EXHIBIT 10.19
EXECUTION COPY
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
by and among
OLYMPUS SECURITIES, LTD.
and
▇▇▇▇▇▇ PARTNERS
(the "Purchasers")
and
UNIGENE LABORATORIES, INC.
("Unigene")
Dated as of March 6, 1996
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT dated as of
March 6, 1996 (the "Agreement"), by and among OLYMPUS SECURITIES, LTD., a
Bermuda international business company ("Olympus"), and ▇▇▇▇▇▇ PARTNERS, a
Bermuda general partnership ("▇▇▇▇▇▇") (collectively, the "Purchasers"), and
UNIGENE LABORATORIES, INC., a Delaware corporation with a principal place of
business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Unigene").
R E C I T A L:
- - - - - - -
A. Unigene is engaged principally in research and development in the
field of biotechnology and plans to commence manufacturing peptide hormones. Its
common stock is currently traded on the NASDAQ market.
B. Purchasers are private investment companies.
C. Pursuant to a certain Assignment Agreement (the "Assignment
Agreement") dated November 17, 1995, among the Purchasers, Unigene and The
Microcap Fund, Inc. (the "Fund"), the Purchasers have acquired from the Fund:
(i) all rights of the Fund in the Note dated May 8, 1995 (the "Original Note")
with an original principal amount of $2,000,000 (the "Initial Principal Amount")
plus accrued and unpaid interest through such date in an amount equal to
$221,330 (the "Initial Accrued Interest"); (ii) all rights of the Fund in
225,000 warrants (the "Purchased Warrants"), expiring July 7, 2000, to purchase
Unigene's Common Stock (the "Common Stock") at a price of $1.375 per share
(subject to certain anti-dilution provisions); (iii) all rights of the Fund
under that certain Securities Purchase Agreement dated as of May 8, 1995 by and
between the Fund and Unigene (the "Original Agreement"), including the Original
Note and the Documents as defined therein (the "Original Documents"); and (iv)
all security interests, liens and collateral assignment interests of the Fund
arising under and with respect to the Original Documents and securing Unigene's
obligations evidenced by or arising under or in connection with the Original
Agreement and Original Note (such obligations being hereinafter referred to as
the "Original Obligations").
D. The Purchasers entered into the transaction described in the
foregoing recital solely as an accommodation to Unigene (and with the full
knowledge and consent of Unigene), and as an interim step toward receiving from
Unigene certain Senior Secured Convertible Debentures and an amendment and
restatement of the Original Agreement in its entirety.
E. The Purchasers and Unigene entered into a Securities Issuance
Commitment Agreement dated November 17, 1995 (the "Commitment"), which (i)
provided for the Purchasers to lend $778,670 to Unigene (the "Initial Interim
Loan") and (ii) set forth the parties' mutual intention that Unigene issue to
the Purchasers the aforesaid Senior Secured Convertible Debentures in the
aggregate principal amount of $3,000,000 to substitute, amend, restate and
re-evidence (but not as a novation or refinancing of) the Original Obligations
(including the Initial Principal Amount and the Initial Accrued Interest) as
well as to evidence the Initial Interim Loan.
F. On or about December 21, 1995, the Purchasers loaned an additional
$300,000 to Unigene (the "Second Interim Loan"), and the parties desire that
Unigene issue and the Purchasers receive additional Senior Secured Convertible
Debentures, of the same tenor as, but of different date than, the aforesaid
Senior Secured Convertible Debentures, in said $300,000 principal amount to
re-evidence and restate the Second Interim Loan.
G. Unigene has hereby agreed to enter into an Amended and Restated
Security Agreement, an Amended and Restated Trademark Security Agreement, an
Amended and Restated Patent Security Agreement, a Leasehold Mortgage, an Amended
and Restated Collateral Assignment of License Rights, an Amended and Restated
Mortgage and Security Agreement, and an Amended and Restated Lender and
Mortgagee's Consent and Waiver, in each case among Unigene and various other
parties and certain other security documents.
H. Unigene now proposes to issue and sell to Purchasers, and the
Purchasers desire to purchase, two 9.5% Senior Secured Convertible Debentures in
the principal amounts of $3,000,000 (Debenture A) and $300,000 (Debenture B),
respectively, and on the terms and conditions hereinafter set forth -- which
modify the terms of the Commitment in certain respects -- the Debentures to bear
interest from November 17, 1995 ($3,000,000) and December 21, 1995 ($300,000),
respectively, but to otherwise be of like and similar tenor.
I. Unigene and the Purchasers agree that, effective as of the date
hereof, (i) the Original Agreement, Original Note and any and all other
agreements and understandings governing the terms of repayment of or evidencing
the Original Obligations, the Initial Interim Loan and the Second Interim Loan
shall be hereby amended and restated in their entirety by this Agreement and by
the issuance of "Debenture A" and "Debenture B" referred to and defined below.
It is the intention of the parties hereto that the execution and delivery of
this Agreement and the issuance of such Debentures hereby not effect a novation,
payment, discharge or extinguishment of any of the Original Obligations, the
Initial Interim Loan or the Second Interim Loan, but merely constitute a
restatement and substitution of the terms of their repayment and security.
J. The Purchasers hereby acknowledge and agree that as of the date of
hereof Unigene is not, and has not been, in default under the Original Note,
Debenture A or Debenture B, as applicable, by reason of the occurrence of the
existing Maturity Date (as defined in the Original Note).
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions
1.1 Definitions. For purposes hereof, the following
terms have the following meanings:
1.1.1 "Affiliate" shall have the meaning ascribed
to such term in Rule 405 promulgated under the Securities Act.
1.1.2 "Assignees' Rights" means all of the
rights, title and interest of the Fund under the Original Documents (other than
the warrants retained by the Fund) subsequently sold and assigned to the
Purchasers under the terms of the Assignment Agreement.
1.1.3 "Associate" shall have the meaning ascribed
to such term in Rule 405 promulgated under the Securities Act.
1.1.4 "cGMP" means that Unigene's Boonton, New
Jersey facility has achieved a status sufficient to allow Unigene to conduct
Phase III (clinical) pivotal trials with the calcitonin produced therein.
1.1.5 "Claim" refers to any and all actions,
causes of action, suits, liabilities, dues, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, and demands whatsoever,
in law or equity.
1.1.6 "DEA" means the United States Drug
Enforcement Administration.
1.1.7 "Encumbrance" means any title defect,
conflicting claim of ownership, order, decree, judgment, stipulation,
settlement, attachment, restriction, lien, pledge, right of first refusal,
option, security interest, mortgage, covenant, or any other encumbrance on
Unigene's right to transfer the "Collateral" (as defined in the Amended and
Restated Security Agreement (the "Security Agreement") to be executed and
delivered by Unigene in connection with this Agreement or any of its other
property other than (i) liens for taxes, assessments and other governmental
charges or levies not due and payable or which are currently being contested in
good faith by appropriate proceedings, and have been adequately reserved for in
the Financial Statements, (ii) mechanics', workmen's, repairmen's,
materialmen's, warehousemen's, vendors', and carriers', liens, and other similar
liens arising in the ordinary course of business for charges which are not
delinquent, or which are being contested in good faith by appropriate
proceedings and have not proceeded to judgment, and have been adequately
reserved for, and (iii) liens in respect of judgments or awards with respect to
which there shall be a good faith current prosecution of an appeal or
proceedings for review which is secured by an appropriate bond or a stay of
execution pending such appeal or proceedings for review and which have been
adequately reserved for.
1.1.8 "FDA" means the United States Food and Drug
Administration.
1.1.9 "Financial Statements" means the (i)
financial statements of Unigene as contained in its Form 10-K for its fiscal
year ended December 31, 1994, (ii) financial statements of Unigene as contained
in its Form 10-Q for its fiscal quarter ended September 30, 1995, (iii)
unaudited balance sheet of Unigene as of November 30, 1995 and, (iv) unaudited
statements of operations, cash flows and shareholders' equity for the months
ended October 31 and November 30, 1995.
1.1.10 "Funding Event" means (i) Strategic
Partner or other corporate partner financing (only that portion received in cash
upfront or to be received in substantially equal installments over a period of
no more than 12 months), (ii) the issuance of Common Stock, (iii) Preferred
Stock with an average life of no less than two years, (iv) debt securities
(including term bank loans) with a maturity of no less than two years, or (v)
any other non-refundable investments made by third parties. For greater
certainty and not by way of limitation, the sale of the Unigene convertible
debentures pursuant to the Regulation S offering managed by ▇▇▇▇▇▇ Investments
LLC shall constitute a "Funding Event."
1.1.11 "GAAP" means Generally Accepted Accounting
Principles as in effect from time to time in the United States.
1.1.12 "Intellectual Property" means Copyrights,
Patent Rights, Trademarks and Trade Secrets. For purposes of this Agreement, (i)
"Copyrights" means United States and foreign copyrights, whether registered or
unregistered, and pending applications to register the same; (ii) "Patent
Rights" means United States and foreign patents, patent applications,
continuations, continuations-in-part, divisions, reissues, patent disclosures or
improvements thereto; (iii) "Trademarks" means United States, state and foreign
trademarks, service marks, logos, trade dress and trade names, whether
registered or unregistered, and pending applications to register the foregoing;
and (iv) "Trade Secrets" shall have the meaning of the term "trade secret" as
such term is defined in the Illinois Trade Secrets Act, 765 ILCS 1605 et seq.,
any amendments thereto and any successor statute thereto.
1.1.13 "Market Value" of the Common Stock on a
given day shall mean the average bid price on the Common Stock on the NASDAQ or
a national securities exchange, as applicable, for the ten trading days
immediately preceding the date for which the Market Value is being calculated.
