FORM 10-Q
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, 1999
Commission file number 0-16005
Unigene Laboratories, Inc.
- --------------------------
(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
- ---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 882-0860
- ------------------------------------------------------------------
(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__.
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 - 41,174,329 shares as of November 1, 1999
<PAGE>
INDEX
UNIGENE LABORATORIES, INC.
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed balance sheets-
September 30, 1999 and December 31, 1998 3
Condensed statements of operations-
Three months and nine months ended September 30, 1999 and 1998 4
Condensed statements of cash flows-
Nine months ended September 30, 1999 and 1998 5
Notes to condensed financial statements-
September 30, 1999 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UNIGENE LABORATORIES, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
------------ ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 668,379 $ 402,664
Contract receivable 2,000,000 --
Prepaid expenses 68,633 317,823
Other current assets 702,028 887,904
------------ ------------
Total current assets 3,439,040 1,608,391
Contract receivable 2,000,000 --
Property, plant and equipment-net
of accumulated depreciation and amortization 7,030,523 8,085,250
Patents and other intangibles, net 1,228,076 1,206,018
Other assets 512,957 664,434
------------ ------------
$ 14,210,596 $ 11,564,093
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 924,605 $ 982,752
Accrued expenses 1,645,016 1,329,199
Notes payable - stockholders 1,140,000 1,040,000
Current portion-stockholder notes 758,988 --
Current portion-capital lease obligations 61,464 61,464
------------ ------------
Total current liabilities 4,530,073 3,413,415
Stockholder notes, excluding current portion 1,111,012 --
5% convertible debentures 2,800,000 3,802,807
Capital lease obligations, excluding current portion 75,994 127,783
Stockholders' equity:
Common stock-par value $.01 per share;
authorized 60,000,000 shares, issued
41,181,619 shares in 1999 and 39,384,822 in 1998 411,816 393,848
Additional paid-in capital 66,462,635 65,158,403
Accumulated deficit (61,179,903) (61,331,132)
Less: Treasury stock, at cost, 7,290 shares (1,031) (1,031)
------------ ------------
Total stockholders' equity 5,693,517 4,220,088
------------ ------------
$ 14,210,596 $11,564,093
============ ============
</TABLE>
See notes to condensed financial statements.
<PAGE>
UNIGENE LABORATORIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Licensing and other revenue $ 7,000,733 $ 3,008,795 $ 9,527,575 $ 5,020,652
Operating expenses:
Research and development 2,651,584 2,384,413 7,261,543 6,791,085
General and administrative 561,811 494,585 1,653,944 1,552,113
------------ ------------ ------------ ------------
3,213,395 2,878,998 8,915,487 8,343,198
------------ ------------ ------------ ------------
Operating income (loss) 3,787,338 129,797 612,088 (3,322,546)
------------ ------------ ------------ ------------
Other income (expense):
Interest/other income 13,308 37,290 28,850 81,384
Interest expense (108,052) (103,692) (489,709) (211,970)
------------ ------------ ------------ ------------
(94,744) (66,402) (460,859) (130,586)
------------ ------------ ------------ ------------
Income (loss) before
extraordinary item 3,692,594 63,395 151,229 (3,453,132)
Extraordinary item-loss
on extinguishment of debt (Note D) -- (143,810) -- (143,810)
------------ ------------ ------------ ------------
Net income (loss) $ 3,692,594 $ (80,415) $ 151,229 $ (3,596,942)
============ ============ ============ ============
Earnings per share (Note E):
Basic:
Income (loss) before
extraordinary item $ .09 $ -- $ -- $ (.09)
Extraordinary item -- -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ .09 $ -- $ -- $ (.09)
============ ============ ============ ============
Diluted:
Income (loss) before
extraordinary item $ .09 $ -- $ -- $ (.09)
Extraordinary item -- -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ .09 $ -- $ -- $ (.09)
============ ============ ============ ============
Weighted average number of shares
outstanding: Basic 41,169,120 38,647,682 40,284,824 38,562,591
============ ============ ============ ============
Diluted 43,159,961 38,647,682 40,284,824 38,562,591
============ ============ ============ ============
</TABLE>
See notes to condensed financial statements.
<PAGE>
UNIGENE LABORATORIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net cash used for operating activities $(1,553,470) $(2,085,805)
----------- -----------
Investing activities:
Purchase of equipment and furniture (75,263) (261,927)
Increase in patents and other assets (19,753) (122,474)
Construction of leasehold and building improvements (4,010) (5,284)
----------- -----------
(99,026) (389,685)
----------- -----------
Financing activities:
Issuance of stockholder notes 1,970,000 --
Issuance of 5% Debenture, net of related expenses -- 3,751,919
Exercise of stock options and warrants -- 47,969
Repayment of capital lease obligations (51,789) --
Redemption of convertible debentures -- (107,171)
----------- -----------
1,918,211 3,692,717
----------- -----------
Net increase in cash and cash equivalents 265,715 1,217,227
Cash and cash equivalents at beginning of year 402,664 2,126,327
----------- -----------
Cash and cash equivalents at end of period $ 668,379 $ 3,343,554
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash investing and financing activities:
Conversion of convertible debentures and
accrued interest into Common Stock $ 1,390,959 $ 204,375
=========== ===========
Conversion of notes payable-stockholders
into Common Stock $ -- $ 225,000
=========== ===========
Cash paid for interest $ 17,448 $ 43,455
=========== ===========
</TABLE>
See notes to condensed financial statements
<PAGE>
UNIGENE LABORATORIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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, 1999 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1999. 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, 1998.
NOTE B - CONVERTIBLE DEBENTURES
During January 1999, $200,000 of principal amount of the Company's 5%
Convertible Debentures, due December 31, 2001, were converted into (a) 164,102
shares of Common Stock and (b) warrants, expiring January 29, 2004, to purchase
6,564 shares of Common Stock at an exercise price of $1.52 per share. In
addition, the Company issued 79,384 shares of Common Stock as payment of
interest on the 5% Convertible Debentures in lieu of a semi-annual cash interest
payment in the amount of $101,000.
During the second quarter of 1999, $1,000,000 of principal amount of the
Company's 5% Convertible Debentures, due December 31, 2001, were converted into
(a) 1,457,458 shares of Common Stock and (b) warrants, expiring April - June
2004, to purchase an aggregate of 58,298 shares of Common Stock at exercise
prices ranging from $.78 to $1.15 per share.
During July 1999, the Company issued 95,853 shares of Common Stock as payment of
interest on the 5% Convertible Debentures in lieu of a semi-annual cash interest
payment in the amount of $90,000.
NOTE C - NOTES PAYABLE - STOCKHOLDERS
During the second quarter of 1999 (a) Jay Levy, the chairman of the board and an
officer of the Company, loaned the Company $1,500,000 evidenced by demand notes
bearing interest at 6% per year, and (b) Warren Levy and Ronald Levy, directors
and officers of the Company, loaned the Company $100,000 evidenced by demand
notes bearing interest at the Merrill Lynch Margin Loan Rate plus .25% (8.625%
at September 30, 1999) (the "Floating Rate"). In July 1999, Jay Levy loaned the
Company an additional $370,000 evidenced by term notes maturing January 2002 and
bearing interest at 6% per year, and the $1,500,000 of demand notes evidencing
loans made by Jay Levy in the second quarter were converted into 6% term notes
maturing January 2002. The Company has granted Jay Levy a security interest in
all of its equipment and a mortgage on its real property to secure payment of
the term notes which are senior to all notes payable to Warren Levy and Ronald
Levy. The Company is required to make installment payments on the term notes
commencing in October 1999 and ending in January 2002 in an aggregate amount of
$72,426 per month. Jay Levy has agreed to postpone the October and November
installment payments.
<PAGE>
NOTE D - EXTRAORDINARY ITEM
During September 1998, $178,515 of principal amount of the Company's 10%
Convertible Debentures due March 4, 1999, plus $44,060 of accrued interest, was
converted into 214,131 shares of Common Stock. Due to restrictions on the total
number of shares which could be issued upon conversion of the Debentures, the
Company redeemed an additional $271,485 of principal, and in connection
therewith paid to the holder $68,899 of accrued interest and $143,810 in
redemption premiums, for an aggregate payment of $484,194. The premium of
$143,810 was recorded as an extraordinary loss in September 1998.
NOTE E - EARNINGS PER SHARE
Basic earnings per share is computed by dividing the net income available to
common shareholders by the weighted average number of shares of common stock
outstanding. For purposes of calculating diluted earnings per share, the
denominator includes both the weighted average number of shares of common stock
outstanding and the number of dilutive common stock equivalents.
The Company's 5% Convertible Debentures were dilutive for the three-month period
ended September 30, 1999, but anti-dilutive for all other periods. Stock options
to purchase 1,746,490 shares of Common Stock and warrants to purchase 3,983,768
shares of Common Stock were not included in computing diluted earnings per share
because their effects are anti-dilutive.
The following table sets forth the computation for basic and diluted earnings
per share (EPS) for the three months ended September 30, 1999:
<TABLE>
<CAPTION>
<S> <C>
Numerator for basic EPS - net income $ 3,692,594
Interest expense - 5% Convertible Debentures 35,287
-----------
Numerator for diluted EPS $ 3,727,881
-----------
Denominator for basic EPS - weighted
average shares outstanding 41,169,120
Effect of conversion of 5% Convertible
Debentures into maximum number of shares 1,990,841
-----------
Denominator for diluted EPS 43,159,961
===========
</TABLE>
NOTE F - LIQUIDITY
The Company has incurred annual operating losses since its inception and, as a
result, at September 30, 1999 had an accumulated deficit of approximately
$61,180,000 and a working capital deficit of approximately $1,091,000. The
independent auditors' report covering the Company's 1998 financial statements
includes an explanatory paragraph that states the above factors raise
substantial doubt about the Company's ability to continue as a going concern.
However, the financial statements have been prepared on a going concern basis
and as such do not include any adjustments that might result from the outcome of
this uncertainty. In October 1999, the Company was delisted by Nasdaq. The
delisting of the Company's Common Stock may have an adverse effect on the
Company's ability to raise capital.
<PAGE>
In August 1999, the Company and Warner-Lambert successfully concluded their
second pilot human study for their oral calcitonin formulation, resulting in a
payment to the Company of $2.5 million. In September 1999, the Company and
Warner-Lambert identified an oral calcitonin formulation to be used in their
upcoming Phase I clinical study entitling the Company to a milestone, payable in
installments, totaling $4.5 million. The first installment of $500,000 was
received in September 1999, with payment of an additional $500,000 due every 90
days thereafter, with the unpaid balance payable upon the initiation of the
Phase I study, which the Company expects to occur in the first half of 2000. Due
to the completion of this milestone in September 1999, the Company recognized
$4.5 million as revenue in the third quarter; $2 million was recorded as a
current contract receivable and an additional $2 million was recorded as a
non-current contract receivable.
With the receipt of almost $2 million in stockholder loans during the second and
third quarters of 1999, in addition to an aggregate of $3 million in payments
from Warner-Lambert in the third quarter, management believes that the Company
will have sufficient financial resources to sustain its operations at the
current level into the fourth quarter of 1999. The Company expects to receive
$500,000 from Warner-Lambert in December 1999, and $3.5 million in one or more
payments in the first half of 2000 from the milestone completed in September
1999. The Company also expects to achieve additional milestones under the
Warner-Lambert agreement during 2000, which will result in further payments.
However, there can be no assurance as to when or if the Company will achieve
such milestones. The Company is currently pursuing licensing agreements for its
nasal and injectable calcitonin products. These agreements could provide
short-term funds to the Company in upfront payments as well as milestone
payments. The Company has executed an agreement for the sale of state tax
benefits, to yield approximately $4 million, under a New Jersey Economic
Development Authority program, which allows certain New Jersey taxpayers to sell
their state tax benefits to third-parties. However, the proceeds will be
received over the next few years and the size and timing of such proceeds are
subject to the continued funding of the program by the State of New Jersey as
well as limitations based on the level of participation by other companies. The
Company's application for the sale was approved by the New Jersey Economic
Development Authority in October 1999 and the Company expects to receive at
least $1 million in the first year's allocation. However, there can be no
assurance that any of these transactions will be completed or, if completed,
that the terms and timing of such transactions would provide sufficient funds to
sustain operations at the current level.
