an
institutional investor, to post an indemnity bond as a condition to the issuance
of a replacement certificate. In the event a certificate is mutilated, such
certificates shall be surrendered and canceled by the Company prior to delivery
of a new certificate. The Warrant Holder shall also comply with such other
regulations and pay such other reasonable charges as the Company may prescribe.
8. Adjustment of Exercise
Price and Number of Shares Purchasable.
(a) (i) Except as otherwise provided in Section 8(b) and
subject to the exceptions set forth in Section 8(c), in the event the
Company shall, at any time or from time to time after the date hereof,
(A) sell or issue any shares of Common Stock for a consideration per
share that is less than the Closing Price of the Common Stock (as
defined in Section 3(e)) on the last trading day preceding the date of
the sale or issuance, (B) issue any shares of Common Stock as a stock
dividend to the holders of shares of Common Stock, or (C) subdivide or
combine the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Exercise
Price in effect immediately prior to such event shall be changed to the
Exercise Price (calculated to the nearest cent) determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, (1) the numerator of which shall be the sum of the number of
<PAGE>
shares of Common Stock outstanding immediately prior to the issuance of
such additional shares and the number of shares of Common Stock that
the aggregate consideration received (determined as provided in Section
8(b)) for the issuance of such additional shares would purchase at the
Closing Price and (2) the denominator of which shall be the sum of the
number of shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
(ii) Upon the adjustment of the Exercise Price
pursuant to this Section 8, the total number of shares of Common Stock
purchasable upon exercise of each Warrant shall be such number of
shares (calculated to the nearest one-tenth of a share) purchasable at
the Exercise Price in effect immediately prior to such adjustment
multiplied by a fraction, (1) the numerator of which shall be the
Exercise Price in effect immediately prior to such adjustment and (2)
the denominator of which shall be the Exercise Price in effect
immediately after such adjustment.
(b) For purposes of Section 8(a), the following provisions
shall be applicable:
(i) The number of shares of Common Stock outstanding
at any given time shall not include shares of Common Stock owned or
held by or for the account of the Company, and the sale of such shares
shall be a sale for purposes of Section 8(a).
(ii) No adjustment of the Exercise Price shall be
made unless such adjustment would require an increase or decrease of at
least $.01 in the Exercise Price; provided that any adjustments that by
reason of this clause (ii) 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 that, together with all adjustments so carried
forward, require an increase or decrease of at least $.01 in the
Exercise Price.
(iii) In the event of (A) the sale by the Company
(or as a component of a unit being sold) of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, either
Common Stock or any securities that are convertible into or
exchangeable for Common Stock (such securities convertible or
exchangeable into Common Stock being herein referred to as "Convertible
Securities") or (B) the issuance by the Company, without the receipt by
the Company of any consideration therefor, of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, Common
Stock or Convertible Securities (in either case whether or not such
rights, warrants or options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable), and the price per
share for which Common Stock is issuable upon the exercise of such
rights, warrants or options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (1) the minimum
aggregate consideration payable to the Company upon the exercise of
such rights, warrants or options, plus the consideration, if any,
received by the Company for the issuance or sale of such rights,
<PAGE>
warrants or options, plus, in the case of such Convertible Securities,
the minimum aggregate amount of additional consideration, if any (other
than the surrender of such Convertible Securities), payable upon the
conversion or exchange thereof, by (2) the total maximum number of
shares of Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of the
Convertible Securities issuable upon the exercise of such rights,
warrants or options) is less than the Closing Price of the Common Stock
on the last trading day preceding the date of the issuance or sale of
such rights, warrants or options, then for purposes of Section 8(a) the
total maximum number of shares of Common Stock issuable upon the
exercise of such rights, warrants, or options and upon the conversion
or exchange of such Convertible Securities shall be deemed to be
outstanding shares of Common Stock as of the date of the issuance or
sale of such rights, warrants or options and shall be deemed to have
been sold for cash in an amount equal to such price per share.
(iv) In the event of the sale by the Company of any
Convertible Securities, whether or not the right of conversion or
exchange thereunder is immediately exercisable, and the price per share
for which Common Stock is issuable upon the conversion or exchange of
such Convertible Securities (determined by dividing (1) the total
amount of consideration received by the Company for the sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any (other than the surrender of such Convertible
Securities), payable upon the conversion or exchange thereof, by (2)
the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of such Convertible Securities) is less than the
Closing Price of the Common Stock on the last trading day preceding the
date of the sale of such Convertible Securities, then for purposes of
Section 8(a) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of such Convertible Securities
shall be deemed to be outstanding shares of Common Stock as of the date
of the sale of such Convertible Securities and shall be deemed to have
been sold for cash in an amount equal to such price per share.
(v) In the case of the sale by the Company of
shares of Common Stock, Convertible Securities, or rights or warrants
to subscribe for or the purchase of, or options for the purchase of,
Common Stock or Convertible Securities in exchange for property, assets
or rights (other than cash), the fair market value of the consideration
received by the Company shall be determined in good faith by the Board
of Directors. Whenever the Board of Directors of the Company shall be
required to make a determination in good faith of the fair market value
of any consideration and determine such value to be in excess of $7.5
million, such determination shall be supported by an opinion of an
independent appraiser or financial advisor of recognized standing that
is selected by the Board of Directors.