1.1.14 "Net Proceeds" means the gross proceeds
received by Unigene from any Funding Events minus any banker's, underwriter's,
finder's, accountant's, printer's, filing, legal and other transaction expenses.
1.1.15 "Permits" means permits, licenses, orders,
authorizations, certification or approvals of any federal, state, local or
foreign governmental or regulatory body, including, without limitation, the DEA
and the FDA.
1.1.16. "Permitted Liens" means:
(a) the liens arising under this Agreement or the
Documents in favor of the Purchasers;
(b) with respect to any Person, liens for taxes not
yet due and payable or which are being contested in good faith by
appropriate proceedings diligently pursued; provided that (i) any
proceedings commenced for the enforcement of such liens shall have been
duly suspended and (ii) full provision for the payment of all such
taxes known to such Person has been made on the books of such Person if
and to the extent required by GAAP; and provided further that no liens
arising under the Employee Retirement Income Security Act, as amended
("ERISA"), or relating to environmental obligations or liabilities
shall be deemed "Permitted Liens";
(c) with respect to any Person, mechanics',
materialmen's, carriers', warehousemen's and similar liens arising by
operation of law and in the ordinary course of business and securing
obligations of such Person that are not yet delinquent or are being
contested in good faith by appropriate proceedings diligently pursued,
provided that in the case of any such contest (i) any proceedings
commenced for the enforcement of such liens shall have been duly
suspended and (ii) full provision of the payment of such liens has been
made on the books of such Person if and to the extent required by GAAP;
(d) with respect to any Person, liens arising in
connection with worker's compensation, unemployment insurance, old age
pensions and social security benefits and deposits in connection with
self-insurance arrangements, in each case that are not overdue or are
being contested in good faith by appropriate proceedings diligently
pursued, provided that in the case of any such contest (i) any
proceeding commenced for the enforcement of such liens shall have been
duly suspended, and (ii) full provision for the payment of such liens
has been made on the books of such Person if and to the extent required
by GAAP;
(e) with respect to any Person, liens incurred or
deposits made in the ordinary course of business to secure the
performance of bids, tenders, statutory obligations, trade contracts
(exclusive of obligations incurred in connection with the borrowing of
money or the payment of the deferred purchase price of property),
surety, indemnity, performance, appeal and release bonds and other
obligations of a like nature incurred in the ordinary course of
business, provided that full provision for the payment of all such
obligations has been made on the books of such Person if and to the
extent required by GAAP;
(f) imperfections of title, covenants, restrictions,
easements and other encumbrances on real property that (i) do not arise
out of the incurrence of any indebtedness for money borrowed and (ii)
do not interfere with or impair in any material respect the utility,
operation, value or marketability of the real property on which such
lien is imposed;
(g) liens securing indebtedness in respect of capital
leases, provided that no such lien shall extend to or cover any
property of such Person other than the respective property financed by
such indebtedness and the principal amount of indebtedness secured
thereby is not increased; and
(h) liens which are in existence as of the date
hereof, including extensions and renewals thereof, provided that no
such lien covers any additional property and the principal amount of
indebtedness secured thereby is not increased.
1.1.17 "Person" means an individual, partnership,
corporation, trust, unincorporated organization, government or any department or
agency thereof and any other entity.
1.1.18 "Securities Act" means the Securities Act
of 1933, as amended.
1.1.19 "Strategic Partner" means any Person which
has entered into an agreement with Unigene which provides (a) that such Person
will arrange for marketing, manufacturing and/or distribution services for
Unigene's amidated peptide products developed and/or manufactured utilizing
Unigene's proprietary technology and (b) that such Person or entity will, at
Unigene's option, either (1) make an aggregate payment of at least $2,000,000 to
Unigene in up-front fees and/or scheduled, already known fixed payments over the
term of the agreement or (2) if the marketing territory covered by the agreement
includes the United States, Japan, or European countries, pay Unigene at least a
5% royalty over the term of the agreement.
1.2 Accounting Terms. Any accounting terms used in
this Agreement shall, unless otherwise specifically provided, have the meanings
customarily given them in accordance with GAAP.
2. Issuance of Debentures and Warrants.
2.1 Closing.
(a) On the date hereof, the Purchasers and Unigene
having as of such time and date executed and delivered this Agreement,
Unigene shall deliver to the Purchasers the Senior Secured Convertible
Debentures in the aggregate principal amount of $3,300,000 duly
executed by Unigene, in the forms of Exhibit A and Exhibit B hereto.
(b) This Agreement is being executed and delivered on
March 6, 1996. On or before the end of the fifth business day after the
date hereof, Unigene will deliver or cause to be delivered to
Purchaser:
(i) an Amended and Restated Security Agreement;
(ii) certain amended and restated Subordination
Agreements;
(iii) an amended and restated first mortgage on
Unigene's real property located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Mortgage");
(iv) certain UCC financing statements and UCC-3
statements of assignment executed by Unigene;
(v) Amended and Restated Patent Security Agreement
and Trademark Security Agreements and related
documents; and
(vi) Amended and Restated Collateral Assignment of
License Agreements.
Failure timely to deliver the foregoing shall cause
Unigene forthwith to be in default under this Agreement as well as
under the Debentures.
Unigene shall use best efforts to cause ▇▇▇. ▇▇▇▇
▇▇▇▇ to execute and deliver certain amended and restated Subordination
Agreements on or before the fifth business day after the date hereof,
but shall only be deemed in default (as contemplated by the preceding
paragraph) if the agreements referred to in (ii) are not delivered by
March 31, 1996.
Unigene shall also use best efforts to (i) cause the
Fund to execute and deliver the UCC financing statements and UCC-3
statements of assignment set forth in clause (iv) above, (ii) deliver
to the Purchaser a Leasehold Mortgage with respect to Unigene's rights
under its lease of the premises located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, together with an Amended and Restated Landlord and
Mortgage's Consent and Waiver, (iii) certain UCC-3 termination
statements and subordination agreements, and such other instruments of
similar effect, duly executed by any party (other than the parties
hereto, and including specifically and without limitation the Levy
Family) that has a lien or security interest in any of Unigene's
assets, (iv) title insurance regarding the real property located at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and (v) a lien search
report regarding the real property located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. Failure to deliver the documents identified in
clauses (i) through (v) in the immediately preceding sentence shall
not, however, in the absence of bad faith, constitute a default
hereunder or under the Debentures.
(b) As of the date hereof, the Purchasers shall
transfer to Unigene the Original Note, after first affixing the
following legend thereto:
"The indebtedness evidenced by this promissory note
(as well as certain other indebtedness for money
borrowed) has been re-evidenced and substituted by
that certain Debenture A dated November 17, 1995
executed by Unigene Laboratories, Inc., a Delaware
corporation ("Unigene"), and made payable to
Purchasers pursuant to that certain Amended and
Restated Securities Purchase Agreement dated as of
March 6, 1996 among Unigene and such Purchasers. Such
substitution did not constitute a repayment or
novation of the indebtedness evidenced by this
promissory note."
(c) Unigene shall use best efforts to deliver to
Purchasers the favorable opinions of counsel to Unigene, in form and
substance satisfactory to the Purchasers and substantially similar to
those opinions delivered in connection with the Original Documents.
Failure to deliver such opinions shall not, however, in the absence of
bad faith, constitute a default under this Agreement or under the
Debentures.
2.2 Terms of Debentures. Unigene shall issue to the
Purchasers two Senior Secured Convertible Debentures having the terms described
in this Agreement. Debenture A shall be issued in the principal amount of
$3,000,000 -- relating to the amounts due to Purchasers based upon the November
17, 1995 transactions described above ("Debenture A"). Debenture B shall be
issued in the principal amount of $300,000 -- relating to the amounts due to
Purchasers based upon the December 21, 1995 transaction described above
("Debenture B"). Collectively, Debenture A and Debenture B shall be referred to
herein as the "Debentures".
2.2.1 Maturity Date. The Debentures shall all
mature on November 15, 1998 (the "Maturity Date"). Debenture A shall bear
interest from November 17, 1995 and Debenture B from December 21, 1995.
Debenture A shall be dated November 17, 1995 and Debenture B shall be dated
December 21, 1995.
2.2.2 Principal and Interest. Interest shall
accrue on each Debenture at the rate of nine and one-half percent (9.5%) per
annum, from the date of each Debenture (not the date hereof) until all principal
and interest due on such Debenture are paid in full. Interest on the Debentures
shall be paid in cash semi-annually, on May 15 and November 15 of each year
(each an "Interest Payment Date") commencing May 15, 1996. Interest shall be
calculated on the basis of a 360-day year of 12 30-day months.
Payment of the principal of and interest on the
Debentures shall be made by Unigene to the Purchasers by wire transfer of
immediately available funds.
2.2.3 Conversion.
(a) The Debentures are convertible into Common Stock,
at any time and from time to time, through the Maturity Date. The
Debentures are initially convertible at a price per share equal to
$1.15, subject to the following adjustments (the "Conversion Price").
(b) On April 1, 1996, July 1, 1996, and thereafter
annually on July 1 of each subsequent year (each a "Reset Date"), the
Conversion Price shall be reset to the lower of (i) the Conversion
Price then in effect, or (ii) 85% of the Market Value of the Common
Stock.
(c) In the event that during the Registration Period
(as hereinafter defined) an effective registration statement covering
the public resale of the Common Stock issuable upon conversion of the
Debentures is not in effect for more than five (non-consecutive or
consecutive) months, the Conversion Price then in effect on the
Debentures shall be reduced by 5% each. Subsequent 5% Conversion Price
reductions shall occur if such registration statement is not in effect
as of more than ten, fifteen, twenty, etc. (non-consecutive or
consecutive) month-ends during the Registration Period. Once reduced
under the preceding sentence, the Conversion Price shall not be
adjusted back, regardless of any future effective registration
statements.