While the Company believes that the transactions it currently is pursuing and
the milestone payments under the Warner-Lambert agreement would satisfy the
Company's liquidity requirements in the near term, satisfying the Company's
long-term liquidity requirements will require the successful commercialization
of its nasal or oral calcitonin product. In addition, the commercialization of
its calcitonin products will require the Company to incur additional capital
expenditures, including expenditures to expand or upgrade the Company's
manufacturing operations to satisfy certain of its calcitonin supply
obligations. However, neither the cost nor timing of such capital expenditures
is determinable at this time.
<PAGE>
NOTE G - DIRECTORS STOCK OPTION PLAN
At the Company's June 23, 1999 Annual Meeting, the stockholders approved the
adoption of a new Directors Stock Option Plan (the "New Plan") to replace the
1994 Outside Directors Stock Option Plan (the "1994 Plan"). Under the New Plan,
each person elected to the Board after June 23, 1999 who is not an employee will
receive, on the date of his initial election, an option to purchase 21,000
shares of Common Stock. In addition, on May 1st of each year, commencing May 1,
1999, each non-employee director will receive an option to purchase 10,000
shares of Common Stock if he or she has served as a non-employee director for at
least six months prior to the May 1st grant. Each option granted under the New
Plan will have a ten-year term and the exercise price of each option will be
equal to the fair value of the Company's Common Stock on the date of the grant.
A total of 350,000 shares of Common Stock are reserved for issuance under the
New Plan.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Revenue increased 133% from $3 million to $7 million and 90% from $5 million to
$9.5 million for the three months and nine months ended September 30, 1999,
respectively, as compared to the same periods in 1998. Revenue for all periods
consisted primarily of milestone revenue from Warner-Lambert Company, as the
result of the achievement of benchmarks in the development of an oral calcitonin
product for treating osteoporosis.
Research and development, the Company's largest expense, increased 11% from
$2,384,000 to $2,652,000 for the three months ended September 30, 1999, as
compared to the same period in 1998. Research and development expenses increased
7% from $6,791,000 to $7,262,000 for the nine months ended September 30, 1999,
as compared to the same period in 1998. The 1999 increases were primarily
attributable to consulting and testing expenses related to the Company's Type II
variation for its injectable calcitonin product, development expenses related to
the Company's nasal calcitonin product, and consulting fees related to the
Company's collaboration with Warner-Lambert.
General and administrative expenses increased 14% from $495,000 to $562,000 and
7% from $1,552,000 to $1,654,000 for the three months and nine months ended
September 30, 1999, respectively, as compared to the same periods in 1998. The
increases were primarily due to increased personnel costs and professional fees,
partially offset by reductions in public relations and travel expenses.
Interest income decreased $24,000 and $53,000 for the three months and nine
months ended September 30, 1999, respectively, as compared to the same periods
in 1998, due to reduced funds available for investment in 1999.
Interest expense increased $4,000 and $278,000 for the three months and nine
months ended September 30, 1999, respectively, as compared to the same periods
in 1998. The nine month increase for 1999 was due primarily to the amortization
of the value of the beneficial conversion feature and related warrants of the
Company's 5% Convertible Debentures in the amount of $197,000 for the first nine
months of 1999.
<PAGE>
As a result of increased revenue from Warner-Lambert milestones during 1999,
partially offset by increased operating expenses and interest expense, net
income improved by $3.7 million ($.09 per share) for both the three-month and
nine-month periods ended September 30, 1999. The Company had net income of
$3,693,000 for the three months ended September 30, 1999 as compared to a net
loss of $80,000 for the comparable period in 1998. The Company had net income of
$151,000 for the nine months ended September 30, 1999 as compared to a net loss
of $3,597,000 for the comparable period in 1998.
As of December 31, 1998, the Company had available for federal income tax
reporting purposes net operating loss carryforwards in the approximate amount of
$58,400,000, expiring from 1999 through 2018, which are available to reduce
future earnings that would otherwise be subject to federal income taxes. For the
nine months ending September 30, 1999, the Company had a profit of approximately
$151,000. In addition, the Company has investment tax credits and research and
development credits in the amounts of $19,000 and $2,178,000, respectively,
which are available to reduce the amount of future federal income taxes. These
credits expire from 1999 through 2018. For 1999, the Company does not expect to
have income before income taxes in excess of its available net operating loss
and tax credit carryforwards.
The Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes". Given the Company's past history of incurring
operating losses, any deferred tax assets that are recognizable under SFAS 109
have been fully reserved. As of January 1, 1999, under SFAS 109, the Company had
deferred tax assets of approximately $25,500,000, subject to a valuation
allowance of $25,500,000. The deferred tax assets are primarily a result of the
Company's net operating losses and tax credits generated. For the nine-month
period ended September 30, 1999, the Company's deferred tax assets and valuation
allowances each decreased by approximately $60,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently has no material commitments outstanding for capital
expenditures relating to the Boonton, New Jersey production facility, the
Company's facility in Fairfield, New Jersey, or to its other activities.
The Company, at September 30, 1999, had cash and cash equivalents of $668,000,
an increase of $266,000 from December 31, 1998.
The Company has incurred annual operating losses since its inception and, as a
result, at September 30, 1999 had an accumulated deficit of approximately
$61,180,000 and a working capital deficit of approximately $1,091,000. The
independent auditors' report covering the Company's 1998 financial statements
includes an explanatory paragraph that states the above factors raise
substantial doubt about the Company's ability to continue as a going concern.
However, the financial statements have been prepared on a going concern basis
and as such do not include any adjustments that might result from the outcome of
this uncertainty. In October 1999, the Company was delisted by Nasdaq. The
delisting of the Company's Common Stock may have an adverse effect on the
Company's ability to raise capital.
The Company's future ability to generate cash from operations will depend
primarily upon signing research or licensing agreements, achieving defined
benchmarks in such agreements, receiving regulatory approval for its licensed
products, and the commercial sale of these products.
<PAGE>
In July 1997, the Company entered into an agreement under which it granted to
the Parke-Davis division of Warner-Lambert Company a worldwide license to use
the Company's oral calcitonin technology. Through September 30, 1999, the
Company had received an aggregate of $16.5 million from Warner-Lambert in the
form of an equity investment, a licensing fee and milestone payments. Under the
terms of the license agreement, the Company is eligible to receive up to an
additional $38 million in milestone payments during the course of the
development program. Early-stage milestones primarily relate to the product's
performance characteristics, while the latter-stage milestones are primarily
related to regulatory activities and approvals. If the product is successfully
commercialized, the Company also would receive revenue from royalties on product
sales by Warner-Lambert and its affiliates and from the sale of raw material to
Warner-Lambert. The Company has retained the right to license the use of its
technologies for injectable and nasal formulations of calcitonin on a worldwide
basis. The Company is actively seeking other licensing and/or supply agreements
with pharmaceutical companies for injectable and nasal forms of calcitonin.
However, there is no assurance that any additional revenue-generating agreements
will be signed.
The Company's cash requirements are approximately $10-11 million per year due to
the operations of its research and peptide manufacturing facilities and with
three calcitonin products in various stages of development. In addition, the
Company has principal and interest obligations over the next several years under
its outstanding notes payable to stockholders and 5% Convertible Debentures.
However, because of the conversion features of the 5% Convertible Debentures, a
substantial portion of this debt is expected to be converted into Common Stock,
thereby decreasing the amount of cash required for principal payments. The
Company may elect to pay interest on these debentures in Common Stock, which
would decrease the amount of cash required for interest payments. Due to the
delisting of its Common Stock from the Nasdaq National Market System, the
Company is required to make payments to the holder of the 5% Convertible
Debentures, in an amount equal to 2% per month of the aggregate principal amount
of these debentures for any month or portion thereof. In addition, if the
delisting period lasts for 4 months, then, at the option of the investor, the
Company shall redeem these debentures on a redemption date designated by such
investor at a redemption price equal to 120% of the outstanding principal amount
of these debentures.
During the second quarter of 1999 (a) Jay Levy, the chairman of the board and an
officer of the Company, loaned the Company $1,500,000 evidenced by demand notes
bearing interest at 6% per year, and (b) Warren Levy and Ronald Levy, directors
and officers of the Company, loaned the Company $100,000 evidenced by demand
notes bearing interest at the Merrill Lynch Margin Loan Rate plus .25% (8.625%
at June 30, 1999) (the "Floating Rate"). In July 1999, Jay Levy loaned the
Company an additional $370,000 evidenced by term notes maturing January 2002 and
bearing interest at 6% per year, and the $1,500,000 of demand notes evidencing
loans made by Jay Levy in the second quarter were converted into 6% term notes
maturing January 2002. The Company has granted Jay Levy a security interest in
all of its equipment and a mortgage on its real property to secure payment of
the term notes which are senior to all notes payable to Warren Levy and Ronald
Levy. The Company is required to make installment payments on the term notes
commencing in October 1999 and ending in January 2002 in an aggregate amount of
$72,426 per month. Jay Levy has agreed to postpone the October and November
installment payments.
In August 1999, the Company and Warner-Lambert successfully concluded their
second pilot human study for their oral calcitonin formulation, resulting in a
payment to the Company of $2.5 million. In September 1999, the Company and
Warner-Lambert identified an oral calcitonin formulation to be used in their
upcoming Phase I clinical study entitling the Company to a milestone, payable in
installments, totaling $4.5 million. The first installment of $500,000 was
received in September 1999, with payment of an additional $500,000 due every 90
days thereafter, with the unpaid balance payable upon the initiation of the
Phase I study, which the Company expects to occur in the first half of 2000. Due
to the completion of this milestone in September 1999, the Company recognized
$4.5 million as revenue in the third quarter; $2 million was recorded as a
current contract receivable and an additional $2 million was recorded as a
non-current contract receivable.
<PAGE>
With the receipt of almost $2 million in stockholder loans during the second and
third quarters of 1999, in addition to an aggregate of $3 million in payments
from Warner-Lambert in the third quarter, management believes that the Company
will have sufficient financial resources to sustain its operations at the
current level into the fourth quarter of 1999. The Company expects to receive
$500,000 from Warner-Lambert in December 1999, and $3.5 million in one or more
payments in the first half of 2000 from the milestone completed in September
1999. The Company also expects to achieve additional milestones under the
Warner-Lambert agreement during 2000, which will result in further payments.
However, there can be no assurance as to when or if the Company will achieve
such milestones. The Company is currently pursuing licensing agreements for its
nasal and injectable calcitonin products. These agreements could provide
short-term funds to the Company in upfront payments as well as milestone
payments. The Company has executed an agreement for the sale of state tax
benefits, to yield approximately $4 million, under a New Jersey Economic
Development Authority program, which allows certain New Jersey taxpayers to sell
their state tax benefits to third-parties. However, the proceeds will be
received over the next few years and the size and timing of such proceeds are
subject to the continued funding of the program by the State of New Jersey as
well as limitations based on the level of participation by other companies. The
Company's application for the sale was approved by the New Jersey Economic
Development Authority in October 1999 and the Company expects to receive at
least $1 million in the first year's allocation. However, there can be no
assurance that any of these transactions will be completed or, if completed,
that the terms and timing of such transactions would provide sufficient funds to
sustain operations at the current level.
While the Company believes that the transactions it currently is pursuing and
the milestone payments under the Warner-Lambert agreement will satisfy the
Company's liquidity requirements in the near term, satisfying the Company's
long-term liquidity requirements will require the successful commercialization
of its nasal or oral calcitonin product. In addition, the commercialization of
its calcitonin products will require the Company to incur additional capital
expenditures, including expenditures to expand or upgrade the Company's
manufacturing operations to satisfy certain of its calcitonin supply
obligations. However, neither the cost nor timing of such capital expenditures
is determinable at this time.