<PAGE>
(vi) On the expiration of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, Common
Stock or Convertible Securities, or the termination of any right to
convert or exchange Convertible Securities, in respect of which any
adjustments previously shall have been made in accordance with clause
(iii), (iv), (v) or (viii) of this Section 8(b), the Exercise Price in
effect immediately prior to the time of such expiration or termination
shall be adjusted to such Exercise Price as would be applicable had
such adjustments not been made with respect to (A) the issuance of or
the adjustment of the Exercise Price of such rights, warrants or
options which have expired or (B) the issuance of or the adjustment of
the conversion or exercise price of such Convertible Securities the
rights under which to convert or exchange have terminated.
(vii) In case of the sale or issuance for cash of any
shares of Common Stock, any Convertible Securities, any rights or
warrants to subscribe for or purchase, or any options for the purchase
of, Common Stock or Convertible Securities, the consideration received
by the Company therefor shall be deemed to be the gross sales price
therefor without deducting therefrom any expense paid or incurred by
the Company or any underwriting discounts or commissions or concessions
paid or allowed by the Company in connection therewith.
(viii) In case the Company shall make a nonmandatory
modification to the rights of conversion, exchange or exercise of any
outstanding securities of the type described in paragraphs (iii) or
(iv) above ("Covered Securities") subsequent to the issuance thereof
and, as a consequence of such modification, the consideration per share
received and to be received by the Company, after giving effect to such
modification, is less than the Closing Price on the date of such
modification (after giving effect to the deemed expiration or
cancellation of the then-outstanding Covered Securities in accordance
with the provisions of paragraph (vi)), the Exercise Price in effect
after such modification shall be determined by multiplying the Exercise
Price in effect immediately prior to such event by a fraction, (A) the
numerator of which shall be the number of shares of Common Stock
outstanding on the date of the modification, plus the number of shares
of Common Stock that the aggregate consideration received by the
Company upon the original issuance of such Covered Securities, if any,
and receivable by the Company for the conversion, exchange and exercise
of the Covered Securities, after giving effect to the modification,
would purchase at the Closing Price and (B) the denominator of which
shall be the number of shares of Common Stock outstanding on the date
of the modification, plus the number of shares of Common Stock issuable
upon conversion, exchange and exercise of the modified Covered
Securities.
(ix) In the event that the Company subsequent to the date
hereof shall issue any securities of the type described in paragraphs
(iii) or (iv) above ("Future Securities") and the terms of any such
Future Securities provide for anti-dilution adjustments that are
triggered as a consequence of the operation of anti-dilution
adjustments in any other securities issued by the Company, then the
Warrants shall be adjusted pursuant to the terms of this Section 8 to
give effect to such adjustment in the same manner and to the same
extent as is provided for under the terms of such other security.
<PAGE>
(x) If the Company shall issue any rights or warrants to
subscribe for or purchase, or options for the purchase of, Common Stock
or Convertible Securities with a variable exercise price, or shall
issue Convertible Securities with a variable conversion price, other
than variability that solely is the result of customary anti-dilution
adjustments ("Variable Securities"), no adjustment contemplated by
Section 8(a) with respect to such Variable Securities shall be made at
the time of the issuance of such Variable Securities. Instead, the
adjustments contemplated by Section 8(a) shall be made as follows: (i)
all Variable Securities as to which the exercise or conversion price
became fixed prior to the date of exercise of a Warrant will be deemed
to have been issued on the date that the exercise or conversion price
of such Variable Securities became fixed and (ii) all Variable
Securities as to which the exercise or conversion price is not fixed as
of the date of the exercise of such Warrant will be deemed to have been
issued as of the close of business on the last business day preceding
the date of exercise of such Warrant with an exercise or conversion
price equal to the variable price then in effect, except that the
adjustment pursuant to paragraph (ii) of Section 8(a) shall be
calculated to the nearest 1/1000th of a share. Within two business days
of a request received from any Warrant Holder, the Company shall advise
such Warrant Holder of the Exercise Price and the number of shares of
Common Stock purchasable upon the exercise of each Warrant recomputed
as of the date of such request in accordance with the provisions of
this paragraph (x).
(c) No adjustment to the Exercise Price of the Warrants or to
the number of shares of Common Stock purchasable upon the exercise of
each Warrant will be made:
(i) upon the issuance or sale of any securities
(including stock options) of the Company that are issued pursuant to
any stock option or stock bonus plan or arrangement of the Company for
the benefit of directors, officers or employees of the Company, that is
in effect on the date hereof; or
(ii) upon the sale or exercise of the Warrants or
any adjustment to the Exercise Price thereof; or
(iii) upon the issuance or sale of Common Stock or
Convertible Securities as the result of the exercise of any rights or
warrants to subscribe for or purchase, or any options for the purchase
of, Common Stock or Convertible Securities, whether or not such rights,
warrants or options were outstanding on the date of this Agreement or
were thereafter issued or sold (provided that adjustments were made for
the issuance of such rights, warrants and options and each required
adjustment under Section 8(b)(viii)); or
(iv) upon the issuance or sale of Common Stock as the
result of the conversion or exchange of any Convertible Securities,
whether or not such Convertible Securities were outstanding on the date
of this Agreement or were thereafter issued or sold (provided that
adjustments were made for the issuance of such Convertible Securities
and each required adjustment under Section 8(b)(viii)); or
<PAGE>
(v) upon the issuance of any additional Units
contemplated by the introductory paragraph of this Agreement and the
Confidential Private Placement Memorandum dated September 27, 1996, as
supplemented by a Supplement thereto dated October 9, 1996.
(d) As used in this Section 8, the term "Common Stock" shall
mean the Common Stock as designated in the Company's Certificate of
Incorporation on the date hereof and shall also include any capital stock of any
class of the Company hereafter authorized that shall not be limited to a fixed
sum or percentage in respect of the rights of the holders thereof to participate
in dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the shares
issuable upon exercise of the Warrants shall be the shares so designated as
Common Stock on the date hereof or (i) in the case of any reclassification,
change, consolidation, merger, sale or conveyance of the character referred to
in Section 8(e), the stock, securities or property provided for in such section,
or (ii) in the case of any reclassification or change in the outstanding shares
of Common Stock issuable upon exercise of the Warrants consisting of a change in
par value, or from par value to no par value, or from no par value to par value,
such shares of Common Stock as so reclassified or changed.
(e) In case of any reclassification, capital reorganization or
other change in the Common Stock, or in case of any consolidation or merger of
the Company with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change in the
Common Stock), or in case of any sale or conveyance to another corporation of
the property of the Company as, or substantially as, an entirety, the Company
shall cause effective provision to be made so that each registered holder of a
Warrant then outstanding shall have the right thereafter, by exercising such
Warrant, to purchase the kind and number of shares of stock or other securities
or property (including cash) receivable upon such reclassification, capital
reorganization or other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock that could have been purchased
upon the exercise of such Warrant immediately prior to such reclassification,
capital reorganization or other change, consolidation, merger, sale or
conveyance, and in any such case appropriate adjustments shall be made in the
application of the provisions of this Section 8 with respect to rights and
interests thereafter of the holder to the end that the provisions of this
Section 8 shall thereafter be applicable, as near as reasonably practicable, in
relation to any shares or other property thereafter purchasable upon the
exercise of a Warrant. The Company shall not effect any such consolidation,
merger or sale unless prior to, or simultaneously with, the consummation thereof
the successor (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing the property of the Company shall assume,
by written instrument executed and delivered to the Company, the obligation to
deliver to the holder of each Warrant such shares of stock, securities or
property as, in accordance with the foregoing provisions, such holder shall be
entitled to purchase (and the other obligations of the Company under this
Agreement). The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes in the Common Stock
and to successive consolidations, mergers, sales or conveyances.
<PAGE>
(f) After each adjustment of the Exercise Price pursuant to
this Section 8, the Company promptly will prepare a statement, certified by its
Chairman or President and by its Treasurer or Assistant Treasurer, setting
forth: (i) in reasonable detail the computation of the Exercise Price, as so
adjusted, and the computation of the number of shares of Common Stock
purchasable upon exercise of each Warrant, as so adjusted, and (ii) a brief
description of the circumstances giving rise to the adjustment. The Company
shall deliver a copy of such statement to each Warrant Holder by overnight
courier or by facsimile, with a confirmation copy sent by either overnight or
two-day courier. The Company will allow any Warrant Holder or its representative
to inspect the books and records of the Company to the extent necessary to
verify any such computation.
(g) Irrespective of any adjustments in the Exercise Price or
the number of shares of Common Stock purchasable upon exercise of the Warrants,
the Warrant certificates theretofore and thereafter issued shall, unless the
Company in its sole discretion shall determine to issue new Warrant
certificates, continue to express the Exercise Price per share and the number of
shares purchasable thereunder as were expressed in the Warrant certificates when
the same were originally issued.
(h) The Company will not, by amendment of its Certificate of
Incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as reasonably may be necessary
or appropriate (including, if necessary or appropriate, making equitable
adjustments to the kind and amount of securities issuable upon the exercise of
the Warrants and the Exercise Price) in order to protect the rights of the
holders of the Warrants against dilution or other impairment.
(i) In case the Company shall take a record of the holders of
its Common Stock for the purpose of (i) entitling them to receive a dividend or
any other distribution in respect of the Common Stock payable in cash or other
property, (ii) entitling them to subscribe for or purchase any shares of stock
of any class or to receive any other rights, (iii) any classification,
reclassification or other reorganization of the capital stock of the Company,
any consolidation or merger of the Company with or into another corporation, or
any conveyance of all or substantially all of the assets of the Company, or (iv)
the voluntary or involuntary dissolution, liquidation or winding up of the
Company, then, and in any such case, the Company shall mail to each Warrant
Holder, at least 15 days prior to such record date, a notice stating the date or
expected date on which a record is to be taken for the purpose of such dividend,
distribution of rights, or the date on which such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up, as the case may be, is to take place.
Such notice shall also specify the date or expected date, if any is to be fixed,
on which said dividend, distribution of rights, or an exchange of shares of
Common Stock for securities or other property deliverable upon such
classification, reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up, as the case may be, is
expected to occur, provided, however, that the failure to give such notice shall
not affect the validity of any such proceeding or transaction.
<PAGE>
9. Obtaining of Governmental Approvals
and Stock Exchange Listings.
The Company will use its best efforts (a), except that the
Company is not obligated to register the Warrant Shares for sale by the Company
under the Securities Act, to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities and make any
necessary filings under federal or state securities laws, which may be or become
requisite in connection with the issuance, sale and delivery of the Warrant
certificates, the exercise of the Warrants and the issuance, sale, transfer and
delivery of the Warrant Shares and (b) to cause the Warrant Shares, prior to
their sale pursuant to any registration statement filed in accordance with the
Registration Rights Agreement or other transfer which is not restricted under
the federal securities laws, to be listed on the NASDAQ National Market or the
principal securities exchange or market within the United States of America on
which the Common Stock is then listed.
10. Notices.
All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be in writing
and shall be delivered by hand or sent by registered or certified mail, return
receipt requested and postage prepaid, or by facsimile transmission to, in the
case of the Company:
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, NJ 07004
Telecopier: (201) 227-6088
Attention: Ronald S. Levy
and if to the Warrant Holder at the address of such holder as set forth on the
transfer books maintained by or on behalf of the Company.
All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid; upon receipt, if sent
by facsimile (followed by a confirmation copy sent by either overnight or
two-day courier).
11. Third Party Beneficiaries.
Each registered holder of a Warrant, whether or not such
holder is a party to this Agreement, is an intended beneficiary of this
Agreement, and this Agreement may be enforced by such registered holder. Nothing
in this Agreement shall be construed to give any person or entity, other than
the Company and the registered holders of the Warrants, any legal or equitable
right, remedy or claim under this Agreement.
12. Further Instruments.
The parties shall execute and deliver any and all such other
instruments and take any and all other actions as may be reasonably necessary to
carry out the intention of this Agreement.
<PAGE>
13. No Inconsistent Agreements.
The Company has not, as of the date hereof, and the Company
shall not, after the date of this Agreement, enter into any agreement with
respect to any of its securities that is inconsistent with the rights granted to
the Warrant Holders in this Agreement or otherwise conflicts with the provisions
hereof. The Company will not enter into any agreement which will grant any such
rights that are in conflict with the rights afforded by this Agreement.
14. Amendments and Waivers.
The Company may, without the consent or concurrence of the
holders of the Warrants, make any changes or corrections in this Agreement that
are necessary or desirable to cure any ambiguity or to correct any defective
provision, mistake or manifest error herein contained; provided that such
changes do not adversely affect the rights or interests of the holders of the
Warrants. Otherwise, the provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, except with the prior written consent of the
Company and the registered holders of not less than a majority of the
then-outstanding Warrants (or, in the case of a change that affects only one of
the two classes of Warrants, then only with the prior written consent of the
holders of not less than a majority of the Warrants of that class); provided,
however, that no change in the number of the Warrant Shares purchasable upon the
exercise of any Warrant, no increase in the Exercise Price and no acceleration
of the Warrant Expiration Date shall be made without the consent in writing of
each Warrant Holder.
15. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties hereto.
16. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
17. Headings.
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
18. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES, AND EACH BENEFICIARY
HEREOF SHALL BE BOUND, TO SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
<PAGE>
19. Severability.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall, to the extent permitted by law, remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such invalid, illegal, void or unenforceable term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any term, provision,
covenant or restriction that may be hereafter declared invalid, illegal, void or
unenforceable.
20. Entire Agreement.
This Agreement, together with the Registration Rights
Agreement, the Subscription Agreements executed in connection with the Offering
(the "Subscription Agreements") and, with respect to the Placement Agent, the
Placement Agency Agreement executed in connection with the Offering (the
"Placement Agency Agreement"), is intended by the parties hereto as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement, the Registration Rights
Agreement, the Subscription Agreements, and, with respect to the Placement
Agent, the Placement Agency Agreement supersede all prior agreements between the
parties with respect to such subject matter. There are no representations,
promises, warranties or undertakings between the parties hereto with respect to
the subject matter hereof, other than those set forth or referred to herein and
therein and in the Confidential Private Placement Memorandum dated September 27,
1996, as it may be amended or supplemented to the date hereof, relating to the
Offering.
[signature pages follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first set forth above.
UNIGENE LABORATORIES, INC.
By: /s/Ronald S. Levy
------------------
Ronald S. Levy
Vice President
BT SECURITIES CORPORATION
By: /s/Peter R. Barry
-----------------
Peter R. Barry
Vice President
[additional signature pages follow]
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
Jeffrey Dobbs
Name of Purchaser #1 Name of Purchaser #2
(Please print or type) (Please print or type)
/s/Jeffrey Dobbs
- ----------------
Signature Signature
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
William J. Jacobs
Name of Purchaser #1 Name of Purchaser #2
(Please print or type) (Please print or type)
/s/William J. Jacobs
- --------------------
Signature Signature
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
Stephen J. Mazur
Name of Purchaser #1 Name of Purchaser #2
(Please print or type) (Please print or type)
/s/Stephen J. Mazur
- -------------------
Signature Signature
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR INDIVIDUAL PURCHASERS
Vincent A. Rossi, Jr.
Name of Purchaser #1 Name of Purchaser #2
(Please print or type) (Please print or type)
/s/Vincent A. Rossi, Jr.
- ------------------------
Signature Signature
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Annapurna Partners, L.P.
Name of Partnership (Please print or type)
By /s/Hope Taitz
-------------
Signature of a General Partner
Name: Hope Taitz
Title: President
Ely Capital Advisors, LLC (authorized representative)
By ------------------------------------------------
Signature of Additional General Partner
(if required by partnership agreement)
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Catalyst Partners, L.P.
Name of Partnership (Please print or type)
By /s/Allison J. Rosen
-------------------
Signature of a General Partner
Name: Allison J. Rosen
By /s/Hope Taitz
-------------
Signature of Additional General Partner
Name: Hope Taitz
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
CL Investment Partnership II, L.P.
Name of Partnership (Please print or type)
By /s/Ted Ammon
------------
Signature of a General Partner
Name: Ted Ammon
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Turnberry Capital Partners, L.P.
Name of Partnership (Please print or type)
By /s/
Name: Turnberry Capital Management, L.P.
Its General Partner
By /s/Vincent A. Rossi, Jr.
------------------------
Signature of Additional General Partner
Name: Vincent A. Rossi, Jr.
Title: Managing Director
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Woodstead Associates II, L.P.
Name of Partnership (Please print or type)
By: RDS Woodstead, Inc., its General Partner
By /s/David A. Persing
-------------------
Signature of General Partner
Name: David A. Persing
Title: Senior Vice President
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR PARTNERSHIP PURCHASERS
Nelson Partners
Name of Partnership (Please print or type)
By /s/Cre Dupuy
------------
Signature of General Partner
Name: Cre Dupuy
Title: Officer
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
By ________________________________________________
Signature of Additional General Partner
(if required by partnership agreement)
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR CORPORATE PURCHASERS
Continental Casualty Company
Name of Corporation (Please print or type)
By /s/Richard Dubberke
-------------------
Signature of Authorized Agent
Name: Richard Dubberke
Title: Vice President
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR CORPORATE PURCHASERS
Legg Mason High Yield Fund
Name of Corporation (Please print or type)
By /s/Trudie Whitehead
-------------------
Signature of Authorized Agent
Name: Trudie Whitehead
Title: Portfolio Manager/Principal
<PAGE>
WARRANT AGREEMENT
SIGNATURE PAGE
FOR CORPORATE PURCHASERS
Olympus Securities, Ltd.
Name of Corporation (Please print or type)
By /s/Cre Dupuy
------------
Signature of Authorized Agent
Name: Cre Dupuy
Title: Alternate Director
<PAGE>
EXHIBIT A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS.
CLASS C WARRANT CERTIFICATE
UNIGENE LABORATORIES, INC.
Warrant No. WC-________ No. of Class C Warrants: ________
This certifies that, for value received and subject to the terms and
conditions set forth herein, _______________________________ or its registered
assign (the "Warrant Holder"), is the registered holder of _____ Class C
Warrants. This Class C Warrant has been issued pursuant to, and is subject to
the terms and conditions set forth in, a Warrant Agreement dated October __,
1996, by and among Unigene Laboratories, Inc. (the "Company"), BT Securities
Corporation, and the other initial purchasers of Class C Warrants (the "Warrant
Agreement").
1. Exercise. Each whole Class C Warrant evidenced hereby is exercisable
by the Warrant Holder at any time on or prior to the Warrant Expiration Date (as
defined in Section 2) to purchase, at an exercise price of $3.00 per Class C
Warrant (the "Exercise Price"), one (1) share of the common stock, par value
$.01 per share (the "Common Stock"), of the Company. (The shares of Common Stock
acquirable upon exercise hereof are referred to herein as "Warrant Shares.")
Notwithstanding the foregoing, no Warrant may be exercised by the Warrant
Holder, nor may any Warrant Shares be issued or delivered by the Company, unless
on the Exercise Date (i) there is an effective registration statement covering
the offer and sale of the applicable Warrant Shares under the Securities Act of
1933, as amended (the "Act") and the Warrant Shares are registered or qualified
for sale under applicable securities or "Blue Sky" statutes; or (ii) an
exemption from registration or qualification thereunder is applicable. The
Company may require, as a condition of allowing the exercise of this Class C
Warrant, that the Warrant Holder furnish to the Company a written representation
from the Warrant Holder to the effect that (i) the holder is an "accredited
investor" as defined by Rule 501 under the Act (or such other reasonable
representations as shall be necessary for the Company to conclude that the sale
of the Warrant Shares to the Warrant Holder is an exempt transaction under the
Act), (ii) the Warrant Shares being acquired upon exercise are being purchased
for investment and not for distribution in violation of the Act, (iii)
acknowledging that such Warrant Shares have not been registered under the Act
and (iv) agreeing that such Warrant Shares may not be sold or transferred unless
there is an effective registration statement relating thereto under the Act, or,
such sale or transfer is not in violation of the Act. No fractional shares may
be acquired upon exercise hereof.
<PAGE>
2. Term of Warrant. The Class C Warrants evidenced by this certificate
may be exercised at any time, and from time to time, in whole or in part prior
to 5:00 P.M. on _______________ (the "Warrant Expiration Date"); provided,
however, that if the Company exercises its right under Section 2(b) of the
Warrant Agreement to reduce the exercise price of the Class C Warrants and the
Class D Warrants, then this Class C Warrant shall expire on the date that is 30
trading days after the Notice Date (as defined in the Warrant Agreement),
subject to extension under certain circumstances as described in the Warrant
Agreement (or, if such 30th trading day is not a Business Day (as defined in the
Warrant Agreement), then on the next Business Day); and provided further, that
if the Warrant Shares are not, within 90 days after the Closing Date (as defined
in the Warrant Agreement), covered by an effective registration statement under
the Act for the resale of such Warrant Shares or such registration statement
does not remain effective through the Warrant Expiration Date, then the Warrant
Expiration Date shall be extended for, respectively, (A) the number of days
elapsed from the 90th day after the closing of the Offering through the date
that such registration statement becomes effective and (B) such number of days
as is necessary to provide that the Warrants are exercisable for the same number
of trading days for which they would have been exercisable had such registration
statement not ceased to be effective.
3. Adjustments. The Exercise Price and the number of shares of Common
Stock issuable upon the exercise of the Class C Warrants is subject to
adjustment under certain circumstances as set forth in Section 8 of the Warrant
Agreement, including upon the issuance of a stock dividend, a subdivision or
combination of the Common Stock, and the issuance of Common Stock at a price per
share that is less than the Closing Price (as defined in the Warrant Agreement)
of the Common Stock. The Exercise Price of the Class C Warrants is subject to
reduction if a registration statement has not become effective on or prior to
the 90th day after the Closing Date or if holders of shares issued or issuable
upon exercise of the Warrant are required to discontinue disposition thereof for
more than an aggregate of 120 days after the date that the registration
statement is initially declared effective, to the extent and as more fully set
forth in the Registration Rights Agreement (as defined in the Warrant
Agreement).
4. Manner of Exercise. The Class C Warrants evidenced hereby may be
exercised by delivery to the Company at its corporate offices located at 110
Little Falls Road, Fairfield, N.J. 07004, or such other office or agency as the
Company may designate, of (i) this Class C Warrant certificate, with the
attached Election to Purchase Certificate duly executed and (ii) payment in full
of the aggregate Exercise Price for the number of Class C Warrants being
exercised by official bank or certified check, money order or wire transfer in
lawful money of the United States of America.
5. Issuance of Common Stock upon Exercise. Within two Business Days (as
defined in the Warrant Agreement) after the exercise date of a Class C Warrant,
the Company, at its own expense, shall cause to be issued and sent for next
Business Day delivery, a certificate or certificates for the whole number of
Warrant Shares to which the Warrant Holder is entitled upon such exercise. Cash
will be issued in lieu of any fractional share of Common Stock to which the
Warrant Holder otherwise would be entitled. The Warrant Shares delivered upon
the exercise of the Class C Warrants shall be validly issued, fully paid and
nonassessable. Irrespective of the date of issuance and delivery of any Warrant
Shares, upon the exercise of a Class C Warrant, each person in whose name any
such certificate is to be issued will for all purposes be deemed to have become
the holder of record of the Warrant Shares acquired on the date on which the
Class C Warrant has been duly exercised.
<PAGE>
6. Registration Rights. The Company has agreed to file a registration
statement with respect to the resale of the Warrant Shares issuable upon
exercise of the Class C Warrants and to use its best efforts to cause such
registration statement to be declared effective, as more fully set forth in the
Registration Rights Agreement.
7. No Right as Shareholder. The Warrant Holder is not, by virtue of the
ownership of this Class C Warrant, entitled to any rights whatsoever as a
shareholder of the Company.
8. Transfer or Assignment. A Class C Warrant may not be transferred or
assigned unless the Warrant Holder provides to the Company an opinion of
counsel, reasonably satisfactory in form and substance to counsel for the
Company, that an exemption from registration under the Act for the transfer
exists and the transferee provides a written representation that (i) the Class C
Warrant is being acquired for investment and not for distribution otherwise than
in compliance with the Act, (ii) acknowledging that the Class C Warrant has not
been registered under the Act for sale to the transferee and (iii) agreeing that
the Class C Warrant may not be transferred unless there is an effective
registration statement with respect thereto under the Act, or in the opinion of
its counsel delivered to the Company, which opinion shall be satisfactory in
form and substance to counsel for the Company, such transfer is an exempt
transaction under the Act.
9. State Legends.
Residents of Florida are advised of the following:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE FLORIDA SECURITIES ACT, WHICH ACT PROVIDES, IN RELEVANT
PART, THAT "ANY SALE IN THIS STATE MADE PURSUANT TO THIS
SUBSECTION IS VOIDABLE BY THE PURCHASER IN SUCH SALE EITHER
WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS
MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER
OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY
OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER
OCCURS LATER."
THIS NOTICE SERVES AS SUCH COMMUNICATION. THE VOIDING OF
A SALE IS WITHOUT PENALTY.
10. Warrant Agreement. The terms and conditions of this Class C Warrant
are set forth in the Warrant Agreement which is incorporated herein by this
reference as if fully set forth herein and made a part hereof, and to which the
Warrant Holder, by the acceptance of this certificate, agrees to be bound. To
the extent of any conflict between this certificate and the Warrant Agreement,
the terms and conditions of the Warrant Agreement shall control.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to
be signed on its behalf by its President, his signature to be attested to by its
Secretary, and its corporate seal to be hereunto affixed this __________day
of____________, 199__.
[SEAL] UNIGENE LABORATORIES, INC.
on behalf of the Company
and as Warrant Agent
By:_______________________
Attest: _________________________________
Name: ___________________________
Title: ____________________________
<PAGE>
[Form of Election to Purchase Certificate]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant certificate, to purchase _______ shares of
Common Stock of Unigene Laboratories, Inc. (the "Company") and herewith tenders
payment for such shares to the order of the Company in the amount of $______ in
cash or by official bank or certified check, money order or wire transfer.
The undersigned requests that a certificate for such shares be
registered in the name of ___________________, which person, if other than the
undersigned, is the __________ (e.g., nominee or affiliate) of the undersigned,
and whose address is __________________________ and that such shares be
delivered to ___________________________ whose address is ________________.
If said number of shares is less than all of the shares of
Common Stock purchasable hereunder, the undersigned requests that a new Warrant
certificate representing the remaining balance of such shares be registered in
the name of ________________, which person, if other than the undersigned, is
the _____________ (e.g., nominee or affiliate) of the undersigned, and whose
address is ____________________, and that such Warrant certificate be delivered
to ________________, whose address is ______________________.
In connection with this exercise, the undersigned (i)
represents and warrants to the Company that the shares are being purchased for
investment and not for distribution in violation of the Securities Act of 1933,
as amended (the "Act"), (ii) acknowledges that such shares have not been
registered for sale to the undersigned under the Act, and (iii) agrees that such
shares may not be sold or transferred unless there is an effective registration
statement relating thereto under the Act or, in the opinion of counsel to the
Company, such sale or transfer is an exempt transaction under the Act.
/s/
- ----------------------------
Signature
Date:
- -----------------------------
Signature Guaranteed
<PAGE>
[Form of Assignment]
(To Be Executed by the Registered Holder
in Order to Assign Warrants)
FOR VALUE RECEIVED, _________________________________________________ hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
(please print or type name and address)
_________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints_______________________ Attorney to transfer this Warrant Certificate on
the books of the Company, with full power of substitution in the premises.
Dated: /s/
--------------------------
Signature
THE SIGNATURE TO THE ASSIGNMENT FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON
THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
<PAGE>
EXHIBIT B
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS.
CLASS D WARRANT CERTIFICATE
UNIGENE LABORATORIES, INC.
Warrant No. WD-________ No. of Class D Warrants: ________
This certifies that, for value received and subject to the terms and
conditions set forth herein, _______________________________ or its registered
assign (the "Warrant Holder"), is the registered holder of _____ Class D
Warrants. This Class D Warrant has been issued pursuant to, and is subject to
the terms and conditions set forth in, a Warrant Agreement dated October __,
1996, by and among Unigene Laboratories, Inc. (the "Company"), BT Securities
Corporation, and the other initial purchasers of Class D Warrants (the "Warrant
Agreement").
1. Exercise. Each whole Class D Warrant evidenced hereby is exercisable
by the Warrant Holder at any time on or prior to the Warrant Expiration Date (as
defined in Section 2) to purchase, at an exercise price of $3.00 per Class D
Warrant (the "Exercise Price"), one (1) share of the common stock, par value
$.01 per share (the "Common Stock"), of the Company. (The shares of Common Stock
acquirable upon exercise hereof are referred to herein as "Warrant Shares.")
Notwithstanding the foregoing, no Warrant may be exercised by the Warrant
Holder, nor may any Warrant Shares be issued or delivered by the Company, unless
on the Exercise Date (i) there is an effective registration statement covering
the offer and sale of the applicable Warrant Shares under the Securities Act of
1933, as amended (the "Act") and the Warrant Shares are registered or qualified
for sale under applicable securities or "Blue Sky" statutes; or (ii) an
exemption from registration or qualification thereunder is applicable. The
Company may require, as a condition of allowing the exercise of this Class D
Warrant, that the Warrant Holder furnish to the Company a written representation
from the Warrant Holder to the effect that (i) the holder is an "accredited
investor" as defined by Rule 501 under the Act (or such other reasonable
representations as shall be necessary for the Company to conclude that the sale
of the Warrant Shares to the Warrant Holder is an exempt transaction under the
Act), (ii) the Warrant Shares being acquired upon exercise are being purchased
for investment and not for distribution in violation of the Act, (iii)
acknowledging that such Warrant Shares have not been registered under the Act
and (iv) agreeing that such Warrant Shares may not be sold or transferred unless
there is an effective registration statement relating thereto under the Act, or
such sale or transfer is not in violation of the Act. No fractional shares may
be acquired upon exercise hereof.
<PAGE>
2. Term of Warrant. The Class D Warrants evidenced by this certificate
may be exercised at any time, and from time to time, in whole or in part prior
to 5:00 P.M. on _________________ (the "Warrant Expiration Date"); provided,
however, that if the Warrant Shares are not, within 90 days after the Closing
Date (as defined in the Warrant Agreement), covered by an effective registration
statement under the Act for the resale of such Warrant Shares or such
registration statement does not remain effective through the Warrant Expiration
Date, then the Warrant Expiration Date shall be extended for, respectively, (A)
the number of days elapsed from the 90th day after the closing of the Offering
through the date that such registration statement becomes effective and (B) such
number of days as is necessary to provide that the Warrants are exercisable for
the same number of trading days for which they would have been exercisable had
such registration statement not ceased to be effective.
3. Adjustments. The Exercise Price and the number of shares of Common
Stock issuable upon the exercise of the Class D Warrants is subject to
adjustment under certain circumstances as set forth in Section 8 of the Warrant
Agreement, including upon the issuance of a stock dividend, a subdivision or
combination of the Common Stock, and the issuance of Common Stock at a price per
share that is less than the Closing Price (as defined in the Warrant Agreement)
of the Common Stock. The Exercise Price of the Class D Warrants is subject to
reduction if a registration statement has not become effective on or prior to
the 90th day after the Closing Date or if holders of shares issued or issuable
upon exercise of the Warrants are required to discontinue disposition thereof
for more than an aggregate of 120 days after the date that the registration
statement is initially declared effective, to the extent and as more fully set
forth in the Registration Rights Agreement (as defined in the Warrant
Agreement).
4. Manner of Exercise. The Class D Warrants evidenced hereby may be
exercised by delivery to the Company at its corporate offices located at 110
Little Falls Road, Fairfield, N.J. 07004, or such other office or agency as the
Company may designate, of (i) this Class D Warrant certificate, with the
attached Election to Purchase Certificate duly executed and (ii) payment in full
of the aggregate Exercise Price for the number of Class D Warrants being
exercised by official bank or certified check, money order or wire transfer in
lawful money of the United States of America.
5. Issuance of Common Stock upon Exercise. Within two Business Days (as
defined in the Warrant Agreement) days after the exercise date of a Class C
Warrant, the Company, at its own expense, shall cause to be issued and sent for
next Business Day delivery, a certificate or certificates for the whole number
of Warrant Shares to which the Warrant Holder is entitled upon such exercise.
Cash will be issued in lieu of any fractional share of Common Stock to which the
Warrant Holder otherwise would be entitled. The Warrant Shares delivered upon
the exercise of the Class D Warrants shall be validly issued, fully paid and
nonassessable. Irrespective of the date of issuance and delivery of any Warrant
Shares, upon the exercise of a Class D Warrant, each person in whose name any
such certificate is to be issued will for all purposes be deemed to have become
the holder of record of the Warrant Shares acquired on the date on which the
Class D Warrant has been duly exercised.
6. Registration Rights. The Company has agreed to file a registration
statement with respect to the resale of the Warrant Shares issuable upon
exercise of the Class D Warrants and to use its best efforts to cause such
registration statement to be declared effective, as more fully set forth in the
Registration Rights Agreement.
<PAGE>
7. No Right as Shareholder. The Warrant Holder is not, by virtue of the
ownership of this Class D Warrant, entitled to any rights whatsoever as a
shareholder of the Company.
8. Transfer or Assignment. A Class D Warrant may not be transferred or
assigned unless the Warrant Holder provides to the Company an opinion of
counsel, reasonably satisfactory in form and substance to counsel for the
Company, that an exemption from registration under the Act for the transfer
exists and the transferee provides a written representation that (i) the Class D
Warrant is being acquired for investment and not for distribution otherwise than
in compliance with the Act, (ii) acknowledging that the Class D Warrant has not
been registered under the Act for sale to the transferee and (iii) agreeing that
the Class D Warrant may not be transferred unless there is an effective
registration statement with respect thereto under the Act, or in the opinion of
its counsel delivered to the Company, which opinion shall be satisfactory in
form and substance to counsel for the Company, such transfer is an exempt
transaction under the Act.
9. State Legends.
Residents of Florida are advised of the following:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE FLORIDA SECURITIES ACT, WHICH ACT PROVIDES, IN RELEVANT
PART, THAT "ANY SALE IN THIS STATE MADE PURSUANT TO THIS
SUBSECTION IS VOIDABLE BY THE PURCHASER IN SUCH SALE EITHER
WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS
MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER
OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY
OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER
OCCURS LATER."
THIS NOTICE SERVES AS SUCH COMMUNICATION. THE VOIDING OF A
SALE IS WITHOUT PENALTY.
10. Warrant Agreement. The terms and conditions of this Class D Warrant
are set forth in the Warrant Agreement which is incorporated herein by this
reference as if fully set forth herein and made a part hereof, and to which the
Warrant Holder, by the acceptance of this certificate, agrees to be bound. To
the extent of any conflict between this certificate and the Warrant Agreement,
the terms and conditions of the Warrant Agreement shall control.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to
be signed on its behalf by its President, his signature to be attested to by its
Secretary, and its corporate seal to be hereunto affixed this __________day
of____________, 199__.
[SEAL] UNIGENE LABORATORIES, INC.
on behalf of the Company
and as Warrant Agent
By:_______________________
Attest: _________________________________
Name: ___________________________
Title: ____________________________
<PAGE>
[Form of Election to Purchase Certificate]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant certificate, to purchase _______ shares of
Common Stock of Unigene Laboratories, Inc. (the "Company") and herewith tenders
payment for such shares to the order of the Company in the amount of $______ in
cash or by official bank or certified check, money order or wire transfer.
The undersigned requests that a certificate for such shares be
registered in the name of ___________________, which person, if other than the
undersigned, is the __________ (e.g., nominee or affiliate) of the undersigned,
and whose address is __________________________ and that such shares be
delivered to ___________________________ whose address is ________________.
If said number of shares is less than all of the shares of
Common Stock purchasable hereunder, the undersigned requests that a new Warrant
certificate representing the remaining balance of such shares be registered in
the name of ________________, which person, if other than the undersigned, is
the _____________ (e.g., nominee or affiliate) of the undersigned, and whose
address is ____________________, and that such Warrant certificate be delivered
to ________________, whose address is ______________________.
In connection with this exercise, the undersigned (i)
represents and warrants to the Company that the shares are being purchased for
investment and not for distribution in violation of the Securities Act of 1933,
as amended (the "Act"), (ii) acknowledges that such shares have not been
registered for sale to the undersigned under the Act, and (iii) agrees that such
shares may not be sold or transferred unless there is an effective registration
statement relating thereto under the Act or such sale or transfer is an exempt
transaction under the Act.
/s/
- ------------------------------
Signature
Date:
- -------------------------------------------
Signature Guaranteed
<PAGE>
[Form of Assignment]
(To Be Executed by the Registered Holder
in Order to Assign Warrants)
FOR VALUE RECEIVED, _________________________________________________ hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
(please print or type name and address)
_________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints _____________________- Attorney to transfer this Warrant Certificate on
the books of the Company, with full power of substitution in the premises.
Dated: /s/
-----------------------------
Signature
THE SIGNATURE TO THE ASSIGNMENT FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON
THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 489,537
<SECURITIES> 0
<RECEIVABLES> 100,954
<ALLOWANCES> 0
<INVENTORY> 530,065
<CURRENT-ASSETS> 1,638,705
<PP&E> 16,563,846
<DEPRECIATION> 5,919,923
<TOTAL-ASSETS> 13,677,722
<CURRENT-LIABILITIES> 3,066,879
<BONDS> 4,455,000
0
0
<COMMON> 295,343
<OTHER-SE> 5,860,500
<TOTAL-LIABILITY-AND-EQUITY> 13,677,722
<SALES> 7,528
<TOTAL-REVENUES> 307,528
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,277,314
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 626,771
<INCOME-PRETAX> (7,435,304)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,435,304)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,435,304)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