2.2.4 Anti-Dilution.
(a) Effectiveness. The anti-dilution provisions
described in this Section 2.2.4 shall be effective with respect to each
Debenture from such Debenture's date of issuance until each such
Debenture is paid in full, including all principal and interest due
thereon, in accordance with the terms thereof.
(b) Computation of Adjusted Conversion Price. The
Conversion Price of the Debentures shall be adjusted proportionately
downward as provided in this Section 2.2.4(b), in the event that
Unigene issues, other than pursuant to the exercise or conversion of a
Convertible Security (as hereinafter defined), or sells any shares of
its Common Stock (including shares held in Unigene's treasury) for a
price below the higher of the then-current Conversion Price or the
then-current Market Value of the Common Stock. Forthwith upon any such
issuance or sale, the Conversion Price shall be reduced to the price
calculated by multiplying the Conversion Price by a fraction, the
numerator of which shall be the sum of (a) the number of shares of
Common Stock outstanding prior to the issuance on a fully-diluted
basis, plus (b) the number of shares of Common Stock which the
aggregate cash consideration received by the Company for such issuance
would have purchased at the higher of the then-current Market Value or
the then-current Conversion Price, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately
following such issuance on a fully-diluted basis.
(c) Options, Rights, Warrants and Convertible and
Exchangeable Securities. Except with respect to rights described in
Section 2.2.4(i), if Unigene issues or sells options, rights or
warrants to subscribe for shares of Common Stock, or issues any
securities or instruments convertible into or exchangeable for shares
of Common Stock (collectively, the "Convertible Securities"), which
Convertible Securities have an exercise, conversion or exchange price
(in the case of warrants or options, when added to the amount paid
therefor) below the higher of the then-current Conversion Price or the
then-current Market Value of the Common Stock, the Conversion Price in
effect immediately prior to the issuance of such Convertible Securities
shall be reduced to a price determined by making a computation in
accordance with the provisions of Section 2.2.4(b) above. The
Conversion Price shall be further adjusted in the manner provided for
herein, and only downwards, in the event that the conversion, exercise
or exchange price of Convertible Securities is reset subsequent to the
issuance thereof. For such purposes, all cash consideration received by
Unigene upon issuance thereof and which Unigene would be entitled to
receive upon exercise, conversion or exchange of such Convertible
Securities, shall be deemed to have been received upon issuance of such
Convertible Securities, and the maximum number of shares (without
giving effect to the anti-dilution provisions of such instruments)
issuable upon full exercise thereof shall be deemed outstanding after
the issuance of such Convertible Securities for which adjustment has
been made hereunder for purposes of the Section 2.2.4(b) calculation.
No adjustment shall be made for the issuance of shares upon the
exercise, conversion or exchange of any Convertible Security if any
adjustment was made with respect to the issuance of such Convertible
Security.
(d) Subdivisions and Combinations. In the event that
Unigene authorizes a stock split of or otherwise subdivides the
outstanding shares of Common Stock, the Conversion Price shall
forthwith be proportionately decreased by multiplying it by a fraction,
the numerator of which shall be one and the denominator of which shall
be the number of shares of Common Stock into which each share existing
before the subdivision was subdivided. Reverse stock splits and similar
combinations of the outstanding shares of Common Stock shall result in
an adjustment reciprocal to that which is described above.
(e) Reclassifications, Consolidations, Mergers, etc.
In case of any reclassification or change of the outstanding shares of
Common Stock (other than a change from par value to no par value, or
from no par value to par value, or as a result of a subdivision or
combination), or in the case of any consolidation of Unigene with, or
merger of Unigene into, another corporation (other than a consolidation
or merger in which Unigene is the surviving corporation and which does
not result in any reclassification or change of the outstanding shares
of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or
in the case of a sale or conveyance to another corporation of the
property of Unigene as an entirety or substantially as an entirety, the
Purchasers shall have the right to convert the Debentures, as of the
date of such reclassification, change, consolidation, merger, sale or
conveyance so as to acquire the kind and number of shares of Common
Stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance due
to the Purchasers or the owners of the shares of Common Stock
underlying the Debentures acquired at the conversion price in effect
immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance; provided that in the event
of a sale or conveyance to another corporation of the property of
Unigene as an entirety or substantially as an entirety or in the case
of a consolidation of Unigene with or a merger of Unigene into another
corporation (hereinafter a "Sale Transaction"), Purchasers may, at
their option, require that the Debentures be paid off, within 45 days
of the closing of the Sale Transaction, as follows: (i) if the
consideration to be paid to the holders of Common Stock under the terms
of the Sale Transaction is either cash or readily marketable stock
(i.e., stock that is traded on the NASDAQ or on a national securities
exchange issued by an issuer with a market capitalization in excess of
$100 million and with an average daily trading volume in excess of the
number of shares issued in the Sale Transaction), then the Purchasers
shall receive such cash or readily marketable stock on the same basis
as all other holders of the Common Stock; however, (ii) if, and to the
extent that, the consideration to be paid to the holders of Unigene
Common Stock under the terms of the Sale Transaction is anything other
than as stated in (i), the Purchasers may require that the Debentures
not be converted but rather be paid off in cash at $1.25 for every
$1.00 then owing on the Debentures (in respect of both principal and
accrued interest), such payment to be made within 10 days of the
consummation of such Sale Transaction.
(f) Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that Unigene shall, except as set
forth in Section 2.2.4(g) and with Purchasers' consent as required by
Section 6.5, at any time prior to the conversion of all of the
Debentures declare a dividend (other than a dividend consisting solely
of shares of Common Stock or rights to purchase Common Stock) or
otherwise distribute without market value consideration paid, to its
shareholders any monies, assets, property, rights, evidences of
indebtedness, securities (other than shares of Common Stock or rights
to purchase Common Stock), whether issued by Unigene or by another
Person, or any other thing of value, the Purchasers shall thereafter be
entitled, in addition to the shares of Common Stock or other securities
receivable upon the conversion thereof, to receive, upon conversion,
the same monies, property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution. At
the time of any such dividend or distribution, Unigene shall make
appropriate reserves to ensure the timely performance of the provisions
of this Section 2.2.4(f).
(g) Subscription Rights for Shares of Common Stock or
Other Securities. In the case Unigene or an Affiliate of Unigene shall
at any time, without market value consideration paid, distribute to its
shareholders any rights to subscribe for shares of Common Stock or any
other securities of Unigene or of such Affiliate, the Purchasers shall
be entitled, in addition to the shares of Common Stock or other
securities receivable upon conversion, to receive such rights at the
time such rights are distributed to the other shareholders of Unigene,
on the same basis as the Purchasers would have received such rights had
the Debentures been converted immediately prior to the record date for
such distribution.
(h) Consideration; Expenses, etc. For the purposes
hereof, the consideration received by Unigene in any transaction shall
be deemed to be the gross amount received therefor before deducting
underwriters' discounts, legal fees, finders fees and other costs and
expenses incurred in connection with such issuance or sale determined
as of the date not later than 45 days after the date of the close of
the offering with respect to such issuance or sale.
(i) Exceptions to Adjustments. Notwithstanding
anything to the contrary herein set forth, no adjustment shall be
required to be made:
(i) upon the issue or exercise of any conversion or
exercise option associated with the Debentures or the
Purchased Warrants; or
(ii) upon the exercise of any option heretofore or
hereafter granted to employees, outside directors or
consultants to Unigene pursuant to any benefit plan
of Unigene; or
(iii) upon the issuance or sale of Common Stock or
other securities upon the exercise or exchange of any
Convertible Securities to subscribe for or purchase
Common Stock which were outstanding on the date
hereof.
2.2.5 Preemptive Rights. The Purchasers shall
have preemptive rights to acquire, on the same terms as any other purchaser in
any public or private financing transaction by Unigene of Common Stock or
securities (other than upon the exercise, conversion or exchange of outstanding
securities) exercisable to purchase or convertible into Unigene Common Stock (or
any security with the economic terms of the Common Stock or such securities,
whether a "synthetic equity," a "swap" or whatever), up to such amount of such
Common Stock or securities as would result in the Purchasers holding the same
percentage of the outstanding Common Stock, on a fully diluted basis, as such
Purchasers held prior to such issuance, disregarding securities whose exercise
or conversion price is $3.75 or more in excess of the average closing bid price
for the Common Stock for the thirty trading days prior to such issuance of
additional securities by Unigene. Such preemptive rights shall not apply to (i)
the contemplated offering by Unigene of its convertible debentures through
▇▇▇▇▇▇ Investments, LLC and (ii) other offerings of securities prior to December
31, 1996 which offerings are individually for 50,000 shares of Common Stock or
less, and which in the aggregate total 250,000 shares of Common Stock or less.
2.2.6 Registration Rights. Unigene shall file and
use commercially reasonable efforts to keep a shelf registration statement
effective covering resales of the Common Stock issuable upon conversion of the
Debentures for a period (the "Registration Period") commencing no later than
June 30, 1996 and ending no later than the earlier of (i) February 28, 1999, and
(ii) the date upon which the Purchasers are able to resell all of the Common
Stock into which the Debentures are convertible without registration.
2.2.7 Redemption.
(a) The Debentures are subject to redemption at the
election of Unigene as of the 15th day of each month beginning December
15, 1996, upon not less than thirty (30) days' notice, in a maximum
principal amount of up to $495,000 per month, provided that the average
closing bid price of the Common Stock on the NASDAQ or a national
securities exchange exceeds 200% (the "Redemption Target Percentage")
of the Conversion Price for 20 of the 30 trading days preceding the
date of notice. Such required Redemption Target Percentage shall be
adjusted downward each month by 2.083% such that the required
Redemption Target Percentage will be 175% of the Conversion Price after
December 15, 1997, as contemplated by the following paragraph. The
redemption price shall be equal to 100% of the principal amount
redeemed, plus any accrued but unpaid interest to the redemption date.