YEAR 2000
The Company has established a Year 2000 taskforce that is responsible for
identifying and reviewing all of the Company's internal computer systems for
Year 2000 compliance, including workstations, the accounting system, and the
control systems for equipment in the Company's manufacturing and laboratory
facilities. The taskforce has reviewed and tested all critical and non-critical
systems for Year 2000 compliance. All critical systems, such as the accounting
and telephone systems have been brought into compliance so that the Company
believes that its business will not be adversely affected by the non-performance
of these systems. Of the non-critical workstations tested and found not to be in
compliance, most have been updated to be compliant. The Company intends to
repair or replace the few remaining non-critical noncompliant systems in a
timely manner. To date, the costs of remediation have not been material.
<PAGE>
The Company has no material relationships with third-party suppliers, to the
extent that third-party noncompliance could seriously disrupt operations. The
Company could be significantly affected by Year 2000 noncompliance on the part
of Warner-Lambert as the Company currently is dependent upon timely milestone
payments from Warner-Lambert. In addition, the loss of the utility supply to the
Company's laboratory, production and administrative facilities would cause a
shut down of those facilities which, depending on the duration of the shut down,
may have a material adverse impact on the Company's business. In addition, the
loss of telecommunications services and banking services would, as is the case
with all businesses, adversely affect the Company.
OTHER
The Company's Common Stock has been delisted from the Nasdaq National Market
System effective October 5, 1999 and is now trading on the OTC Bulletin Board.
The stock price has been adversely affected, but the impact on the liquidity of
the stock has not yet been determined. The Company has filed an appeal with
Nasdaq to review the delisting decision. However, the ultimate resolution of the
hearing is unknown.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting For Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133, as amended, will be effective for the
Company's fiscal year beginning January 1, 2001. The adoption of SFAS No. 133 is
not expected to have a material effect on the Company's financial position or
results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
MARKET RISK
In the normal course of business, the Company is exposed to fluctuations in
interest rates as the Company seeks debt financing to sustain its operations.
The Company does not use derivative instruments or hedging to manage its
exposures.
The information below summarizes the Company's market risks associated with debt
obligations as of September 30, 1999. Fair values included herein have been
estimated taking into consideration the nature and terms of each instrument and
the prevailing economic and market condition at September 30, 1999. The table
below presents principal cash flows and related interest rates by year of
maturity based on the terms of the debt. The information presented as to the
convertible debentures is without consideration as to conversion features, as
the Company is unable to predict if and when such conversions may occur.
Variable interest rates disclosed represent the rates at September 30, 1999.
<PAGE>
<TABLE>
<CAPTION>
Estimated Year of Maturity
Fair Carrying ----------------
Value Amount 1999 2000 2001 2002 2003
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Notes payable - stockholders $1,140,000 1,140,000 1,140,000 -- -- -- --
Variable interest rate 8.625% -- -- -- --
Notes payable - stockholders $1,870,000 1,870,000 171,922 788,684 837,328 72,066 --
Fixed interest rate 6% 6% 6% 6%
5% convertible debentures $2,800,000 2,800,000 -- -- 2,800,000 -- --
Fixed interest rate (1) 5% 5% 5% -- --
</TABLE>
(1) At the option of the Company, interest payments may be made using the
Company's Common Stock.
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or activities of the Company, or industry results, to be materially different
from any future results, performance or activities expressed or implied by such
forward-looking statements. Such factors include: general economic and business
conditions, the financial condition of the Company, including the Company's need
for and success in securing additional financing, competition, the Company's
dependence on other companies to commercialize, manufacture and sell products
using the Company's technologies, the uncertainty of results of preclinical and
clinical testing, the risk of product liability and liability for human clinical
trials, the Company's dependence on patents and other proprietary rights,
dependence on key management officials, the availability and cost of capital,
the availability of qualified personnel, changes in, or the failure to comply
with, governmental regulations, the failure to obtain regulatory approvals of
the Company's products and other factors discussed in the Company's various
filings with the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) Recent Sales of Unregistered Securities.
In July 1999, the Company issued 95,853 shares of Common Stock as payment of
approximately $90,000 in accrued interest on the Company's 5% Convertible
Debentures due December 31, 2001. All of such shares were issued by the Company
without registration in reliance on an exemption under Section 4 (2) of the
Securities Act.
(d) Not applicable.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.1 Amended and Restated Secured Note dated July
13, 1999.
Exhibit 10.2 Amended and Restated Security Agreement
dated July 13, 1999.
Exhibit 10.3 Subordination Agreement dated July 13, 1999.
Exhibit 10.4 Mortgage and Security Agreement dated July
13, 1999.
Exhibit 10.5 $70,000 Secured Note dated July 30, 1999.
Exhibit 10.6 $200,000 Secured Note dated August 5, 1999.
Exhibit 10.7 Modification of Mortgage and Security
Agreement dated August 5, 1999.
Exhibit 10.8 Amendment to Security Agreement and
Subordination Agreement between the Company
and Jay Levy, Warren Levy and Ronald Levy
dated August 5, 1999.
Exhibit-27 Financial Data Schedule - period ended
September 30, 1999.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the three months ended
September 30, 1999.
<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)
/s/ Warren P. Levy
November 15, 1999 -----------------------
Warren P. Levy, President
(Chief Executive Officer)
/s/ Jay Levy
November 15, 1999 -----------------------
Jay Levy, Treasurer
(Chief Financial Officer and
Chief Accounting Officer)
Exhibit 10.1
AMENDED AND RESTATED SECURED NOTE
$1,600,000.00 July 13, 1999
THIS AMENDED AND RESTATED SECURED NOTE (the "Note") is made as of the
13th day of July, 1999 by Unigene Laboratories, Inc., a Delaware corporation
(the "Company"), in favor and for the benefit of Jay Levy, a resident of New
Jersey (the "Lender").
WITNESSETH:
WHEREAS, the Lender has heretofore made the following loans to the
Company: (i) a loan in the amount of $200,000 on May 5, 1999, (ii) a loan in the
amount of $200,000 on May 24, 1999, (iii) a loan in the amount of $200,000 on
June7, 1999 (the loans identified in clauses (i), (ii), and (iii), collectively,
the "Prior Loans"), (iv) a loan in the amount of $200,000 on June 25, 1999, as
evidenced by that certain secured promissory note dated June 25, 1999, issued by
the Company to the Lender (the "June 25 Note") and secured by a security
interest in certain of the Company's equipment and real property, (v) a loan in
the amount of $350,000 on June 29, 1999, as evidenced by that certain secured
promissory note dated June 29, 1999, issued by the Company to the Lender (the
"June 29 Note") and secured by a security interest in certain of the Company's
equipment and real property, and (vi) a loan in the amount of $350,000 on June
30, 1999, as evidenced by that certain secured promissory note dated June 30,
1999, issued by the Company to the Lender (the "June 30 Note") and secured by a
security interest in certain of the Company's equipment and real property; and
WHEREAS, as of the date hereof the aggregate amount of accrued and
unpaid interest on the Prior Loans, the June 25 Note, the June 29 Note and the
June 30 Note is $6,994 (the "Accrued Interest"); and
WHEREAS, on the date hereof the Lender has loaned to the
Company an additional $100,000 (the "New Loan"); and
WHEREAS, the parties desire to document the Prior Loans and the New
Loan, and to amend and restate in their entirety the June 25 Note, the June 29
Note and the June 30 Note, all on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
FOR VALUE RECEIVED, the undersigned, Unigene Laboratories, Inc., a
Delaware corporation, promises to pay to the order of Jay Levy, or the holder
hereof (the "Holder"), on January 13, 2002 (the "Maturity Date"), the principal
sum of One Million Six Hundred Thousand Dollars ($1,600,000.00), or, if less,
the unpaid principal amount outstanding at such time, in either case together
with all accrued and unpaid interest thereon.
<PAGE>
1. Surrender and Cancellation of Notes
Simultaneously with the execution and delivery hereof the
Lender is surrendering to the Company the June 25 Note, the June 29 Note and the
June 30 Note, which shall be marked "superseded by that certain Amended and
Restated Secured Note, dated July 13, 1999, in the principal amount of
$1,600,000."
2. Security
The due and punctual payment by the Company of all amounts due
hereunder is secured by that certain Mortgage of even date herewith issued by
the Company to the Lender (the "Mortgage") and that certain Amended and Restated
Security Agreement of even date herewith between the Company, the Lender, Warren
P. Levy and Ronald S. Levy (the "Security Agreement").
3. Interest
(a) The Company promises to pay to the Holder interest on the
unpaid principal amount hereof from the date hereof at a rate of six percent (6
%) per year, compounded monthly.
(b) Interest on this Note shall be computed on the basis of a
365-day year.
4. Payments
(a) On October 13, 1999, the Company shall pay to the Holder
$6,994 as full payment of the Accrued Interest.
(b) Commencing October 13, 1999, and on the 13th day of each month
thereafter through and including the Maturity Date, the Company shall pay to the
Holder the lesser of (i) $61,993.99 and (ii) the outstanding principal amount
hereof plus all accrued and unpaid interest hereon.
(c) This Note may be prepaid by the Company, in whole or in part,
at any time and from time to time without premium or penalty. All prepayments
shall be credited first to accrued and unpaid interest and then to principal.
(d) All payments by the Company hereunder shall be made by check
not later than 5:00 p.m. Eastern time on the day when due. Whenever any payment
to be made pursuant to this Note shall be stated to be due on a public holiday,
Saturday or Sunday, such payment may be made on the next succeeding business
day. Such extension of time shall not be included in computing interest in
connection with such payment.
5. Events of Default
(a) An "Event of Default" shall exist if any of the following
occurs and is continuing:
<PAGE>
(i) the Company fails to make any payment on this Note
when such payment is due and such default shall continue for more than ten (10)
business days;
(ii) the Company fails to comply with or breaches any
material provision of the Mortgage or the Security Agreement and such failure or
breach continues for more than thirty (30) days after the Holder has given
written notice of such failure to the Company; or
(iii) a receiver, custodian, liquidator or trustee of the
Company, or of any of the property of the Company or any of its material
subsidiaries, is appointed by court order; or the Company or any of its material
subsidiaries is adjudicated bankrupt or insolvent; or any of the property of the
Company or any of its material subsidiaries is sequestered by court order; or a
petition to reorganize the Company or any of its material subsidiaries under any
bankruptcy, reorganization or insolvency law is filed against the Company or any
of its material subsidiaries and is not dismissed within sixty (60) days after
such filing; or the Company or any of its material subsidiaries files a
voluntary bankruptcy petition or requesting reorganization or arrangement under
any provision of any bankruptcy, reorganization or insolvency law, or consents
to the filing of any petition against it under any such law; or the Company or
any of its material subsidiaries makes a general assignment for the benefit of
its creditors, or admits in writing its inability to pay its debts generally as
they become due, or consents to the appointment of a receiver, trustee or
liquidator of the Company or any of its material subsidiaries or of all or any
part of the property of the Company or any of its material subsidiaries.
(b) If an Event of Default occurs under Section 5(a)(i), then this
Note shall accrue additional interest on all unpaid amounts of principal and
interest from the date of the Event of Default at a rate equal to the lesser of
(i) eleven percent (11%) per annum or (ii) the highest amount allowable by law.
(c) If an Event of Default exists, then the Holder may exercise
any right, power or remedy conferred upon it by law, and shall have the right to
declare by written notice the entire principal and all interest accrued on this
Note to be, and such Note shall thereupon become, forthwith due and payable and
the Company shall immediately pay to the Holder of this Note the entire unpaid
principal and interest accrued on this Note.
(d) In the case of an Event of Default, the Company, to the extent
permitted by law, waives presentment, demand, notice, protest and all other
demands or notices in connection with the enforcement of this Note.
6. Miscellaneous.
(a) No delay or omission by the Holder hereof in exercising any
right or remedy hereunder shall constitute a waiver of any such right or remedy.
A waiver on one occasion shall not operate as a bar to or waiver of any such
right or remedy on any future occasion.
(b) The Company shall pay all reasonable costs and expenses of
collection, including attorney's fees, incurred or paid by the Holder hereof in
enforcing this Note and the obligations evidenced hereby.
<PAGE>
(c) This Note may be amended only by written agreement of the
Company and the Holder hereof.