Notwithstanding the foregoing sentence, interest installments whose
stated maturity is on or prior to any such redemption date will be
payable to the holders of such Debentures as of such redemption date.
(b) The Debentures are subject to redemption at the
election of Unigene as of the 15th day of each month beginning December
15, 1997 upon not less than thirty (30) days' notice, in a maximum
principal amount of up to $1,100,000, provided that the average closing
bid price for the Common Stock on the NASDAQ or a national securities
exchange exceeds 175% of the Conversion Price for 20 of the 30 trading
days preceding the date of notice. The redemption price shall be equal
to 100% of the principal amount redeemed plus any accrued but unpaid
interest to the redemption date. Notwithstanding the foregoing
sentence, interest installments whose stated maturity is on or prior to
such redemption date will be payable to the holders of such Debentures
as of such redemption date.
(c) In the event that either (i) the Common Stock is
not listed on NASDAQ or any national securities exchange or (ii) the
Common Stock issuable upon conversion of the Debentures is not the
subject of an effective registration statement permitting the immediate
resale of such Common Stock, Unigene cannot exercise its redemption
option. In the event that Unigene is eligible to and does elect to
redeem any portion of the Debentures, the Debenture holders shall have
the right to convert all or part of the Debentures to Common Stock at
any time through the close of business on the redemption date of the
Debentures. Upon any conversion of the Debentures, the Debenture
holders shall be entitled to receive any interest accrued on such
Debentures through the close of business on the conversion date.
(d) In the event of redemption of the Debentures in
part only, a new Debenture or Debentures for the unredeemed portion
will be issued in the name of the holder of the Debenture upon
cancellation of the redeemed Debenture.
2.2.8 Security. The amounts due under the
Debentures, including all accrued but unpaid interest, shall be secured by
certain Collateral as provided in the Security Agreement.
2.2.9 Transfer.
(a) Unigene shall cause to be kept at its corporate
offices a register (the register maintained in such office and in any
other office or agency of Unigene being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, Unigene shall provide for the
registration of the Debentures and of the registration of transfers of
the Debentures. Unigene shall act as Security Registrar for the purpose
of registering Debentures and transfers of Debentures as herein
provided.
(b) Upon surrender for registration of transfer of
any Debenture at the office of Unigene, Unigene shall execute and make
available for delivery, in the name of the designated transferee or
transferees, one or more new Debentures of the same series, of any
authorized denominations and of a like aggregate principal amount and
maturity or expiration date. All Debentures issued upon any
registration of transfer or exchange of Debentures shall be the valid
obligations of Unigene, evidencing the same obligation, and entitled to
the same benefits under this Agreement, as the Debentures surrendered
upon such registration of transfer or exchange.
(c) Every Debenture presented or surrendered for
registration of transfer or for exchange shall (if so required by
Unigene) be duly endorsed or be accompanied by a written instrument of
transfer in a form satisfactory to the Security Registrar duly
executed, by the holder thereof or his attorney duly authorized in
writing.
(d) Unless otherwise provided in the Debentures to be
transferred or exchanged, no service charge shall be made for any
registration of transfer or exchange of Debentures.
(e) Unigene shall not be required to register the
transfer of or exchange any Debenture selected for redemption in whole
or in part, except the unredeemed portion of any Debenture being
redeemed in part.
2.2.10 Legend. Each Debenture and each certificate
for shares of Common Stock issued upon the conversion of the Debentures shall
bear a restrictive legend as contemplated by Section 4.3 of this Agreement.
2.2.11 Authentication. The Debentures shall be
executed on behalf of Unigene by its Chairman of the Board, its President or one
of its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries.
The Debentures together with any other document executed pursuant to this
Agreement are hereinafter referred to collectively as the "Documents."
2.2.12 Limit on Purchasers' Equity Ownership and
Number of Shares Issuable upon Conversion of the Debentures. Purchasers may not
acquire, pursuant to anti-dilution adjustments or otherwise, in excess of a
19.5% "fully-diluted" equity interest in Unigene's Common Stock, calculated on
the basis prescribed by Securities Exchange Act Rel. No. 8325, i.e., including
all shares of Common Stock into which the Debentures and the Purchased Warrants
are convertible or exercisable (regardless of conversion or exercise price), as
the case may be, as outstanding but excluding all shares of Common Stock subject
to acquisition upon conversion or exercise of any derivative securities held by
any other investors (again, regardless of conversion or exercise price).
Consequently, at each time that the number of shares of Common Stock
beneficially owned by the Purchasers (i.e., into which the Debentures and the
Purchased Warrants are convertible or exercisable) is adjusted upward through
the reset of the Conversion Price or the Purchased Warrants' exercise price or
otherwise, a sufficient principal amount of the Debentures shall be
automatically converted into such principal amount of Non-Convertible Senior
Secured Debentures, in each case due on November 15, 1998 (and otherwise upon
events of default as specified in the Debentures) and bearing interest at 17%
per annum, so that Purchasers' "fully-diluted" equity interest, calculated as
set forth above, does not exceed 19.5%. The Non-Convertible Senior Secured
Debentures shall be secured pari passu with the Debentures.
In addition to the foregoing limitation on
Purchasers' aggregate equity interest in Unigene, and, notwithstanding any term
or provision of this Agreement or the Debentures to the contrary, in no event
may the total number of shares issuable upon conversion of the Debentures,
irrespective of which party or parties holds the Debentures at the time of
conversion, exceed 19.5% of Unigene's outstanding Common Stock as of the date
hereof.
3. Representations and Warranties of Unigene. Unigene hereby
represents and warrants to the Purchasers that:
3.1 Standing and Qualification. Unigene is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Unigene is not, nor is it required to be, qualified or
licensed to transact business as a foreign corporation under the laws of any
State other than the State of its incorporation and New Jersey in order to
enable it to conduct its business as it is presently being conducted, except
where the failure to be so qualified or licensed is not reasonably expected to
have a material adverse effect on its financial condition, assets, business or
results or operation or its ability to perform its obligations hereunder.
Unigene is duly qualified as a foreign corporation and is in good standing under
the laws of the State of New Jersey. Unigene has full corporate power and
authority to own or lease its properties and other assets and to conduct its
business as it is now being conducted.
3.2 Subsidiaries. Except as set forth in Schedule
3.2, Unigene does not own any capital stock or other voting securities of any
corporation, partnership or other organization. Unigene is not a party to any
joint venture or partnership. Unigene is the sole vehicle through which Unigene
and its Affiliates conducts its and their business.
3.3 Capitalization. The authorized capital stock of
Unigene consists of 48,000,000 shares of Common Stock, of which, as of December
31, 1995, 23,813,171 shares are issued and outstanding. There are no dividends,
whether current or accumulated, due or payable on any of the capital stock of
Unigene.
3.4 Interests in Unigene Securities. Except as
disclosed in Unigene's Form 10-Q for the quarter-end September 30, 1995 (the
"1995 Form 10-Q") or Schedule 3.4, there are no outstanding options, convertible
securities, warrants or other rights to subscribe for or purchase from Unigene,
nor any plans, contracts or commitments providing for the issuance by Unigene
of, or for the granting by Unigene of rights to acquire: (i) any capital stock
in Unigene; or (ii) any securities convertible into or exchangeable for any
capital stock or other ownership interest in Unigene.
3.5 Authority. Unigene (i) has the full corporate
right, power and authority to execute and deliver this Agreement and to perform
its obligations hereunder and to execute, deliver and perform its obligations
under the Documents (as defined in Section 2.2.11), and (ii) has taken all
necessary corporate actions to approve and adopt this Agreement and such
Documents and to authorize the performance of this Agreement and such Documents.
Upon execution and delivery, this Agreement and each of the Documents to which
Unigene is a party is the duly authorized, valid and binding obligation of
Unigene, enforceable against it, in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or similar laws from time to time in effect which affect the
enforcement of creditors' rights generally and by legal and equitable
limitations on the availability of specific performance and other equitable
remedies against it, public policy, and with respect to the priority of
Purchasers, security interest, subject to applicable filing requirements.
3.6 Absence of Conflicts and Consents. Neither the
execution and delivery of this Agreement and the Documents nor the consummation
of the transactions contemplated hereby or thereby will (i) breach or violate
any of the terms and conditions of the Articles of Incorporation or Bylaws of
Unigene, or (ii) breach or violate any judgment, order, injunction, decree or
ruling of any court, arbitrator or any governmental authority, domestic or
foreign, or any material contract, material agreement or other material
instrument to which Unigene is a party or any of its respective properties,
rights or assets is subject or which it is bound or with any statute, law,
ordinance, rule or regulation of any federal, state, local or foreign
governmental authority or regulatory body, the breach or violation of which (A)
would have a material adverse effect on Unigene's properties, assets, business,
operations, prospects or financial condition or (B) would impair the ability of
Unigene to execute, deliver or perform its obligations under this Agreement or
any Document, (C) would terminate or result in the cancellation of any payments
under any such agreement, contract or instrument or (D) would result in any
material damages or result in or, except as contemplated by this Agreement or
the Documents, require the creation or imposition of any Encumbrance of any
nature upon or with respect to any of its properties or assets.
3.7 Title to; Condition of Assets; Real Property.
Except as set forth in Schedule 3.7, all of Unigene's assets, including the
Premises (as defined in the Mortgage) and Collateral (as defined in the Security
Agreement), are owned free and clear of all material Encumbrances. All such
personal property is in good operating condition and in a state of reasonable
maintenance and repair, fit for the purpose for which it is intended. Unigene is
the lessee of property located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ pursuant to a
lease dated May 20, 1993, as amended by First Amendment to Lease on that same
day. Such lease is in full force and effect and has not been further modified or
amended, and no event has occurred that, with the passage of time or notice,
would constitute a default thereunder. All other leases that, individually or in
the aggregate, are material are valid and subsisting and are in full force and
effect in all material respects.
3.8 Conduct of Business.
(a) Since September 30, 1995, except as set forth in
Schedule 3.8 or in its 1995 Form 10-Q, Unigene has preserved
substantially intact its business organization.
(b) Except as set forth in Schedule 3.8 or in its
September 30, 1995 Form 10-Q, Unigene has conducted its business only
in the ordinary and usual course of business consistent with past
practice and there has not been:
(i) any increase in its indebtedness for borrowed
money incurred by or on behalf of Unigene or any
incurrence of any other material obligation or
liability (fixed or contingent) by or on behalf of
Unigene, except for the additional indebtedness
incurred by Unigene through borrowings from the
Purchasers, and except for obligations incurred in
the ordinary course of business consistent with past
practice;
(ii) except for increased indebtedness and decrease
in stockholders equity, any material adverse change
in its assets, liabilities, properties, business,
financial condition or results of operations or any
development of which its management has knowledge
which is reasonably likely to result in any such
change other than any such change resulting from
changes in general economic conditions;
(iii) any damage, destruction, loss or claim to or
against any of its property or other assets, whether
or not covered by insurance, which materially
adversely affects its assets, properties, business,
profits or financial condition;
(iv) any sale, lease, transfer or other disposition
or mortgage or pledge of any of its properties or
other assets, or an imposition of any Encumbrance on
any of its properties or other assets, other than
transactions in the ordinary course of business
consistent with past practice;
(v) any cancellation of any debts owed to or claims
held by or on behalf of Unigene, or any waiver or
release of any of its rights of material value;
(vi) any dividend or other distribution or payment in
respect of, any subdivision, consolidation or other
recapitalization of its capital stock or any
declaration or authorization of any of the foregoing;
(vii) any issuance of additional warrants or rights
to acquire any equity security or any security
convertible into any equity security of Unigene,
except as contemplated by this Agreement; or
(viii) other than as contemplated by the Commitment,
Unigene has not agreed or consented to cause or
permit in the future (upon the happening of a
contingency or otherwise) any of its properties or
assets whether now owned or hereafter acquired, or
any income or profits therefrom, to be or become
subject to a lien.
3.9 Financial Statements; SEC Filings. The Financial
Statements (i) were prepared in accordance with the books of account and records
of Unigene, which accurately reflects all assets and transactions of Unigene,
and (ii) present fairly Unigene's financial condition as of the dates thereof
and its results of operations for the periods then ended in accordance with
GAAP, subject, in the case of the interim Financial Statements, to routine,
recurring year-end adjustments. As of the date hereof, except as set forth in
the Financial Statements, Unigene has no material contingent liabilities,
liabilities for taxes, unusual commitments or unrealized or unanticipated losses
which are required to be reflected on a balance sheet prepared in accordance
with GAAP. Unigene has delivered to the Purchasers its Forms 10-K for the fiscal
years ended December 31, 1993 and 1994 and its Forms 10-Q for the first three
fiscal quarters of 1995 as filed with the Securities Exchange Commission. Such
reports do not contain any untrue statement or omission of any material fact.
3.10 Tax and Other Returns and Reports. (i) All
federal, foreign, state, provincial and local tax returns and tax reports (or
extensions relating thereto) required to be filed by or on behalf of Unigene or
any affiliated, combined or unitary group of which Unigene is or was a member
have been filed on a timely basis with the appropriate governmental agencies in
all jurisdictions in which such returns and reports are required to be filed and
all such returns and reports were true and correct in all material respects when
filed; and (ii) all federal, foreign, state, provincial and local income,
profits, franchise, sales, use, occupancy, property, severance, excise,
withholding, value added and other taxes as shown on such returns (including
interest and penalties) due from Unigene either directly, as part of the
consolidated tax return of another taxpayer, or otherwise, have been fully and
timely paid, or where payment is not required to have been made, Unigene has set
up an adequate reserve or accrual for such payment. Unigene knows of no basis
for any other tax, assessment or governmental charge that, individually or in
the aggregate, could reasonably be expected to have a material adverse effect on
Unigene, its operations or prospects.
3.11 Intellectual Property.
(a) Schedule 3.11(a) accurately lists all registered
United States and Foreign Patents and Trademarks, and all pending
United States Patent and Trademark applications that are owned or
controlled by Unigene.
(b) Schedule 3.11(b) accurately lists all
Intellectual Property owned or controlled by others besides Unigene,
the use of which is licensed to Unigene. Unigene is not aware of any
other Intellectual Property owned or controlled by others besides
Unigene that is material to the ability of Unigene to operate its
business as it is currently conducted or as currently contemplated.
(c) Schedule 3.11(c) accurately lists all
Intellectual Property rights licensed or granted by Unigene to third
parties.
Unigene is the sole and exclusive owner of the entire
right, title and interest in and to the Intellectual Property
identified on Schedule 3.11(a) and except for such licenses and rights
identified on Schedule 3.11(c), Unigene has not granted nor does there
exist by implication or operation of law, any license or other right in
respect thereof which does or which will, subsequent to the date
hereof, permit or enable any Person other than Unigene to use the
Intellectual Property and, moreover, except as set forth in Schedule
3.11(c), none of said Intellectual Property is subject to any
Encumbrance. As of the date hereof, there is no pending or, to the best
knowledge of Unigene, threatened claim against Unigene asserting (A)
that Unigene's use of any of said Intellectual Property infringes or
violates any rights of third parties, (B) that the past or present
conduct of Unigene's business infringes or violates the rights of third
parties, (C) that any third parties have any rights to use any of said
Intellectual Property or (D) except as set forth in Schedule 3.15, that
any third parties have or will have any right which could adversely
affect Unigene's ability to use any of the Intellectual Property after
the date hereof; and to the best knowledge of Unigene, there is no
basis for any claim of the foregoing types. Neither the Intellectual
Property nor Unigene's past or present conduct of its business
infringes or violates the rights of third parties. During the past five
(5) years, Unigene has not given any notice to any third parties
asserting infringement by such third parties of any of said
Intellectual Property. To the best knowledge of Unigene, there is no
material violation by any person of any right of Unigene with respect
to the Intellectual Property. Unigene is not aware of any bars or other
restrictions with respect to its rights to utilize any of said
Intellectual Property, and no bars or other restrictions on Unigene's
rights to utilize any of said Intellectual Property will be created by,
or will, by reason of any action or inaction by Unigene, before the
date hereof, exist after the consummation of the transactions
contemplated hereby.
Nothing has come to the attention of Unigene which
has led Unigene to form the opinion that any of said Intellectual
Property is invalid or that its rights in any of said Intellectual
Property are unenforceable in any way, with the proviso that pending
patent applications are merely requests for patents, and there can be
no guarantee that those requests will be granted and that any patents
will necessarily be issued based upon said pending applications, and
with the further proviso that applications for trademark registrations
are merely requests for registration which may or may not ultimately
result in registration with the U.S. Patent and Trademark office. The
execution and delivery of this Agreement will not affect or impair
Unigene's right to continue to use all of said Intellectual Property
without the impairment or alteration thereof and without the payment of
any license or other fees (other than that the license fees payable
under the License Agreements identified in Schedule 3.11(b)).
All of the License Agreements identified on Schedule
3.11(b) are valid agreements, enforceable in accordance with their
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, bulk sales or
similar laws from time-to-time in effect which affect the enforcement
of creditors' rights generally and by legal and equitable limitations
on the availability of specific performance and other equitable
remedies. There is no pending or, to the best knowledge of Unigene,
threatened claim against either Unigene or, to the best knowledge of
Unigene, the licensor of any Licensed Intellectual Property asserting
that any of the Licensed Intellectual Property infringes or conflicts
with the rights of third parties, or that the present or past conduct
of Unigene's business infringes or violates the rights of third
parties, and to the best knowledge of Unigene, no basis for any such
claim exists.
3.12 ERISA. Unigene has complied in all material
respects with the requirements of ERISA; no Reportable Event (as defined in
ERISA) has occurred and is continuing with respect to any Plan (as defined in
ERISA); and it has no unfunded vested liability under any Plan.
3.13 Permits and Licenses.
(a) List of Governmental Permits. Set forth on
Schedule 3.13(a) is a list and description of all Permits which are
issued to, held or used by Unigene, or for which Unigene has applied,
and which are material to the operation and development of its
business. There are no other Permits which are material to the
operation of Unigene's business as now conducted. Except as otherwise
indicated, all Permits listed in Schedule 3.13(a) are in good standing,
valid and effective in accordance with their respective terms. Unigene
owns the Permits, free and clear of all Encumbrances and subject to no
Claims.
(b) Compliance with Permits. Except as set forth on
Schedule 3.13(b), Unigene is in material compliance with all Permits
listed on Schedule 3.13(a) and no governmental proceedings or
investigations are pending or, to the best knowledge of Unigene,
threatened against it relating to noncompliance with such Permits.
3.14 Governmental Authorizations. No consent,
approval or authorization of, or registration, filing or declaration with, any
governmental authority is required in connection with the execution, delivery or
performance by Unigene of this Agreement or any of the Documents other than
those required with respect to the registration contemplated in Section 2.2.6
and the security interest filings contemplated in this Agreement and the
Documents.