(d) This Note shall be governed by the laws of the State of New
Jersey without regard to its choice of law provisions.
(e) In the event that the Holder notifies the Company that this
Note has been mutilated, lost, stolen or destroyed, the Company will issue a
replacement Note identical in all respects to the original Note (except for
registration number and the then outstanding principal amount, if different than
that shown on the original Note), provided that the Holder surrenders for
cancellation its Note certificate in the case of a mutilated certificate or
provides evidence of lost, theft or destruction and indemnity reasonably
satisfactory to the Company in the case of a lost, stolen or destroyed
certificate .
(f) The Holder may mortgage, encumber, transfer or assign any of
its rights or interest in and to this Note or any part hereof and, without
limitation, each assignee, transferee and mortgagee (which may include any
affiliate of the Holder) shall have the right to so mortgage, encumber, transfer
or assign its interest. The Company may not assign its obligations hereunder
without the prior written consent of the Holder, except that without the prior
written consent of the Holder, but after notice duly given, the Company may
assign its obligations hereunder to any successor-in-interest corporation in the
event of a merger or consolidation of the Company with or into another
corporation, or the sale of all or substantially all of the Company's assets.
The Note shall in all cases be binding on the Company and its successors and
assigns and inure to the benefit of the Holder and its successors and assigns.
IN WITNESS WHEREOF, the Company and the Lender have caused this Note to
be executed and delivered as of the day and year first written above.
UNIGENE LABORATORIES, INC.
By:
----------------------
Title:
--------------------
[Corporate Seal]
--------------------------
JAY LEVY
Exhibit 10.2
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement") is
entered into this 13th day of July, 1999 by and among UNIGENE LABORATORIES,
INC., a Delaware corporation, having its principal place of business at 110
Little Falls Road, Fairfield, New Jersey 07004 (the "Company"), Jay Levy, a
resident of New Jersey, Warren P. Levy, a resident of New Jersey, and Ronald S.
Levy, a resident of New Jersey. Jay Levy, Warren P. Levy and Ronald S. Levy are
sometimes individually referred to as a "Secured Party" and collectively
referred to as "Secured Parties."
WITNESSETH:
WHEREAS, on March 2, 1995, the Secured Parties loaned the Company
$500,000, as evidenced by that certain promissory note, dated as of March 2,
1995, (the "March 2 Note"); and
WHEREAS, in order to secure the payment by the Company of the March 2
Note, on March 2, 1995, the Company and the Secured Parties entered into that
certain Security Agreement pursuant to which the Company granted the Secured
Parties a security interest in its equipment located at its premises at 110
Little Falls Road, Fairfield, New Jersey (the "Fairfield Equipment"), which
agreement was amended by that certain Amendment to Loan Agreement and Security
Agreement, dated March 20, 1995, pursuant to which the Company granted the
Secured Parties a security interest in its equipment located at its premises at
83 Fulton Street, Boonton, New Jersey (the "Boonton Equipment"); and
WHEREAS, the security interest in the Fairfield Equipment granted by
the Company to the Secured Parties was perfected by the filing of a financing
statement with respect thereto in Essex County, New Jersey on February 27, 1995;
and
WHEREAS, on June 29, 1995, the Secured Parties loaned the Company
$700,000, as evidenced by that certain promissory note, dated as of June 29,
1995, (the "June 29, 1995 Note"); and
WHEREAS, the Company and the Secured Parties further amended the
Security Agreement pursuant to that certain Amendment to Loan Agreement and
Security Agreement, dated March 20, 1995, in order to secure the payment by the
Company of the June 29, 1995 Note; and
WHEREAS, on June 25, 1999, Jay Levy loaned the Company $200,000, as
evidenced by that certain promissory note, dated as of June 25, 1999, (the "June
25 Note"); and
WHEREAS, the Company and the Secured Parties further amended the
Security Agreement pursuant to that certain Amendment to Loan Agreement and
Security Agreement, dated June 25, 1999, in order to secure the payment by the
Company of the June 25 Note; and
WHEREAS, on June 29, 1999, Jay Levy loaned the Company $350,000, as
evidenced by that certain promissory note, dated as of June 29, 1999, (the "June
29, 1999 Note"); and
<PAGE>
WHEREAS, the Company and the Secured Parties further amended the
Security Agreement pursuant to that certain Amendment to Loan Agreement and
Security Agreement, dated June 29, 1999, in order to secure the payment by the
Company of the June 29, 1999 Note; and
WHEREAS, on June 30, 1999, Jay Levy loaned the Company $350,000, as
evidenced by that certain promissory note, dated as of June 30, 1999, (the "June
30 Note"); and
WHEREAS, the Company and the Secured Parties further amended the
Security Agreement pursuant to that certain Amendment to Loan Agreement and
Security Agreement, dated June 30, 1999, in order to secure the payment by the
Company of the June 30 Note; and
WHEREAS, Jay Levy has made the following additional loans to the
Company: (i) a loan in the amount of $200,000 on May 5, 1999, (ii) a loan in the
amount of $200,000 on May 24, 1999, and (iii) a loan in the amount of $200,000
on June 7, 1999 (collectively, the "Prior Loans"); and
WHEREAS, Jay Levy has agreed to loan the Company $100,000
contemporaneously with the execution and delivery hereof (the "New Loan"); and
WHEREAS, in order to induce Jay Levy to make the Prior Loans and the
New Loan, the Company has agreed to grant him a security interest in the
Collateral (as defined below) to secure payment of the New Loan and the Prior
Loans and a mortgage on certain real property owned by the Company at 110 Little
Falls Road, Fairfield, New Jersey; and
WHEREAS, in order to document the New Loan and the Prior Loans and to
amend and restate the June 25 Note, the June 29, 1999 Note and the June 30 Note,
the Company contemporaneously with the execution and delivery hereof will issue
and deliver to Jay Levy that certain Amended and Restated Secured Promissory
Note in the principal amount of $1,600,000 (the "Restated Note") and Jay Levy
will in exchange for the Restated Note surrender the June 25 Note, the June 29,
1999 Note and the June 30 Note; and
<PAGE>
WHEREAS, the parties desire to document the security interest granted
to Jay Levy to secure payment of the New Loan and the Prior Loans, and to amend
and restate the Security Agreement, as heretofore amended, in its entirety, all
on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Definitions. The following terms when used herein shall have the
following definitions:
1.1 "Collateral" shall mean (a) all laboratory equipment,
manufacturing equipment, office machinery, tools, materials, storage and
handling equipment, computer equipment and hardware, including central
processing units, terminals, drives, memory units, printers, keyboards, screens,
peripherals and input or output devices, and other equipment of every kind and
nature, wherever situated, now or hereafter owned by the Company, (b) all
additions, accessions, replacements, accessories and parts in respect of the
foregoing, all manuals, blueprints, warranties and records in connection
therewith, all rights against suppliers, warrantors, manufacturers, sellers or
others in connection therewith, and all substitutions for any of the foregoing,
(c) all books and records, in whatever form, owned by the Company related to the
foregoing, and (d) all proceeds of any of the foregoing.
1.2 "Event of Default" shall mean:
(a) an "Event of Default" as defined in the Restated Note;
(b) any occurrence specified in Section 3 of the March 2 Note;
(c) any occurrence specified in Section 3 of the June 29, 1995
Note; or
(d) any material breach of representation made by the Company
in Section 5 hereof.
1.3 "Obligations" shall mean all indebtedness, obligations and
liabilities of every kind and nature of the Company now or hereafter existing
under or arising out of or in connection with the Restated Note, the March 2
Note, the June 29, 1995 Note and this Agreement and all extensions, amendments
or renewals hereof or thereof, whether for principal, premium, interest, or
fees, and all or any portion of such indebtedness, obligations or liabilities
that are paid to the extent all or any part of such payment is avoided or
recovered directly or indirectly from a Secured Party as a preference,
fraudulent transfer or otherwise.
2. Grant of Security. As security for the due and punctual performance of the
Obligations, the Company hereby (a) grants to the Secured Parties, for the
ratable benefit of the Secured Parties, a security interest in the Collateral
and (b) reaffirms all prior grants to the Secured Parties of security interests
in the Collateral.
<PAGE>
3. Release and Satisfaction.
3.1. Upon the termination of this Agreement, the Secured Parties shall
promptly deliver to the Company upon request therefor and at the Company's
expense, releases and satisfactions of all financing statements and other
registrations of security.
3.2. The Company from time to time may sell all or any portion of the
Collateral; provided that such sale is an arm's length transaction with a party
that is not an affiliate of the Company and that the Collateral is sold for fair
value; provided further that the proceeds from such sale shall be applied
ratably to the payment of the Obligations to the extent thereof.
4. Location of Collateral. The Collateral is located at 110 Little Falls Road,
Fairfield, New Jersey or 83 Fulton Street, Boonton, New Jersey. So long as any
Obligations shall be outstanding, the Company shall not move any of the
Collateral having an aggregate book or market value in excess of $5,000 to any
location other than 110 Little Falls Road, Fairfield, New Jersey or 83 Fulton
Street, Boonton, New Jersey, unless the Company shall have given the Secured
Parties ten (10) day's prior written notice of its intention to do so,
identifying the new location.
5. Representations and Warranties. The Company hereby represents and warrants to
the Secured Parties that, as of the date hereof:
5.1. The Company owns all of the Collateral free and clear of any lien,
encumbrance, mortgage, security agreement, pledge or charge other than (i) a
security interest in the Collateral granted to Jean Levy to secure a loan in the
principal amount of $650,000 and (ii) security interests heretofore granted to
the Secured Parties.
5.2. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business and own its
properties as now conducted and owned. The Company is duly qualified to do
business as a foreign corporation and in good standing in the State of New
Jersey.
5.3. The Company has full corporate power and authority to execute,
deliver and perform this Agreement and has taken all requisite corporate action
necessary for (i) the authorization, execution and delivery of this Agreement
and (ii) the performance of all obligations of the Company hereunder. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as such
enforcement may be limited by (a) applicable bankruptcy, insolvency,
reorganization, voidable preference, fraudulent conveyance and other similar
laws affecting the rights or remedies of creditors generally and (b) the
exercise of judicial discretion in accordance with general principles of equity
(whether applied by a court of law or equity).
<PAGE>
6. Further Actions. The Company agrees that from time to time, at the expense of
the Company, the Company will promptly execute and deliver all further
instruments and documents and take all further action that any Secured Party
reasonably may request in order to perfect the security interest granted hereby,
including the execution, recording and filing of such financing or continuation
statements, or amendments thereto, and such other instruments, documents or
notices, as a Secured Party reasonably may request.
7. Covenants. During the term hereof, the Company shall:
(a) not use or permit any Collateral to be used unlawfully or in violation
of any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral;
(b) maintain the Collateral in good working condition;
(c) maintain insurance reasonably believed by Company to be adequate on all
Collateral of a type customarily insured by companies similarly situated to the
Company, covering property damage and loss of income by fire or other casualty;
(d) pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including claims
for labor, materials and supplies) against, the Collateral, except to the extent
the validity thereof is being contested in good faith;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except (i) as permitted by this Agreement and
(ii) that the Company may dispose of Collateral that has become obsolete; and
(f) keep reasonable records respecting the Collateral and at all times keep
at least one complete set of its records concerning all of the Collateral at its
chief executive office or principal place of business.
7. Inspection. Any Secured Party may examine and inspect the Collateral upon
reasonable prior notice during the Company's normal business hours.
8. Secured Parties May Perform. If the Company fails to perform any agreement
contained herein, each Secured Party may itself perform, or cause performance
of, such agreement, and the expenses of such Secured Party incurred in
connection therewith shall be reimbursed by the Company promptly.
9. Enforcement. Upon the occurrence of any Event of Default, each Secured Party
shall have, in addition to all of its other rights under this Agreement, all of
the rights and remedies of a secured party under the Uniform Commercial Code.
10. Termination. This Agreement shall terminate at such time as all of the
Obligations shall have been indefeasibly fully paid and satisfied and, until
such time, the Secured Parties shall retain all security in the Collateral held
by them hereunder.
<PAGE>
11. Binding Effect. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Secured Parties and
their respective heirs, executors, administrators, successors and assigns.
12. Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
(i) on the same day if given by personal delivery, (ii) on the following
business day if given by telecopier with confirmation of receipt, or (iii) on
the following business day if given by nationally recognized overnight air
courier, in each case addressed to the party to be notified at:
110 Little Falls Road
Fairfield, New Jersey, 07004,
Attention: [Name of Party]
Facsimile: 973-227-6088
or at such other address as such party may designate by ten days' advance
written notice given hereunder to any other party.
13. Waiver. No delay or failure on the part of any Secured Party in exercising
any right, privilege, remedy or option hereunder shall operate as a waiver of
such or any other right, privilege, remedy or option, and no waiver shall be
valid unless in writing and signed by each Secured Party and then only to the
extent therein set forth.
14. Modifications and Amendments. This Agreement constitutes the complete
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto. This Agreement may not be
changed, modified or amended orally, but only by a writing signed by all parties
hereto.
15. Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New Jersey without giving effect
to conflicts of laws principles.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which shall
constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
<PAGE>
UNIGENE LABORATORIES, INC.
By:
Name:
Title:
------------------------------------
JAY LEVY
------------------------------------
WARREN P. LEVY
------------------------------------
RONALD S. LEVY
Exhibit 10.3
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the "Agreement") is entered into this
13th day of July by and among Unigene Laboratories, Inc., a Delaware corporation
(the "Company"), Jay Levy, a resident of New Jersey, Warren P. Levy, a resident
of New Jersey, and Ronald S. Levy, a resident of New Jersey (Warren P. Levy and
Ronald S. Levy are referred to herein individually as a "Subordinated Creditor"
and collectively as the "Subordinated Creditors").
WITNESSETH:
WHEREAS, Jay Levy and the Subordinated Creditors jointly hold a
promissory note (the "March 2 Note"), dated March 2, 1995, in the original
principal amount of $500,000 issued by the Company; and
WHEREAS, Jay Levy and the Subordinated Creditors jointly hold a
promissory note (the "June 29 Note"), dated June 29, 1995, in the original
principal amount of $700,000 issued by the Company; and
WHEREAS, the aggregate principal amount outstanding and owed by the
Company to Jay Levy under the March 2 Note and the June 29 Note as of the date
hereof is $60,000 and the aggregate amount of accrued and unpaid interest owed
by the Company to Jay Levy under the March 2 Note and the June 29 Note as of the
date hereof is $103,541; and
WHEREAS, Jay Levy holds a promissory note (the "Restated Note") of even
date herewith in the principal amount of $1,600,000 issued by the Company; and
WHEREAS, the payment of the March 2 Note, the June 29 Note and the
Restated Note are secured by a security interest in the Collateral granted by
the Company to Jay Levy and the Subordinated Creditors pursuant that certain
Amended and Restated Security Agreement of even date herewith by and among the
Company, Jay Levy and the Subordinated Creditors (the "Security Agreement"); and
WHEREAS, to induce Jay Levy to make certain of the loans to the Company
evidenced by the Restated Note, each of the Subordinated Creditors has agreed to
subordinate his security interest in the Collateral to the security interest in
the Collateral granted to Jay Levy, all on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Definitions.
1.1 All terms used herein and not defined shall have the meanings
ascribed to such terms in the Security Agreement.
1.2 The following terms when used herein shall have the following
meanings:
(a) "Senior Debt" shall mean all indebtedness, liabilities,
and obligations of the Company to Jay Levy under the Restated Note, the March 2
Note and the June 29 Note, including, without limitation, principal, interest
(including interest accruing after the bankruptcy of the Company) and fees
payable thereunder.
(b) "Subordinated Debt" shall mean all indebtedness,
liabilities, and obligations of the Company to the Subordinated Creditors under
the March 2 Note and the June 29 Note, including, without limitation, principal,
interest and fees payable thereunder.
2. Subordination. Each Subordinated Creditor hereby agrees that any and all
liens on and security interests in the Collateral granted by the Company,
whether pursuant to the Security Agreement or otherwise, to such Subordinated
Creditor to secure any Subordinated Debt is hereby immediately made subordinate
and junior to, and postponed in priority and effect to, the liens on and
security interests in the Collateral granted by the Company pursuant to the
Security Agreement to Jay Levy to secure the Senior Debt, all as if Jay Levy's
security interests had been perfected by the timely filing of financing
statements or by any other legal means prior to the time the security interest
with respect to the Subordinated Debt was perfected and prior to the filing of
any financing statements in connection with the Subordinated Debt.
3. Rights to Collect Prior to Subordinated Debt. In the event of, and commencing
with the date of, any dissolution, winding up, liquidation, reorganization or
other similar proceeding relating to the Company, its creditors or its property
(whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership, or upon assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of the Company
or any sale of the assets of the Company), the Senior Debt shall be satisfied in
full in cash or otherwise to the reasonable satisfaction of Jay Levy before the
Subordinated Creditors shall be entitled to receive and/or retain any payment,
distribution, asset or other property of the Company in respect of the
Subordinated Debt and, in order to implement the foregoing, all payments,
distributions or transfers of property of any kind in respect of the
Subordinated Debt to which any Subordinated Creditor would be entitled but for
the provisions of this Agreement shall be made directly to Jay Levy (and each
Subordinated Creditor hereby directs any person making such payment or
distribution to make such payment or distribution directly to Jay Levy).
<PAGE>
4. Postponement of Enforcement. Each Subordinated Creditor hereby agrees that he
shall not attempt to assert, enforce or take any action in furtherance of any
rights or remedies granted pursuant to the Security Agreement in respect of the
Subordinated Debt unless and until the Senior Debt shall have been satisfied in
full in cash or otherwise to the reasonable satisfaction of Jay Levy; provided
that the foregoing shall not terminate or otherwise void the rights granted to
the Subordinated Creditors pursuant to the Security Agreement.
5. Further Assurances. Each Subordinated Creditor hereby agrees to execute any
and all such further agreements, documents and instruments, and to take or
refrain from taking any further action, as Jay Levy reasonably may request to
carry into effect the intent of this Agreement.
6. Term. This Agreement shall remain in full force and effect until all Senior
Debt has been satisfied in full in cash or otherwise to the reasonable
satisfaction of Jay Levy.
7. Binding Effect. This Agreement shall be binding upon the Company and the
Subordinated Creditors and their respective, heirs, executors, administrators,
successors and assigns and shall inure to the benefit of Jay Levy and his heirs,
executors, administrators, successors and assigns.
8. Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
(i) on the same day if given by personal delivery, (ii) on the following
business day if given by telecopier with confirmation of receipt, or (iii) on
the following business day if given by nationally recognized overnight air
courier, in each case addressed to the party to be notified at:
110 Little Falls Road
Fairfield, New Jersey, 07004,
Attention: [Name of Party]
Facsimile: 973-227-6088
or at such other address as such party may designate by ten days' advance
written notice given hereunder to any other party.
9. Waiver. No delay or failure on the part of any party in exercising any right,
privilege, remedy or option hereunder shall operate as a waiver of such or any
other right, privilege, remedy or option, and no waiver shall be valid unless in
writing and signed by each party and then only to the extent therein set forth.
10. Modifications and Amendments. This Agreement constitutes the complete
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto. This Agreement may not be
changed, modified or amended orally, but only by a writing signed by all parties
hereto.
<PAGE>
11. Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New Jersey without giving effect
to conflicts of laws principles.
12. Severability. If one or more provisions of this Agreement is held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which shall
constitute the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
UNIGENE LABORATORIES, INC.
By:
----------------------------------
Name:
Title:
------------------------------------
JAY LEVY
------------------------------------
WARREN P. LEVY
------------------------------------
RONALD S. LEVY
Prepared by:
-----------------------
T. Thomas Van Dam, Esq.
Exhibit 10.4
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE made this 13th day of July, 1999, between UNIGENE
LABORATORIES, INC., a Delaware corporation, having an office at 110 Little
Falls Road, Fairfield, New Jersey 07004 (herein called the "Mortgagor") and JAY
LEVY, having an address at 2150 Center Avenue, Fort Lee, New Jersey 07024
(herein called the "Mortgagee").
W I T N E S S E T H:
WHEREAS, the Mortgagor is now indebted to the Mortgagee in the
principal sum of ONE MILLION SIX HUNDRED THOUSAND and 00/100 ($1,600,000.00)
DOLLARS with interest thereon at the rates and times more particularly set forth
in a certain Amended and Restated Secured Note of even date herewith from the
Mortgagor herein to the Mortgagee herein as Payee (the "Note"); and WHEREAS, the
Mortgagor is the owner in fee simple of a certain tract or parcel of real
property and improvements thereon located in the Township of Fairfield, County
of Essex and State of New Jersey.
NOW, THEREFORE, for the better securing of the payment of the monies
owing on said Note and all extensions and renewals thereof and substitutions
therefor, including other payments mentioned therein for the protection of the
security as well as to secure the repayment of all future advances that may be
made by the Mortgagee to the Mortgagor with interest thereon as may from time to
time be agreed upon, the Mortgagor has granted, bargained, sold and conveyed and
by these presents does grant, and assigns, ALL the following tract or parcel of
land and premises located in the ownership of Fairfield, County of Essex and
State of New Jersey, as more particularly described in Exhibit A attached hereto
and made a part hereof (hereafter referred to as the "Mortgaged Premises").
TOGETHER with all and singular and tenements, hereditaments, and
appurtenances thereunto belonging, or in anyway appertaining, and the reversion
or reversions, remainder and remainders; and also all the estate, right, title,
interest, property, possession, claim and demand whatsoever, in Law as well as
in Equity, of the Mortgagor, of, in and to the same and every part and parcel
thereof, with appurtenances; including all fixtures affixed to the same, or
intended so to be, and also all equipment and improvements intended so to be,
and also all equipment and improvements now in, upon, or which may hereafter be
installed or placed in or upon the same, adapted to or necessary for the
complete and conformable use, enjoyment or occupancy thereof. TO HAVE AND TO
HOLD, the above granted and described Mortgaged Premises, with the
appurtenances, fixtures, equipment and improvements thereto, unto the Mortgagee,
its successors and assigns, to its and their own proper use and benefit forever.
PROVIDED ALWAYS, and these premises are upon the express condition, that if the
Mortgagor shall well and truly pay to the Mortgagee all money secured hereby
when the same shall become due and payable, without deduction or credit for any
amount payable for taxes, then these presents and the estate hereby granted
shall cease, terminate and be void.
<PAGE>
THE MORTGAGOR REPRESENTS, WARRANTS, COVENANTS AND AGREES WITH THE MORTGAGEE AS
FOLLOWS:
1. The Mortgagor shall comply with all provisions hereof and of
the Note evidencing the indebtedness secured hereby (which Note is made a part
hereof as if recited at length herein).
2. The Mortgagor shall pay to the Mortgagee said sum of money as
mentioned above and interest thereon and additions thereto, as expressed in the
conditions of the Note.
3. If requested by the Mortgagee, the Mortgagor shall pay to the
Mortgagee at the time of each monthly payment, one-twelfth (1/12) of the current
annual taxes levied and assessed against the Mortgaged Premises, and one (1)
month's proportion of the insurance premium, to be held by the Mortgagee and
used in payment of the taxes and insurance premiums as they become due and
payable, and the Mortgagor shall make such further tax or insurance reserve
payments in such amounts and at such time to times as the Mortgagee shall
require, and if not so requested, Mortgagor shall provide to Mortgagee as
requested within twenty (20) days of the due date proof of payment of any taxes
or assessments levied or assessed against the Mortgaged Premises and any
insurance premiums due with regard to insurance of the Mortgaged Premises.
4. The Mortgagor is seized of an indefeasible estate in fee
simple in the Mortgaged Premises, and the Mortgagor warrants title to the
Mortgaged Premises subject to prior mortgages and security agreements of record.
<PAGE>
5. The Mortgagor shall keep any buildings and other structures
now or hereafter erected upon the Mortgaged Premises, including fixtures and
equipment, insured against loss or damage by fire, and will insure against such
other hazards as Mortgagee may specify, by insurers and in amounts approved by
the Mortgagee, with loss payable to the Mortgagee as mortgagee and as
co-insured, and shall deliver said policy or policies to the Mortgagee; and in
default thereof, the Mortgagee may effect such insurance. The Mortgagor hereby
assigns to the Mortgagee all rights to demand and receive all money payable
under any of said policies of insurance, or certificates of insurance with
respect to public liability insurance, and the rights to settle or compromise
all claims thereunder, and all money received may be applied on account of the
indebtedness secured hereby or used to repair or replace the buildings on the
Mortgaged Premises, as the Mortgagee shall elect. In the event of loss or
damage, the Mortgagor shall give immediate notice thereof to the Mortgagee. The
Mortgagee may make proof of loss if not made promptly by the Mortgagor, and such
insurer is hereby authorized and directed to make payment for such loss or
damage directly to the Mortgagee instead of the Mortgagor and the Mortgagee
jointly. At least thirty (30) days prior to the expiration of any such policies
the Mortgagor shall furnish evidence satisfactory to the Mortgagee that the
policies have been renewed or replaced or are no longer required.
6. In the event the Mortgaged Premises, or any part thereof,
shall be taken and condemned for public purposes by the proper governmental
authorities, the Mortgagor shall have no claim against the award for damages, or
be entitled to any portion of the award until the entire indebtedness secured by
this Mortgage shall be paid in full, and all rights to damages of the Mortgagor
are hereby assigned to the Mortgagee to the extent of the principal indebtedness
as remains unpaid (the Mortgagee, however, having the right to appeal said award
to the courts of competent jurisdiction) . The satisfaction of the principal
condemnation award upon exercise of any authority with the right of eminent
domain shall constitute a prepayment to the full extent thereof.
7. The Mortgagor agrees to comply with all laws, rules,
regulations and ordinances made or promulgated by lawful authority and now or
hereafter applicable to the Mortgaged Premises within such time as may be
required by law.
<PAGE>
8. The Mortgagor shall keep and maintain any buildings and other
structures on the Mortgaged Premises, including fixtures and equipment, in good
and substantial repair, and will make such repairs as may be required by the
Mortgagee within thirty (30) days from the written notice from the Mortgagee.
The Mortgagor shall not do, and shall not permit to be done, any act which may
in any way impair or weaken the security under this Mortgage, and the Mortgagor
shall not remove or demolish or substantially alter, without the prior express
written consent of the Mortgagee, any building, structure or improvement on the
Mortgaged Premises.
9. Mortgagor shall have the right to prepay this Mortgage in
full or in part at any time.
10. The Mortgagor shall pay any taxes, assessments, municipal or
governmental rates, charges, impositions, liens, and water and sewer rents or
any part thereof, heretofore or hereafter imposed upon or which may become a
lien against the Mortgaged Premises within ten (10) days after the same is due
and payable and shall submit receipt therefore on request.
11. The Mortgagor hereby presently assigns all leases (present
and future), rents, issues, and profits arising out of or from the Mortgaged
Premises to the Mortgagee as additional security for payment of the indebtedness
secured by this mortgage or under the Note, and in the event of default
hereunder after notice the Mortgagee shall be entitled to enter upon and take
possession of the Mortgaged Premises, and collect and receive all rents, issues
and profits arising from the Mortgaged Premises, including the rents, issues and
profits then due and unpaid to the Mortgagor and also those thereafter to fall
due.
12. The Mortgagor shall, upon the written request of the
Mortgagee, certify within ten (10) business days to such person as the Mortgagee
may designate, by writing duly acknowledged, the amount of principal and
interest then owing on this mortgage, and whether any offsets or defenses exist
against the indebtedness evidenced by the Note.
13. The Mortgagee may, at its option, expend money for insurance,
payment of taxes, assessments, municipal or governmental rates, charges,
impositions, liens, and water and sewer rents or any part thereof and for
repair, maintenance and preservation of the Mortgaged Premises, or of any
buildings or other structures thereon, including fixtures, or for the discharge
of any liens or encumbrances on the Mortgaged Premises, or for perfecting the
title thereto, or for enforcing collection of the indebtedness secured hereby,
or for any water, gas or electric charge imposed for any services rendered to
the Mortgaged Premises, or for advances of any trustee or receiver of the
Mortgaged Premises, or for any addition or improvements to the Mortgaged
Premises, or to any buildings or other structures thereon, including fixtures,
considered desirable by the Mortgagee while it or any receiver or trustee is in
possession thereof; and all money so paid, with interest at the rate fixed in
the Note, shall be a lien on the Mortgaged Premises added to the amount of the
Note and secured by this Mortgage and shall be due and payable upon demand.
<PAGE>
14. No owner of the Mortgaged Premises shall be entitled to any
credit by reason of payment of any tax thereon.
15. This Mortgage constitutes a security agreement under the New
Jersey Uniform Commercial Code and the Mortgagor hereby grants to the Mortgagee
a security interest in the Mortgagor's title and interest in and to all
appurtenances, fixtures, equipment and improvements to, now or hereafter
installed, placed or used in and necessary to the operation of building and
structure, including without by way of limitation, lighting, heating,
ventilating, air-conditioning systems, sprinkling, plumbing, gas, water, power
systems, boilers and meters, which are now, or which may hereafter be, placed or
located in, on, or upon the Mortgaged Premises herein defined, together with all
additions and accessories thereto, substitutions therefor, and replacements
thereof and all cash and non-cash proceeds thereof. The Mortgagor shall execute,
deliver, file and refile any financing statements, continuation statements, or
other security agreements that the Mortgagee may require from time to time to
confirm the lien of this Mortgage with respect to such property. Without
limiting the foregoing, the Mortgagor hereby irrevocably appoints the Mortgagee
attorney-in-fact for the Mortgagor to execute, deliver and file such instruments
for and on behalf of the Mortgagor. Notwithstanding any release of any or all of
that property included in the Mortgaged Premises which is deemed "real property"
and proceedings to foreclose this Mortgage or its satisfaction of record, the
terms hereof shall survive as a security agreement with respect to the security
interest created hereby and referred to above until the repayment or
satisfaction in full of the obligations of the Mortgagor as are now or hereafter
secured hereby.
16. The proceeds of the Note shall be disbursed in accordance
with the terms and conditions set forth in the Note.
<PAGE>
THE MORTGAGOR SHALL BE IN DEFAULT OF THIS MORTGAGE UPON THE OCCURRENCE OF ANY OF
THE FOLLOWING EVENTS:
1. In the event that any representation or warranty made by the
Mortgagor in this Mortgage, in the Note or in any other writing used in
connection herewith, shall prove to be false, incorrect, or misleading in any
substantial and material respect as of the date when made.
2. In the event that the Mortgagor shall have failed to make any
payment of any installment due on the Note within the applicable grace period
set forth therein, if any, or in the event of any default under the Note or in
any other writing used in connection therewith or herewith.
3. In the event that the Mortgagor shall have failed to duly
observe any covenant, condition or agreement with respect to the payment of
monies on the part of Mortgagor, to be observed or performed pursuant to the
terms of the Mortgage, the Note or any other loan document, and such default
shall have remained uncured for a period of thirty (30) days after notice
thereof to the Mortgagor by the Mortgagee.
4. In the event the Mortgagor shall have failed to duly observe
or perform any covenant, condition or agreement on the part of the Mortgagor to
be observed or performed pursuant to the terms of the Mortgage, the Note or any
other loan document, other than the payment of monies which shall be governed by
paragraphs 2 and 3 above, and such default shall have remained uncured for a
period of thirty (30) days after notice thereof to the Mortgagor by the
Mortgagee.
5. In the event that the Mortgagor shall have applied for or
consented to the appointment or a custodian, receiver, trustee, or liquidator of
all or substantial part of its assets; or shall generally be unable to pay its
debts when due; or shall have admitted, in writing, its inability to pay its
debts as they mature; or shall have made a general assignment for the benefit of
its creditors; or shall have a petition or an answer seeking reorganization or
an arrangement with its creditors or shall have taken advantage of any
insolvency law, or shall have submitted an answer admitting the material
allegations of a petition in bankruptcy, reorganization, or insolvency
proceedings; or an order, judgment or decree shall have been entered, without
the application, approval or consent of the Mortgagor, by any Court of competent
jurisdiction approving a petition seeking reorganization of the Mortgagor, or
appointing a custodian, receiver, trustee or liquidator of the Mortgagor, or a
substantial part of its assets and such order, judgment or decree shall have
continued unstayed and in effect for any period of sixty (60) consecutive days;
or shall have failed to remove an involuntary petition in bankruptcy filed
against it within sixty (60) days of the filing thereof; or if any order for
Relief shall have been entered under the Federal Bankruptcy Code of 1978 as
amended.
<PAGE>
6. In the event of a subsequent encumbrance of or any change in
the ownership of the Mortgaged Premises.
7. In the event that the Mortgagor shall have encumbered,
mortgaged or given a security interest in any fixture or fixtures, or shall
have, without the consent of the Mortgagee, removed or replaced fixtures.
8. In the event that default is made in any of the terms,
covenants and conditions contained in any other mortgage constituting a lien
upon the Mortgaged Premises, or should proceedings be instituted for the
foreclosure or collection of any mortgage, judgment, or lien prior or
subordinate to the lien of this Mortgage, affecting the Mortgaged Premises.
9. In the event that any insurance company authorized to do
business in the State of New Jersey by the Department of Insurance, shall refuse
to insure said Mortgaged Premises in the form of policy approved by the
Mortgagee, so that there no longer exist insurance coverage in a sum equal to
the full insurable value of the Mortgaged Premises.
10. In the event that the Mortgagor shall have entered into any
secondary financing of the Mortgaged Premises or shall have consented to the
placing of any lien on the Mortgaged Premises, whether or not such financing or
lien is prior to or subordinate to the lien of the Mortgage.
11. In the event that the Mortgagor shall have transferred or
caused to have been transferred, title to or possession of the interest in the
Mortgaged Premises, or any part hereof, to any party without the express prior
written consent of the Mortgagee.
12. In the event that the Mortgagor shall have caused or
permitted a security interest, perfected or otherwise, other than the security
interest specifically provided for or permit hereunder, to be created in any
collateral provided for hereby, or shall have failed to take any action
requested by the Mortgagee to perfect or protect the security interest provided
for herein.
13. In the event of the passage of any law deducting from the
value of the land for the purposes of taxation, any lien thereon, or changing in
any way the taxation of the mortgages or debts secured thereby for state or
local purposes.
<PAGE>
SHOULD ANY DEFAULT BE MADE BY THE MORTGAGOR, THE MORTGAGEE MAY
TAKE ANY OR ALL OF THE FOLLOWING ACTIONS, AT THE SAME OR AT DIFFERENT TIMES:
1. Declare the entire amount of unpaid principal, accrued and
unpaid interest and other money due under this Mortgage and the Note secured
hereby, immediately due and payable.
2. All rents, issues and profits collected or received by the
Mortgagor shall be accepted and held for the Mortgagee in trust and shall not be
co-mingled with the funds and property of the Mortgagor but shall be promptly
paid over to the Mortgagee. The Mortgagor shall pay to the Mortgagee a
reasonable rental for the Mortgaged Premises occupied by the Mortgagor on the
first day of each and every month in advance, as a tenant from month to month
hereby recognizing the Mortgagee as landlord; and upon default in any such
payment, the Mortgagor shall vacate and surrender possession of the Mortgaged
Premises to the Mortgagee or to any receiver, if one has been appointed, and in
default thereof, the Mortgagor may be dispossessed by the usual summary
proceedings. The Mortgagor agrees that this covenant shall be effective either
with or without any action being brought to foreclose this Mortgage, and with or
without the Mortgagee having applied for a receiver to collect the rents. Any
such tenancy of the Mortgagor shall terminate at the option of the Mortgagee and
in any event, upon the delivery of the Deed of any Sheriff or Master following
foreclosure.
3. The Mortgagee may enter upon and take possession of the
Mortgaged Premises and rent the same, either in its name or in the name of the
owner of such property, and receive the rents, issues and profits, thereof, and
apply the same, after the payment of the necessary charges and expenses,
including management commissions, on account of the debt secured hereby, being
accountable only for such rents and profits as are collected by it while in
possession.
4. The Mortgagee, at its option, may foreclose this Mortgage, and
upon the filing of a Complaint in Foreclosure, the Mortgagee shall be entitled
to the appointment of a receiver of the rents of the Mortgaged Premises without
the necessity of proving either inadequacy of the security or insolvency of the
Mortgagor or of any person who may be legally or equitably liable to pay money
secured hereby, and the Mortgagor and each such person waive such proof and
consent to the appointment of such receiver.
<PAGE>
5. In the event of a foreclosure sale of the Mortgaged Premises,
the Mortgaged Premises may, at the option of the Mortgagee, be sold in one or
several parcels.
6. The Mortgagee may apply on account of the unpaid principal and
interest thereon or on account of any arrearages of interest thereon, or on
account of any balance due to the Mortgagee after a foreclosure sale of the
Mortgaged Premises whether or not a deficiency action shall have been
instituted, any unexpended monies still retained by the Mortgagee that were paid
by the Mortgagor to the Mortgagee for the payment of, or as security for the
payment of taxes, assessments, municipal or governmental rates, charges,
impositions, liens, water or sewer rents, or insurance premiums, if any, or in
order to secure the performance of some act by the Mortgagor.
MISCELLANEOUS
1. The rights and remedies herein expressed to be vested in or
conferred upon the Mortgagee shall be cumulative and shall be in addition to and
not in substitution for or in derogation of the rights and remedies conferred by
any applicable law. The failure, at any one or more times, of the Mortgagee to
assert the right to declare the principal indebtedness due or the granting of
any extension or extensions of time of payment of the Note either to the maker
thereof or to any other person, or taking of other or additional security for
the payment thereof, or releasing any security, or changing any of the terms of
the within Mortgage, or the Note or other obligation accompanying this mortgage,
or waiver of or failure to exercise any right under any covenant or stipulation
herein contained shall not in any way affect this Mortgage nor the rights of the
Mortgagee hereunder nor operate as a release from any personal liability upon
the Note or other obligation accompanying this Mortgage, nor under any covenant
or stipulation therein contained, nor under any agreement assuming the payment
of said Note or obligation.
2. All notices to be given hereunder shall be given by certified
mail directed to the Mortgagor or to the Mortgagee at the addresses shown at the
head of this Mortgage.
3. All of the terms, covenants, provisions and conditions herein
contained shall be for the benefit of, apply to, and bind the heirs, executors,
administrators, successors, and assigns of the Mortgagor and the Mortgagee, and
are intended and shall be held to be real covenants running with the land, and
the term "Mortgagor" shall also include any and all subsequent owners and
successors in title of the Mortgaged Premises.
<PAGE>
4. All references herein to "Note" shall be construed to mean
"Bond" or any other evidence of indebtedness secured hereby.
5. when such interpretation is appropriate, any word denoting
gender used herein shall include all persons, natural or artificial, and words
used in the singular shall include the plural.
6. This Mortgage, the loan made hereunder and the rights of the
parties shall be governed by and construed under the laws of the State of New
Jersey.
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be
duly executed as of the day and year first above written.
Attest: Unigene Laboratories, Inc.
- ------------------------- By ----------------------
Ronald S. Levy, Secretary Warren P. Levy, President
(Seal)
<PAGE>
STATE OF NEW JERSEY
)
) ss:
COUNTY OF )
I certify that on 1999 Ronald S. Levy personally came before
me and this person acknowledged under oath, to my satisfaction, that:
(a) this person is the Secretary of Unigene Laboratories, Inc.,
the corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is Warren Levy,
the President of the corporation;
(c) this document was signed and delivered by the corporation as
its voluntary act duly authorized by a proper resolution of
its Board of Directors;
(d) this person knows the proper seal of the corporation which
was affixed to this document; and
(e) this person signed this proof to attest to the truth of these
facts.
--------------------
Ronald S. Levy
Sworn and subscribed to before me
this day of 1999
----------------------------------
Exhibit 10.5
SECURED NOTE
$70,000.00 July 30, 1999
FOR VALUE RECEIVED, the undersigned, Unigene Laboratories, Inc., a
Delaware corporation (the "Company"), promises to pay to the order of Jay Levy,
or the holder hereof (the "Holder"), on January 13, 2002 (the "Maturity Date"),
the principal sum of Seventy Thousand Dollars ($70,000.00), or, if less, the
unpaid principal amount outstanding at such time, in either case together with
all accrued and unpaid interest thereon.
7. Security
The due and punctual payment by the Company of all amounts due
hereunder is secured by that certain Mortgage, dated July 13, 1999 and
subsequently amended, issued by the Company to Jay Levy (the "Mortgage") and
that certain Amended and Restated Security Agreement, dated July 13, 1999 and
subsequently amended, between the Company, Jay Levy, Warren P. Levy and Ronald
S. Levy (the "Security Agreement").
8. Interest
(a) The Company promises to pay to the Holder interest on the
unpaid principal amount hereof from the date hereof at a rate of six percent (6
%) per year, compounded monthly.
(b) Interest on this Note shall be computed on the basis of a
365-day year.
9. Payments
(a) Commencing October 13, 1999, and on the 13th day of each month
thereafter through and including the Maturity Date, the Company shall pay to the
Holder the lesser of (i) $2,704.95 and (ii) the outstanding principal amount
hereof plus all accrued and unpaid interest hereon.
(b) This Note may be prepaid by the Company, in whole or in part,
at any time and from time to time without premium or penalty. All prepayments
shall be credited first to accrued and unpaid interest and then to principal.
(c) All payments by the Company hereunder shall be made by check
not later than 5:00 p.m. Eastern time on the day when due. Whenever any payment
to be made pursuant to this Note shall be stated to be due on a public holiday,
Saturday or Sunday, such payment may be made on the next succeeding business
day. Such extension of time shall not be included in computing interest in
connection with such payment.
<PAGE>
10. Events of Default
(a) An "Event of Default" shall exist if any of the following
occurs and is continuing:
(i) the Company fails to make any payment on this Note when
such payment is due and such default shall continue for more than ten (10)
business days;
(ii) the Company fails to comply with or breaches any material
provision of the Mortgage or the Security Agreement and such failure or breach
continues for more than thirty (30) days after the Holder has given written
notice of such failure to the Company; or
(iii) a receiver, custodian, liquidator or trustee of the
Company, or of any of the property of the Company or any of its material
subsidiaries, is appointed by court order; or the Company or any of its material
subsidiaries is adjudicated bankrupt or insolvent; or any of the property of the
Company or any of its material subsidiaries is sequestered by court order; or a
petition to reorganize the Company or any of its material subsidiaries under any
bankruptcy, reorganization or insolvency law is filed against the Company or any
of its material subsidiaries and is not dismissed within sixty (60) days after
such filing; or the Company or any of its material subsidiaries files a
voluntary bankruptcy petition or requesting reorganization or arrangement under
any provision of any bankruptcy, reorganization or insolvency law, or consents
to the filing of any petition against it under any such law; or the Company or
any of its material subsidiaries makes a general assignment for the benefit of
its creditors, or admits in writing its inability to pay its debts generally as
they become due, or consents to the appointment of a receiver, trustee or
liquidator of the Company or any of its material subsidiaries or of all or any
part of the property of the Company or any of its material subsidiaries.
(b) If an Event of Default occurs under Section 4(a)(i), then this
Note shall accrue additional interest on all unpaid amounts of principal and
interest from the date of the Event of Default at a rate equal to the lesser of
(i) eleven percent (11%) per annum or (ii) the highest amount allowable by law.
(c) If an Event of Default exists, then the Holder may exercise
any right, power or remedy conferred upon it by law, and shall have the right to
declare by written notice the entire principal and all interest accrued on this
Note to be, and such Note shall thereupon become, forthwith due and payable and
the Company shall immediately pay to the Holder of this Note the entire unpaid
principal and interest accrued on this Note.
(d) In the case of an Event of Default, the Company, to the extent
permitted by law, waives presentment, demand, notice, protest and all other
demands or notices in connection with the enforcement of this Note.
11. Miscellaneous.
(a) No delay or omission by the Holder hereof in exercising any
right or remedy hereunder shall constitute a waiver of any such right or remedy.
A waiver on one occasion shall not operate as a bar to or waiver of any such
right or remedy on any future occasion.
<PAGE>
(b) The Company shall pay all reasonable costs and expenses of
collection, including attorney's fees, incurred or paid by the Holder hereof in
enforcing this Note and the obligations evidenced hereby.
(c) This Note may be amended only by written agreement of the
Company and the Holder hereof.
(d) This Note shall be governed by the laws of the State of New
Jersey without regard to its choice of law provisions.
(e) In the event that the Holder notifies the Company that this
Note has been mutilated, lost, stolen or destroyed, the Company will issue a
replacement Note identical in all respects to the original Note (except for
registration number and the then outstanding principal amount, if different than
that shown on the original Note), provided that the Holder surrenders for
cancellation its Note certificate in the case of a mutilated certificate or
provides evidence of lost, theft or destruction and indemnity reasonably
satisfactory to the Company in the case of a lost, stolen or destroyed
certificate .
(f) The Holder may mortgage, encumber, transfer or assign any of
its rights or interest in and to this Note or any part hereof and, without
limitation, each assignee, transferee and mortgagee (which may include any
affiliate of the Holder) shall have the right to so mortgage, encumber, transfer
or assign its interest. The Company may not assign its obligations hereunder
without the prior written consent of the Holder, except that without the prior
written consent of the Holder, but after notice duly given, the Company may
assign its obligations hereunder to any successor-in-interest corporation in the
event of a merger or consolidation of the Company with or into another
corporation, or the sale of all or substantially all of the Company's assets.
The Note shall in all cases be binding on the Company and its successors and
assigns and inure to the benefit of the Holder and its successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered as of the day and year first written above.
UNIGENE LABORATORIES, INC.
By:
-------------------------
Title:
---------------------
[Corporate Seal]
Exhibit 10.6
SECURED NOTE
$200,000.00 August 5, 1999
FOR VALUE RECEIVED, the undersigned, Unigene Laboratories, Inc., a
Delaware corporation (the "Company"), promises to pay to the order of Jay Levy,
or the holder hereof (the "Holder"), on January 13, 2002 (the "Maturity Date"),
the principal sum of Two Hundred Thousand Dollars ($200,000.00), or, if less,
the unpaid principal amount outstanding at such time, in either case together
with all accrued and unpaid interest thereon.
12. Security
The due and punctual payment by the Company of all amounts due
hereunder is secured by that certain Mortgage, dated July 13, 1999 and
subsequently amended, issued by the Company to Jay Levy (the "Mortgage") and
that certain Amended and Restated Security Agreement, dated July 13, 1999 and
subsequently amended, between the Company, Jay Levy, Warren P. Levy and Ronald
S. Levy (the "Security Agreement").
13. Interest
(a) The Company promises to pay to the Holder interest on the
unpaid principal amount hereof from the date hereof at a rate of six percent (6
%) per year, compounded monthly.
(b) Interest on this Note shall be computed on the basis of a
365-day year.
14. Payments
(a) Commencing October 13, 1999, and on the 13th day of each month
thereafter through and including the Maturity Date, the Company shall pay to the
Holder the lesser of (i) $7,720.84 and (ii) the outstanding principal amount
hereof plus all accrued and unpaid interest hereon.
(b) This Note may be prepaid by the Company, in whole or in part,
at any time and from time to time without premium or penalty. All prepayments
shall be credited first to accrued and unpaid interest and then to principal.
(c) All payments by the Company hereunder shall be made by check
not later than 5:00 p.m. Eastern time on the day when due. Whenever any payment
to be made pursuant to this Note shall be stated to be due on a public holiday,
Saturday or Sunday, such payment may be made on the next succeeding business
day. Such extension of time shall not be included in computing interest in
connection with such payment.
<PAGE>
15. Events of Default
(a) An "Event of Default" shall exist if any of the following occurs and is
continuing:
(i) the Company fails to make any payment on this Note when
such payment is due and such default shall continue for more than ten (10)
business days;
(ii) the Company fails to comply with or breaches any material
provision of the Mortgage or the Security Agreement and such failure or breach
continues for more than thirty (30) days after the Holder has given written
notice of such failure to the Company; or
(iii) a receiver, custodian, liquidator or trustee of the
Company, or of any of the property of the Company or any of its material
subsidiaries, is appointed by court order; or the Company or any of its material
subsidiaries is adjudicated bankrupt or insolvent; or any of the property of the
Company or any of its material subsidiaries is sequestered by court order; or a
petition to reorganize the Company or any of its material subsidiaries under any
bankruptcy, reorganization or insolvency law is filed against the Company or any
of its material subsidiaries and is not dismissed within sixty (60) days after
such filing; or the Company or any of its material subsidiaries files a
voluntary bankruptcy petition or requesting reorganization or arrangement under
any provision of any bankruptcy, reorganization or insolvency law, or consents
to the filing of any petition against it under any such law; or the Company or
any of its material subsidiaries makes a general assignment for the benefit of
its creditors, or admits in writing its inability to pay its debts generally as
they become due, or consents to the appointment of a receiver, trustee or
liquidator of the Company or any of its material subsidiaries or of all or any
part of the property of the Company or any of its material subsidiaries.
(b) If an Event of Default occurs under Section 4(a)(i), then this
Note shall accrue additional interest on all unpaid amounts of principal and
interest from the date of the Event of Default at a rate equal to the lesser of
(i) eleven percent (11%) per annum or (ii) the highest amount allowable by law.
(c) If an Event of Default exists, then the Holder may exercise
any right, power or remedy conferred upon it by law, and shall have the right to
declare by written notice the entire principal and all interest accrued on this
Note to be, and such Note shall thereupon become, forthwith due and payable and
the Company shall immediately pay to the Holder of this Note the entire unpaid
principal and interest accrued on this Note.
(d) In the case of an Event of Default, the Company, to the extent
permitted by law, waives presentment, demand, notice, protest and all other
demands or notices in connection with the enforcement of this Note.
16. Miscellaneous.
(a) No delay or omission by the Holder hereof in exercising any
right or remedy hereunder shall constitute a waiver of any such right or remedy.
A waiver on one occasion shall not operate as a bar to or waiver of any such
right or remedy on any future occasion.
<PAGE>
(b) The Company shall pay all reasonable costs and expenses of
collection, including attorney's fees, incurred or paid by the Holder hereof in
enforcing this Note and the obligations evidenced hereby.
(c) This Note may be amended only by written agreement of the
Company and the Holder hereof.
(d) This Note shall be governed by the laws of the State of New
Jersey without regard to its choice of law provisions.
(e) In the event that the Holder notifies the Company that this
Note has been mutilated, lost, stolen or destroyed, the Company will issue a
replacement Note identical in all respects to the original Note (except for
registration number and the then outstanding principal amount, if different than
that shown on the original Note), provided that the Holder surrenders for
cancellation its Note certificate in the case of a mutilated certificate or
provides evidence of lost, theft or destruction and indemnity reasonably
satisfactory to the Company in the case of a lost, stolen or destroyed
certificate .
(f) The Holder may mortgage, encumber, transfer or assign any of
its rights or interest in and to this Note or any part hereof and, without
limitation, each assignee, transferee and mortgagee (which may include any
affiliate of the Holder) shall have the right to so mortgage, encumber, transfer
or assign its interest. The Company may not assign its obligations hereunder
without the prior written consent of the Holder, except that without the prior
written consent of the Holder, but after notice duly given, the Company may
assign its obligations hereunder to any successor-in-interest corporation in the
event of a merger or consolidation of the Company with or into another
corporation, or the sale of all or substantially all of the Company's assets.
The Note shall in all cases be binding on the Company and its successors and
assigns and inure to the benefit of the Holder and its successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered as of the day and year first written above.
UNIGENE LABORATORIES, INC.
By:
-------------------------
Title:
----------------------
[Corporate Seal]
Exhibit 10.7
Prepared by:
-----------------------
T. Thomas Van Dam, Esq.
MODIFICATION OF MORTGAGE AND SECURITY AGREEMENT
This modification of Mortgage and Security Agreement
("Modification") made effective as of the 5th day of August, 1999, by and
between UNIGENE LABORATORIES, INC., a Delaware corporation authorized to do
business in New Jersey, having office at 110 Little Falls Road, Fairfield, New
Jersey 07004 (the "Mortgagor") and JAY LEVY, with an address at 2150 Center
Avenue, Fort Lee, New Jersey 07024 (the "Mortgagee").
WHEREAS, on July 13, 1999 the Mortgagee provided a loan to
Mortgagor in the principal amount of ONE MILLION SIX HUNDRED THOUSAND and 00/100
($1,600,000.00) DOLLARS (the "Loan") as evidenced by a certain Amended and
Restated Secured Note dated July 13, 1999 (the "Note"); and
WHEREAS, in connection with the Loan the Mortgagor executed and
delivered a Mortgage and Security Agreement to the Mortgagee dated July 13, 1999
which has been forwarded to the Essex County Register's office for recording
(the "Mortgage"), with respect to property located in the Township of Fairfield,
County of Essex and State of New Jersey as particularly described in the
Mortgage (the "Premises"); and
WHEREAS, Mortgagee provided additional loans to Mortgagor
evidenced by a Secured Note dated July 30, 1999 in the amount of SEVENTY
THOUSAND and 00/100 ($70,000.00) DOLLARS and a Secured Note dated August 5, 1999
in the amount of TWO HUNDRED THOUSAND and 00/100 ($200,000.00) DOLLARS made by
Mortgagor to Mortgagee (the "Additional Loans").
WHEREAS, as a condition of the Additional Loans, Mortgagee
required that the Mortgagor amend the Mortgage to secure the Secured Notes
evidencing the Additional Loans.
NOW, THEREFORE, the parties agree as follows:
1. Modification of Mortgage. The Mortgage shall be deemed
modified to secure the Additional Loans as evidenced by the Secured Note dated
July 30, 1999 in the amount of Seventy Thousand and 00/100 ($70,000.00) Dollars
and the Secured Note in the amount of Two Hundred Thousand and 00/100
($200,000.00) Dollars dated August 5, 1999, and accordingly the total amount due
Mortgagee by Mortgagor and secured by the Mortgage as hereby amended shall be
the amount of One Million Eight Hundred Seventy Thousand and 00/100
($1,870,000.00) Dollars.
<PAGE>
2. Mortgagor's Estoppel. Mortgagor does hereby represent, warrant
and confirm that there are no set-offs, rights, claims or causes of action of
any nature whatsoever which Mortgagor has or may assert against Mortgagee with
respect to the Mortgage as amended and the indebtedness secured thereby as
aforesaid.
3. Affirmation of Validity of Loan Documents. Mortgagor does
hereby affirm the extent and validity of the Mortgage, as amended, and the Notes
secured thereby, and does confirm that all loan documentation remains
enforceable, and in full force and effect as of the date of execution hereof,
and that the Mortgage, as modified by the within Agreement, shall constitute a
continuing, valid lien upon the Mortgaged Premises, to secure payment of the
indebtedness evidenced by the Notes as aforesaid.
4. Binding Effect. The within Agreement shall be binding upon the
parties hereto, their successors and assigns.
5. Governing Law. The within Agreement shall be construed and
enforced in accordance with the laws of the State of New Jersey.
6. Copy Acknowledge. The undersigned Mortgagor acknowledges
receipt of a true copy of this document without charge.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Modification of Mortgage and Security Agreement as of the day and year first
above written.
Attest: Unigene Laboratories, Inc.
By
---------------------------
Ronald S. Levy, Secretary Warren P. Levy, President
Witness:
<PAGE>
STATE OF NEW JERSEY )
)ss:
COUNTY OF ESSEX )
I certify that on August , 1999 Ronald S. Levy personally came
before me and this person acknowledged under oath, to my satisfaction, that:
(a) this person is the Secretary of Unigene Laboratories, Inc.,
the corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is Warren Levy,
the President of the corporation;
(c) this document was signed and delivered by the corporation as
its voluntary act duly authorized by a proper resolution of
its Board of Directors;
(d) this person knows the proper seal of the corporation which
was affixed to this document; and
(e) this person signed this proof to attest to the truth of
these facts.
----------------------------
Ronald S. Levy
Sworn and Subscribed to this
day of August, 1999
- ----------------------------
Exhibit 10.8
AMENDMENT TO SECURITY AGREEMENT
AND SUBORDINATION AGREEMENT
THIS AMENDMENT TO SECURITY AGREEMENT AND SUBORDINATION AGREEMENT (the
"Amendment") is entered into this 5th day of August, 1999 by and among UNIGENE
LABORATORIES, INC., a Delaware corporation, having its principal place of
business at 110 Little Falls Road, Fairfield, New Jersey 07004 (the "Company"),
Jay Levy, a resident of New Jersey, Warren P. Levy, a resident of New Jersey,
and Ronald S. Levy, a resident of New Jersey. Jay Levy, Warren P. Levy and
Ronald S. Levy are sometimes individually referred to as a "Secured Party" and
collectively referred to as "Secured Parties."
WITNESSETH:
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Security Agreement, dated July 13, 1999 (the "Security Agreement"),
pursuant to which the Company granted the Secured Parties a security interest in
the Collateral (as defined in the Security Agreement) in order to secure payment
of certain loans made by the Secured Parties; and
WHEREAS, the parties hereto are parties to that certain Subordination
Agreement, dated July 13, 1999 (the "Subordination Agreement"), pursuant to
which Warren P. Levy and Ronald S. Levy subordinated their security interests in
the Collateral to the security interest in the Collateral held by Jay Levy; and
WHEREAS, on July 30, 1999, Jay Levy loaned the Company $70,000, as
evidenced by a secured promissory note dated as of July 30, 1999 (the "July 30
Note") and on the date hereof Jay Levy loaned the Company $200,000, as evidenced
by a secured promissory note dated the date hereof (the "August 5 Note"); and
WHEREAS, the parties hereto desire that the Security Agreement be
amended on the terms set forth herein to include the July 30 Note and the August
5 Note in the definition of "Obligations;" and
WHEREAS, the parties hereto desire that the Subordination Agreement be
amended on the terms set forth herein to include the July 30 Note and the August
5 Note in the definition of "Senior Debt."
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
1. The definition of the term "Obligations" set forth in Section 1.3 of
the Security Agreement is hereby amended to include all indebtedness,
obligations and liabilities of the Company under the July 30 Note and the August
5 Note.
2. The definition of the term "Senior Debt" set forth in Section 1.2(a)
of the Subordination Agreement is hereby amended to include all indebtedness,
obligations and liabilities of the Company to Jay Levy under the July 30 Note
and the August 5 Note.
3. This Amendment shall be construed in accordance with and governed by
the laws of the State of New Jersey without giving effect to conflicts of laws
principles.
4. This Amendment may be executed in two or more counterparts, each of
which shall constitute an original and all of which shall constitute the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed on the day and year first above written.
UNIGENE LABORATORIES, INC.
By:
Name:
Title:
------------------------------------
JAY LEVY
------------------------------------
WARREN P. LEVY
------------------------------------
RONALD S. LEVY
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 668,379
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 699,628
<CURRENT-ASSETS> 3,439,040
<PP&E> 17,482,087
<DEPRECIATION> 10,451,564
<TOTAL-ASSETS> 14,210,596
<CURRENT-LIABILITIES> 4,530,073
<BONDS> 3,987,006
0
0
<COMMON> 411,816
<OTHER-SE> 5,281,701
<TOTAL-LIABILITY-AND-EQUITY> 14,210,596
<SALES> 0
<TOTAL-REVENUES> 9,527,575
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,915,487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 489,709
<INCOME-PRETAX> 151,229
<INCOME-TAX> 0
<INCOME-CONTINUING> 151,229
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 151,229
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