3.15 Litigation and Proceedings. Except as set forth
on Schedule 3.15, there are no causes of action or other litigations or
arbitrations or regulatory, administrative, zoning or other governmental
proceedings or investigations presently pending or, to the best knowledge of
Unigene, threatened, before any court, arbitrator, governmental agency or other
forum either against Unigene or any of its properties or assets which relate in
any way to Unigene or any of its properties or assets.
3.16 FDA Status. The Unigene manufacturing process is
undergoing formal validation in order to obtain GMP (Good Manufacturing
Practice) status. Unigene has completed testing of the manufacturing equipment
and is now performing the various manufacturing process operations. The
validation process is essentially complete when three consecutive "conformance
batches" (batches in which all of the in-process and final product test
specifications have been met and which are performed in compliance with all cGMP
requirements) of product have been prepared. Unigene has received no notice, and
is not aware of any state of facts that would lead it to believe, that its
Boonton, New Jersey facility will not receive FDA validation to allow Unigene to
produce its Calcitonin for human use in the United States. Finally, Unigene has
been advised verbally by the FDA that only brief clinical programs designed to
test safety and bioequivalence should be required for the approval of Unigene's
injectable Calcitonin product. Following validation, Unigene intends to file an
IND (investigational new drug application) and initiate clinical programs to
support such product approval in 1996.
3.17 Environmental Laws. Unigene has received no
notice, and is not aware of any state of fact that would lead it to believe that
there exists, or has existed at any real property occupied by it, any hazardous
material in violation of any environmental law, rule or regulation.
3.18 Judgments, Orders and Consent Decrees. Unigene
is not subject to any judgment, order or decree of, or agreement with, any
court, arbitrator or regulatory authority limiting, restricting or adversely
affecting its conduct, financial condition or operating result, and no such
judgment, order, decree or agreement is pending.
3.19 No Omissions. No representation, warranty,
covenant or agreement of Unigene in this Agreement, any schedule or exhibit
attached hereto, or any Document contains nor shall contain any untrue statement
of material fact nor omits nor shall omit to state any material fact necessary
to make the statements contained herein and therein not misleading.
4. Representations and Warranties of the Purchasers.
4.1 Standing and Capacity.
(a) Olympus represents and warrants to Unigene that
it has all requisite legal and corporate power to execute and deliver
this Agreement and the other Documents to which it is a party, to
purchase the Debentures, and to perform its obligations under this
Agreement and the other Documents to which it is a party. Olympus has
the capacity to enter into the transactions contemplated by the
Documents; neither the execution, delivery nor performance of this
Agreement or the Documents violates any law, rule or regulation, of any
jurisdiction, court or administrative judgment, order or decree or any
agreement applicable to or binding upon Olympus.
(b) ▇▇▇▇▇▇ represents and warrants to Unigene that it
has all requisite legal and partnership power to execute and deliver
this Agreement and the other Documents to which it is a party, to
purchase the Debentures, and to perform its obligations under this
Agreement and the other Documents to which it is a party. ▇▇▇▇▇▇ has
the capacity to enter into the transactions contemplated by the
Documents; neither the execution, delivery nor performance of this
Agreement or the Documents violates any law, rule or regulation, of any
jurisdiction, court or administrative judgment, order or decree or any
agreement applicable to or binding upon ▇▇▇▇▇▇.
4.2 Authority. Each Purchaser represents and warrants
to Unigene that all action necessary for the purchase of the Debentures and the
performance of its obligations under this Agreement and the other Documents to
which it is a party has been duly taken. The Agreement is valid and binding upon
it and enforceable in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, reorganization,
bulk sales, or similar laws from time to time in effect which affect the
enforcement of creditors' rights generally and by legal and equitable
limitations on the availability of specific performance and other equitable
remedies against it, public policy.
4.3 Investment Representation. Each Purchaser
represents and warrants to Unigene that (i) it is acquiring the Debentures for
investment, for its own account as principal and not with the current view to
distribution or trade thereof, (ii) it is an "accredited investor" as defined in
Rule 501(a) and (iii) the questionnaire executed and delivered by it to Unigene
in connection with the transactions contemplated hereby is true and accurate in
all material respects and does not omit any material information required to be
stated therein or necessary to make the Statements made therein not misleading.
The Debentures and shares issued upon conversion of the Debentures shall bear
restrictive legends that are customary for securities that are issued without
registration under the Securities Act in reliance on a "private placement
exemption."
5. Affirmative Covenants of Unigene. Unigene covenants that,
until the principal of, and interest on, the Debentures and all other monetary
obligations to the Purchasers under the Debentures have been paid in full, it
will:
5.1 Corporate Existence. Do all things necessary to
preserve and keep in full force and effect its existence (corporate or other)
and existing name, rights and franchises, and qualify and remain qualified to do
business in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business, operating results, assets or condition
(financial or otherwise) or prospects.
5.2 Insurance. Schedule 5.2 lists insurance coverage
currently maintained by Unigene. No change in such insurance coverage will be
made without the Purchasers' consent, which will not be unreasonably withheld or
delayed.
5.3 Keeping of Records and Books of Account. Keep
adequate records and books of account, in which complete entries will be made
reflecting all of Unigene's financial transactions.
5.4 Inspection Rights. At any reasonable time, and
from time to time, permit representatives of the Purchasers, upon reasonable
notice to Unigene, to examine and make copies of and abstracts from its records
and books of account of, and visit its properties during normal business hours
and to discuss its affairs, finances and accounts with any of its officers and
its independent certified public accountants. The Purchasers agree to keep in
confidence and not to utilize or disclose any confidential information provided
to them, including, without limitation, financial statements or information,
business plans, proposed financing or acquisition plans, information concerning
Unigene's products, patents, patent applications, trade secrets, secret
processes or other proprietary information unless and until such confidential
information is publicly disseminated by Unigene. This confidentiality provision
shall survive the execution and delivery of this Agreement, but if Unigene
defaults on its obligations and the Purchasers take possession of the
Collateral, such confidentiality obligation shall terminate to the extent
reasonably necessary to enable the Purchasers to sell any of the Collateral. In
such event, the Purchasers may disclose or use any confidential information in a
manner as it deems necessary (in its sole judgment) to obtain payment of all
Obligations.
5.5 Compliance with Laws. Comply with the applicable
requirements of all laws and all rules, regulations and orders of any
governmental authority, the violation of which might be reasonably expected to
have a material adverse effect on its business, operating results, assets or
condition (financial or other).
5.6 Reporting Requirements. Furnish to the Purchasers
(a) (i) Commencing with the month of March, 1996, as
soon as practicable and in any event within 40 days
after the close of each monthly accounting period,
unaudited financial statements, consisting of a
balance sheet as at the end of such monthly period
and statements of operations, and cash flows of
Unigene for such monthly period and for the period
from the beginning of the fiscal year to the end of
such monthly period;
(ii) Commencing with the quarterly period ending
March 31, 1996, as soon as possible and in any event
within 50 days after the close of each of the first
three quarterly accounting periods of each fiscal
year, unaudited financial statements, consisting of a
balance sheet as at the end of such quarterly period
and statements of operations, cash flows,
shareholders' equity for such quarterly period and
for the period from the beginning of the fiscal year
to the end of such quarterly period; and
(iii) Annually, as soon as available but in any event
within 95 days after the close of each fiscal year of
Unigene, a balance sheet of Unigene as at the end of
such year and statements of income and retained
earnings and of cash flow of Unigene reflecting the
results of its operations during such year, which
financial statements shall be used by Unigene's
independent public accountants in the preparation of
Unigene's audited financial statements for such year
end, certified by the President and Treasurer of the
Unigene to fairly present its financial condition at
such year end and the results of its operations for
such period in accordance with GAAP.
The financial statements required to be delivered
under this Subsection (a) shall contain reasonable
detail and shall be certified by the Chief Executive
Officer of Unigene and, in the case of the financial
statements required to be delivered under clause (ii)
above, as (x) having been prepared in accordance with
GAAP, subject to normal year-end audit adjustments
(except that footnotes shall not be required on
monthly and quarterly financial statements), (y)
being complete and correct, and (z) presenting fairly
the financial condition, results of operations,
shareholders' equity and cash flows which they
purport to present.
(b) Together with the quarterly financial statements
furnished pursuant to Section 5.6(a), there shall be delivered to the
Purchasers a certificate signed by the Chief Executive Officer of
Unigene stating that they have caused a review of the affairs of
Unigene to be made and that based thereon nothing has come to their
attention which would lead them to believe that any event of default
("Event of Default") under the terms of the Debenture or any event
which, with the lapse of time or the giving of notice or both could
become an Event of Default has occurred or exists hereunder or, if such
is not the case, specifying the nature thereof and what action has been
taken or is being taken or is proposed to be taken with respect
thereto.
(c) Promptly after Unigene discovers the occurrence
of any Event of Default or any event which, with the lapse of time or
the giving of notice or both, could become an Event of Default, a
statement of Unigene's President or Chief Financial Officer setting
forth details of such Event of Default or other event and the action
taken, or proposed to be taken, with respect thereto.
(d) Promptly after Unigene has knowledge thereof,
notice of any action, suit or proceeding known to it before any court
or governmental authority, domestic or foreign, which might reasonably
be expected to have a material adverse effect on its business,
earnings, assets or condition (financial or other).
(e) Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports which
Unigene sends to its shareholders, and copies of all reports, and all
registration statements it files with the U.S. Securities and Exchange
Commission (the "SEC") or the National Association of Securities
Dealers, Inc.
(f) Such other information respecting the business,
operating results, assets or condition (financial or other) of Unigene
as the Purchasers may reasonably request from time to time.
(g) Promptly, but in any event not later than three
business days after the receipt of a reasonable written demand from the
Purchasers, a certificate of its Chief Executive Officer or the Chief
Financial Officer, in form satisfactory to the Purchasers, stating and
acknowledging (a) the then outstanding principal balance of the
Debentures, (b), the fact that there are no defenses, offsets or
counterclaims thereto (or stating such defenses, offsets or
counterclaims, if any); (c) that no Event of Default and no event
which, with the giving of notice or the lapse of time or both, would
constitute such an Event of Default exists, or if such is not the fact,
the facts and circumstances relating to such Event of Default or other
event; and (d) that no litigation or administrative proceeding has been
instituted by or against Unigene if determined adverse to Unigene would
have a material adverse effect on its business, operating results,
assets or condition (financial or other) or, if such is not the fact,
the facts and circumstances relating to such litigation or proceeding.
5.7 Further Assurances. Unigene shall, without
further consideration, take all such other action and shall procure or execute,
acknowledge, and deliver all such further certificates, conveyance instruments,
consents, and other documents the Purchasers or their counsel may reasonably
request to perfect and protect Purchasers' rights as contemplated by this
Agreement, including, without limitation, their security interest in and to the
Collateral.
6. Negative Covenants. Unigene covenants that until all
amounts due under the Debentures have been fully paid, unless otherwise
expressly consented to in writing by the Purchasers, it will not:
6.1 Investments. Make or permit to exist any
investment in securities or other financial instruments (including loans and
advances), except:
(a) Accounts receivables arising in the ordinary
course of business;
(b) Notes or other securities in connection with any
bona fide settlement of account receivables owing in the ordinary
course of business;
(c) Direct obligations of the United States of
America or any agency thereof, solely for investment purposes, provided
the same shall mature within twelve months;
(d) Certificates of deposit, time deposits, bankers'
acceptances, commercial paper and similar short term bank deposits or
instruments having a maturity of not more than twelve months of a
commercial bank; and
(e) Money market funds with a AAA rating.
6.2 Impair Value. Take any action which would result
in a material impairment of the overall value of any property on which the
Purchasers shall have a lien.
6.3 Change of Business. Conduct any business, the
nature of which would differ in any material respect from that presently
conducted by it or contemplated as set forth in its 1994 Annual Report and
September 30, 1995 Form 10-Q or which does not complement such business.
6.4 No New Entities. Except as set forth in Schedule
3.2, form or acquire any corporation, partnership, joint venture or other kind
of entity for the purpose of transferring to such person or entity any of its
assets or business of the type presently conducted by it, unless the assets so
transferred remain subject to the Purchasers' lien and Unigene's interest in
such entity is pledged to the Purchasers.
6.5 Merger; Sale of Assets; Reclassification. (a)
Enter into any merger or consolidation in which it is not the surviving entity,
(b) liquidate, wind up its affairs or dissolve, (c) sell, lease, transfer,
convey or otherwise dispose of all or substantially all of its assets or capital
stock or (d) reclassify or change the outstanding shares of Common Stock (other
than a change from par value to no par value or from no par value to par value
or as a result of a subdivision or combination).
6.6 Dividends; Distributions. Directly or indirectly,
declare or pay dividends or otherwise make any distribution or assets or
anything of value in respect of its Common Stock or capital shares, or redeem or
repurchase any shares of the Common Stock or capital shares.
6.7 Increase in Compensation. Until such time as
Unigene's Boonton facility achieves cGMP status and Unigene has entered into a
definitive agreement with one or more Strategic Partners, directly or
indirectly, increase compensation paid to any person who is or was an officer,
director or Affiliate of Unigene. At such point as the conditions in the
foregoing sentence have been met, then Unigene's directors may increase the
compensation of each officer, director or Affiliate by 10%, and thereafter may
provide additional reasonable and customary increases in compensation to such
persons, as the directors may, in their discretion, determine.
6.8 No Amendment. Make any material amendment,
modification or change to any agreement or instrument respecting indebtedness
for money borrowed, or waive any of its rights or privileges thereunder, without
the Purchasers' prior written consent which will not be unreasonably withheld or
delayed.
6.9 Transactions with Affiliates and/or Associates.
(a) Enter into any transactions with an Affiliate or
Associate of Unigene, except as contemplated in this Agreement or
except in the ordinary course and pursuant to the reasonable
requirements of its business, and in good faith and upon commercial
reasonable terms or conditions that are no less favorable to such
person or entity than would be obtainable at the time in a comparable
arm's length transaction with a person or entity other than an
Affiliate and/or an Associate.
(b) Except as expressly permitted by any other
provision of this Section 6, make any loan of money or property to any
Affiliate, or become contingently liable (through guarantee or
otherwise) to any person with respect to any indebtedness of an
Affiliate and/or Associate.
6.10 Disposition of Collateral. Sell, assign,
exchange or otherwise dispose of any Collateral except in the ordinary course of
business.
6.11 Loans. Make any loans or advances to any Person,
including without limitation Unigene's directors, officers and employees, except
(i) advances to officers or employees with respect to expenses incurred by them
in the ordinary course of their duties which are properly reimbursable by
Unigene; and (ii) loans to employees not exceeding $20,000 in the aggregate
during any fiscal year of Unigene; and (iii) advances to collaborators,
suppliers, material men and with respect to research and development projects
made in the ordinary course of Unigene's business, but not to exceed $100,000 to
any one Person.
6.12 Negative Pledge. Create or suffer to exist any
mortgage, pledge, liens, permits, interest, assignment or transfer upon any of
the Collateral which purports to be senior to or pari passu with any of the
security for the Debentures, other than Permitted Liens.
6.13 Guarantees. Assume, guaranty, endorse or
otherwise become directly or contingently liable in respect to (including
without limitation by way of agreement, contingent or otherwise, to purchase,
provide funds to or otherwise invest in a debtor or otherwise to assure a
creditor against loss), any Indebtedness of any other Person (except guarantees
by endorsement of instruments for deposit or collection in the ordinary course
of business.
6.14 Removal of Hazardous Substances. Should Unigene
cause or permit any intentional or unintentional act or omission resulting in
the discharging of hazardous substances or wastes into the atmosphere or waters,
or onto lands, resulting in damage to the natural resources without having
obtained a permit issued by the appropriate governmental authorities, Unigene
shall promptly clean up same in accordance with all applicable federal, state
and local orders, statutes, laws, ordinances, rules and regulations.
6.15 Intent and Purpose. It is the intent of the
parties that, subject to this Article 6, until an Event of Default and the
principal sum under the Debentures has become due and payable by acceleration or
otherwise, Unigene may conduct its business in the ordinary course, may use its
cash, cash equivalents, royalties, licensing fees, milestone payments, research
sponsorship payments, interest, dividend income, proceeds of loans and sales of
securities, sales of inventory and joint venture distributions for general
corporate purposes.
6.16 Levy Family Repayment. The outstanding Levy
family loans may be repaid in the following (or any less) amounts and pursuant
to the following schedule:
Precondition Repayment Tranche Maximum Repayment Rate
------------ ----------------- ----------------------
1. cGMP status achieved $250,000 50% per month
2. filing of injectable calcitonin IND $250,000 50% per month
3. filing of oral calcitonin IND $250,000 50% per month
4. contract with a Strategic Partner $500,000 50% per month
The repayment of each of the foregoing "repayment
tranches" may not overlap. Should one such tranche become eligible for repayment
during a month while another tranche is being repaid, or has been repaid,
payment of the former shall be delayed until the month immediately following
repayment in full of the latter tranche.
Repayment shall become permissible as of the
beginning of the calendar month immediately following the month in which the
specified precondition is satisfied.
7. Events of Default.
7.1 Event of Default. Each of the following shall
constitute an Event of Default under this Agreement, the Debentures and
Security Agreement:
(a) Unigene shall default in the payment of principal
of, or any interest on, the Debentures, when and as the same shall
become due and payable; or
(b) Unigene shall incur an event of default in the
performance of its payment obligations for borrowed money under any
note or other obligation for borrowed money in excess of $500,000 which
has become due and payable by acceleration or otherwise; or
(c) any representation or warranty made by Unigene in
this Agreement, the Debentures, or the Security Agreement or in any
other Document shall prove to be false or inaccurate in any material
respect; or
(d) Unigene shall default in the performance or
compliance with any covenant, condition or agreement to be performed or
complied with by it under this Agreement or any Documents delivered in
connection herewith, and such default shall continue unremedied for a
period of 14 consecutive days after Unigene receives notice from the
Purchasers or becomes aware, or with the exercise of reasonable
diligence should have been aware, of the event of default, provided,
however, if Unigene shall have commenced to remedy such default during
such 14 day period and is diligently seeking to remedy such default at
the expiration of such period, then if the Purchasers are satisfied
that, with the exercise of due diligence in the circumstances, Unigene
could not have remedied such default in such 14 day period and that,
with the exercise of due diligence, such default is capable of being
remedied by Unigene within a further period of 10 consecutive days, no
Event of Default shall be deemed to have occurred under this Section
7.1(d), unless such default is not remedied to the reasonable
satisfaction of the Purchasers by the expiration of such second 10 day
period; or
(e) A final judgment for the payment of money which,
together with all other such undischarged judgments, against Unigene
exceeds an aggregate of $200,000 (after taking into account any
proceeds from third party indemnifications and insurance proceeds which
are paid to Unigene with respect to such liability) shall have been
entered against Unigene if, within 14 days after the entry thereof,
such judgment shall not have been discharged or execution thereon
stayed pending appeal, or if, within 14 days after the expiration of
any such stay, such judgment shall not have been discharged; or
(f) A proceeding shall have been instituted or order
for relief shall have been made in respect of Unigene in an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Unigene or for any substantial part of its property, or
for the winding-up or liquidation of its affairs, and such proceeding
shall remain undismissed or unstayed and in effect for a period of 60
consecutive days or such court shall enter a decree of order granting
the relief sought in such proceeding; or
(g) Unigene shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of Unigene or for any substantial part of its property, or shall make a
general assignment for the benefit of creditors, or shall take any
action in furtherance of any of the foregoing; or
(h) Any material provision of any Document shall,
after execution and delivery of such Document, for any reason cease to
be valid and binding on Unigene, or Unigene shall so state in writing
or shall contest the validity or enforceability thereof, or any
Document shall otherwise cease to be in full force and effect, and, in
such case, the Purchasers shall be adversely affected as a result
thereof; or
(i) If ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ cease to be
officers of Unigene.
7.2 Consequences of an Event of Default.
(a) If an Event of Default specified in Section
7.1(a), (g), or (h) shall occur, the outstanding principal of, and interest
accrued on, the Debentures and all other obligations of Unigene to the
Purchasers hereunder or under the Documents shall be immediately due and
payable, upon written notice from the Purchasers.
(b) If an Event of Default, other than under Section
7.1(a), (g) or (h) shall occur and continue, the Purchasers, at their option, on
14 days prior written notice to Unigene, may declare the outstanding principal
of, and interest accrued on, the Debentures and all other obligations of Unigene
to the Purchasers hereunder and under the Documents to be forthwith due and
payable, and the same shall thereupon become and be immediately due and payable,
without further notice of any kind.
(c) Upon an Event of Default and at the time the
principal sum of the Debentures is due and payable, the Purchasers may exercise
any one of its rights provided to a secured party under the Uniform Commercial
Code or other applicable law or under this Agreement, the Security Agreement or
any one or more of the Documents delivered in connection with or pursuant to
this Agreement.
8. Success Fee. During the period commencing on March 6, 1996
and ending on December 31, 1996, Unigene intends to raise additional funds
through "Funding Events" -- including, without limitation, the sale of Unigene's
convertible debentures pursuant to the Regulation S offering managed by ▇▇▇▇▇▇
Investments LLC -- in an amount not less than $9,000,000 (the "Minimum Financing
Target").
As of December 31, 1998, Unigene shall become obligated to
pay, such payment to be made as provided in the last paragraph of this Section
8, to the Purchasers an amount equal to the sum of (i) 2% of the Enterprise
Value of Unigene as of such date plus (ii) (a) the fraction the numerator of
which is the shortfall between the Net Proceeds from Funding Events and the
Minimum Financing Target and the denominator of which is the Minimum Financing
Target multiplied by (b) 18% multiplied by (c) the Enterprise Value of Unigene
as of such date. Notwithstanding the foregoing, the amounts payable by Unigene
under clause (i) of this Section 8 shall not exceed $3,000,000; this limitation
does not apply to clause (ii) of this Section 8.
"Enterprise Value" for purposes of the preceding paragraph
shall equal the sum of (i) the aggregate Market Value of all outstanding shares
of Common Stock, plus (ii) the principal amount of all outstanding long-term and
short-term debt, less (iii) the cash held on deposit by Unigene and not subject
to pledge, lien or encumbrance.
Unigene covenants that it will exercise good faith in not
attempting to manipulate the December 31, 1998 Enterprise Value of Unigene to
the detriment of the Purchasers.
The Success Fee shall be due as of December 31, 1998, but
shall not be paid until completion and filing of Unigene's 1998 Final 10-K
Annual Report with the SEC. Final computation of the amount of the Success Fee
shall be based on the audited financial statements included in such Final 10-K.
9. Miscellaneous.
9.1 Notices. All notices and other communications
given to or made upon any party hereto in connection with this Agreement shall,
except as otherwise expressly herein provided, be in writing (including
telecopied communications) and personally delivered, mailed, telecopied or sent
by express courier to the respective parties as follows:
if to Unigene, to:
Unigene Laboratories, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
if to the Purchasers, to:
Olympus Securities, Ltd.
c/o Leeds Management Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇ Bermuda
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ Partners
c/o Citadel Investment Management, L.P.
Citadel Investment Management, Inc.
Leeds Management Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇ Bermuda
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery, if delivered by
hand; two days after deposit in the mail, if sent by registered mail, return
receipt requested, postage prepaid; in the case of telecopy, when the answer
back is received; or if sent by express courier providing guaranteed next day
delivery, on the next succeeding Business Day.
9.2 Costs. Unigene will pay (i) the reasonable fees
and expenses of counsel for the Purchasers in connection with the preparation of
the Documents and any waiver, consent or release by the Purchasers under any of
the Documents, any amendment thereof, or any Event of Default, and (ii) if the
Purchasers shall incur costs and/or expenses to collect, enforce or protect
their rights under this Agreement or any of the Documents, Unigene shall pay all
of the reasonable costs and expenses of such collection, enforcement and
protection, including reasonable attorneys' fees, of the Purchasers. Whenever
counsel fees are provided for in this Agreement or any of the Documents, it is
understood and agreed that the interests of the Purchasers (and/or holders) are
substantially similar and that there shall be no allowance of counsel fees for
separate counsel of each of the Purchasers (and/or holders).
9.3 Representations to Survive. All representations
and warranties contained herein or in any other Document made or delivered
pursuant hereto or thereto or to be executed and delivered hereunder or
thereunder, shall be deemed to survive (a) the execution and delivery of this
Agreement and the Documents and (b) any investigation made by or on behalf of
the Purchasers at any time while any amounts under the Debentures are
outstanding.
9.4 Purchased Warrants to Survive. The terms of the
Purchased Warrants shall remain in full force and effect irrespective of the
transactions contemplated hereby (except as provided in Sections 2.2.6 and
2.2.12).
9.5 Successors and Assigns. All representations,
warranties and covenants in this Agreement by or on behalf of, or for the
benefit of any of the parties hereto, shall be binding on and inure to the
benefit of such party, its successors and assigns. The foregoing
notwithstanding, this Agreement, the Debentures, and the other agreements,
documents and instruments entered in or delivered in connection herewith or
therewith may not be assigned, in whole or in part and in fact or by operation
of law, by Unigene without the prior written approval of the Purchasers.
9.6 Stamp or Other Tax. Should any stamp, recording
tax or fee or other similar tax become payable with respect to this Agreement,
the Debentures, the Security Agreement, the Warrants or any other document,
Unigene promptly following demand therefor will pay the same. This section shall
not apply to any income or withholding taxes or transfers by Purchasers or
holders.
9.7 Cumulative Remedies. No failure on the part of
any Purchaser to exercise, and no delay in exercising, any remedy, right, power
or privilege hereunder, or under any other agreement, security or instrument
delivered pursuant hereto, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such remedy, right, power or privilege
preclude any other or further exercise of any other such remedy, right, power or
privilege, and no waiver whatsoever shall be valid unless in writing signed by
the Purchasers and then only to the extent specifically set forth in such
writing. All remedies, rights, powers and privileges afforded the Purchasers
under this Agreement, the Debentures and any other agreements, documents or
instruments delivered in connection herewith or therewith shall be cumulative
and not be exclusive of any remedies, rights, powers and privileges available by
law and shall be available until the Debentures and all interest thereon and all
other indebtedness of Unigene to the Purchasers have been paid in full. The
Purchasers may exercise any such remedies, rights, powers and privileges in any
order or priority.
9.8 Severability. In case any one or more of the
provisions of this Agreement or the Documents shall be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions hereof and thereof shall not be affected or impaired
thereby.
9.9 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York, except that the Security
Agreement and Mortgage shall be governed by the laws of the state of New Jersey.
9.10 Sole Agreement; Amendments. It is the intention
of the parties that this Agreement and the Documents shall supersede any prior
negotiations, discussions, commitments, representations or agreements, written
or oral, other than as specified herein, including but not limited to any
correspondence, conversations, discussions, representations or other means of
communication not specified or set forth herein. No amendment, modification or
waiver of any provision of this Agreement, nor consent to any departure by any
party herefrom, shall in any event be effective unless the same shall be in
writing and signed by the party to be charged and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
9.11 Captions. The headings of the Sections of this
Agreement have been inserted solely for convenience of reference and shall not
modify, define or limit the express provisions of this Agreement.
9.12 Waiver. The waiver by a party of a breach of any
provision of this Agreement or any Document shall not operate or be construed as
a waiver of any subsequent breach by any party.
9.13 Right of the Purchasers to Perform Covenants. If
Unigene fails or refuses to perform or comply with any covenant, condition or
agreement to be performed or complied by it under any provision of this
Agreement or any other Document to which it is a party, Purchasers may, but
shall not be obligated to, perform or comply with such provision for the account
of and at the expense of such Person, and Unigene will, jointly and severally,
on demand, reimburse Purchasers for all costs and expenses paid or incurred by
them in performing or complying with such provision, together with accrued
interest thereon at the rate of 11.5% per annum from the time such cost or
expense was paid or incurred and payment demanded until the same is reimbursed
in full to Purchasers.
9.14 No Brokerage or Finder's Fees. Each party
represents and warrants that it has dealt with no broker or finder in connection
with the transactions contemplated hereby. Each party shall indemnify and save
the other harmless from any and all claims for broker's or finder's fees or
commissions which arise out of any agreement made by such indemnifying party
with respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
UNIGENE LABORATORIES, INC.
By:________________________________
Name:
Title:
OLYMPUS SECURITIES, LTD.
By:________________________________
Name:
Title:
▇▇▇▇▇▇ PARTNERS
By: CITADEL INVESTMENT
MANAGEMENT, L.P.,
General Partner
By: CITADEL INVESTMENT MANAGEMENT,
INC., General Partner
By:________________________________
Name:
Title: