EXHIBIT 10.42
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT ("Agreement") is entered into the 9th day of
April 2002, by and among Unigene Laboratories, Inc., a Delaware corporation (the
"Company") and The Tail Wind Fund, Ltd., a British Virgin Islands limited
liability company ("Tail Wind").
W I T N E S S T H:
WHEREAS, as of June 29, 1998, the Company and Tail Wind entered in to
a Purchase Agreement, pursuant to which the Company sold to Tail Wind $4,000,000
in principal amount of Debentures, of which $2,000,000 in principal amount
remains outstanding (the "Financing");
WHEREAS, certain disputes have arisen with respect to the Financing
and the respective obligations of the parties thereunder, and Tail Wind has
initiated an arbitration proceeding under the rules of the American Arbitration
Association (AAA No. 50 J 153 00261 00) to resolve those disputes (the
"Arbitration Proceeding"); and
WHEREAS, the Company and Tail Wind have agreed to a settlement of
their respective claims, to terminate the Arbitration Proceeding and to release
each other from any and all obligations and claims, all as more fully set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises made herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Issuance of Promissory Note.
At the Effective Time, the Company shall issue to Tail Wind a duly
executed Promissory Note in the principal amount of $1,000,000 in the form
attached hereto as Attachment A (the "Promissory Note").
2. Issuance of Common Stock.
At the Effective Time, the Company shall issue to Tail Wind 2,000,000
shares (the "Shares") of Unigene common stock, par value $.01 per share ("Common
Stock"). The certificate(s) for the shares shall not include any securities law
or other restrictive legend and shall be deposited with the Escrow Agent in
accordance with the terms of the Escrow Agreement. The Shares shall be entitled
to the registration rights set forth in Section 7 of this Agreement. Tail Wind
agrees that it will not sell the Shares in any manner prohibited by applicable
law. Tail Wind covenants and agrees that from the date hereof and for so long as
it owns any Shares, it will not engage in any short sales of Common Stock
(except for short sales that, within one week of the sale, are covered and
settled by the delivery of Shares), provided, however, that Tail Wind may engage
in short sales of Common Stock if (a) the Company has materially breached any of
the Related Agreements and has failed to cure such breach within 20 days of Tail
Wind's written notice thereof, or (b) an Event of Default (as defined in the
Mortgage) has occurred pursuant to Section 22(a) of the Mortgage.
3. Effective Date and Conditions to Settlement
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a. Effective Date. This Agreement shall become effective only
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upon the satisfaction or waiver of the conditions set forth in paragraphs (b)
and (c) of this Section 3. The effectiveness of this Agreement shall be
evidenced by (i) the delivery by the Company to Tail Wind of a certificate
executed by an officer of the Company certifying that the conditions set forth
in paragraph (b) have been satisfied or waived and (ii) the delivery by Tail
Wind to the Company of a certificate executed by a duly authorized official on
behalf of Tail Wind certifying that the conditions set forth in paragraph (c)
have been satisfied or waived (the time of the later to occur being referred to
herein as the "Effective Time"). The delivery of the documents contemplated by
this Section 3 shall take place at the offices of Xxxxx X. Xxxxxxx, P.C., 110
East 00/xx/ Xxxxxx, 00/xx/. Xxxxx, Xxx Xxxx, XX 00000, or at such other location
as the parties shall mutually agree. If the conditions set forth in paragraphs
(b) and (c) have not been satisfied or waived on or before April 12, 2002, or
such later date as the parties may agree in writing (the "Deadline"), this
Agreement shall terminate and be of no further force or effect without liability
of either party, except for liability for any breach of this Agreement.
b. Conditions to the Company's Obligations. The obligations of
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the Company to consummate the transactions contemplated by this Agreement shall
be subject to the following:
i. the execution and delivery of the Security Agreement by
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Tail Wind;
ii. the execution and delivery of the Subordination
---
Agreement by Tail Wind;
iii. the execution and delivery of the Escrow Agreement by
----
Tail Wind and the Escrow Agent; and
iv. the surrender to the Company by Tail Wind of
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Convertible Debentures, dated June 29, 1998, in the aggregate principal amount
of $2,000,000 (the "Debentures").
c. Conditions to Tail Wind's Obligations. The obligations of Tail
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Wind to consummate the transactions contemplated by this Agreement shall be
subject to the following:
i. the execution and delivery of the Mortgage and the
--
Security Agreement by the Company;
ii. the execution and delivery of the Subordination
---
Agreement by the Company, Xxx Xxxx, Xxxx Xxxx, Xxxxxx X. Xxxx and Xxxxxx Xxxx;
iii. the execution and delivery of the Escrow Agreement by
----
the Company and the Escrow Agent;
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iv. delivery by the Company to Tail Wind of the Promissory
---
Note as contemplated by Section 1 of this Agreement; and
v. delivery by the Company to the Escrow Agent of
--
certificates for the Shares as contemplated by Section 2 of this Agreement.
d. Obligations to Satisfy Conditions. The Company and Tail Wind
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each covenant and agree to use its best efforts to cause the conditions to the
obligations of the other to be satisfied in full on or before the Deadline.
4. Mutual Release.
In consideration of the covenants, agreements and undertakings set
forth in this Agreement, the Company and Tail Wind agree to the mutual general
release set forth in this Section 4 (the "Mutual Release"), such Mutual Release
to be effective at the Effective Time, except that, under no circumstances will
the Mutual Release be deemed to cover any claims that may arise subsequent to
the Effective Time under the terms of this Agreement or any of the Related
Agreements.
a. Release of Claims by the Company. The Company hereby forever
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generally and completely releases and discharges Tail Wind, each of its
Affiliates and each of its and their directors, officers, employees, attorneys
and agents, in their corporate, company and individual capacities (the "Tail
Wind Parties"), of and from any and all claims and demands of every kind and
nature, in law, equity or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, and in particular (but without
limitation) of and from all claims and demands of every kind and nature, known
and unknown, suspected and unsuspected, disclosed and undisclosed, for damages,
actual, consequential and exemplary, past, present and future, arising out of or
in any way related to the Company's dealings with any Tail Wind Party in
connection with the Financing, and any and all claims raised in the Arbitration
Proceeding.
b. Release of Claims by Tail Wind. Tail Wind hereby forever
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generally and completely releases and discharges the Company, each of its
Affiliates and each of its and their directors, officers, employees, attorneys
and agents, in both their corporate and individual capacities (the "Company
Parties"), of and from any and all claims and demands of every kind and nature,
in law, equity or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, and in particular (but without limitation) of and
from all claims and demands of every kind and nature, known and unknown,
suspected and unsuspected, disclosed and undisclosed, for damages, actual,
consequential and exemplary, past, present and future, arising out of or in any
way related to Tail Wind's dealings with any Company Party in connection with
the Financing, and any and all claims raised in the Arbitration Proceeding.
c. Unknown Claims. For avoidance of doubt, the parties understand
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and agree that the releases given in paragraphs (a) and (b) above constitute
full, complete and final general releases, and that the releases shall apply to
all unknown, unanticipated, unsuspected and undisclosed claims, demands,
liabilities, actions and causes of action, in
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law, equity or otherwise, as well as those which are now known, anticipated,
suspected or disclosed.
d. Dismissal of Arbitration Proceeding. On or promptly
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following the Effective Date, the parties shall cause the Arbitration Proceeding
to terminate and be dismissed with prejudice. Each party shall bear its own
attorneys' fees, expenses and costs incurred in connection with the Arbitration
Proceeding.
5. Representations and Warranties of the Company.
The Company represents and warrants to Tail Wind that:
a. Organization, Good Standing and Qualification. The
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Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business and own its properties as now
conducted and owned. The Company and each of its subsidiaries is duly qualified
or licensed to do business as a foreign corporation and in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property makes such qualification or licensing necessary, unless the failure to
so qualify or be licensed would not individually or in the aggregate have a
Material Adverse Effect.
b. Authorization. The Company has full corporate power and
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authority and has taken all requisite corporate action on the part of the
Company, its officers, directors and stockholders necessary for (i) the
authorization, execution and delivery of this Agreement and the Related
Agreements and (ii) the performance of all obligations of the Company under this
Agreement and the Related Agreements. This Agreement and each of the Related
Agreements constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
c. Enforceability of the Promissory Note. The Promissory
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Note, when issued to Tail Wind at the Effective Time, will constitute the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
d. Valid Issuance of the Shares. The Shares, when issued
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to Tail Wind at the Effective Time, will be duly authorized, validly issued,
fully paid, non-assessable, and free and clear of all liens, claims,
encumbrances and restrictions, except as set forth in the Escrow Agreement.
e. Consents. Assuming the accuracy in all material
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respects of Tail Wind's representations and warranties set forth in paragraph
(e) through (i) of Section 6 of this Agreement, the execution, delivery and
performance by the Company of this Agreement and the Related Agreements requires
no consent of, action by or in respect of, or filing with, any Person, except as
otherwise contemplated by this Agreement and the Related Agreements.
f. No Breach, Violation or Default. The execution,
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delivery and performance by the Company of this Agreement and the Related
Agreements (assuming the accuracy in all material respects of Tail Wind's
representations and warranties set forth in
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paragraph (e) through (i) of Section 6 of this Agreement) will not result in
a breach or violation of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company or any subsidiary of the Company or any of their properties, or (ii)
except to the extent such breach, violation or default would not individually or
in the aggregate have a Material Adverse Effect, any agreement or instrument to
which the Company or any subsidiary is a party or by which the Company or any
subsidiary is bound, or (iii) the Certificate of Incorporation or By Laws of the
Company.
g. Environmental Matters. Neither the Company nor any of
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its subsidiaries is in violation of any federal, state or local statute, rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, "Environmental
Laws"), owns or operates any real property contaminated with any substance that
is subject to any Environmental Laws, is liable for any offsite disposal or
contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation that might lead to such a
claim. The Company is in full compliance with all, and has not violated any,
applicable Environmental Laws concerning or relating to the Fairfield
Collateral, except where non-compliance would not have a Material Adverse
Effect.
h. Compliance with OTC Bulletin Board Continued Listing
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Requirements. There are no proceedings pending or threatened against the Company
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relating to the continued listing of the Common Stock on the OTC Bulletin Board
and the Company has not received any notice of the delisting or the possible
delisting of the Common Stock from the OTC Bulletin Board.
i. Securities Act Compliance. Assuming the accuracy of
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the representations and warranties of Tail Wind in Section 6 of this Agreement,
the offer and sale of Shares to Tail Wind contemplated hereby will be exempt
from the registration requirements of the 1933 Act.
6. Representations and Warranties of Tail Wind.
Tail Wind represents and warrants to the Company that:
a. Organization and Existence. Tail Wind is a validly
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existing corporation or limited liability company and has all requisite
corporate or other power and authority to perform its obligations under this
Agreement.
b. Authorization. Tail Wind has full corporate or other
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power and authority and has taken all requisite corporate or other action on the
part of Tail Wind, its officers, directors and stockholders necessary for (i)
the authorization, execution and delivery of this Agreement and the Related
Agreements and (ii) the performance of all obligations of
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Tail Wind under this Agreement and the Related Agreements. This Agreement and
each of the Related Agreements constitutes a valid and legally binding
obligation of Tail Wind, enforceable against Tail Wind in accordance with its
terms.
c. Consents. The execution, delivery and performance by
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Tail Wind of this Agreement and the Related Agreements requires no consent of,
action by or in respect of, or filing with, any Person, except as otherwise
contemplated by this Agreement and the Related Agreements.
d. No Breach, Violation or Default. The execution,
-------------------------------
delivery and performance by Tail Wind of this Agreement and the Related
Agreements will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any statute, rule, regulation
or order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over Tail Wind or any of its properties, or (ii) except to
the extent such breach, violation or default would not individually or in the
aggregate have a Material Adverse Effect, any agreement or instrument to which
Tail Wind is a party or is bound, or (iii) the organizational documents of Tail
Wind.
e. Purchase Entirely for Own Account. The Securities being
---------------------------------
acquired by Tail Wind hereunder are being acquired entirely for Tail Wind's own
account, not as nominee or agent, and not with a view to the resale or
distribution of all or any part thereof in violation of the 1933 Act, and Tail
Wind will not sell, grant any participation in, or otherwise distribute the
Shares in violation of the 1933 Act.
f. Investment Experience. Tail Wind acknowledges that it
---------------------
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment contemplated
hereby.
g. Disclosure of Information. Tail Wind has had an
-------------------------
opportunity to ask questions and receive answers from authorized officers and
other representatives of the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities and has been furnished
with all information Tail Wind deemed necessary to make an informed investment
decision with respect to the Securities.
h. Restricted Securities. Subject to Section 7(h) below,
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Tail Wind understands that the Securities are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may not be
resold without registration, except pursuant to a valid exemption from
registration under the 1933 Act.
i. Accredited Investor. Tail Wind is an accredited
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investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933
Act.
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7. Registration of the Shares.
a. Registration Statement. Not later than 15 calendar days after the
----------------------
Effective Time or 10 calendar days after the date on which the Company files its
Annual Report on Form 10-K for the year ended December 31, 2001, whichever is
later (but in no event later than 30 days following the Effective Time), the
Company shall prepare and file with the SEC a registration statement (the
"Registration Statement") on Form S-3 (or, if Form S-3 is not then available to
the Company, on such other form of registration statement as is available)
registering the Shares for resale under the 1933 Act. The Registration Statement
also shall cover, to the extent permitted by Rule 416 under the 1933 Act, such
indeterminate number of additional shares of Common Stock resulting from stock
splits or similar transactions. The Company shall use its best efforts to cause
the Registration Statement to be declared effective as soon as reasonably
practicable after the date of filing thereof, but in no event later than the
date (the "Registration Date") that is (i) 30 calendar days after the date that
the Company files the Registration Statement with the SEC, if the SEC notifies
the Company that it will not review the Registration Statement prior to
declaring it effective or (ii) 82 calendar days after the date that the Company
files with the SEC its Annual Report on Form 10-K for the year ended December
31, 2001, if the SEC notifies the Company that it will review the Registration
Statement prior to declaring it effective, provided, however, that such 30-day
or 82-day limit, as the case may be, shall be increased by up to 20 additional
days in the event that such Registration Statement is not declared effective
substantially due to reasons beyond the Company's control. The Company shall
promptly request acceleration of effectiveness of the Registration Statement
after the SEC notifies the Company it may request acceleration.
b. Liquidated Damages.
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i. If the Registration Statement is not declared effective by the
SEC on or before the Registration Date, then the Company shall pay Tail Wind, as
liquidated damages and not as a penalty, an amount equal to the product of (A)
$1,000.00, multiplied by (B) the number of days in the period commencing on the
day immediately following the Registration Date and ending on the day that the
Registration Statement is declared effective by the SEC (or the last day of the
Registration Period, if earlier).
ii. If, after the Registration Statement has been declared
effective by the SEC, sales cannot be made by Tail Wind pursuant to the
Registration Statement by reason of a stop order or the Company's failure to
update the Registration Statement (but excluding the period during which
suspension of sales is permitted by Section 7(d) hereof), then the Company shall
pay Tail Wind, as liquidated damages and not as a penalty, an amount equal to
the product of (A) $1,000.00, multiplied by (B) the number of days in the period
commencing on the first day that sales cannot be made by Tail Wind pursuant to
the Registration Statement and ending on the day that sales can be made by Tail
Wind pursuant to the Registration Statement (or the last day of the Registration
Period, if earlier).
iii. The total amount of liquidated damages payable pursuant to
paragraphs 7(b)(i) and 7(b)(ii) above which accrue during any calendar month
shall be paid to Tail Wind within five (5) business days following the end of
such calendar month.
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c. Company Obligations. The Company shall use its best efforts
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to effect the registration of the Shares in accordance with the terms of this
Section 7, and in connection therewith the Company shall:
i. use its best efforts to cause the Registration Statement
to remain continuously effective for a period that will terminate when all
Shares covered by the Registration Statement, as amended from time to time, have
been sold by Tail Wind or until such time as the Shares become eligible for
resale by Tail Wind pursuant to Rule 144(k), or any successor provision thereof,
under the 1933 Act (the "Registration Period");
ii. prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and each prospectus
thereunder as may be necessary to keep the Registration Statement effective for
the Registration Period and to comply with the provisions of the 1933 Act with
respect to the distribution of the Shares;
iii. permit a firm of counsel designated by Tail Wind to
review the Registration Statement, any amendments or supplements thereto and any
prospectuses thereunder no fewer than five days prior to their filing with the
SEC, and not file the Registration Statement or any such amendment, supplement
or prospectus to which such counsel promptly and reasonably objects within such
five-day period; provided that such counsel also proposes reasonably acceptable
alternative language within such five-day period;
iv. furnish to Tail Wind and its legal counsel (A) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one copy of the Registration Statement, any amendment
or supplement thereto and any prospectus thereunder, and each letter written by
or on behalf of the Company to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment),
and (B) such number of copies of the final prospectus, and all amendments and
supplements thereto, as Tail Wind may reasonably request in order to facilitate
Tail Wind's resale of the Shares;
v. use its best efforts to prevent the issuance of any stop
order or other suspension of effectiveness with respect to the Registration
Statement and, if such order is issued, use its best efforts to obtain the
withdrawal of any such order as soon as practicable;
vi. use its best efforts to register or qualify the Shares
for offer and sale under the securities or blue sky laws of such jurisdictions
as Tail Wind shall reasonably request and take all such actions as are
reasonably necessary or advisable to enable the distribution of the Shares in
such jurisdictions; provided, however that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or subject the
Company to any material tax in any
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such jurisdiction where it is not then so subject;
vii. cause all of the Shares covered by the Registration
Statement to be listed on the OTC Bulletin Board or such other market on which
the Common Stock is then listed or traded;
viii. immediately notify Tail Wind, at any time when a
prospectus then in effect relating to the Registration Statement includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, and, as promptly as possible,
prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that neither the Registration Statement nor such
prospectus, as thereafter delivered, will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and
ix. otherwise comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, and take such other
actions as may be reasonably necessary to facilitate the registration the Shares
hereunder.
d. Suspension of Sales. Subject to the last sentence of this
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Section 7(d), the Company may by written notice require that Tail Wind
immediately cease sales of Shares (for a period not to exceed 15 calendar days
in any one instance and for a period not to exceed 30 calendar days in the
aggregate in any twelve-month period) pursuant to a Registration Statement at
any time that (i) the Company becomes engaged in a business activity or
negotiation that is not disclosed in the Registration Statement or the
then-current prospectus which the Company reasonably believes must be disclosed
therein under applicable law and which the Company desires to keep confidential
for business purposes, (ii) the Company determines that a particular disclosure
so determined to be required to be disclosed therein would be premature or would
adversely affect the Company or its business or prospects or (iii) the
Registration Statement can no longer be used under the existing rules and
regulations promulgated under the Securities Act (each of (i), (ii) or (iii), a
"Material Condition"). The Company shall not be required to disclose to Tail
Wind the reasons that are the basis for requiring a suspension of sales due to
the occurrence of a Material Condition specified in (i) or (ii) or (iii) above.
The Company shall use its best efforts to ensure that the use of the
Registration Statement and the related prospectus may be resumed as soon as it
is practicable thereafter. The Company may not suspend sales of Shares under the
Registration Statement pursuant to this Section 7(d) more than three times
during any twelve-month period.
e. Obligations of Tail Wind.
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i. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Section 7 with respect
to the Shares that Tail Wind cooperate with the Company, as reasonably requested
by the Company, in
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connection with the preparation and filing of the Registration Statement and
to furnish in writing to the Company such information regarding itself, the
shares of Common Stock held by it and the intended method of disposition of the
Shares as shall be reasonably required to effect the registration of the Shares
and shall execute such documents in connection with such registration as the
Company may reasonably request.
ii. Tail Wind agrees that, upon receipt of any notice from
the Company contemplated by Section 7(c)(viii), Tail Wind shall immediately
discontinue disposition of the Shares pursuant to the Registration Statement
until it receives copies of a supplemented or amended prospectus and, if so
directed by the Company, Tail Wind shall deliver to the Company (at the expense
of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies of the prospectus then in its possession (except copies
that Tail Wind may retain solely for purposes of its records).
iii. Tail Wind agrees that it will not make any offers or
sales of the Shares other than pursuant to the Registration Statement or
pursuant to an exemption from registration under the 1933 Act.
f. Expenses. The Company will pay all costs, fees and expenses
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directly or indirectly associated with the preparation and filing of the
Registration Statement, including all filing fees and the costs of the
reproduction of the prospectus, but shall not be responsible for any cost
incurred by Tail Wind, including the fees and disbursements of its counsel.
g. Indemnification
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i. Indemnification by the Company. The Company agrees to
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indemnify and hold harmless, to the fullest extent permitted by law, Tail Wind,
its officers, directors, stockholders and employees and each person who controls
Tail Wind (within the meaning of the 0000 Xxx) against all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorney's fees) and expenses resulting from (A) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement or in any
related prospectus or any preliminary prospectus, including any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same is based upon any information
furnished in writing to the Company by Tail Wind specifically for use therein,
or (B) any violation by the Company of any federal, state or common law, rule or
regulation applicable to the Company in connection with the Registration
Statement or any related prospectus or any preliminary prospectus, including any
amendment or supplement thereto, and shall reimburse in accordance with
subparagraph (iii) below, each of the foregoing persons for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claims. The foregoing is subject to the condition that, insofar as the
foregoing indemnities relate to any untrue statement, alleged untrue statement,
omission or alleged omission made in any preliminary prospectus or prospectus
that is eliminated or remedied in any prospectus or amendment or supplement
thereto that has been delivered to Tail Wind and was not sent or given by Tail
Wind at or prior to the time such action was required by the 1933 Act and if
delivery of such
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prospectus or amendment or supplement thereto would have eliminated (or been a
sufficient defense to) any liability of Tail Wind with respect to such statement
or omission.
ii. Indemnification by Tail Wind. Tail Wind agrees to
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indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its officers, directors, employees, stockholders and each person who
controls the Company (within the meaning of the 0000 Xxx) against any losses,
claims, damages, liabilities, costs (including, without limitation, reasonable
attorney's fees) and expenses resulting from (A) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement or in any
related prospectus or any preliminary prospectus, including any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, to the extent that such untrue statement or omission is
contained in any information furnished in writing by Tail Wind to the Company
specifically for use therein or (B) any violation by Tail Wind of any federal,
state or common law, rule or regulation in connection with the resale of the
Shares, and shall reimburse in accordance with subparagraph (iii) below, each of
the foregoing persons for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claims. In no event shall
the liability of Tail Wind be greater in amount than the dollar amount of the
proceeds (net of all expense paid Tail Wind and the amount of any damages Tail
Wind has otherwise been required to pay by reason of such untrue statement or
alleged untrue statement or omission or alleged omission) received by Tail Wind
upon the sale of the Shares giving rise to such indemnification obligation.
iii. Conduct of Indemnification Proceedings. Any person
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entitled to indemnification hereunder shall (A) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (B) permit the indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided that any
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person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless (x)
the indemnifying party has agreed to pay such fees or expenses, or (y) the
indemnifying party shall have failed to timely assume the defense of such claim
and employ counsel reasonably satisfactory to such person or (z) in the
reasonable judgment of counsel to such person (set forth in a written opinion),
a conflict of interest exists between such person and the indemnifying party
with respect to such claims, in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such person; and
provided, further, that the failure of any indemnified party to give notice as
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provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially and adversely affect the indemnifying party in the defense of any
such claim. It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all of the
indemnified parties. No indemnified party shall enter into any settlement of any
claim for which indemnification is or may be sought without the prior written
consent of the indemnifying party. No indemnifying party will, except with the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement that does not include as an
11
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
iv. Contribution. If for any reason the indemnification
------------
provided for in the preceding subparagraphs (i) or (ii) is unavailable to an
indemnified party or insufficient to hold it harmless, other than as expressly
specified therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of Tail Wind be
greater in amount than the dollar amount of the proceeds (net of all expenses
paid by Tail Wind and the amount of any damages that Tail Wind has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission) received by Tail Wind upon the sale of the Shares
giving rise to such contribution obligation.
h. Rule 144(k). Tail Wind, at its own expense, may request (the
----------------
"Request") a "no-action" letter from the SEC to the effect that the SEC will not
take any enforcement action if the Shares are sold pursuant to Rule 144(k) (due
to tacking of the holding period for the Shares to the holding period of the
Debentures); provided the Company's counsel approves of the form and substance
of the Request (which approval shall not be unreasonably withheld or delayed).
If Tail Wind receives such a "no-action" letter, the Company shall take the
position that the Shares are saleable by Tail Wind under Rule 144(k) and
instruct (and shall cause its counsel to instruct) the transfer agent for the
Shares accordingly; provided that the Shares shall remain subject to the terms
of the Escrow Agreement.
8. Arbitration.
--
Any and all disputes arising from or in connection with this
Agreement and the Related Agreements, whether based on contract, tort, common
law, equity, statute, regulation, order or otherwise ("Disputes"), including
Disputes arising in connection with claims by third persons, shall be
exclusively governed by and settled in accordance with the provisions of this
Section 8; provided, that the foregoing shall not preclude equitable or other
judicial relief to enforce the provisions of this Section 8 or to preserve the
status quo pending resolution of Disputes hereunder.
a. Binding Arbitration. The parties hereby agree to submit all
-------------------
Disputes to arbitration for final and binding resolution. Either party may
initiate such arbitration by delivery of a demand therefor (the "Arbitration
Demand") to the other party. The arbitration shall be conducted in New York, New
York by a sole arbitrator selected by agreement of the parties not later than 10
days after delivery of the Arbitration Demand, or, failing such agreement,
appointed pursuant to the Commercial Arbitration Rules of the American
Arbitration Association, as amended from time to time (the "AAA Rules"). If the
arbitrator becomes unable to serve, his successor(s) shall be similarly selected
or appointed.
12
b. Procedures. The arbitration shall be conducted pursuant to the
----------
Federal Arbitration Act and such procedures as the parties may agree or, in the
absence of or failing such agreement, pursuant to the AAA Rules. Notwithstanding
the foregoing (i) each party shall provide to the other, reasonably in advance
of any hearing, copies of all documents that a party intends to present in such
hearing; (ii) all hearings shall be conducted on an expedited schedule; and
(iii) all proceedings shall be confidential, except that either party may at its
expense make a stenographic record thereof.
c. Timing. The arbitrator shall complete all hearings not later
------
than 90 days after his or her selection or appointment, and shall make a final
award not later than 30 days thereafter. The arbitrator shall apportion all
costs and expenses of the arbitration, including the arbitrator's fees and
expenses, and fees and expenses of experts ("Arbitration Costs") between the
prevailing and non-prevailing party as the arbitrator shall deem fair and
reasonable. In circumstances where a Dispute has been asserted or defended
against on grounds that the arbitrator deems manifestly unreasonable, the
arbitrator may assess all Arbitration Costs against the non-prevailing party and
may include in the award the prevailing party's attorney's fees and expenses in
connection with any and all proceedings under this Section 8. Notwithstanding
the foregoing, in no event may the arbitrator award multiple or punitive
damages.
9. Definitions.
The following terms, as used in this Agreement, have the following
meanings:
a. "Affiliate" means, with respect to any Person, any other
---------
Person that directly or indirectly controls, is controlled by, or is under
common control with, such Person. For this purpose "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
b. "Collateral" means the Fairfield Collateral.
----------
c. "Escrow Agreement" means the Escrow Agreement among the
----------------
Company, Tail Wind and the Escrow Agent, in the form attached hereto
as Attachment B.
d. "Escrow Agent" means First Union National Bank.
------------
e. "Fairfield Collateral" means the real estate property,
--------------------
improvements and other assets, which are included in the definition of Mortgaged
Property under the Mortgage and the definition of Collateral under the Security
Agreement.
f. "Material Adverse Effect" means a material adverse effect on
-----------------------
(i) the condition (financial or otherwise), business, assets, results of
operations or prospects of the Company and its subsidiaries, taken as a whole;
(ii) the ability of the Company to perform any of its material obligations under
the terms of this Agreement and the Related Agreements; (iii) the rights and
remedies of Tail Wind under the terms of this Agreement and the Related
Agreements; or (iv) any of the Collateral.
13
g. "Mortgage " means the Mortgage by the Company in favor of Tail
--------
Wind, in the form attached hereto as Attachment C.
h. "Person" means an individual, corporation, limited liability
------
company, partnership, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority, agency or official or any other form of
entity not specifically listed herein.
i. "Related Agreements" means this Agreement, the Promissory
------------------
Note, the Mortgage, the Security Agreement, the Subordination Agreement and the
Escrow Agreement.
j. "SEC" means the United States Securities and Exchange
---
Commission.
k. "Securities" mean the Promissory Note and the Shares.
----------
l. "Security Agreement" means the Equipment Security Agreement
------------------
between the Company and Tail Wind, in the form attached hereto as Attachment D.
m. "Subordination Agreement" means the Subordination Agreement
-----------------------
between Tail Wind and the Company, Xxx Xxxx, Xxxx Xxxx, Xxxxxx X. Xxxx and
Xxxxxx Xxxx, in the form attached hereto as Attachment E.
n. "1933 Act" means the Securities Act of 1933, as amended, and
--------
the rules and regulations promulgated thereunder.
o. "1934 Act" means the Securities Exchange Act of 1934, as
--------
amended, and the rules and regulations promulgated thereunder.
10. Miscellaneous.
a. Certain Additional Covenants of the Company.
-------------------------------------------
i. Listing. The Company shall use its reasonable efforts to
-------
continue the uninterrupted listing and trading of its Common Stock on the OTC
Bulletin Board and to comply in all material respects with the Company's
reporting, filing and other obligations under the rules of the OTC Bulletin
Board throughout the Registration Period; provided, however, that the Company
may at any time, if it so elects, list the Common Stock on a national securities
exchange or the Nasdaq Stock Market.
ii. No Conflicting Agreements. The Company will not, and will
-------------------------
not permit its subsidiaries to, take any action, enter into any agreement or
make any commitment that would conflict or interfere in any material respect
with the obligations to Tail Wind under the Related Agreements, or which would
be inconsistent with any of the representations made by the Company in any of
the Related Agreements.
b. Successors and Assigns. Neither this Agreement nor the
----------------------
respective obligations of the parties hereunder may be assigned by either party
without the prior written
14
consent of the other, except that (i) without the prior written consent of
Tail Wind, but after notice duly given, the Company may assign its rights and
delegate its duties hereunder to any successor-in-interest corporation in the
event of a merger or consolidation of the Company with or into another
corporation and (ii) without the prior written consent of the Company, but after
notice duly given, Tail Wind may assign its rights and delegate its duties
hereunder and under the Related Agreements, as they relate to the Securities, to
any transferee of the Securities. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
c. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
d. Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
e. Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given only upon delivery to each party to be notified by (i)
personal delivery, (ii) facsimile transmission, or (iii) internationally
recognized overnight air courier, addressed to the party to be notified at the
address as follows, or at such other address as such party may designate by ten
days' advance written notice given hereunder to the other party:
If to the Company:
Unigene Laboratories, Inc.
000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15
If to Tail Wind:
The Tail Wind Fund, Ltd.
c/o Tail Wind Advisory and Management Ltd.
Xxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attn: Xxxxx Xxxxx
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
with a copy to:
Xxxxx X. Xxxxxxx, P.C.
110 East 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
f. Expenses. Except as otherwise provided in Section 7(f) of
--------
this Agreement, each party shall bear its own costs and expenses (including
attorney's fees) incurred in connection with the execution, delivery and
performance of this Agreement.
g. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Tail Wind.
h. Severability. If one or more provisions of this Agreement
------------
is held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms to the fullest extent permitted by law.
i. Entire Agreement. This Agreement and the Related Agreements
----------------
constitute the entire agreement between the Company and Tail Wind with respect
to the subject matter hereof and thereof, and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof, including, without limitation, the letter
agreement between the Company and Tail Wind dated June 22, 2001; provided that
this Agreement becomes effective pursuant to Section 3 hereof.
j. Further Assurances. The parties shall execute and deliver
------------------
all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.
16
k. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
l. Survival. All representations and warranties contained in
--------
this Agreement shall be deemed to be representations and warranties as of the
date hereof, and all representations, warranties, covenants and agreements in
this Agreement shall survive the execution and delivery of this Agreement and
shall remain in full force and effect until such time as the obligations of the
Company and Tail Wind under this Agreement, the Related Agreements and the
Promissory Note are discharged in full.
17
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
UNIGENE LABORATORIES, INC.
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Xxxxxx X. Xxxx
President
THE TAIL WIND FUND, LTD.
By: TAIL WIND ADVISORY AND
MANAGEMENT LTD., its investment
manager
By: /s/ Xxxxx Xxxxx
---------------------------
Name: Xxxxx Xxxxx
Title: CEO
18
ATTACHMENT A
SECURED PROMISSORY NOTE
$1,000,000 April ___, 2002
FOR VALUE RECEIVED, the undersigned, Unigene Laboratories, Inc., a
Delaware corporation (the "Company"), promises to pay to the order of The Tail
Wind Fund, Ltd., or the holder hereof (the "Holder"), on February 1, 2005
("Maturity Date"), the principal sum of One Million Dollars ($1,000,000), or, if
less, the unpaid principal amount outstanding at such time, in either case
together with all accrued and unpaid interest thereon. This Note is the Note
referred to in Section 1 of the Settlement Agreement, dated April ___, 2002 (the
"Settlement Agreement"), between the Company and The Tail Wind Fund, Ltd. ("Tail
Wind"). The obligations of the Company under this Note are secured in accordance
with the terms of a Mortgage and an Equipment Security Agreement, each dated the
date hereof, between the Company and Tail Wind (the "Mortgage" and the "Security
Agreement," respectively).
1. Interest
This Note shall bear interest at the rate of six percent (6%) per
annum. Such interest shall compound annually and shall be due and payable on the
Maturity Date. For any computation covering less than a full year, interest
shall be computed on the basis of the actual number of days elapsed.
2. Prepayments
Upon three (3) Business Days prior written notice to the holder, the
Company may at any time prepay the entire principal balance of this Note or may
from time to time prepay any portion of the principal balance. Any such
prepayment shall be accompanied by a payment of all accrued and unpaid interest
on the principal balance being prepaid.
3. Manner of Payment
All payments by the Company hereunder shall be payable in lawful money
of the United States in immediately available funds by wire transfer to an
account designated in writing by the Holder, not later than 2:00 p.m., New York
City time on the day when due to the Holder, in accordance with the wire
transfer instructions provided by Holder to the Company, provided that if no
such instructions are provided payment shall be made by check payable to Holder
and delivered to the address of the Holder set forth in the Settlement
Agreement, or at such other place as the Holder may from time to time designate
in writing to the Company. Whenever any payment to be made pursuant to this Note
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the next succeeding Business Day. Such extension of time shall
in such case not be included in computing interest in connection with such
payment. The
term "Business Day" shall mean any day other than a Saturday or Sunday or a day
on which the Banks in New York City are closed.
4. Events of Default
(a) Each of the following events or occurrences described in this
Section 4(a) shall constitute an "Event of Default" under this Note:
(i) the Company fails to make any payment of principal
or interest on this Note when such payment is due and such default shall
continue for more than three (3) Business Days;
(ii) the Company fails to comply with or breaches any
other material provision of this Note and such failure continues for more than
five (5) Business Days after the Holder has given to the Company written notice
of such failure;
(iii) levy, seizure, attachment, execution or similar
process is levied on on any portion of the Collateral (as defined by the
Settlement Agreement);
(iv) a material adverse event occurs with respect to or
affecting any of the Collateral and same is not promptly cured or discharged;
(v) indebtedness of the Company having an outstanding
principal amount of at least $1,000,000 ("Other Indebtedness") is declared by
the holder thereof to be immediately due and payable due to a default by the
Company in the payment of principal when due or in the observance or performance
by the Company any obligation or condition;
(vi) a receiver, custodian, liquidator or trustee of
the Company, or of any of the property of the Company, is appointed by court
order; or the Company is adjudicated bankrupt or insolvent; or any of the
property of the Company is sequestered by court order; or a petition to
reorganize the Company under any bankruptcy, reorganization or insolvency law is
filed against the Company and is not dismissed within sixty (60) days after such
filing; or the Company files a voluntary bankruptcy petition or requesting
reorganization or arrangement under any provision of any bankruptcy,
reorganization or insolvency law, or consents to the filing of any petition
against it under any such law; or the Company makes a general assignment for the
benefit of its creditors, or admits in writing its inability to pay its debts
generally as they become due, or consents to the appointment of a receiver,
trustee or liquidator of the Company of all or any part of the property of the
Company; or
(vii) an Event of Default occurs under the Mortgage or
the Security Agreement.
(b) If an Event of Default occurs and is continuing, then the
Holder may exercise any right, power or remedy conferred upon it by law, and
shall have the right to declare by written notice the entire principal and all
interest accrued on this Note to be, and such Note shall thereupon become,
forthwith due and payable without, to the extend permitted by law, any other
declaration, presentment, demand, protest or notice of any kind and the Company
shall
2
immediately pay to the Holder of this Note the entire unpaid principal and
interest accrued on this Note.
5. Extraordinary Transactions
If, at any time, (i) there occurs any consolidation or merger of the
Company with or into any other corporation or other entity or person and the
Company is not the surviving corporation or there occurs any other corporate
reorganization or transaction or series of related transactions, and as a result
thereof the current shareholders of the Company after such merger,
consolidation, reorganization or other transaction own in the aggregate less
than 50% of the voting power and common equity of the ultimate parent
corporation or other entity surviving or resulting from such merger,
consolidation, reorganization or other transaction, or (ii) the Company
transfers all or substantially all of the Company's assets to another
corporation or other entity or person (an "Extraordinary Transaction"), then in
any such event (a) the Company shall promptly notify the Holder in writing of
the happening of such Extraordinary Transaction, and (b) the Holder may require
that the Company prepay an amount equal to 50% of the then outstanding principal
amount of the Note, plus accrued but unpaid interest on such prepaid principal
amount. Notice of the Holder's election under this Section 5 shall be given not
less than fifteen (15) days after the Holder receives written notice from the
Company of the happening of such Extraordinary Transaction.
6. Miscellaneous.
(a) No delay or omission by the Holder hereof in exercising any
right or remedy hereunder shall constitute a waiver of any such right or remedy.
A waiver on one occasion shall not operate as a bar to or waiver of any such
right or remedy on any future occasion.
(b) The Company shall pay all reasonable costs and expenses of
collection, including attorney's fees, incurred or paid by the Holder hereof in
enforcing this Note and the obligations evidenced hereby.
(c) This Note may be amended only by written agreement of the
Company and the Holder hereof.
(d) This Note is governed by the laws of the State of New York.
(e) In the event that the Holder notifies the Company that this
Note has been mutilated, lost, stolen or destroyed, the Company will issue a
replacement Note identical in all respects to the original Note (except for
registration number and the then outstanding principal amount, if different than
that shown on the original Note), provided that the Holder surrenders for
cancellation its Note certificate in the case of a mutilated certificate or
provides evidence of lost, theft or destruction and indemnity reasonably
satisfactory to the Company in the case of a lost, stolen or destroyed
certificate.
(f) The Holder may, subject to compliance with applicable federal
and state securities laws, transfer or assign this Note or any interest herein
and may mortgage, encumber or transfer any of its rights or interest in and to
this Note or any part hereof and, without limitation, each
3
assignee, transferee and mortgagee (which may include any affiliate of the
Holder) shall have the right to transfer or assign its interest. The Note shall
in all cases be binding on the Company and its successors and inure to the
benefit of the Holder and its successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer as of the day and year first written
above.
UNIGENE LABORATORIES, INC.
By:_____________________________________
Xxxxxx X. Xxxx
President
[Corporate Seal]
4
ATTACHMENT B
ESCROW AGREEMENT
This Escrow Agreement ("Agreement"), dated as of April __, 2002, is entered
into by and among Unigene Laboratories, Inc., a Delaware corporation
("Unigene"), The Tail Wind Fund, Ltd., a British Virgin Islands limited
liability company ("Tail Wind"), and First Union National Bank, as escrow agent
(the "Escrow Agent").
Recitals
--------
A. Pursuant to a Settlement Agreement between Tail Wind and Unigene dated
the date hereof, Unigene is issuing to Tail Wind 2,000,000 shares (the "Escrowed
Shares") of Unigene common stock, par value $.01 per share ("Common Stock"),
which they have agreed would be deposited in escrow and released to Tail Wind in
accordance with the terms of this Agreement commencing on the date ("Effective
Date") which is the earlier of (i) the date on which a Registration Statement
filed with the Securities and Exchange Commission ("SEC") registering the
Escrowed Shares for resale under the Securities Act of 1933, as amended
("Securities Act"), is declared effective by the SEC, (ii) the date on which the
SEC issues a "no-action" letter to the effect that the Escrowed Shares may
currently be sold pursuant to Rule 144(k) promulgated under the Securities Act,
and (iii) the date on which the Escrowed Shares otherwise become eligible for
resale under Rule 144(k).
B. Unigene and Tail Wind desire that the Escrow Agent hold and disburse the
Escrowed Shares in accordance with the terms set forth in this Agreement, and
the Escrow Agent has so agreed.
NOW THEREFORE, in consideration of the mutual benefits and covenants
contained herein, and subject to the terms and conditions set forth below, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Appointment of the Escrow Agent. Unigene and Tail Wind each hereby
-------------------------------
appoint the Escrow Agent to serve as escrow agent for the Escrowed Shares and
the Escrow Agent hereby agrees to such appointment, in each case pursuant to the
terms and conditions set forth in this Agreement. The Escrow Agent shall be
entitled to such fees and expenses for its services hereunder as are set forth
in Schedule A attached hereto, payment of which in respect of the Escrow Agent
shall be the joint and several obligation of Unigene and Tail Wind, but as
between Unigene and Tail Wind shall be shared equally.
2. Receipt of Escrow Deposit. The Escrow Agent hereby acknowledges the
-------------------------
receipt from Unigene of forty (40) unlegended stock certificates evidencing in
the aggregate 2,000,000 Escrowed Shares (50,000 shares each) registered in the
name of "The Tail Wind Fund, Ltd." The Escrow Agent agrees to hold and disburse
the Escrowed Shares only in accordance with the terms of this Agreement.
3. Release of Escrowed Shares.
--------------------------
(a) Unigene shall immediately notify Tail Wind upon the occurrence of
the Effective Date, and either Unigene or Tail Wind may notify the Escrow Agent
(which may be verbally by telephone followed by confirmation by fax or mail) of
such Effective Date. Escrowed Shares shall be released by the Escrow Agent as
follows:
(i) On the first Monday following the Effective Date and on each
Monday thereafter (or next business day if not a business day), the
Escrow Agent shall release from escrow and deliver by messenger or
nationally recognized overnight courier one (1) stock certificate
representing 50,000 Escrowed Shares to Tail Wind at the following
address:
The Tail Wind Fund, Ltd.
c/x Xxxxxx Xxxxx & Co.
000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(ii) On the first business day of each calendar month following
the Effective Date, the Escrow Agent shall release from escrow and
deliver to Tail Wind at the above address by messenger or nationally
recognized overnight courier the Additional Monthly Release Amount (as
defined below) as directed by, and only in accordance with, the joint
written instructions in the form attached hereto as Exhibit A signed
and delivered to the Escrow Agent by Unigene and Tail Wind.
(b) Unigene and Tail Wind each hereby agree that at or before 5:00
p.m., New York City time, on the last business day of each calendar month,
commencing with the full calendar month following the Effective Date, they will
deliver to the Escrow Agent joint written instructions (the "Release Notice")
directing the Escrow Agent to release to Tail Wind a specified number (the
"Additional Monthly Release Amount") of the Escrowed Shares as described in
paragraph 3(c) below. All Escrowed Shares released from escrow under this
Agreement (the "Released Shares") shall be evidenced by stock certificates that
shall not bear any securities law or any other restrictive legend. (For
clarification purposes, a Release Notice does not need to be, and will not be,
delivered to the Escrow Agent for release of Escrowed Shares pursuant to Section
3(a)(i) above.)
(c) The Additional Monthly Release Amount to be specified in the
Release Notice shall be equal to the extent to which (i) 10% of the trading
volume in shares of Common Stock for the calendar month immediately preceding
the date the Release Notice is (or was required to have been) delivered, as
reported by the OTC Bulletin Board or any other exchange on which Unigene's
shares are then trading, exceeds (ii) the number of Escrowed Shares previously
released during such calendar month pursuant to 3(a)(i) above, provided that the
Additional Monthly Release Amount is equal to a minimum of 50,000 shares of
Common Stock. If the Additional Monthly Release Amount is less than 50,000
shares, or to the extent it is in
2
excess of a multiple of 50,000 shares, then the difference will be carried
over to the following month(s) until the aggregated Additional Monthly Release
Amount equals at least 50,000 shares.
(d) Upon release of all of the Escrowed Shares, this Agreement shall
terminate, and the Escrow Agent shall be discharged from any further obligations
hereunder.
4. Duties of the Escrow Agent.
--------------------------
(a) Duties in General. The Escrow Agent undertakes to perform only
-----------------
such duties as are expressly set forth herein (which all parties hereto agree
are ministerial in nature), and any other duties that are imposed by law. If in
doubt as to its duties and responsibilities hereunder, the Escrow Agent may
consult with counsel of its choice and shall be protected in any action taken or
omitted to be taken in good faith in reliance on the advice or opinion of such
counsel. The Escrow Agent agrees to perform its duties hereunder in good faith
in accordance with the terms of this Agreement.
(b) Exculpation. Except for Escrow Agent's own willful misconduct, bad
-----------
faith or negligence, the Escrow Agent: (i) may rely and/or act upon any written
instrument, document or request believed by the Escrow Agent in good faith to be
genuine and to be executed and delivered by the proper person, and may assume in
good faith the authenticity, validity and effectiveness thereof and shall not be
obligated to make any investigation or determination as to the truth and
accuracy of any information contained therein; and (ii) shall not be responsible
for the acts or omissions of the other parties hereto.
(c) Reporting. The Escrow Agent shall provide Unigene and Tail Wind,
---------
on a monthly basis, a report detailing the following information: (1) total
number of shares in escrow at the beginning of the month, (2) total number of
shares released from escrow during the month, and (3) total number of shares in
escrow at the end of the month.
(d) No Additional Duties. The Escrow Agent shall have no duties except
--------------------
those that are expressly set forth in this Agreement, and it shall not be bound
by any notice of a claim or demand hereunder, or any waiver, modification,
amendment, termination or rescission of this Agreement, unless received by it in
writing.
(e) Miscellaneous. The Escrow Agent may execute any of its powers or
-------------
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys.
5. Indemnification of the Escrow Agent. In consideration of its acceptance
-----------------------------------
of the appointment as the Escrow Agent, Unigene and Tail Wind jointly and
severally agree to indemnify the Escrow Agent against, and hold the Escrow Agent
harmless from, all costs, damages, expenses (including reasonable attorney's
fees and disbursements) and liabilities (collectively, "Expenses") that the
Escrow Agent may incur or sustain in connection with the performance of its
duties under, and fulfillment of the terms of, this Agreement, unless such
Expenses are caused by the Escrow Agent's willful misconduct, bad faith or
negligence.
3
6. Resignation and Termination of the Escrow Agent. The Escrow Agent, and
-----------------------------------------------
any successor Escrow Agent, shall have the right to resign from its duties
hereunder by giving written notice of its intention to resign to all other
parties hereto at least 30 business days in advance. Upon their receipt of a
resignation notice from the Escrow Agent, Unigene and Tail Wind shall use their
best efforts jointly to designate a successor Escrow Agent which is independent
of Unigene and Tail Wind and does not provide services to Unigene or Tail Wind.
If the parties do not agree upon a successor Escrow Agent within 30 business
days after the receipt of the Escrow Agent's resignation notice, the Escrow
Agent may petition any court of competent jurisdiction for the appointment of a
successor independent Escrow Agent or other appropriate relief and any such
resulting appointment shall be binding upon all parties hereto. By mutual
agreement, Unigene and Tail Wind shall have the right at any time, upon not less
than five business days prior written notice to the Escrow Agent, to terminate
their appointment of the Escrow Agent, or any successor Escrow Agent, as escrow
agent hereunder. Notwithstanding any provision of this Agreement to the
contrary, the Escrow Agent, or the successor Escrow Agent, shall continue to act
as the Escrow Agent until its successor is appointed and qualified to act as the
Escrow Agent.
7. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to be duly given (i) on the date delivered, if
delivered personally or sent by facsimile transmission or (ii) on the date
received, if mailed by registered or certified mail (return receipt requested),
or sent by nationally recognized overnight courier service, in each case to the
parties at the following addresses (or at such other address for a party as such
party shall specify by notice to the other parties):
If to Escrow Agent:
First Union National Bank
Corporate Trust Division
0000 Xxxxx Xxxxx Xxxxx
999 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Unigene:
Unigene Laboratories, Inc.
000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
4
with a copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Tail Wind:
The Tail Wind Fund, Ltd.
Windermere House
000 Xxxx Xxx Xxxxxx
X.X. Xxx XX-0000
Nassau, Bahamas
Attn: Directors
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
The Tail Wind Fund, Ltd.
c/o Tail Wind Advisory and Management Ltd.
Xxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attn: Xxxxx Xxxxx
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
and with a copy to:
Xxxxx X. Xxxxxxx, P.C.
110 East 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
provided, however, that the providing of notice to counsel for a party shall
not, of itself, be deemed notice to such party. Any notice sent to the Escrow
Agent also shall be sent to the other party to this Agreement.
5
8. Entire Agreement and Amendment. This Agreement constitutes the entire
------------------------------
agreement among the parties with respect to the matters covered by this
Agreement. This Agreement may be amended only by a writing that is signed by
each of the parties that would be bound thereby.
9. Successors and Assigns. This Agreement shall inure to the benefit of,
----------------------
and shall be binding upon the parties hereto and their successors and assigns.
This Agreement may not be assigned by any party hereto, except that a successor
to the Escrow Agent may be designated in accordance with the provisions of
Section 6. Nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties hereto and their permitted successors
and assigns, any rights or remedies whatsoever.
10. Headings. The headings in this Agreement have been included solely for
--------
ease of reference and shall not be considered in the interpretation or
construction of this Agreement.
11. Severability. If any provision of this Agreement or its application is
------------
held to be invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, the validity, legality and enforceability of all other
applications of that provision, and of all other provisions and applications of
this Agreement, shall not in any way be affected or impaired. If any court shall
determine that any provision of this Agreement is in any way unenforceable, such
provision shall be construed by the court to be enforced to the greatest extent
allowed by law.
12. Governing Law. This Agreement shall in all respects be construed,
-------------
enforced and governed by the laws of the State of New York, without regard to
the choice of law rules utilized in that jurisdiction.
13. Arbitration. Any and all disputes arising from or in connection with
-----------
this Agreement, whether based on contract, tort, common law, equity, statute,
regulation, order or otherwise ("Disputes"), including Disputes arising in
connection with claims by third persons, shall be exclusively governed by and
settled in accordance with the provisions of this Section 13; provided, that the
foregoing shall not preclude equitable or other judicial relief to enforce the
provisions of this Section 13 or to preserve the status quo pending resolution
of Disputes hereunder.
(a) Binding Arbitration. The parties hereby agree to submit all
-------------------
Disputes to arbitration for final and binding resolution. Either party may
initiate such arbitration by delivery of a demand therefore (the "Arbitration
Demand") to the other party. The arbitration shall be conducted in New York, New
York by a sole arbitrator selected by agreement of the parties not later than 10
days after delivery of the Arbitration Demand, or, failing such agreement,
appointed pursuant to the Commercial Arbitration Rules of the American
Arbitration Association, as amended from time to time (the "AAA Rules"). If the
arbitrator becomes unable to serve, his successor(s) shall be similarly selected
or appointed.
(b) Procedures. The arbitration shall be conducted pursuant to the
----------
Federal Arbitration Act and such procedures as the parties may agree or, in the
absence of or failing such agreement, pursuant to the AAA Rules. Notwithstanding
the foregoing (i) each party shall provide to the other, reasonably in advance
of any hearing, copies of all documents that a party intends to present in such
hearing; (ii) all hearings shall be conducted on an expedited schedule;
6
and (iii) all proceedings shall be confidential, except that either party may at
its expense make a stenographic record thereof.
(c) Timing. The arbitrator shall complete all hearings not later than
------
90 days after his or her selection or appointment, and shall make a final award
not later than 30 days thereafter. The arbitrator shall apportion all costs and
expenses of the arbitration, including the arbitrator's fees and expenses, and
fees and expenses of experts ("Arbitration Costs") between the prevailing and
non-prevailing party as the arbitrator shall deem fair and reasonable. In
circumstances where a Dispute has been asserted or defended against on grounds
that the arbitrator deems manifestly unreasonable, the arbitrator may assess all
Arbitration Costs against the non-prevailing party and may include in the award
the prevailing party's attorney's fees and expenses in connection with any and
all proceedings under this Section 13. Notwithstanding the foregoing, in no
event may the arbitrator award multiple or punitive damages.
[Signature Page Follows]
7
IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Agreement as of the date first set forth above.
UNIGENE LABORATORIES, INC.
By:_________________________________________
Xxxxxx X. Xxxx
President
THE TAIL WIND FUND, LTD.
By: Tail Wind Advisory and Management Ltd.
By:_____________________________________
Xxxxx Xxxxx
CEO
FIRST UNION NATIONAL BANK, as Escrow Agent
By:________________________________________
Name:
Title:
8
Exhibit A
---------
ESCROW RELEASE CERTIFICATE
Release Notice Date: ______________________
To: First Union National Bank
Pursuant to Section 3(a)(ii) of the Escrow Agreement ("Escrow Agreement"),
dated as of April __, 2002, by and among Unigene Laboratories, Inc., a Delaware
corporation ("Unigene"), The Tail Wind Fund, Ltd., a British Virgin Islands
limited liability company ("Tail Wind"), and First Union National Bank, as
escrow agent (the "Escrow Agent"), you are hereby authorized and directed to
release to Tail Wind from escrow the number of shares of Unigene common stock
specified below. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Escrow Agreement:
Additional Monthly Release Amount: ______________
Number of shares to be released (multiple of 50,000 shares): ______________
Additional Monthly Release Amount carried forward: ______________
Please register the shares in the following name: The Tail Wind Fund Ltd.
c/o Tail Wind Advisory and
Management Ltd.
Xxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Please send the certificate(s) to: The Tail Wind Fund, Ltd.
c/x Xxxxxx Xxxxx & Co.
000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
UNIGENE LABORATORIES, INC.
By:_____________________
Name:
Title:
THE TAIL WIND FUND, LTD.
By:_____________________
Name:
Title:
NOTE: THIS RELEASE NOTICE IS VALID ONLY IF SIGNED BY BOTH UNIGENE AND TAIL WIND.
----
SCHEDULE A
FEES PAYABLE TO ESCROW AGENT
Acceptance Fee: $Waived
Annual Escrow Agent Fee: $2,500
Out of Pocket Expenses: Billed Separately
The Acceptance Fee and the Annual Escrow Fee are payable upon execution
of this Agreement. In the event the escrow is not funded, the Acceptance Fee and
all related expenses will not be refunded. Annual fees cover a full year in
advance, or any part thereof, and thus are not pro-rated in the year of
termination.
All out-of-pocket expenses, including, but not limited to, reasonable
attorney fees and expenses, accountant fees and expenses, legal notice
publication, environmental surveys, travel expenses, postage, registered mail
and insurance costs and courier charges, will be billed separately.
The fees quoted in this schedule apply to services ordinarily rendered
in the administration of an Escrow Account and are subject to reasonable
adjustment based on final review of documents, or when the Escrow Agent is
called upon to undertake unusual duties or responsibilities, or as changes in
law, procedures, or the cost of doing business demand. Services in addition to
and not contemplated in this Agreement, including, but not limited to, document
amendments and revisions, non-standard cash and/or investment transactions,
calculations, notices and reports, and legal fees in connection therewith, will
be billed as extraordinary expenses.
Unless otherwise indicated, the above fees provide for the
establishment of one account. Additional sub-accounts governed by the same
Escrow Agreement may incur an additional charge.
ATTACHMENT C
--------------------------------------------------------------------------------
UNIGENE LABORATORIES, INC., MORTGAGOR
and
THE TAIL WIND FUND, LTD., MORTGAGEE
__________________________________
MORTGAGE
(Fee)
__________________________________
Dated: April _, 2002
Location: 000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
RECORD AND RETURN TO:
Kleinberg, Kaplan, Xxxxx & Xxxxx
0 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxxxx X. Tiger, Esq.
The premises described within this instrument are also known as Section
Block 2801 and Xxx 00 xx xxx Xxxxxxxx Xxx Xxx xx Xxxxx Xxxxxx.
--------------------------------------------------------------------------------
MORTGAGE
--------
THIS MORTGAGE is made the ___ day of April, 2002, by UNIGENE
LABORATORIES, INC., a Delaware corporation having its principal place
of business at 000 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the
"Mortgagor"), to THE TAIL WIND FUND, LTD., a British Virgin Islands
limited liability company ("Tail Wind" or the "Mortgagee"), having an
address at Xxxxxxxxxx Xxxxx, 000 Xxxx Xxx Street, P.O. Box 55-5539,
Nassau, Bahamas.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Mortgagor is the owner of a fee estate in the premises
described in Exhibit A attached hereto (the "Premises") and commonly known as
---------
000 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx;
WHEREAS, the Mortgagor has executed and delivered a certain secured
note in the amount of One Million ($1,000,000) Dollars, lawful money of the
United States of America, dated the date hereof, to Tail Wind;
WHEREAS, the Mortgagor and the Mortgagee are entering or have entered
into, on or about the date hereof, a Settlement Agreement (the "Settlement
Agreement"), and an Equipment Security Agreement (the "Security Agreement");
NOW THEREFORE, to secure the payment of an indebtedness in the
principal sum of One Million ($1,000,000) Dollars, lawful money of the United
States of America, to be paid with interest (said indebtedness, interest and all
other sums which may or shall become due hereunder, collectively, the "Debt")
pursuant to the above described secured promissory note given by the Mortgagor
to the Mortgagee (the "Note"), the Mortgagor has mortgaged, given, granted,
bargained, sold, aliened, enfeoffed, conveyed, confirmed and assigned, and by
these presents does mortgage, give, grant, bargain, sell, alien, convey, confirm
and assign unto the Mortgagee forever all right, title and interest of the
Mortgagor now owned, or hereafter acquired, in and to the following property,
rights and interest (such property, rights and interests, collectively, the
"Mortgaged Property"):
(a) The Premises;
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of the Mortgagor, either in law or in equity, in possession or
expectancy, in and to the Premises, Improvements, Easements (defined below),
Equipment (defined below), Leases (defined below), and/or Rents (defined below),
or any part thereof;
(d) all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and/or Improvements
(including, without limitation, any and all development rights, air rights or
similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises and/or Improvements or now or hereafter transferred
to the Premises and/or Improvements) and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises and/or Improvements to the center line thereof ("Easements");
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever and all additions thereto and
renewals and replacements thereof, and all substitutions therefor now owned or
hereafter acquired by the Mortgagor, or in which the Mortgagor has or shall have
an interest, now or hereafter attached to any portion of the Premises or
Improvements (collectively, the "Equipment");
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises,
Improvements, Easements, Equipment, Leases and/or Rents, whether from the
exercise of the right of eminent domain (including any transfer made in lieu of
the exercise of said right), or awards or refunds received as a result of a
reduction in the real estate taxes or tax assessment affecting the Premises,
Improvements, Easements, Equipment, Leases and/or Rents, or proceeds received in
connection with any tax certiorari proceeding affecting the Premises,
Improvements, Easements, Equipment, Leases and/or Rents, or for any other injury
to or decrease in the value of the Mortgaged Property;
(g) all leases and other agreements affecting the use or occupancy of
the Premises, Improvements, Easements and/or Equipment, now or hereafter entered
into (the "Leases") and the right to receive and apply the rents, issues and
profits of the Premises, Improvements, Easements, Equipment and/or Leases, (the
"Rents") to the payment of the Debt;
(h) all right, title and interest of the Mortgagor in and to (i) all
contracts from time to time executed by the Mortgagor or any manager or agent on
its behalf relating to the ownership, construction, maintenance, repair,
operation, occupancy, sale or financing of the Premises, Improvements,
Easements, Equipment, Leases and/or Rents, or any part thereof and all
agreements relating to the purchase or lease of any portion of the Premises,
Improvements, Easements, Equipment, Leases and/or Rents, or any property which
is adjacent or peripheral to the Premises, Improvements and/or Easements,
together with the right to exercise such options and all leases of Equipment,
(ii) all consents, licenses, building permits, certificates of occupancy and
other governmental approvals relating to construction, completion, occupancy,
use or operation of the Premises, Improvements, Easements, Equipment, Leases
and/or Rents, or any part thereof, and (iii) all drawings, plans, specifications
and similar or related items related to the Premises, Improvements, Easements,
Equipment, Leases and/or Rents;
(i) all books and records relating to or used in connection with the
operation of the Premises, Improvements, Easements, Equipment, Leases and/or
Rents, or any part thereof; all general intangibles related to the operation of
the Premises, Improvements, Easements, Equipment, Leases and/or Rents, now
existing or hereafter arising;
(j) all proceeds, both cash and non-cash, of the foregoing;
-2-
(k) all proceeds of and any unearned premiums on any insurance policies
covering the Premises, Improvements, Easements, Equipment, Leases and/or Rents,
including, without limitation, the right to receive and apply the proceeds of
any insurance, judgments, or settlements made in lieu thereof, for damage to the
Premises, Improvements, Easements, Equipment, Leases and/or Rents; and
(l) after the occurrence of an Event of Default hereunder, the right,
in the name and on behalf of the Mortgagor, to appear in and defend any action
or proceeding brought with respect to the Premises, Improvements, Easements,
Equipment, Leases and/or Rents, and to commence any action or proceeding to
protect the interest of the Mortgagee in the Premises, Improvements, Easements,
Equipment, Leases and/or Rents.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of the Mortgagee, and the successors and
assigns of the Mortgagee, forever.
AND the Mortgagor covenants and agrees with and represents and warrants
to the Mortgagee as follows:
1. Payment of Debt. The Mortgagor will pay the Debt at the time and in
---------------
the manner provided for its payment in the Note and in this Mortgage.
2. Warranty of Title.
-----------------
(a) Subject only to (i) the lien of water, sewer and other utility
charges which are accrued but not yet due and payable, (ii) those other
exceptions (to the extent not past due or otherwise delinquent) to title set
forth in the title search issued by Commonwealth Land Title Insurance Company to
the Mortgagee dated June 1, 2001 as updated on December 30, 2001 (the "Permitted
Title Exception") and (iii) "Permitted Liens" and "Exempt Liens" as defined
below, the Mortgagor represents and warrants that, as of the date hereof, title
to the Mortgaged Property is free and clear of liens, claims, encumbrances or
defects of any nature. The Mortgagor also represents and warrants that (i)
contemporaneously with, and in consideration for, the execution and delivery of
this Mortgage, the Mortgagor is receiving new value from the Mortgagee, which
new value is reasonably equivalent value in exchange for this Mortgage, (ii) the
execution and delivery of this Mortgage by the Mortgagor does not constitute a
"fraudulent conveyance" within the meaning of Title 11 of the United States Code
as now constituted or under any other applicable statute, (iii) no bankruptcy or
insolvency proceedings are pending or contemplated by or, to the knowledge of
Mortgagor, against the Mortgagor, and (iv) this Mortgage is legal and valid and,
subject as to priority to Permitted Liens and subject to the Permitted Title
Exception, enforceable, and upon the recording of this Mortgage and the
Subordination Agreement (as defined in paragraph 38 below) and upon the filing
of the UCC-1 Financing Statements as set forth in Section 29 herein, this
Mortgage shall be a first priority and perfected lien and security interest on
the Mortgaged Property.
(b) The Mortgagor (and the undersigned representative of the Mortgagor,
if any) additionally represents and warrants that: (i) it has full power,
authority and legal right to execute this Mortgage, and to mortgage, give,
grant, bargain, sell, alien, convey, confirm and assign the
-3-
Mortgaged Property pursuant to the terms hereof and to keep and observe all of
the terms of this Mortgage on the Mortgagor's part to be performed and (ii) the
Mortgagor is a duly organized and presently existing corporation and this
Mortgage has been executed by authority of its Board of Directors. The Mortgagor
additionally represents and warrants that no shareholder approval is required to
authorize the execution, delivery and performance of this Mortgage.
3. Insurance. The Mortgagor (i) will keep the Improvements and the
---------
Equipment insured against loss or damage by fire, standard extended coverage
perils and such other hazards in amounts not less than 100% of the full
insurable value of the Improvements and the Equipment, excluding the costs of
foundations, excavations and footings below grade, and shall be sufficient to
meet all applicable co-insurance requirements, and (ii) will maintain business
interruption insurance and such other forms of insurance coverage with respect
to the Mortgaged Property as the Mortgagee shall from time to time reasonably
require in amounts approved by the Mortgagee but in no event in all such
instances greater than those coverages customarily required of other comparable
buildings in the Fairfield, NJ area by other institutional commercial lenders.
All policies of insurance (the "Policies") shall be issued by insurers having a
minimum policy holders rating of "A" per the latest rating publication of
Property and Casualty Insurers by A.M. Best Company and who are lawfully doing
business in New Jersey and are otherwise reasonably acceptable in all respects
to the Mortgagee in its reasonable discretion. All Policies shall contain the
standard New Jersey mortgagee non-contribution clause endorsement or an
equivalent endorsement satisfactory to the Mortgagee naming the Mortgagee as the
person to which all payments made by the insurer thereunder shall be paid and
shall otherwise be in form and substance satisfactory in all respects to the
Mortgagee. Blanket insurance policies shall not be acceptable for the purposes
of this paragraph unless otherwise approved to the contrary by the Mortgagee.
The Mortgagor shall pay the premiums for the Policies as the same become due and
payable. At the request of the Mortgagee, the Mortgagor will deliver the
Policies to the Mortgagee. Not later than ten (10) days prior to the expiration
date of each of the Policies, the Mortgagor will deliver to the Mortgagee a
renewal policy or policies accompanied by evidence of payment of premiums billed
reasonably satisfactory to the Mortgagee. If at any time the Mortgagee is not in
receipt of written evidence that all insurance required hereunder is in force
and effect, the Mortgagee shall have the right upon four (4) business days
notice to the Mortgagor to take such action as the Mortgagee deems necessary to
protect its interest in the Mortgaged Property, including, without limitation,
the obtaining of such insurance coverage as the Mortgagee in its sole discretion
deems appropriate, and all expenses incurred by the Mortgagee in connection with
such action or in obtaining such insurance and keeping it in effect shall be
paid by the Mortgagor to the Mortgagee upon demand. The Mortgagor shall at all
times comply with and shall cause the Improvements and Equipment and the use,
occupancy, operation, maintenance, alteration, repair and restoration thereof to
comply with the terms, conditions, stipulations and requirements of the
Policies.
If the Premises, or any portion of the Improvements, is located in
a Federally designated "special flood hazard area," in addition to the other
Policies required under this paragraph, a flood insurance policy shall be
delivered by the Mortgagor to the Mortgagee. If the Mortgaged Property shall be
damaged or destroyed, in whole or in part, by fire or other property hazard or
casualty, the Mortgagor shall give prompt notice thereof to the Mortgagee. Sums
paid to the Mortgagee by any insurer may be retained and applied by the
Mortgagee toward payment of the Debt whether or not then due and payable in such
order, priority and proportions as the
-4-
Mortgagee in its discretion shall deem proper or, at the discretion of the
Mortgagee, the same may be paid, either in whole or in part, to the Mortgagor
for such purposes as the Mortgagee shall designate. If the Mortgagee shall
receive and retain such insurance proceeds, the lien of this Mortgage shall be
reduced only by the amount thereof received and retained by the Mortgagee and
actually applied by the Mortgagee in reduction of the Debt.
4. Covenants.
---------
(a) The Mortgagor shall pay all taxes, assessments, water rates, sewer
rents and other charges, including vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Premises, now or hereafter levied
or assessed against the Mortgaged Property (the "Taxes") prior to the time of
any creation, imposition or perfection of any tax or other applicable lien,
judgment, writ or warrant of attachment upon the Mortgaged Property or any
portion thereof which lien, judgment, writ or attachment would in any respect
have priority to, or be pari passu with, the liens created under this Mortgage
or the Security Agreement, except for liens for such Taxes up to $20,000 in the
aggregate ("Exempt Liens"). The Mortgagor shall deliver to the Mortgagee, upon
request, receipted bills, cancelled checks and other evidence satisfactory to
the Mortgagee evidencing the payment of the Taxes in accordance with the
previous sentence. The Mortgagor shall promptly notify the Mortgagee if at any
time there exists any tax or other applicable lien, judgment, writ or warrant of
attachment upon the Mortgaged Property or any portion thereof which would in any
respect have priority to, or be pari passu with, the liens created under this
Agreement or the Mortgage for amounts in excess of $20,000 in the aggregate.
(b) Corporate Existence, Etc. The Mortgagor will preserve and keep in
force and effect its corporate existence and will cause each subsidiary to
preserve and keep in force and effect its corporate, partnership or other
existence, except in each such case in the event of a merger as expressly
permitted herein, in accordance with the respective organizational documents of
each such subsidiary, and the rights and franchises of the Mortgagor and its
subsidiaries; provided that, except as may be provided elsewhere herein or in
--------
the Security Agreement, the Mortgagor shall not be required to preserve any such
right or franchise, or the existence, right or franchise of any of its
subsidiaries, if (i) the board of directors of the Mortgagor shall determine
that the preservation thereof is no longer desirable in the conduct of the
businesses of the Mortgagor and its subsidiaries, (ii) such lack of preservation
shall not prejudice the rights of the Mortgagee hereunder or under any other
Loan Document, and (iii) such lack of preservation shall not have a Material
Adverse Effect.
(c) Maintenance. The Mortgagor will cause the Mortgaged Property and
each portion thereof to be maintained and kept in good repair, working order and
condition, ordinary wear and tear excepted, and will from time to time cause to
be made all necessary repairs, renewals, and replacements thereof, all as in the
reasonable judgment of the Mortgagor may be necessary; provided, however, that,
-------- -------
except as may be provided elsewhere in this Mortgage or in the Security
Agreement (and subject to Section 22(d) below), nothing in this Section 4(c)
shall prevent the Mortgagor from discontinuing the use, operation or maintenance
of such Mortgage Properties (provided that the Premises shall not be permitted
to fall into a state of disrepair), or disposing of any of such Mortgage
Properties if the board of directors of the Mortgagor or the board of directors
(or equivalent thereof) of the subsidiary concerned determines such
discontinuance or disposal to be in the best interests of the Mortgagor or any
such subsidiary
-5-
(provided that any such disposal is in an arms-length transaction for a fair
value after taking into account all circumstances involved in the decision to
dispose of such property).
(d) Books and Records. The Mortgagor will, and will cause each of its
subsidiaries to, keep books and records which accurately reflect all of its
business affairs and transactions and permit the Mortgagee or any of its
representatives, at reasonable times and intervals, to visit all of its offices,
to discuss its financial matters with its officers, and to examine (and, at the
expense of the Mortgagee, photocopy extracts from) any of its books or other
corporate records; provided, however, that, if confidential information is
-------- -------
sought, the Mortgagee will enter into a reasonable confidentiality agreement
with the Mortgagor.
(e) Rights of the Mortgagee. The Mortgagor will not, at any time, by
any amendment of the Mortgagor's Articles of Incorporation, or through any
consolidation, merger, reorganization, transfer of assets, dissolution, issue or
sale of securities or any other action, seek to avoid the observance or
performance hereof or under any of the other Loan Documents, but will at all
times take such actions as are necessary or appropriate in order to protect the
rights of the Mortgagee hereunder and under the other Loan Documents.
(f) Limitations on Indebtedness. Except as approved in writing by the
Mortgagee, the Mortgagor will not, and will not permit any subsidiary to,
create, assume or incur any Indebtedness except:
(i) Indebtedness evidenced by the Note.
(ii) Indebtedness of the Mortgagor outstanding as of the
date of this Note and disclosed in any document heretofore filed by the
Mortgagee with the Securities and Exchange commission.
(iii) Indebtedness in respect of workers' compensation claims
incurred in the ordinary course of business.
(iv) Indebtedness to third parties unaffiliated with the
Mortgagor incurred on an arm's length basis (provided that each member of the
Levy family and each of his or her direct or indirect affiliates shall be
considered affiliated with the Mortgagor).
(v) Indebtedness to any member of the Levy family or any of
his or her direct or indirect affiliates, provided that such member or affiliate
subordinates such Indebtedness to this Mortgage, the Debt, the Note, the
Security Agreement and the Obligations (as that term is defined in the Security
Agreement) on the same terms as set forth in the Subordination Agreement.
Indebtedness means, without duplication, as to any Person or Persons:
(i) indebtedness for borrowed money; (ii) indebtedness evidenced by bonds,
debentures, notes or other similar instruments; (iii) other than indebtedness
for the deferred purchase price of property or services, obligations and
liabilities secured by a lien upon property owned by such Person, whether or not
owing by such Person and even though such Person has not assumed or become
liable for the payment thereof; (iv) indebtedness directly or indirectly
guaranteed by such Person; (v) obligations of such Person as lessee under
capital leases; (vi) net liabilities of such Person under
-6-
hedging agreements and foreign currency exchange agreements, as calculated on a
basis satisfactory to the Mortgagee and in accordance with accepted practice;
(vii) obligations of such Person as an account party in respect of letters of
credit; (viii) all obligations of such Person in respect of bankers'
acceptances; and (ix) all contingent liabilities of such person in respect of
any of the foregoing. Indebtedness shall not include accounts payable and lease
obligations incurred in the ordinary course of business consistent with past
practices.
(g) Liens. The Mortgagor will not, and will not permit any of its
subsidiaries to, create, incur, assume or suffer to exist any lien upon any of
the Mortgaged Property or Collateral (as that term is used in the Security
Agreement), whether now owned or hereafter acquired, except (unless the
following are not permitted under any of the other provisions of this Mortgage
or under any of the provisions of the Security Agreement):
(i) liens for taxes, assessments or other governmental
charges or levies which would not in any respect have priority to, or be pari
passu with, the liens created under this Mortgage and the Security Agreement and
Exempt Liens;
(ii) liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not overdue;
(iii) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other forms of
governmental insurance or governmental benefits; purchase money liens and liens
securing rental payments under capital lease arrangements; and liens on assets
hereafter acquired which exist at the time of such acquisition;
(iv) judgment liens in existence less than ten (10) days
(but not later than five days prior to the date of any proposed sale thereunder)
after the entry thereof or with respect to which execution has been stayed or
the payment of which is covered in full by insurance maintained with responsible
and solvent insurance companies which have acknowledged coverage (the liens
referred to in clauses (i) through (iv) above and Permitted Junior Liens
(defined below) are sometimes referred to as "Permitted Liens"); and
(v) liens effectively subordinated to the Note, Debt,
Security Agreement, Obligations (as defined in the Security Agreement), and this
Mortgage, pursuant to the Subordination Agreement ("Permitted Junior Liens").
(h) Transactions with Affiliates. The Mortgagor will not, and will not
permit any of its subsidiaries to enter into, or cause, suffer or permit to
exist any arrangement or contract with any of its affiliates unless such
arrangement or contract is for fair consideration on arm's length terms and is
an arrangement or contract of the kind which would be entered into by a prudent
Person in the position of the Mortgagor or such subsidiary with a Person which
is not one of its affiliates, provided that the Mortgagor may issue stock
options and stock grants to the Mortgagor's officers and directors so long as
(1) the amount of such options and grants, individually and in the aggregate, do
not exceed an amount consistent with industry practice, (2) the terms of such
options and grants, individually and in the aggregate, are consistent with
industry practice in all material respects, and (3) the effective exercise or
issuance price per share
-7-
in each case is at or above the market price of the Mortgagor's common stock on
the date of issuance of such stock option or grant.
(i) Restricted Payments. The Mortgagor will not, and will not permit
any subsidiary:
(i) to make any distribution or declare or pay any
dividends (in cash or other property, other than in capital stock) on, or
purchase, redeem or otherwise retire any of the Mortgagor's or any of its
subsidiaries' capital stock, whether now or hereafter outstanding, except any
subsidiary may declare and pay dividends or other distributions to or purchase,
redeem or otherwise retire any capital stock from, the Mortgagor or any
subsidiary;
(ii) to make any payment or prepayment of principal of, or
make any payment of interest on, or redeem, purchase or defease any, debt (other
than trade payables) on any date other than (A) (unless prohibited by the
Subordination Agreement) the stated, scheduled date for such payment or
prepayment set forth in the documents and instruments memorializing such debt
(other than trade payables), and (B) payments on the Subordinated Debt (as
defined in the Subordination Agreement) as permitted by and in accordance with
the terms of the Subordination Agreement; or
(iii) to make any deposit for any of the foregoing purposes.
(j) Consolidation, Merger, etc. The Mortgagor will not, and will not
permit any of its subsidiaries, to liquidate or dissolve, consolidate with, or
merge into or with, any other Person, or purchase or otherwise acquire all or
substantially all of the assets of any Person (or of any division thereof), or
issue any securities or any rights or options to purchase securities for less
than fair value except:
(i) any subsidiary of the Mortgagor may liquidate or
dissolve voluntarily into, and may merge with and into, the Mortgagor or any
other subsidiary of the Mortgagor, and the assets or securities of any
subsidiary of the Mortgagor may be purchased or otherwise acquired by the
Mortgagor or any other subsidiary of the Mortgagor; and
(ii) so long as no default or Event of Default has occurred
and is continuing or would occur after giving effect thereto, the Mortgagor or
any of its subsidiaries may purchase all or substantially all of the assets of
any Person, may sell all or substantially all of the assets of the Mortgagor to
any Person, or merge with any Person, if (x) such transaction would not have any
material adverse effect on the Mortgaged Property or the rights of the Mortgagee
hereunder or under any of the other Loan Documents, and (y) at least fifty
percent (50%) of the then outstanding amount of principal due under the Note,
plus accrued interest thereon, is redeemed at the closing of such merger, sale
or purchase, and (z) if the Mortgagor sells all or substantially all of its
assets to any Person or merges with any Person, such Person assumes, and agrees
to be liable for (jointly and severally with the Mortgagor in the case of a sale
of assets), all of the obligations of the Mortgagor under this Mortgage and
other Loan Documents; provided, that any such sale of all or substantially all
of its assets shall not in any way affect the lien on the Mortgaged Property
created hereunder.
(k) Leases. Become liable in any way, whether directly or by
assignment or as a guarantor or other surety, for the obligations of the lessee
under any operating lease, unless,
-8-
immediately after giving effect to the occurrence of the liability with respect
to such leases, the aggregate amount of all rents paid under such leases at the
time in effect during the then current fiscal year will not exceed in the
aggregate $2,000,000.
5. Escrow Fund. At any time after the occurrence of an Event of
-----------
Default hereunder, upon the request of Mortgagee, the Mortgagor will pay to the
Mortgagee on the first day of each calendar month one-twelfth of an amount (the
"Escrow Fund") which would be sufficient to pay the Taxes payable, or reasonably
estimated by the Mortgagee in good faith to be payable, during the ensuing
twelve (12) months. The Mortgagee will apply the Escrow Fund to the payment of
Taxes which are required to be paid by the Mortgagor pursuant to the provisions
of this Mortgage and shall provide to Mortgagor without demand satisfactory
evidence of Mortgagee's prompt payment thereof. If the amount of the Escrow Fund
shall exceed the amount of the Taxes payable by the Mortgagor pursuant to the
provisions of this Mortgage, the Mortgagee shall, in its discretion, (a) return
any excess to the Mortgagor, or (b) credit such excess against future payments
to be made to the Escrow Fund. If the Escrow Fund is not sufficient to pay the
Taxes, as the same become payable, the Mortgagor shall pay to the Mortgagee,
upon request, an amount which the Mortgagee shall estimate in good faith as
sufficient to make up the deficiency. Until expended or applied as above
provided, any amounts in the Escrow Fund may be commingled with the general
funds of the Mortgagee and shall constitute additional security for the Debt and
shall bear interest at the rate of 4% per annum.
6. Condemnation. Notwithstanding any taking by any public or
------------
quasi-public authority through eminent domain or otherwise, the Mortgagor shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and this Mortgage and the Debt shall not be reduced until any award
or payment therefor shall have been actually received and applied by the
Mortgagee to the discharge of the Debt. The Mortgagee may apply the entire
amount of any such award or payment to the discharge of the Debt whether or not
then due and payable in such order, priority and proportions as the Mortgagee in
its or his discretion shall deem proper. If the Mortgaged Property is sold,
through foreclosure or otherwise, prior to the receipt by the Mortgagee of such
award or payment, the Mortgagee shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to
receive such award or payment, or a portion thereof sufficient to pay the Debt,
whichever is less. The Mortgagor shall file and prosecute its claim or claims
for any such award or payment in good faith and with due diligence and cause the
same to be collected and paid over to the Mortgagee. The Mortgagor hereby
irrevocably authorizes and empowers the Mortgagee, in the name of the Mortgagor
or otherwise, to collect and receipt for any such award or payment and to file
and prosecute such claim or claims. Although it is hereby expressly agreed that
the same shall not be necessary in any event, the Mortgagor shall, upon demand
of the Mortgagee, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of assigning any such award or payment to
the Mortgagee, free and clear of any encumbrances of any kind or nature
whatsoever.
7. Leases and Rents. Mortgagor represents that there are no leases or
----------------
tenancies with respect to the Mortgaged Property. Subject to the terms of this
paragraph, the Mortgagee waives the right to enter the Mortgaged Property for
the purpose of collecting the Rents, and grants the Mortgagor the right to
collect the Rents. The Mortgagor shall hold the Rents, or an amount sufficient
to discharge all current sums due on the Debt, in trust for use in payment of
the Debt.
-9-
The right of the Mortgagor to collect the Rents may be revoked by the Mortgagee
upon any default by the Mortgagor that remains uncured beyond the expiration of
any applicable notice and cure period under the terms of the Note or this
Mortgage by giving notice of such revocation to the Mortgagor. Following such
notice the Mortgagee may retain and apply the Rents toward payment of the Debt
in such order, priority and proportions as the Mortgagee, in its discretion,
shall deem proper, or to the operation, maintenance and repair of the Mortgaged
Property, and irrespective of whether the Mortgagee shall have commenced a
foreclosure of this Mortgage or shall have applied or arranged for the
appointment of a receiver. The Mortgagor shall not, without the consent of the
Mortgagee, make, or suffer to be made, any Leases or modify any Leases or cancel
any Leases or accept prepayments of installments of the Rents for a period of
more than one (1) month in advance or further assign the whole or any part of
the Rents. The Mortgagor shall (a) fulfill or perform each and every material
provision of the Leases on the part of the Mortgagor to be fulfilled or
performed, (b) promptly send copies of all notices of default which the
Mortgagor shall send or receive under the Leases to the Mortgagee, and (c)
enforce, short of termination of the Leases, the performance or observance of
the material provisions thereof by the tenants thereunder. The Mortgagor shall
from time to time upon the request of the Mortgagee provide to the Mortgagee a
complete and detailed leasing status report with respect to the Improvements,
which leasing status report shall be in form and substance reasonably
satisfactory in all respects to the Mortgagee. In addition to the rights which
the Mortgagee may have herein, in the event of any default under this Mortgage
that remains uncured beyond the expiration of any applicable notice and cure
period, the Mortgagee, at its option, may require the Mortgagor to pay monthly
in advance to the Mortgagee, or any receiver appointed to collect the Rents, the
fair and reasonable rental value for the use and occupation of such part of the
Mortgaged Property as may be in possession of the Mortgagor. Upon default in any
such payment that remains uncured beyond the expiration of any applicable notice
and cure period, the Mortgagor will vacate and surrender possession of the
Mortgaged Property to the Mortgagee, or to such receiver, and, in default
thereof, the Mortgagor may be evicted by summary proceedings or otherwise.
Nothing contained in this paragraph shall be construed as imposing on the
Mortgagee any of the obligations of the lessor under the Leases.
8. Maintenance of the Mortgaged Property. The Mortgagor shall cause
-------------------------------------
the Mortgaged Property to be maintained in good condition and repair and will
not commit or suffer to be committed any waste of the Mortgaged Property. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment), without the consent of
the Mortgagee. The Mortgagor shall promptly comply with all existing and future
governmental laws, orders, ordinances, rules and regulations affecting the
Mortgaged Property, or any portion thereof or the use thereof. The Mortgagor
shall promptly repair, replace or rebuild any part of the Mortgaged Property
which may be damaged or destroyed by fire or other property hazard or casualty
(including any fire or other property hazard or casualty for which insurance was
not obtained or obtainable) or which may be affected by any taking by any public
or quasi-public authority through eminent domain or otherwise, and shall
complete and pay for, within a reasonable time, any structure at any time in the
process of construction or repair on the Premises. If such fire or other
property hazard or casualty shall be covered by the Policies, the Mortgagor's
obligation to repair, replace or rebuild such portion of the Mortgaged Property
shall be contingent upon the Mortgagee paying the Mortgagor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. The Mortgagor will not,
without obtaining the prior
-10-
consent of the Mortgagee, initiate, join in or consent to any private
restrictive covenant, zoning ordinance, or other public or private restrictions,
limiting or affecting the uses which may be made of the Mortgaged Property or
any part thereof
9. Environmental Provisions.
------------------------
(a) For the purposes of this paragraph the following terms shall have
the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined or regulated as a hazardous waste, hazardous substance, pollutant or
contaminant under any Environmental Requirement, or which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous or which is or contains petroleum, gasoline, diesel fuel,
another petroleum hydrocarbon product, asbestos, asbestos-containing materials
or polychlorinated biphenyls, (ii) the "Environmental Requirements" shall
collectively mean all present and future laws, statutes, common law, ordinances,
rules, regulations, orders, codes, licenses, permits, decrees, judgments,
directives or the equivalent of or by any Governmental Authority and relating to
or addressing the protection of the environment or human health, and (iii) the
term "Governmental Authority" shall mean the Federal government, or any state or
other political subdivision, or any agency, court or body of the Federal
government, any state or other political subdivision, exercising executive,
legislative, judicial, regulatory or administrative functions.
(b) The Mortgagor hereby represents and warrants to the Mortgagee that
(i) no Hazardous Material regulated or otherwise defined by any Governmental
Authority is currently located at, on, in, under or about the Mortgaged Property
which has not been generated, stored, handled, processed, disposed of, or
otherwise used, by Mortgagor in compliance in all material respects with the
Environmental Requirements, (ii) no releasing, emitting, discharging, leaching,
dumping, disposing or transporting of any Hazardous Material from the Mortgaged
Property onto any other property or from any other property onto or into the
Mortgaged Property has occurred while the Mortgaged Property was owned by the
Mortgagor or is occurring in violation of any Environmental Requirement, (iii)
no notice of violation, non-compliance, liability or potential liability, lien,
complaint, suit, order or other notice with respect to the Mortgaged Property is
presently outstanding under any Environmental Requirement, nor does the
Mortgagor have knowledge or reason to believe that any such notice will be
received or is being threatened, and (iv) the Mortgaged Property and the
operation thereof are in full compliance with all Environmental Requirements,
except where non-compliance would not have a "Material Adverse Effect," as that
term is defined in the Settlement Agreement.
(c) The Mortgagor shall comply, and shall cause all tenants or other
occupants of the Mortgaged Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Mortgaged Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, or about the Mortgaged Property
in a manner that could lead or potentially lead to the imposition on the
Mortgagor, the Mortgagee or the Mortgaged Property of any liability or lien of
any nature whatsoever under any Environmental Requirement. The Mortgagor shall
notify the Mortgagee promptly in the event of any spill or other release of any
Hazardous Material at, in, on, under or about the Mortgaged Property which is
required to be reported to a Governmental Authority under any Environmental
Requirement,
-11-
will promptly forward to the Mortgagee copies of any notices received by the
Mortgagor relating to alleged violations of any Environmental Requirement or any
potential liability under any Environmental Requirement and will promptly pay
when due any fine or assessment against the Mortgagee, the Mortgagor or the
Mortgaged Property relating to any Environmental Requirement. If at any time it
is determined that the operation or use of the Mortgaged Property is in
violation of any applicable Environmental Requirement or that there are
Hazardous Materials located at, in, on, under or about the Mortgaged Property
which violates any applicable Environmental Requirement or that there are
Hazardous Materials located at, in, on, under or about the Mortgaged Property
which, under any Environmental Requirement, require special handling in
collection, storage, treatment or disposal, or any form of cleanup or corrective
action, the Mortgagor shall, within thirty (30) days after receipt of notice
thereof from any Governmental Authority or from the Mortgagee, take, at the
Mortgagor's sole cost and expense, such actions as may be necessary to fully
comply in all respects with all Environmental Requirements, provided, however,
that if such compliance cannot reasonably be completed within such thirty (30)
day period, the Mortgagor shall commence such necessary action within such
thirty (30) day period and shall thereafter diligently and expeditiously proceed
to fully comply in all respects and in a timely fashion with all Environmental
Requirements.
(d) If the Mortgagor fails to timely take, or to diligently and
expeditiously proceed to complete in a timely fashion, any such action described
in clause (c) above, the Mortgagee may, in its sole and absolute discretion,
make advances or payments toward the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by the Mortgagee (including, without limitation, reasonable counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
and fines or other penalty payments) and all sums advanced or paid in connection
with any judicial or administrative investigation or proceeding relating
thereto, will immediately, upon demand, become due and payable from the
Mortgagor and shall bear interest at the Default Rate from the date any such
sums are so advanced or paid by the Mortgagee until the date any such sums are
repaid by the Mortgagor to the Mortgagee. The Mortgagor will execute and
deliver, promptly upon request, such instruments as the Mortgagee reasonably may
deem useful or necessary to permit the Mortgagee to take any such action, and
such additional notes and mortgages, as the Mortgagee may require to secure all
sums so advanced or paid by the Mortgagee. If a lien is filed against the
Mortgaged Property by any Governmental Authority resulting from the need to
expend or the actual expending of monies arising from an action or omission,
whether intentional or unintentional, of the Mortgagor or for which the
Mortgagor is responsible, resulting in the releasing, spilling, leaking,
leaching, pumping, emitting, pouring, emptying or dumping of any Hazardous
Material into the waters or onto land located within or without the State where
the Mortgaged Property is located, then the Mortgagor will, within thirty (30)
days from the date that the Mortgagor is first given notice that such lien has
been placed against the Mortgaged Property (or within such shorter period of
time as may be specified by the Mortgagee if such Governmental Authority has
commenced steps to cause the Mortgaged Property to be sold pursuant to such
lien), either (a) pay the claim and remove the lien, or (b) furnish a cash
deposit, bond, or such other security with respect thereto as is satisfactory in
all respects to the Mortgagee and is sufficient to effect a complete discharge
of such lien on the Mortgaged Property.
(e) The Mortgagee may, at its option, at intervals of not less than one
year, or more frequently if the Mortgagee reasonably believes that a Hazardous
Material or other
-12-
environmental condition violates or threatens to violate any Environmental
Requirement, cause an environmental audit of the Mortgaged Property or portions
thereof to be conducted to confirm the Mortgagor's compliance with the
provisions of this paragraph, and the Mortgagor shall cooperate in all
reasonable ways with the Mortgagee in connection with any such audit. If such
audit discloses that a material violation of or a material liability under an
Environmental Requirement exists or if such audit was required or prescribed by
law, regulation or governmental or quasi-governmental authority, the Mortgagor
shall pay all costs and expenses incurred in connection with such audit;
otherwise, the costs and expenses of such audit shall, notwithstanding anything
to the contrary set forth in this paragraph, be paid by the Mortgagee.
(f) If this Mortgage is foreclosed, or if the Mortgaged Property is sold
pursuant to the provisions of this Mortgage, or if the Mortgagor tenders a deed
or assignment in lieu of foreclosure or sale, the Mortgagor shall deliver the
Mortgaged Property to the purchaser at foreclosure or sale or to the Mortgagee,
its nominee, or wholly-owned subsidiary, as the case may be, in a condition that
complies in all material respects with all Environmental Requirements.
(g) Except to the extent directly and solely caused by the gross negligence
or willful misconduct of the Mortgagee or its employees, officers, directors,
contractors, or authorized agents, the Mortgagor will defend, indemnify, and
hold harmless the Mortgagee, its investors, participants, employees, agents,
officers, and directors, from and against any and all claims, demands,
penalties, causes of action, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, foreseen or unforeseen,
contingent or otherwise (including, without limitation, reasonable counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by the Mortgagor of any of the provisions of this paragraph 9,
(ii) the presence, disposal, spillage, discharge, emission, leakage, release, or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Mortgaged Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Mortgaged Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Mortgaged Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirement by
Mortgagor. The aforesaid indemnification shall, notwithstanding any exculpatory
or other provision of any other document or instrument now or hereafter executed
and delivered in connection with the loan evidenced by the Note and secured by
this Mortgage, constitute the personal recourse undertakings, obligations and
liabilities of the Mortgagor.
(h) The obligations and liabilities of the Mortgagor under paragraph 9(g)
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the Debt
has been paid in full and irrespective of any foreclosure of this Mortgage, sale
of the Mortgaged Property pursuant to the provisions of this Mortgage or
acceptance by the Mortgagee, its nominee or affiliate of a deed or assignment in
lieu of foreclosure or sale and irrespective of any other fact or circumstance
of any nature
-13-
whatsoever, provided that such indemnification shall not apply with respect to
Hazardous Materials which first occur on the Mortgaged Property after the
Mortgagor no longer owns the property, provided that any Person that assumes or
takes the Mortgaged Property subject to this Mortgage shall remain liable
hereunder.
10. Estoppel Certificates. The Mortgagor, within twenty (20) days after
---------------------
request by the Mortgagee and at its expense, will furnish the Mortgagee with a
statement, duly acknowledged and certified, setting forth the amount of the Debt
and the offsets or defenses thereto, if any.
11. Transfer or Encumbrance of the Mortgaged Property. Except for Permitted
-------------------------------------------------
Liens, no part of the Mortgaged Property nor any interest of any nature
whatsoever therein (whether record, beneficial, or otherwise) shall in any
manner be further encumbered, sold, transferred or conveyed, or permitted to be
further encumbered, sold, transferred, assigned or conveyed without the prior
consent of the Mortgagee, which consent in any and all circumstances may be
withheld in the sole and absolute discretion of the Mortgagee. The provisions of
the foregoing sentence of this paragraph shall apply to each and every such
further encumbrance, sale, transfer, assignment or conveyance, regardless of
whether or not the Mortgagee has consented to, or waived by its action or
inaction its rights hereunder with respect to, any such previous further
encumbrance, sale, transfer, assignment or conveyance, and irrespective of
whether such further encumbrance, sale, transfer, assignment or conveyance is
voluntary, by reason of operation of law or is otherwise made.
12. Notice. Any notice, request, demand, statement, authorization, approval
------
or consent made hereunder shall be in writing and shall be hand delivered or
sent by Federal Express, or other reputable courier service, or by postage
pre-paid registered or certified mail, return receipt requested, and shall be
deemed given (i) when received at the following addresses if hand delivered or
sent by Federal Express, or other reputable courier service, and (ii) three (3)
business days after being postmarked and addressed as follows if sent by
registered or postage pre-paid certified mail, return receipt requested:
If to the Mortgagor:
Unigene Laboratories, Inc.
000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxxxxx
with a copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
-14-
If to the Mortgagee:
The Tail Wind Fund, Ltd.
c/o Tail Wind Advisory and Management Ltd.
0 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX0X 0XX XX
Attn: Xxxxx Xxxxx
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
With a copy to (which shall not constitute Notice):
Xxxxx X. Xxxxxxx, P.C.
110 East 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Each party to this Mortgage may designate a change of address by notice given,
as herein provided, to the other party fifteen (15) days prior to the date such
change of address is to become effective.
13. Sale of Mortgaged Property. If this Mortgage is foreclosed, the
--------------------------
Mortgaged Property, or any interest therein, may, at the discretion of the
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
14. Changes in Laws Regarding Taxation. In the event of the passage after
----------------------------------
the date of this Mortgage of any law of the State of New Jersey deducting from
the value of real property for the purpose of taxation any lien or encumbrance
thereon or changing in any way the laws for the taxation of mortgages or debts
secured by mortgages for state or local purposes or the manner of the collection
of any such taxes, and imposing a tax, either directly or indirectly, on this
Mortgage, the Note or the Debt, the Mortgagor shall, if permitted by law, pay
any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by the Mortgagee, whichever is less.
15. No Credits on Account of the Debt. The Mortgagor will not claim or
---------------------------------
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt. If at any time this Mortgage shall secure less than all of the principal
amount of the Debt, it is expressly agreed that any repayment of the principal
amount of the Debt shall not reduce the amount of the lien of this Mortgage
until the lien amount shall equal the principal amount of the Debt outstanding.
This Section is subject to Section 43.
16. Intentionally Deleted.
---------------------
-15-
17. Other Security for the Debt. The Mortgagor shall observe and perform
---------------------------
all of the terms, covenants and provisions contained in the Note, the Security
Agreement, the Settlement Agreement, the Subordination Agreement and the other
instruments or documents evidencing, securing or guaranteeing payment of the
Debt, in whole or in part, or otherwise executed and delivered in connection
with the Note, this Mortgage, the Settlement Agreement or the loan evidenced and
secured thereby; provided that, for clarification purposes, (1) any failure to
so observe or perform any such term, covenant or provision does not constitute
an Event of Default hereunder until after any applicable cure period set forth
in the terms of such document or in Section 22 below, and (2) any failure by the
Mortgagor to cause the Registration Statement to become effective by the
Registration Date and remain effective throughout the Registration Period (as
such terms are defined in the Settlement Agreement) in accordance with the terms
of Section 7 of the Settlement Agreement shall not constitute an Event of
Default hereunder so long as the Mortgagor pays and continues to pay the
liquidated damages as required by and in accordance with the terms of Section
7(b) of the Settlement Agreement.
18. Documentary Stamps. If at any time the United States of America, any
------------------
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Note or this Mortgage, the
Mortgagor will pay for the same, with interest and penalties thereon, if any.
19. Right of Entry. Upon reasonable prior notice, the Mortgagee and its
--------------
agents shall have the right to enter and inspect the Mortgaged Property at all
reasonable times during normal business hours.
20. Books and Records. The Mortgagor will keep and maintain or will cause
-----------------
to be kept and maintained on a fiscal year basis in accordance with generally
accepted accounting practices consistently applied proper and accurate books,
records and accounts reflecting all of the financial affairs of the Mortgagor
relating to the Mortgaged Property and all items of income and expense in
connection with the operation of the Mortgaged Property or in connection with
any services, equipment or furnishings provided in connection with the operation
of the Mortgaged Property, whether such income or expense be realized by the
Mortgagor or by any other person whatsoever excepting lessees unrelated to and
unaffiliated with the Mortgagor who have leased from the Mortgagor portions of
the Mortgaged Property for the purpose of occupying the same. The Mortgagee
shall have the right from time to time at all times during normal business hours
after reasonable prior notice to Mortgagor to examine such books, records and
accounts at the office of the Mortgagor or other person maintaining such books,
records and accounts and to make copies or extracts thereof as the Mortgagee
shall desire; provided, however, that if confidential information is sought, the
Mortgagee will enter into a reasonable confidentiality agreement with the
Mortgagor. The Mortgagor will furnish the Mortgagee annually, within one hundred
fifty (150) days next following the end of each fiscal year of the Mortgagor, a
certificate signed by a duly authorized representative of the Mortgagor
certifying on the date thereof either that there does or does not exist an event
which constitutes, or which upon notice or lapse of time or both would
constitute, a default or an Event of Default under this Mortgage and if such
default or Event of Default exists, the nature thereof and the period of time it
has existed.
-16-
21. Performance of Other Agreements. The Mortgagor shall observe and
-------------------------------
perform each and every term to be observed or performed by the Mortgagor
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Mortgaged Property.
22. Events of Default. The occurrence of any one or more of the following
-----------------
events (herein collectively referred to as "Events of Default") shall be an
Event of Default:
(a) if any portion of the Debt is not paid within three (3) days after
notice by the Mortgagee to the Mortgagor that the same is past due;
(b) if the Mortgagor shall fail to pay on or before the due date, any
installment of any assessment against the Mortgaged Property for local
improvements heretofore or hereafter laid, which assessment is or may become
payable in annual or periodic installments and is or may become a lien on the
Mortgaged Property;
(c) if any tax lien, judgment, writ or warrant of attachment against the
Mortgagor, or the Mortgaged Property or any portion thereof, is created, imposed
or perfected which would in any respect have priority to, or be pari passu with,
the liens created under this Mortgage or the Security Agreement, except for
Exempt Liens;
(d) if without the consent of the Mortgagee (which consent in any and all
circumstances may be withheld in the sole and absolute discretion of the
Mortgagee), except in accordance with Section 4(g) above, any part of the
Mortgaged Property or any interest of any nature whatsoever therein is in any
manner, by operation of law or otherwise, whether directly or indirectly,
further encumbered, sold, transferred, assigned or conveyed, and irrespective of
whether any such further encumbrance, sale, transfer, assignment or conveyance
is voluntary, by reason or operation of law or is otherwise made; provided,
however, notwithstanding the foregoing, the Mortgagor may discontinue the use,
operation or maintenance of the Mortgaged Property and sell the Mortgaged
Property if the board of directors of the Mortgagor determines such
discontinuance and sale to be in the best interests of the Mortgagor (provided
that any such sale is in an arms-length transaction for a fair value after
taking into account all circumstances involved in the decision to dispose of
such Mortgaged Property and the net proceeds of such sale are in an amount at
least equal to the remainder of that portion of the Debt due under this
Mortgage);
(e) if without the consent of the Mortgagee any Improvement or the
Equipment (except for the normal ordinary course of business replacement of the
Equipment and the normal ordinary course of business removal of obsolete
Equipment) is removed, demolished or materially altered, or if the Mortgaged
Property is not kept in good condition and repair;
(f) if the Mortgagor shall fail to comply with any requirement or order or
notice of violation of law or ordinance issued by any governmental department
claiming jurisdiction over the Mortgaged Property, which failure could
reasonably be expected to have a material adverse effect on the Mortgaged
Property, within three (3) months from the issuance thereof, or the time period
set forth therein, whichever is less;
(g) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to the Mortgagee upon request;
-17-
(h) if the Mortgagor shall fail to pay any Mortgagee on demand for all
Premiums and/or Taxes paid by the Mortgagee pursuant to this Mortgage, together
with any late payment charge and interest thereon calculated at the Default
Rate;
(i) if without the consent of the Mortgagee any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period of
more than one (1) month in advance or if any of the Rents are further assigned;
(j) if any representation or warranty of the Mortgagor herein, or in
any certificate, report, financial statement or other instrument furnished in
connection with the making of this Mortgage, shall prove false or misleading in
any material respect;
(k) if the Mortgagor shall make an assignment for the benefit of
creditors;
(l) if a court of competent jurisdiction enters a decree or order for
relief with respect to the Mortgagor under Title 11 of the United States Code as
now constituted or hereafter amended or under any other applicable Federal or
state bankruptcy law or other similar law, or if such court enters a decree or
order appointing a receiver, liquidator, assignee, trustee, sequestrator (or
similar official) of the Mortgagor, or of any substantial part of their
respective properties, or if such court decrees or orders the winding up or
liquidation of the affairs of the Mortgagor or any Guarantor;
(m) [Intentionally Deleted]
(n) if the Mortgagor shall be in default under any mortgage or deed of
trust covering any part of the Mortgaged Property whether superior or inferior
in lien to this Mortgage (other than a Permitted Junior Lien), and including,
without limitation, any such mortgage or deed of trust now or hereafter held by
the Mortgagee;
(o) if the Mortgaged Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable and other than Exempt Liens, or (ii) to any lis pendens, notice of
pendency, stop order, notice of intention to file mechanic's or materialman's
lien, mechanic's or materialman's lien or other lien of any nature whatsoever
and the same shall not either be discharged of record or in the alternative
effectively subordinated and insured over to the reasonable satisfaction of the
Mortgagee by a title company selected by Mortgagee that will insure the lien of
this Mortgage (at Mortgagor's expense) within a period of thirty (30) days after
the same is filed or recorded, and irrespective of whether the same is superior
or subordinate in right or other priority to the lien of this Mortgage and
irrespective of whether the same constitutes a perfected or inchoate lien or
encumbered on the Mortgaged Property or is only a matter of record or notice;
(p) if the Mortgagor shall continue to be in default or breach under
any of the other terms, covenants or conditions of this Mortgage, the
Subordination Agreement or the Settlement Agreement for thirty (30) days after
notice from the Mortgagee; provided that, for clarification purposes, (1) any
such default or breach does not constitute an Event of Default hereunder until
after any applicable cure period set forth in the terms of such document, and
(2) any failure by the Mortgagor to cause the Registration Statement to become
effective by the Registration Date and remain effective throughout the
Registration Period (as such terms are defined in the
-18-
Settlement Agreement) in accordance with the terms of Section 7 of the
Settlement Agreement shall not constitute an Event of Default hereunder so long
as the Mortgagor pays and continues to pay the liquidated damages as required by
and in accordance with the terms of Section 7(b) of the Settlement Agreement; or
(q) If an Event of Default occurs under the Security Agreement or the
Note.
23. Remedies. Upon the happening of any one or more of said Events of
--------
Default, the entire unpaid balance of the principal, and accrued interest, and
all other sums secured by this Mortgage shall at the option of Mortgagee become
immediately due and payable without further notice or demand, and in any such
Event of Default, Mortgagee may forthwith undertake any one or more of the
following:
(a) Declare the debt to be immediately due and payable, and thereupon
the same shall become immediately due and payable;
(b) Recover judgment against Mortgagor for any debt; and neither the
recovery of judgment nor the levy of execution thereof on any property,
including the Premises, shall affect Mortgagee's rights hereunder or the lien
hereof;
(c) Enter upon and take possession of the Premises, or have a receiver
appointed (as more fully provided for in Article 25 hereof), without proof of
depreciation in the value of the Premises, inadequacy of the Premises, or
insolvency of Mortgagor; and Mortgagee or the receiver may lease the Premises,
in the name of Mortgagor, Mortgagee or the receiver, and may receive the rents
issues and profits and apply the same:
(i) To the payment of expenses of operating, maintaining,
repairing and improving the Premises, including renting commission and rental
collection commissions paid to an agent of Mortgagee or of the receiver; and/or
(ii) On account of the Note, in such order and in such
amounts as Mortgagee or the receiver determines, but while in possession of the
Premises, Mortgagee or the receiver shall be liable to account only for the
rents, issues and profits actually received; and/or
(d) Take such other action to protect and enforce Mortgagee's rights
hereunder and the lien hereof, as Mortgagee deems advisable, including:
(i) The foreclosure hereof, subject, at Mortgagee's option,
and upon the filing of a Complaint in Foreclosure, Mortgagee shall be entitled
to the appointment of a receiver of the rents of the Premises without the
necessity of either inadequacy of the security or insolvency of the Mortgagor or
any person who may be legally or equitably liable to pay money secured by this
Mortgage, and the Mortgagor and each person waive such proof and consent to the
appointment of such receiver; and in any proceeding to enforce any liability of
the debt, Mortgagor shall not assert as a defense that Mortgagee failed to
foreclosure any such rights or that any such rights adversely affected the value
of the Premises; and
(ii) The sale of the Premises, in a foreclosure proceeding,
and without obligation to have the Premises marshaled (as more fully provided
for in Article 13 hereof).
-19-
24. Right to Cure Default. If default in the performance of any of the
---------------------
covenants of the Mortgagor herein occurs, the Mortgagee may, at its discretion,
remedy the same and for such purpose shall have the right to enter upon the
Mortgaged Property or any portion thereof without thereby becoming liable to the
Mortgagor or any person in possession thereof holding under the Mortgagor. If
Mortgagee shall remedy such a default or appear in, defend, or bring any action
or proceeding to protect its interest in the Mortgaged Property or to foreclose
this Mortgage or collect the Debt, the costs and expenses thereof (including
reasonable attorneys' fees to the extent permitted by law), with interest as
provided in this paragraph, shall be paid by the Mortgagor to the Mortgagee upon
demand. All such costs and expenses incurred by the Mortgagee in remedying such
default or in appearing in, defending, or bringing any such action or proceeding
shall be paid by the Mortgagor to the Mortgagee upon demand, with interest
(calculated for the actual number of days elapsed between the incurrence thereof
and Mortgagor's reimbursement thereof on the basis of a 360-day year) at a rate
per annum equal to 5% plus the rate of cash interest provided in the Note
(herein referred to as the "Default Rate"), provided, however, that the Default
Rate shall in no event exceed the maximum interest rate which the Mortgagor may
by law pay, for the period after notice from the Mortgagee that such costs or
expenses were incurred to the date of payment to the Mortgagee. To the extent
any of the aforementioned costs or expenses paid by the Mortgagee after default
by the Mortgagor shall constitute payment of (i) taxes, charges or assessments
which may be imposed by law upon the Mortgaged Property, (ii) premiums on
insurance policies covering the Mortgaged Property, (iii) expenses incurred in
upholding the lien of this Mortgage, including, but not limited to, the costs
and expenses of any litigation to collect the indebtedness secured by this
Mortgage or to prosecute, defend, protect or preserve the rights and the lien
created by this Mortgage, or (iv) any amount, cost or charge to which the
Mortgagee becomes subrogated, upon payment, whether under recognized principles
of law or equity, or under express statutory authority; then, and in each such
event, such costs, expenses and amounts, together with interest thereon at the
Default Rate, shall be added to the indebtedness secured by this Mortgage and
shall be secured by this Mortgage.
25. Appointment of Receiver. The Mortgagee, in any action to foreclose
-----------------------
this Mortgage or upon the actual or threatened waste to any part of the
Mortgaged Property or upon the occurrence of any Event of Default hereunder,
shall be at liberty, without notice, to apply for the appointment of a receiver
of the Rents, and shall be entitled to the appointment of such receiver as a
matter of right, without regard to the value of the Mortgaged Property as
security for the Debt, or the solvency or insolvency of any person then liable
for the payment of the Debt.
26. Non-Waiver. The failure of the Mortgagee to insist upon strict
----------
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. The Mortgagor shall not be relieved of the
Mortgagor's obligation to pay the Debt at the time and in the manner provided
for its payment in the Note and this Mortgage by reason of (i) failure of the
Mortgagee to comply with any request of the Mortgagor to take any action to
foreclose this Mortgage or otherwise enforce any of the provisions hereof or of
the Note or any other mortgage, instrument or document evidencing, securing or
guaranteeing payment of the Debt or any portion thereof, (ii) the release,
regardless of consideration, of the whole or any part of the Mortgaged Property
or any other security for the Debt, or (iii) any agreement or stipulation
between the Mortgagee and any subsequent owner or owners of the Mortgaged
Property or other person extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Mortgage or any other mortgage,
instrument or document evidencing, securing or
-20-
guaranteeing payment of the Debt or any portion thereof, without first having
obtained the consent of the Mortgagor, and in the latter event, the Mortgagor
shall continue to be obligated to pay the Debt at the time and in the manner
provided in the Note and this Mortgage, as so extended, modified and
supplemented, unless expressly released and discharged from such obligation by
the Mortgagee in writing. Regardless of consideration, and without the necessity
for any notice to or consent by the holder of any subordinate lien, encumbrance,
right, title or interest in or to the Mortgaged Property, the Mortgagee may
release any person at any time liable for the payment of the Debt or any portion
thereof or any part of the security held for the Debt and may extend the time of
payment or otherwise modify the terms of the Note or this Mortgage, including,
without limitation, a modification of the interest rate payable on the principal
balance of the Note, without in any manner impairing or affecting this Mortgage
or the lien thereof or the priority of this Mortgage, as so extended and
modified, as security for the Debt over any such subordinate lien, encumbrance,
right, title or interest. The Mortgagee may resort for the payment of the Debt
to any other security held by the Mortgagee in such order and manner as the
Mortgagee, in its discretion, may elect. The Mortgagee may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of the Mortgagee thereafter to foreclose this
Mortgage. The Mortgagee shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every additional right and
remedy now or hereafter afforded by law. The rights of the Mortgagee under this
Mortgage shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of any Mortgagee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision.
27. Liability. If the Mortgagor consists of more than one person, the
---------
obligations and liabilities of each such person hereunder shall be joint and
several.
28. Security Agreement. This Mortgage constitutes both a real property
------------------
mortgage and a security agreement, within the meaning of the Uniform Commercial
Code, and the Mortgaged Property includes both real and personal property and
all other rights and interest, whether tangible or intangible in nature, of the
Mortgagor in the Mortgaged Property. If an Event of Default shall occur under
the Note or this Mortgage, the Mortgagee, in addition to any other rights and
remedies which it may have, shall have and may exercise immediately and without
demand, any and all rights and remedies granted to a secured party upon default
under the Uniform Commercial Code, including, without limiting the generality of
the foregoing, the right to take possession of the Mortgaged Property or any
part thereof, and to take such other measures as the Mortgagee may deem
necessary for the care, protection and preservation of the Mortgaged Property.
Upon request or demand of the Mortgagee, the Mortgagor shall at its expense
assemble the Mortgaged Property and make it available to the Mortgagee at a
convenient place acceptable to the Mortgagee. The Mortgagor shall pay to the
Mortgagee on demand any and all expenses, including reasonable legal expenses
and attorneys' fees, incurred or paid by the Mortgagee in enforcing or
exercising its rights hereunder with respect to the Mortgaged Property. Any
notice of sale, disposition or other intended action by the Mortgagee with
respect to the Mortgaged Property sent to the Mortgagor in accordance with the
provisions of this Mortgage at least seven (7) days prior to the date of any
such sale, disposition or other action, shall constitute reasonable notice to
the Mortgagor, and the method of sale or disposition or other intended action
set forth or specified in such notice shall conclusively be deemed to be
commercially reasonable within the meaning of the Uniform Commercial Code unless
objected
-21-
to in writing by the Mortgagor within five (5) days after receipt by the
Mortgagor of such notice. The proceeds of any sale or disposition of the
Mortgaged Property, or any part thereof, may be applied by the Mortgagee to the
payment of the Debt in such order, priority and proportions as the Mortgagee in
its discretion shall deem proper. If any change shall occur in the Mortgagor's
name, the Mortgagor shall promptly cause to be filed at its own expense, new
financing statements as required under the Uniform Commercial Code to replace
those on file in favor of the Mortgagee. To the extent the provisions of this
Section 28 conflict with the terms of the Security Agreement, the terms of the
Security Agreement shall govern.
29. Filings. (a) Upon the execution and delivery of this Mortgage, the
-------
Mortgagor will cause this Mortgage, the Subordination Agreement and the UCC-1
Financing Statements to be promptly filed, registered or recorded with the
Secretary of State of the State of Delaware. Upon such filings, the Mortgagee
shall have a perfected security interest in the Mortgaged Property.
(b) Upon the execution and delivery of this Mortgage, the Mortgagor
will further cause this Mortgage and the Subordination Agreement to be promptly
filed, registered or recorded with the appropriate offices in Essex County, New
Jersey. Upon such filings, the Mortgagee will have a lien on the Mortgaged
Property, and all other security interests in and liens on the Mortgaged
Property (except as to priority for Permitted Liens described in clauses (ii)
and (iii) of Section 4(g) above which are automatically granted first priority
pursuant to statute), will be subordinate in all respects to the Mortgagee's
security interest in the Mortgaged Property.
(c) The Mortgagor will pay all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. The Mortgagor shall hold harmless and indemnify
the Mortgagee, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this
Mortgage.
30. Further Acts, etc. The Mortgagor will, at the cost of the
-----------------
Mortgagor, and without expense to the Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances, including the
Subordination Agreement, UCC-1 Financing Statements, as the Mortgagee reasonably
or any present or future law shall, from time to time, require for the better
assuring, conveying, assigning, transferring protecting, preserving, perfecting
and confirming unto the Mortgagee the property and rights hereby mortgaged or
intended now or hereafter so to be, or which the Mortgagor may be or may
hereafter become bound to convey or assign to the Mortgagee, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this mortgage and, on demand, will execute
and deliver and hereby authorizes the Mortgagee to execute in the name of the
Mortgagor to the extent the Mortgagee may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments, to evidence
more effectively the lien hereof upon the Mortgaged Property.
-22-
31. Headings. etc. The headings and captions of various paragraphs of
-------------
this Mortgage are for convenience of reference only and are not to be construed
as defined or limiting, in any way, the scope or intent of the provisions
hereof.
32. Usury Laws. This Mortgage and the Note are subject to the express
----------
condition that at no time shall the Mortgagor be obligated or required to pay
interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Mortgagor is permitted
by law to contract or agree to pay. If by the terms of this Mortgage or the
Note, the Mortgagor is at any time required or obligated to pay interest on the
principal balance due under the Note at a rate in excess of such maximum rate,
the rate of interest under the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note.
33. Sole Discretion of Mortgagee. Except as may otherwise be expressly
----------------------------
provided to the contrary, wherever pursuant to the Note, this Mortgage, or any
other document or instrument now or hereafter executed and delivered in
connection therewith or otherwise with respect to the loan secured hereby, the
Mortgagee exercises any right given to it or him to consent or not consent, or
to approve or disapprove, or any arrangement or term is to be satisfactory to
the Mortgagee, the decision of the Mortgagee to consent or not consent, or to
approve or disapprove, or to decide that arrangements or terms are satisfactory
or not satisfactory, shall be in the sole and absolute discretion of the
Mortgagee and shall be final and conclusive, except as is otherwise required by
applicable law.
34. Recovery of Sums Required To Be Paid. The Mortgagee shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of the Mortgagee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by the Mortgagor existing at the time such
earlier action was commenced.
35. Actions and Proceedings. If the Mortgagor fails to take any and all
-----------------------
actions reasonably requested by the Mortgagee to protect Mortgagee's interest in
the Mortgaged Property within five (5) business days following such request, the
Mortgagee shall have the right, at the expense of Mortgagor, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of the
Mortgagor, which the Mortgagee, in its reasonable discretion, determines should
be brought to protect its interest in the Mortgaged Property.
36. Intentionally Omitted.
---------------------
37. Execution. This Mortgage may be executed in any number of duplicate
---------
originals and each such duplicate original shall be deemed to constitute but one
and the same instrument. This Mortgage, once executed by the Mortgagor, may be
delivered by facsimile transmission, and a facsimile signature shall have the
same force and effect as an original signature.
-23-
38. Certain Definitions. Unless the context clearly indicates a
-------------------
contrary intent or unless otherwise specifically provided in this Mortgage,
words used in this Mortgage shall be used interchangeably in singular or plural
form and the word "Mortgagor" shall mean the Mortgagor and any subsequent owner
or owners of the Mortgaged Property or any part thereof or interest therein; the
word "Mortgagee" shall mean the Mortgagee or any subsequent holder of the Note;
the word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Mortgaged Property" shall include any portion of the Mortgaged
Property or interest therein; the word "Debt" shall mean all sums secured by
this Mortgage; and the word "default" shall mean the occurrence of any default
by the Mortgagor or other person in the observance or performance of any of the
terms, covenants or provisions of the Note or this Mortgage on the part of the
Mortgagor or such other person to be observed or performed without regard to
whether such default constitutes or would constitute upon notice or lapse of
time, or both, an Event of Default under this Mortgage; "Subordination
Agreement" shall mean the Subordination Agreement dated the date hereof among
the parties hereto and Xxx Xxxx, Xxxx Xxxx, Xxxxxx X. Xxxx and Xxxxxx X. Xxxx,
for the benefit of Mortgagee; and the word "UCC-1 Financing Statements" shall
mean those certain UCC-1 Financing Statements made between the Mortgagor as
debtor and Mortgagee as secured party. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
39. Waiver of Notice. The Mortgagor shall not be entitled to any
----------------
notices of any nature whatsoever from the Mortgagee except with respect to
matters for which this Mortgage specifically and expressly provides for the
giving of notice by the Mortgagee to the Mortgagor, and the Mortgagor hereby
expressly waives the right to receive any notice from the Mortgagee with respect
to any matter for which this Mortgage does not specifically and expressly
provide for the giving of notice by the Mortgagee to the Mortgagor, except as is
otherwise required by applicable law.
40. No Verbal Change. This Mortgage may only be modified, amended or
----------------
changed by an agreement in writing signed by the Mortgagor and the Mortgagee,
and may only be released, discharged or satisfied of record by an agreement in
writing signed by the Mortgagee. No waiver of any term, covenant or provision of
this Mortgage shall be effective unless given in writing by the Mortgagee and if
so given by the Mortgagee shall only be effective in the specific instance in
which given. The Mortgagor acknowledges that the Note, this Mortgage, and the
other documents and instruments executed and delivered in connection therewith
or otherwise in connection with the loan secured hereby set forth the entire
agreement and understanding of the Mortgagor and the Mortgagee with respect to
the loan secured hereby and that no oral or other agreements, understanding,
representation or warranties exist with respect to the loan secured hereby other
than those set forth in the Note, this Mortgage and such other executed and
delivered documents and instruments, provided that the terms of the specific
subject matter of this Mortgage are set forth entirely in this Mortgage, and any
inconsistencies between this Mortgage and such other documents with respect to
such subject matter shall be resolved in accordance with the terms of this
Mortgage.
41. Absolute and Unconditional Obligation. The Mortgagor acknowledges
-------------------------------------
that the Mortgagor's obligation to pay the Debt in accordance with the
provisions of the Note and this
-24-
Mortgage is and shall at all times continue to be absolute and unconditional in
all respects, and shall at all times be valid and enforceable irrespective of
any other agreements or circumstances of any nature whatsoever which might
otherwise constitute a defense to the Note or this Mortgage or the obligation of
the Mortgagor thereunder to pay the Debt or the obligations of any other person
relating to the Note or this Mortgage or the obligations of the Mortgagor under
the Note or this Mortgage or otherwise with respect to the loan secured hereby,
and the Mortgagor absolutely, unconditionally and irrevocably waives any and all
right to assert any defense, offset, setoff, counterclaim (except mandatory
counterclaims which must be asserted to avoid being deemed to have been waived
in any separate action) or crossclaim of any nature whatsoever with respect to
the obligation of the Mortgagor to pay the Debt in accordance with the
provisions of the Note and this Mortgage or the obligations of any other person
relating to the Note or this Mortgage or obligations of the Mortgagor under the
Note or this Mortgage or otherwise with respect to the loan secured hereby in
any action or proceeding brought by the Mortgagee to collect the Debt, or any
portion thereof, or to enforce, foreclose and realize upon the lien and security
interest created by this Mortgage or any other document or instrument securing
repayment of the Debt, in whole or in part, and the Mortgagor agrees that it
shall not interpose or assert any such defense, offset, setoff, counterclaim
(except such mandatory counterclaims as described above) or crossclaim in any
action or proceeding.
42. Release.
-------
(a) So long as no Event of Default shall exist under the Security
Agreement, this Mortgage, or any of the other Loan Documents, the Mortgagor
shall be entitled to sell the Mortgaged Property; provided such sale is in an
arms-length transaction with an unaffiliated third party for fair value; and
further provided that all proceeds from such sale shall, at the closing of such
sale, be applied to repay the Note until the Debt is reduced to zero.
(b) At such time as the amounts outstanding under the Note and the Debt
are zero, and no further amounts are due the Mortgagee hereunder or under the
Security Agreement, this Mortgage or any of the other Loan Documents (x) any
additional proceeds received by the Mortgagor on account of the sale of the
Mortgaged Property shall be retained by the Mortgagor and (y) the Mortgaged
Property shall be released from the lien created under this Mortgage and the
Mortgagee shall deliver to the Mortgagor, upon request therefor, and, at the
Mortgagor's expense, releases and satisfactions (to be prepared by the
Mortgagor) of all financing statements related to such Mortgaged Property, and
this Mortgage shall terminate.
43. Disposition of Proceeds. The proceeds of any sale or disposition of
-----------------------
all or any part of the Mortgaged Property shall be applied by the Mortgagee in
the following order: (i) to the payment in full of the costs and expenses of
such sale or sales, collections, and the protection, declaration and enforcement
of the mortgage granted hereunder, and to the payment in full of all other
expenses, liabilities and advances made or incurred by the Mortgagee in
connection therewith, all amounts for which the Mortgagee is entitled to
indemnification hereunder, and all advances made by the Mortgagee hereunder for
the account of the Mortgagor, including the reasonable compensation of the
Mortgagee's agents and attorneys; (ii) to the payment of the Debt for the
benefit of the holder thereof; and (iii) to the payment to the Mortgagor of any
surplus then remaining from such proceeds, subject to the rights of any
permitted holder of a lien on the Mortgaged Property of which the Mortgagee has
received actual written notice. In the
-25-
event that the proceeds of any sale or other disposition of the Mortgaged
Property are insufficient to cover the principal of, and premium, if any, and
interest on, and expenses and fees with respect to, the Debt secured thereby,
plus costs and expenses of the sale or other disposition, the Mortgagor shall
remain liable for any deficiency.
44. Expenses. The Mortgagor agrees that it shall pay all costs and
--------
expenses hereafter incurred in amending, implementing, perfecting, collecting,
defending, declaring and enforcing and otherwise relating to the Mortgagee's
rights and security interests in the Mortgaged Property hereunder or under the
Note or any other instrument or agreement delivered in connection herewith or
therewith, including, but not limited to, searches and filings after the date
hereof, and the Mortgagee's reasonable attorneys' fees (regardless of whether
any litigation is commenced, whether default is declared hereunder, and
regardless of tribunal or jurisdiction); provided, however, that the Mortgagor
shall not be responsible for any costs and expenses (including attorneys fees)
incurred by the Mortgagee in connection with negotiating, execution and delivery
of this Mortgage or any other Loan Document (except as may be provided elsewhere
herein or therein), and provided, further, that the Mortgagor shall only be
obligated to pay up to a maximum aggregate amount equal to $1,000 for the costs
of title, UCC, judgment, lien and similar searches in connection with this
Mortgage or the other Loan Documents.
45. Waiver of Statutory Rights. The Mortgagor shall not and will not
--------------------------
apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws," now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Mortgage, but hereby waives the benefit of such laws to the full extent that the
Mortgagor may do so under applicable law. The Mortgagor for itself and all who
may claim through or under it waives any and all right to have the property and
estates comprising the Mortgaged Property marshaled upon any foreclosure of the
lien of this Mortgage and agrees that any court having jurisdiction to foreclose
such lien may order the Mortgaged Property sold as an entirety. The Mortgagor
hereby waives for itself and all who may claim through or under it, and to the
full extent the Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order of decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.
46. Brokerage. The Mortgagor covenants and agrees that no brokerage
---------
commission or other fee, commission or compensation is to be paid by the
Mortgagee on account of the loan or other financing obligations evidenced by the
Note and/or secured by this Mortgage and the Mortgagor agrees to indemnify the
Mortgagee against any claims for any of the same.
47. Indemnity. Anything in this Mortgage or the other Loan Documents
---------
(as defined below) to the contrary notwithstanding, the Mortgagor shall
indemnify and hold the Mortgagee harmless and defend the Mortgagee at the
Mortgagor's sole cost and expense against any loss or liability, cost or expense
(including, without limitation, reasonable attorneys' fees and disbursements of
the Mortgagee's counsel), and all claims, actions, procedures and suits arising
out of or in connection with (i) any default by the Mortgagor in connection with
the transaction contemplated hereby, the Debt, this Mortgage, the Security
Agreement, the Subordination Agreement, any of the other document or instrument
now or hereafter executed and/or delivered in connection with the Debt or the
Settlement Agreement (the "Loan Documents") and/or the Mortgaged Property,
including, but not limited to, all costs of reappraisal of the Mortgaged
-26-
Property or any part thereof after the date hereof, whether required by law,
regulation, the Mortgagee or any governmental or quasi-governmental authority
(except that the Mortgagor shall not be required to indemnify Mortgagee
hereunder as a result of Mortgagor's failure to cause the Registration Statement
to become effective by the Registration Date and remain effective throughout the
Registration Period (as such terms are defined in the Settlement Agreement) in
accordance with the terms of Section 7 of the Settlement Agreement, except to
the extent that the Mortgagor fails to pay the liquidated damages payable as
required by and in accordance with the terms of Section 7(b) of the Settlement
Agreement, in which case Mortgagor's obligation to indemnify shall be limited to
damages suffered by Mortgagee as a result of Mortgagor's failure to pay such
liquidated damages in accordance with Section 7(b) of the Settlement Agreement),
(ii) any amendment to, or restructuring of, the Debt and this Mortgage, the
Note, the Security Agreement or any of the other Loan Documents, (iii) any and
all lawful action that may be taken by the Mortgagee in connection with the
enforcement of the provisions of this Mortgage or the Note or any of the other
Loan Documents, whether or not suit is filed in connection with the same, or in
connection with the Mortgagor becoming a party to a voluntary or involuntary
federal or state bankruptcy, insolvency or similar proceeding, and (iv) any
enforcement of this indemnification. All sums so expended by the Mortgagee shall
be payable on demand and, until reimbursed by the Mortgagor pursuant hereto,
shall be deemed additional principal of the Debt and secured hereby and shall
bear interest at the Default Rate. The obligations of the Mortgagor under this
paragraph shall, notwithstanding any exculpatory or other provisions of any
nature whatsoever set forth in the Loan Documents, constitute the personal
recourse undertakings, obligations and liabilities of the Mortgagor.
48. Enforceability. Matters of construction, validity and performance,
--------------
this Mortgage and the obligations arising hereunder shall be governed by, and
construed in accordance with, the laws of the State of New Jersey applicable to
contracts made and performed in such State and any applicable laws of the United
State of America. Whenever possible, each provision of this Mortgage shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Mortgage shall be unenforceable or prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such unenforceability, prohibition or invalidity, without invalidating the
remaining provisions of this Mortgage.
49. Representations. Mortgagor represents that the building on the
---------------
Mortgaged Property consists of not less than 12,500 usable square feet of space
and that the Mortgaged Property consists of not less than 2.2 acres of land.
Mortgagor represents as of the date hereof that the aggregate amount of federal,
state and local income, property and other taxes due and payable by the
Mortgagor is $7,154, and specifically the total amount of property taxes due and
payable by the Mortgagor with respect to the Mortgaged Property is $0.
50. Receipt of Mortgage. Mortgagor hereby acknowledges receipt of a
-------------------
true copy of this Mortgage without charge.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage the
day and year first above written.
UNIGENE LABORATORIES, INC.
By:
___________________________________
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of April, 2002, before me, the undersigned, personally appeared
________ , the ____________ of UNIGENE LABORATORIES, INC., a Delaware
corporation, who, I am satisfied, is the person who signed the foregoing
instrument, and he did acknowledge under oath that he signed, sealed with the
corporate seal, and delivered the same in his capacity as such officer and that
the foregoing instrument is the voluntary act and deed of such corporation, made
by virtue of the authority of its board of directors.
______________________
Notary Public
-28-
EXHIBIT A
---------
All the real property located in the Township of Fairfield, County of
Essex, State of New Jersey and more particularly described as follows:
BEGINNING at a point on the West side of Little Falls Road distant
805.68 feet northerly from the intersection of the West side of Little
Falls Road and the North side of Pier Lane; thence
(1) Running through the lands formerly of Xxxxxx XxXxxx, South 40
degrees 57 minutes West, 506.81 feet to a point; thence
(2) Still through the lands of Xxxxxx XxXxxx, North 89 degrees 09
minutes West, 59.13 feet to the West line of lands formerly of
Xxxxxx XxXxxx; thence
(3) Running along the West line of lands formerly of Xxxxxx
XxXxxx, North 6 degrees 18 minutes East, 352.04 feet to a
point; thence
(4) Still along the West line of lands formerly of Xxxxxx Xxxxxx,
North 54 degrees 15 minutes East, 262.37 feet to the Xxxx xxxx
xx Xxxxxx Xxxxx Xxxx; thence
(5) Running along the West side of Little Falls Road, South 49
degrees 03 minutes East, 185.00 feet to the point and place of
Beginning.
NOTE: Being Lot(s) 22, Block 2801, Tax Map of the Township of
Fairfield,
BEING commonly known as 000 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx,
Xxx Xxxxxx.
BEING the same premises conveyed to the Mortgagor herein
by deed recorded on June 23, 1982 in the Essex County Register's Office
in Book 4754, page 450.
-29-
ATTACHMENT D
EQUIPMENT SECURITY AGREEMENT
EQUIPMENT SECURITY AGREEMENT dated as of the _____ day of April, 2002 by
and among UNIGENE LABORATORIES, INC., a Delaware corporation, having its
principal place of business at 000 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx
00000 (the "Company") and THE TAIL WIND FUND, LTD., a British Virgin Islands
limited liability company having an address at Windermere House, 000 Xxxx Xxx
Xxxxxx, X.X. Xxx XX-0000, Nassau, Bahamas ("Secured Party").
RECITALS
A. The Company has issued to the Secured Party a Secured Note, dated the
date hereof (as the same may be amended, modified or supplemented from time to
time, the "Secured Note"), pursuant to which the Company will incur Obligations
(as defined below).
B. To induce the Secured Party to purchase the Secured Note, the Company
wishes to grant the Secured Party security and assurance in order to secure the
payment and performance of all Obligations and to that effect to grant the
Secured Party a first priority and perfected (upon filing) security interest in
the Collateral (as hereinafter defined) and in connection therewith to execute
and deliver this Equipment Security Agreement.
Accordingly, the parties hereto hereby agree as follows:
DEFINITIONS
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Settlement Agreement, dated the date
hereof, among the parties hereto ("Settlement Agreement").
"Agreement": shall mean this Equipment Security Agreement and shall include
---------
all amendments, modifications and supplements hereto and shall refer to this
Agreement as the same may be in effect at the time such reference becomes
operative.
"Collateral": shall mean any and all of the following now located at the
----------
Company's Fairfield, New Jersey facility on Little Falls Road (the "Fairfield
Facility"): (a) all machinery, equipment, office machinery, furniture, fixtures,
leasehold improvements, leasehold fixtures, conveyors, tools, materials, storage
and handling equipment, computer equipment and hardware, including central
processing units, terminals, drives, memory units, printers, keyboards, screens,
peripherals and input or output devices, automotive equipment, trucks, molds,
dies, stamps, motor vehicles and other equipment of every kind and nature now or
hereafter owned by the Company or in which the Company may have any ownership
interest (but only to the extent of such ownership interest); (b) all additions
and accessions to the foregoing, all replacements and all accessories and parts
therefor, all manuals, blueprints, know-how, warranties and records in
connection therewith, all rights against suppliers, warrantors, manufacturers,
sellers or others in connection therewith, and together with all substitutions
for any of the foregoing; (c) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of the
foregoing or are otherwise necessary or helpful in the collection thereof or
realization thereupon; and (d) all proceeds, profits and products thereof
together with all accessions and additions thereto, substitutions and
replacements therefor whether now owned or existing or hereafter arising or
acquired and wherever located; and all payments under insurance (whether or not
the Secured Party is the loss payee thereof) or under any indemnity, warranty or
guaranty, payable by reason or loss or damage to, or otherwise with respect to,
any of the foregoing. Collateral shall not include any of the "Mortgaged
Property", as defined in the Mortgage, except to the extent such items are
covered by Article 9 of the New Jersey Uniform Commercial Code). The Company
represents that the aggregate fair market value of the Collateral as of the date
hereof is not materially lower than the aggregate fair market value of all items
included in the definition of Collateral and then owned by the Company as of
June 1, 2001. No material amount of assets has been removed from the Fairfield
Facility since January 1, 2001.
"Loan Documents": shall mean the Loan Documents as defined in the Mortgage.
--------------
"Obligations": shall mean all indebtedness, obligations and liabilities of
-----------
every kind and nature of the Company now or hereafter existing under or arising
out of or in connection with the Secured Note, the Mortgage, the Loan Documents
and this Agreement and all extensions, amendments or renewals hereof or thereof,
whether for principal, premium, interest, fees, reimbursement, expenses,
indemnity or otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such
indebtedness, obligations or liabilities that are paid (to the extent all or any
part of such payment is avoided or recovered directly or indirectly from the
Secured Party as a preference, fraudulent transfer or otherwise).
I. SECURITY
SECTION 1.01 Grant of Security. As security for the Obligations, the
-----------------
Company hereby grants the Secured Party a first priority lien on and first
priority security interest in all of the Collateral (provided that such liens
shall not be first priority to the extent that (a) liens on the Collateral of
carriers, warehousemen, mechanics, materialmen and landlords and liens in
connection with workmen's compensation, unemployment insurance or other forms of
governmental insurance or governmental benefits are automatically granted first
priority pursuant to statute, and (b) purchase money liens and liens securing
rental payments under capital lease arrangements, and liens on assets hereafter
acquired which exist at the time of such acquisition, hereafter incurred in the
ordinary course of business, have priority).
SECTION 1.02 Proceeds. For all purposes of this Agreement, the term
--------
"Proceeds" shall include without limitation whatever is receivable or received
when Collateral or proceeds are sold, exchanged, collected or otherwise disposed
of, whether such disposition is voluntary or involuntary.
SECTION 1.03 Release and Satisfaction.
------------------------
(a) Upon the termination of this Agreement and the payment in full of the
Obligations, the Secured Party shall promptly deliver to the Company upon
request therefor and
2
at the Company's expense, releases and satisfactions of all financing statements
and other registrations of security.
(b) So long as no Event of Default shall exist under this Agreement or the
other Loan Documents, the Company from time to time shall be entitled to sell
the Collateral; provided such sale is in an arms-length transaction with an
--------
unaffiliated third party for fair value; and further provided that all proceeds
------- --------
from such sale shall, at the closing of such sale, be applied solely in
reduction of the Obligations until the amount outstanding under the Obligations
and the Secured Note is reduced to zero.
SECTION 1.04 Records; Location of Collateral. The chief place of business,
-------------------------------
the chief executive office and the office where the Company keeps its records
regarding the Collateral is, and has been for the twelve month period preceding
the date hereof, located at 000 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
So long as any Obligations to the Secured Party shall be outstanding hereunder,
(a) the Company shall not move its chief executive office, principal place of
business or office at which is kept its books and records (including computer
printouts and programs) from the locations existing on the date hereof and
listed on Schedule A annexed hereto; (b) the Company shall not establish any
----------
offices or other places of business at any other location; (c) the Company shall
not, at any one time or from time to time, move Collateral having an aggregate
book or market value in excess of $5,000 to any location other than those
locations existing on the date hereof and listed on Schedule A annexed hereto,
----------
unless, in each case of clauses (a), (b) and (c) above, (i) the Company shall
have given the Secured Party thirty (30) day's prior written notice of its
intention to do so, identifying the new location and providing such other
information as the Secured Party deems necessary, and (ii) the Company shall
have delivered to the Secured Party financing statements and such other
documentation in form and substance reasonably satisfactory to the Secured Party
and reasonably required by the Secured Party to preserve the Secured Party's
security interest in the Collateral.
II. REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Representations and Warranties. The Company hereby represents
------------------------------
and warrants to the Secured Party as follows:
(a) Collateral. The Company owns all of the Collateral, free and clear of
----------
any lien, encumbrance, mortgage, security agreement, pledge or charge other than
"Permitted Liens" (as defined in the Mortgage) in effect on the date hereof.
Except such as may have been filed in favor of the Secured Party relating to
this Agreement, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office (except with respect to Permitted Liens). Annexed hereto as
Schedule B(i) is a list describing all the places where the Collateral of the
-------------
Company is located. Annexed hereto as Schedule B(ii) is a list which describes,
--------------
in reasonable detail, all the Collateral that has a fair market value of at
least $1,000 as of the date hereof and the place where such Collateral is
presently located.
(b) Governmental Authorizations. Except as described in clause (c) below
---------------------------
and except that which may be required by the Secured Party solely by virtue of
its status as a non-U.S. entity, no authorization, approval or other action by,
and no notice to or filing with, any federal,
3
state or local governmental authority or regulatory body is required for either
(i) the grant by the Company of the security interests granted hereby, (ii) the
execution, delivery or performance of this Agreement by the Company, (iii) the
perfection of the security interests granted hereby or (iv) the exercise by the
Secured Party of its rights and remedies hereunder (except as may have been
effectively taken prior to the date hereof by or at the direction of the
Company).
(c) Perfection. This Agreement, together with the Subordination Agreement
----------
and the filing of certain UCC-1 financing statements describing the Collateral
with the Secretary of State of the State of Delaware, creates a valid, perfected
(upon filing) and first priority security interest in the Collateral in favor of
the Secured Party (except as to priority for "Permitted Liens," as defined in
the Mortgage, other than Permitted Junior Liens), securing the payment of the
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly made or taken.
(d) Other Information. All information heretofore, herein or hereafter
-----------------
supplied to the Secured Party by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects.
(e) Enforceability of Security Interests. Upon the execution of this
------------------------------------
Agreement by the Company, the execution of the Subordination Agreement, and the
filings referred to in (c) above, the security interests and liens granted to
the Secured Party under Section 1.01 hereof shall constitute valid, perfected
(upon filing) and first priority security interests and liens in and to the
Collateral in favor of the Secured Party (except as to priority for Permitted
Liens other than Permitted Junior Liens), in each case enforceable (subject to
the rights of holders of Permitted Liens other than Permitted Junior Liens)
against all third parties and securing the payment of all Obligations purported
to be secured hereby.
III. FURTHER RIGHTS OF SECURED PARTY
SECTION 3.01 Further Actions.
---------------
(a) The Company agrees that from time to time, at the expense of the
Company, the Company will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that the Secured Party may reasonably request, in order to perfect and enable
the Secured Party to protect the security interest granted or purported to be
granted hereby or to enable the Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Company will: (i) at the request of the Secured
Party, xxxx conspicuously each of its records and assets pertaining to the
Collateral with a legend in form and substance satisfactory to the Secured
Party, indicating that such Collateral is subject to the security interest
granted hereby, (ii) execute, record and file such financing or continuation
statements, or amendments thereto, and such other instruments, documents or
notices, as may be necessary or desirable, or as the Secured Party may request,
in order to perfect and preserve the security interests granted or purported to
be granted hereby, (iii) use its best efforts to obtain any necessary consents
of third parties to the grant and perfection of a security interest to the
Secured Party with respect to any Collateral, (iv) at any reasonable time, upon
request by the Secured Party, exhibit the Collateral to and allow inspection of
the Collateral by the Secured Party, or persons designated
4
by the Secured Party, and (v) at the Secured Party's request, appear in and
defend any action or proceeding that may affect the Company's title to or the
Secured Party's security interest in all or any part of the Collateral.
(b) The Company hereby authorizes the Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of the Company. The Company
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by the Company shall be sufficient as a financing
statement and may be filed or recorded as a financing statement in any and all
jurisdictions and with any and all governmental agencies.
(c) If the Company shall hereafter acquire any right, title or interest in
any Collateral, the provisions of this Agreement shall automatically apply
thereto, whether or not such Collateral is listed on any Schedule hereto.
(d) The Company shall, on the last business day of each year, (i) modify
this Agreement by amending Schedules B(i) and B(ii) annexed hereto to include
------------------------
reference to any right, title or interest in any Collateral with a value in
excess of $1,000 acquired by the Company after the execution hereof or to delete
any reference to any right, title or interest in any Collateral in which the
Company no longer has or claims any right, title or interest and (ii) promptly
furnish the Secured Party with a copy of the amended Schedules B(i) and B(ii).
------------------------
(e) The Company will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Secured Party may
reasonably request, all in reasonable detail.
SECTION 3.02 Insurance and Assessments. In the event the Company shall fail
-------------------------
to purchase or maintain insurance, or pay any tax, assessment, government charge
or levy, or in the event that any lien, encumbrance or secured interest
prohibited hereby shall not be paid in full or discharged, or in the event the
Company shall fail to perform or comply with any other covenant, promise or
obligation to the Secured Party hereunder, or under the Mortgage, the Secured
Party may, but shall not be required to, perform, pay, satisfy, discharge or
bond the same for the account of the Company, and all money so paid by the
Secured Party, including reasonable attorney's fees, shall be deemed an
Obligation of the Company to such Secured Party. So long as no default or Event
of Default shall have occurred and be continuing, the Secured Party shall use
its reasonable efforts to notify the Company of its exercise of any of the
foregoing rights prior to the exercise of such rights, or, in any event, as soon
as practicable thereafter.
SECTION 3.03 Covenants. The Company shall:
---------
(a) not use or permit any Collateral to be used unlawfully or in violation
of any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral;
(b) notify the Secured Party of any proposed change in the Company's name,
identity or corporate structure at least 15 days prior to such change;
5
(c) give the Secured Party 30 days' prior written notice of any change
in the Company's chief place of business or chief executive office or the office
where the Company keeps its records regarding the Collateral;
(d) pay all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Collateral, except to the extent the
validity thereof is being contested in good faith, prior to the time of any
creation, imposition or perfection of any tax or other applicable lien,
judgment, writ or warrant of attachment upon the Collateral or any portion
thereof which would in any respect have priority to, or be pari passu with, the
liens created under this Agreement or the Mortgage, except for liens for such
taxes up to $20,000 in the aggregate ("Exempt Liens"); the Company shall
promptly notify the Secured Party if at any time there exists any tax liens,
judgments, writs or warrants of attachment upon the Collateral or any portion
thereof which would in any respect have priority to, or be pari passu with, the
liens created under this Agreement or the Mortgage for amounts in excess of
$20,000 in the aggregate.
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by this Agreement and
except that the Company may dispose of Collateral which is obsolete, which the
Company is unable to sell and which the Company is unable to use in its
operations;
(f) except for Permitted Liens and Exempt Liens, not create or suffer
to exist any lien, charge, encumbrance, security interest, mortgage or pledge
upon or with respect to any of the Collateral to secure the indebtedness or
other obligations of any Person;
(g) diligently keep reasonable records respecting the Collateral and at
all times keep at least one complete set of its records concerning all of the
Collateral at its chief executive office or principal place of business;
(h) in negotiating a contract to which it may become a party, request
the deletion of any provision that would prevent the creation of a security
interest in the Company's rights and interests in, any property included within
the definition of Collateral acquired under such contracts;
(i) upon any officer or authorized agent of the Company or any of its
subsidiaries obtaining knowledge thereof, promptly notify the Secured Party in
writing of any event or series of events that are reasonably likely to
individually or in the aggregate diminish the value of the Collateral or any
portion thereof by $50,000 or more in the aggregate, or that are reasonably
likely to adversely affect the ability of the Company or the Secured Party to
dispose of the Collateral, or any portion thereof, having a cost, in the
aggregate, of over $50,000, or the rights and remedies of the Secured Party in
relation thereto, including without limitation the levy of any legal process
against the Collateral or any portion thereof.
SECTION 3.04 Inspection. The Secured Party may examine and inspect the
----------
Collateral and may examine, inspect and copy all books and records with respect
thereto or relevant to the Obligations upon reasonable prior notice during the
Company's normal business hours subject to applicable laws requiring security
clearance or otherwise restricting access to the
6
foregoing; provided, however, that if confidential information is sought, the
Secured Party will enter into a reasonable confidentiality agreement with the
Company.
SECTION 3.05 Right of Entry. Upon the occurrence of an Event of
--------------
Default, the Secured Party may (to the extent not prohibited by law), without
charge, enter any of the Company's premises where the Secured Party reasonably
believes the Collateral may be located, and until it completes the enforcement
of its rights in the Collateral subject to its security interest hereunder and
the sale or other disposition of any property subject thereto, take possession
of such premises where any Collateral is located without charge, rent or payment
therefor (through self help without judicial process and without having first
given notice or obtained an order of any court), or place custodians in control
thereof, remain on such premises and use the same for the purpose of preparing
any Collateral for disposition, and disposition of or collecting any Collateral.
SECTION 3.06 Mortgagee/Landlord Waivers. The Company shall use
--------------------------
reasonable best efforts to cause each mortgagee of real property owned by the
Company and each landlord of real property leased by the Company to execute and
deliver instruments satisfactory in form and substance to the Secured Party by
which such mortgagee or landlord waives its rights, if any, in the Collateral
and acknowledges the right of the Secured Party to enter and take possession of
the premises as set forth in Section 3.05 above and remove the Collateral.
SECTION 3.07 Indemnification. The Company agrees to indemnify the
---------------
Secured Party and hold it harmless from and against any and all injuries,
claims, damages, judgments, liabilities, costs and expenses (including, without
limitation, reasonable fees and disbursements of counsel), charges and
encumbrances which may be incurred by or asserted against the Secured Party in
connection with or arising out of this Agreement, any assertion, declaration or
defense of the Secured Party's rights or security interest under the provisions
of this Agreement or the Secured Note in connection with the realization,
repossession, safeguarding, insuring or other protection of the Collateral or in
connection with the collecting, perfecting or protecting the Secured Party's
liens and security interests hereunder or under the Secured Note, except to the
extent that such losses are caused by the Secured Party's gross negligence or
willful misconduct.
SECTION 3.08 Amounts Payable in Respect of the Collateral. Except as
--------------------------------------------
otherwise provided in this Section, the Company shall continue to collect, at
its own expense, all amounts, if any, due or to become due to the Company in
respect of the Collateral or any portion thereof. Upon the occurrence and during
the continuation of an Event of Default, the Secured Party shall have the right
at any time, upon written notice by the Secured Party of its intention to do so,
to notify the obligors with respect to any such amounts of the existence of the
security interest created hereby, and to direct such obligors to make payment of
all such amounts directly to the Secured Party, and, upon such notification and
at the expense of the Company, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as the Company might have done. After receipt by the
Company of the notice from the Secured Party referred to in the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
received by the Company in respect of amounts due to the Company in respect of
the Collateral or any portion thereof shall be received in trust for the benefit
of the Secured Party hereunder, shall be
7
segregated from other funds of the Company and shall be forthwith paid over or
delivered to the Secured Party in the same form as so received ( with any
necessary endorsement) to be held as cash Collateral and applied as provided in
Section 4.05, and (ii) the Company shall not adjust, settle or compromise the
amount or payment of any such amount or release wholly or partly any obligor
with respect thereto or allow any credit or discount thereon.
SECTION 3.09 Attorney-in-Fact. To the fullest extent permitted by
----------------
applicable law, the Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company, the Secured Party or otherwise, from
time to time to be effective (a) upon the occurrence and during the continuance
of an Event of Default or (b) with respect to any action or the execution of any
instrument that the Secured Party may deem necessary or advisable to accomplish
the purposes of this Agreement and which the Company is obligated to take
pursuant to any other provision of this Agreement, (i) upon the occurrence and
during the continuance of a default or (ii) after the fifth Business Day after
the Secured Party makes a written request to the Company to take such action or
execute such instrument (provided that the Company fails to fully comply with
such request on or prior to such fifth Business Day), in the Secured Party's
discretion to take any action and to execute any instrument that such Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to endorse the Company's name on all applications, documents,
papers, checks and instruments as may be necessary for the Secured Party with
respect to the Collateral or this Agreement;
(b) to ask for, demand, collect, xxx for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) to file any claims or take any action or institute any proceedings
that the Secured Party reasonably may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or liens, claims, encumbrances, pledges,
charges or mortgages levied or placed upon or threatened against the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Secured Party in its sole discretion, any such payments
made by the Secured Party to become Obligations, and obligations of the Company
to the Secured Party, due and payable immediately without demand; and
(f) only after an Event of Default has occurred and is continuing (i)
to execute and deliver any of the documents requested by the Secured Party
pursuant to Article IV, (ii) to grant or issue an exclusive or non-exclusive
license to the Collateral or any portion thereof to any Person, and (iii)
otherwise generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though the Secured Party
8
were the absolute owner thereof for all purposes, and to do, at the Secured
Party's option and the Company's expense, at any time or from time to time, all
acts and things that the Secured Party deems necessary to protect, preserve or
realize upon the Collateral and the Secured Party's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
the Company might do.
SECTION 3.10 Secured Party May Perform. If the Company fails to
-------------------------
perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be payable by the Company under Section
3.07 and Section 4.06.
IV. REMEDIES OF SECURED PARTY
SECTION 4.01 Events of Default. Each of the following events or
-----------------
occurrences described in this Section 4.01 shall constitute an "Event of
Default".
(a) a default shall be made in the due observance or performance of any
covenant, condition or agreement of the Company to be performed pursuant to
Sections 3.03(d), (e), (f) or (i) of this Agreement;
(b) the Company fails to comply with or breaches any other material
covenant, agreement or obligation of this Agreement or of any other Loan
Document and such failure continues for more than thirty (30) days after the
Secured Party has given written notice of such failure to the Company; provided
that, for clarification purposes, (1) any such failure or breach of another Loan
Document does not constitute an Event of Default hereunder until after any
applicable cure period set forth in the terms of such document, and (2) any
failure by the Company to cause the Registration Statement to become effective
by the Registration Date and remain effective throughout the Registration Period
(as such terms are defined in the Settlement Agreement) in accordance with the
terms of Section 7 of the Settlement Agreement shall not constitute an Event of
Default hereunder so long as the Company pays and continues to pay the
liquidated damages as required by and in accordance with the terms of Section
7(b) of the Settlement Agreement;
(c) any representation or warranty of the Company made in this
Agreement or any other Loan Document shall prove to be false or misleading in
any material respect when made; or
(d) an "Event of Default" shall occur under the Secured Note or the
Mortgage.
SECTION 4.02 Enforcement. Upon the occurrence of any Event of Default,
-----------
the Secured Party shall have, in addition to all of its other rights under this
Agreement and the other Loan Documents, by operation of law or otherwise (which
rights shall be cumulative), all of the rights and remedies of a secured party
under the Uniform Commercial Code and shall have the right to enter upon any
premises where such Collateral is kept and retake possession thereof. Upon the
occurrence of an Event of Default, the Secured Party may, without demand,
advertising or notice, all of which the Company hereby waives (except as the
same may be required by law), sell, lease, dispose of, deliver and grant options
to a third party to purchase, lease, license, or otherwise dispose of any and
all Collateral held by it or for its account at any time or times in
one or more public or private sales or other dispositions, for cash, on credit
or otherwise, at such prices and upon such terms as the Secured Party, in its
sole discretion, deems advisable. The Company agrees that if notice of sale
shall be required by law such requirement shall be met, to the extent permitted
by law, if such notice is mailed, postage prepaid, to the Company at its address
set forth above or such other address as it may have, in writing, provided to
the Secured Party, at least seven (7) days before the time of such sale or
disposition. To the extent permitted by applicable law, notice of any public
sale shall be sufficient if it describes the Collateral to be sold in general
terms, stating the amounts thereof, the nature of the business in which such
Collateral was created and the location and nature of the properties covered by
any other security interests or mortgages and any prior liens thereon. The
Secured Party may postpone or adjourn any sale of any Collateral from time to
time by an announcement at the time and place of the sale to be so postponed or
adjourned without being required to give a new notice of sale. The Secured Party
may be the purchaser at any such sale if it is public, free from any right of
redemption, which the Company also waives to the extent permitted by applicable
law, and payment may be made, in whole or in part, in respect of such purchase
price by the application to the Obligations to the Secured Party. The proceeds
of sale shall be applied as provided in Section 4.05. The Company shall remain
liable for any deficiency.
SECTION 4.03 Waiver. The Company waives any right, to the extent
------
applicable law permits, to receive prior notice of, or a judicial or other
hearing with respect to, any action or prejudgment remedy or proceeding by the
Secured Party to take possession, exercise control over, or dispose of any item
of the Collateral in any instance (regardless of where the same may be located)
where such action is permitted under the terms of this Agreement or by
applicable law or of the time, place or terms of sale in connection with the
exercise of the Secured Party's rights hereunder and also waives, to the extent
permitted by law, any bonds, security of sureties required by any statute, rule
or otherwise by law as an incident to any taking of possession by the Secured
Party of property subject to the Secured Party's lien. The Company also waives
any damages (direct, consequential or otherwise) occasioned by the enforcement
of the Secured Party's rights under this Agreement including the taking of
possession of any Collateral, all to the extent that such waiver is permitted by
law and to the extent that such damages are not caused by the Secured Party's
gross negligence or willful misconduct. These waivers and all other waivers
provided for in this Agreement and any other Loan Documents have been negotiated
by the parties, and the Company acknowledges that it has been represented by
counsel of its own choice and has consulted such counsel with respect to its
rights hereunder.
SECTION 4.04 Other Rights. The Company agrees that the Secured Party
------------
shall not have any obligation, except to the extent required by law, to preserve
rights to any Collateral against prior parties or to proceed first against any
Collateral or to xxxxxxxx any Collateral of any kind for the benefit of any
other creditors of the Company or any other Person.
SECTION 4.05 Disposition of Proceeds. The Proceeds of any sale or
-----------------------
disposition of all or any part of the Collateral shall be applied by the Secured
Party in the following order: (i) to the payment in full of the costs and
expenses of such sale or sales, collections, and the protection, declaration and
enforcement of any security interest granted hereunder, and to the payment in
full of all other expenses, liabilities and advances made or incurred by the
Secured Party in connection therewith, all amounts for which the Secured Party
is entitled to indemnification hereunder, and all advances made by the Secured
Party hereunder for the
10
account of the Company, including the reasonable compensation of the Secured
Party's agents and attorneys; (ii) to the payment of the Obligations; and (iii)
to the payment to the Company of any surplus then remaining from such proceeds,
subject to the rights of any holder of a lien on the Collateral of which the
Secured Party has received actual written notice. In the event that the proceeds
of any sale or other disposition of the Collateral are insufficient to cover the
principal of, and premium, if any, and interest on, and expenses and fees with
respect to, the Obligations secured thereby, plus costs and expenses of the sale
or other disposition, the Company shall remain liable for any deficiency.
SECTION 4.06 Expenses. The Company agrees that it shall pay all costs and
--------
expenses hereafter incurred in amending, implementing, perfecting, collecting,
defending, declaring and enforcing and otherwise relating to the Secured Party's
rights and security interests in the Collateral hereunder or under the Secured
Note or any other instrument or agreement delivered in connection herewith or
therewith, including, but not limited to, searches and filings at all times, and
the Secured Party's reasonable attorneys' fees (regardless of whether any
litigation is commenced, whether default is declared hereunder, and regardless
of tribunal or jurisdiction); provided that the Company shall not be responsible
for any costs or expenses (including attorneys fees) incurred by the Secured
Party in connection with the execution and delivery of this Agreement or any
other Loan Document (except as may be otherwise provided in this Agreement or in
such Loan Document), and provided that the Company shall only be obligated to
pay up to a maximum aggregate amount equal to $1,000 for the costs of title,
UCC, judgment, lien and similar searches in connection with this Agreement, the
Mortgage and the other Loan Documents.
SECTION 4.07 Standard of Care. The powers conferred on the Secured Party
----------------
hereunder are solely to protect their interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. The Secured Party shall be deemed to have exercised reasonable care
in the custody and preservation of Collateral in its or his possession if such
Collateral is accorded treatment substantially equal to that which the Secured
Party accords its own property.
V. GENERAL PROVISIONS
SECTION 5.01 Termination. This Agreement shall remain in full force and
-----------
effect until all the Obligations shall have been indefeasibly fully paid and
satisfied and, until such time, the Secured Party shall retain all security in
and other rights with respect to all Collateral held by it hereunder.
SECTION 5.02 Remedies Cumulative. The Secured Party's rights and remedies
-------------------
under this Agreement shall be cumulative and non-exclusive of any other rights
or remedies which it may have under the Secured Note any other Loan Document or
any other agreement or instrument, by operation of law or otherwise, and may be
exercised alternatively, successively or concurrently as the Secured Party may
deem expedient.
11
SECTION 5.03 Binding Effect. This Agreement is entered into for the benefit
--------------
of the parties hereto and their successors and assigns. It shall be binding upon
and shall inure to the benefit of the said parties, their successors and
assigns.
SECTION 5.04 Notices. Wherever this Agreement provides for notice to either
-------
party (except as expressly provided to the contrary), it shall be given in the
manner specified and shall be addressed as follows:
If to the Company:
Unigene Laboratories, Inc.
000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxxxxx
with a copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Secured Party:
The Tail Wind Fund, Ltd.
c/o Tail Wind Advisory and Management Ltd
Xxx Xxxxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attention: Xxxxx Xxxxx
Telephone: [44-207] 000-0000
Facsimile: [44-207] 468-7657
With a copy to (which shall not constitute Notice):
Xxxxx X. Xxxxxxx, P.C.
110 East 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Each party to this Agreement may designate a change of address by notice given,
as herein provided, to the other party fifteen (15) days prior to the date such
change of address is to become effective.
12
SECTION 5.05 Waiver. No delay or failure on the part of the Secured Party
------
in exercising any right, privilege, remedy or option hereunder shall operate as
a waiver of such or any other right, privilege, remedy or option, and no waiver
shall be valid unless in writing and signed by the Secured Party or by an
officer of the Secured Party, if applicable, and then only to the extent therein
set forth.
SECTION 5.06 Modifications and Amendments. This Agreement constitutes the
----------------------------
complete agreement between the parties with respect to the specific subject
matter hereof and may not be changed, modified, waived, amended or terminated
orally, but only by a writing signed by all parties hereto. For clarification
purposes, all the Loan Documents together and the documents executed in
connection therewith set forth the entire understanding of the parties with
respect to the loan secured hereby and all the transactions contemplated by the
Settlement Agreement.
SECTION 5.07 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Company made herein shall survive the
execution and delivery of this Agreement for a period co-extensive with the
applicable statute of limitations or, if later, the date of the indefeasible
payment of the Obligations in full.
SECTION 5.08 Pronouns. All pronouns and any variations thereof refer to
--------
the masculine, feminine or neuter, singular or plural, as the identity of the
entity or person may require.
SECTION 5.09 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered by facsimile transmission, and facsimile signatures shall be
binding on the parties hereto.
SECTION 5.10 Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial.
-------------------------------------------------------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW JERSEY WITHOUT GIVING EFFECT TO PRINCIPLES OR CONFLICT OR
CHOICE OF LAWS. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK AND ANY
COURT IN THE STATE OF NEW YORK, COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER THEREOF
MAY NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AGREES (i) NOT
13
TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH
COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON
TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (ii) NOT TO ASSERT ANY COUNTERCLAIM
IN ANY SUCH SUIT, ACTION OR PROCEEDING EXCEPT MANDATORY COUNTERCLAIMS WHICH MUST
BE ASSERTED TO AVOID BEING DEEMED TO HAVE BEEN WAIVED IN ANY SEPARATE ACTION.
THE COMPANY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY
METHOD AUTHORIZED BY THE LAWS OF NEW YORK. THE COMPANY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE SECURED NOTE OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized, on the day and year first
above written.
UNIGENE LABORATORIES, INC.
By:____________________________________
Name:
Title:
THE TAIL WIND FUND, LTD.
By: TAIL WIND ADVISORY AND MANAGEMENT
LTD., its investment manager
By:______________________________
Name: Xxxxx Xxxxx
Title: President
15
ATTACHMENT E
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the "Agreement") is entered into this ___
day of April, 2002, by and among Unigene Laboratories, Inc., a Delaware
corporation (the "Company"), The Tail Wind Fund, Ltd., a British Virgin Islands
limited liability company ("Tail Wind"), Xxxx Xxxx, a resident of New Jersey,
Xxx Xxxx, a resident of New Jersey, Xxxxxx X. Xxxx, a resident of New Jersey,
and Xxxxxx X. Xxxx, a resident of New Jersey (Xxxx Xxxx, Xxx Xxxx, Xxxxxx X.
Xxxx and Xxxxxx X. Xxxx are referred to herein individually as a "Subordinated
Creditor" and collectively as the "Subordinated Creditors").
WITNESSETH:
WHEREAS, in connection with the settlement of a dispute between the
Company and Tail Wind (the "Settlement"), the Company has issued to Tail Wind a
secured Promissory Note in the principal amount of US$1,000,000, a copy of which
is attached hereto as Exhibit 1 (the "Tail Wind Note"); and
WHEREAS, pursuant to (i) that certain Mortgage of even date herewith
issued by the Company in favor of Tail Wind (the "Mortgage") and (ii) that
certain Equipment Security Agreement of even date between the Company and Tail
Wind (the "Security Agreement" and, together with the Mortgage, the "Collateral
Agreements"), the Company has granted to Tail Wind a mortgage lien on certain of
its real property located in Fairfield, New Jersey, as more particularly
described on Exhibit A hereto, and a security interest in certain of its
---------
personal property located on or at such real property, which real and personal
property are more fully described in the Mortgage and the Security Agreement,
respectively (the "Collateral"), to secure payment by the Company of the Tail
Wind Note; and
WHEREAS, the Subordinated Creditors on the date hereof hold promissory
notes issued by the Company in the collective aggregate principal amount of
$11,553,322.75 (the "Levy Notes"); and
WHEREAS, payment of all or a portion of the Levy Notes is secured in
part by mortgage liens on and security interests in the Collateral granted by
the Company to the Subordinated Creditors; and
WHEREAS, to induce Tail Wind to enter into the Settlement, each of the
Subordinated Creditors has agreed to subordinate his or her mortgage liens on
and security interests in the Collateral to the mortgage lien on and security
interest in the Collateral granted by the Company to Tail Wind under the
Collateral Agreements, all on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. The following terms when used herein shall have the
following meanings:
A-1
(a) "Senior Debt" shall mean all indebtedness, liabilities, and
obligations of the Company to Tail Wind under the Tail Wind Note, including,
without limitation, principal, interest (including interest accruing after the
bankruptcy of the Company) and fees, if any, payable thereunder; Senior Debt
shall also include "Debt" (as defined in the Mortgage) and "Obligations" (as
defined in the Security Agreement).
(b) "Subordinated Debt" shall mean all indebtedness, liabilities,
and obligations of the Company to any of the Subordinated Creditors under the
Levy Notes or any other loans made to the Company by any of the Subordinated
Creditors after the date hereof, including without limitation, principal,
interest and fees payable thereunder.
2. Subordination. Each Subordinated Creditor hereby agrees that any and
all liens on and security interests in the Collateral granted by the Company to
such Subordinated Creditor to secure any Subordinated Debt (collectively, the
"Levy Liens"), including without limitation those set forth on Exhibit B annexed
---------
hereto, is hereby immediately made subordinate and junior to, and postponed in
priority and effect to, the liens on and security interests in the Collateral
granted by the Company to Tail Wind pursuant to the Collateral Agreements to
secure the Senior Debt, all as if Tail Wind's liens on and security interests in
the Collateral had been perfected by the recording of mortgages and timely
filing of financing statements or by any other legal means prior to the time
that any lien or security interest in the Collateral securing Subordinated Debt
was perfected and prior to the recording of any mortgage or filing of any
financing statements in connection with the Subordinated Debt. Nothing contained
in this Agreement or otherwise will in any event be deemed to constitute any
holder of Senior Debt the agent of any of the Subordinated Creditors for any
purpose nor to create any fiduciary or similar relationship between any such
holder of Senior Debt and any of the Subordinated Creditors. The terms of this
Agreement, the subordination effected hereby and the rights of the holder of
Senior Debt shall not be affected by: (a) any amendment of or addition or
replacement of or supplement to the Collateral Agreements or any other
instrument or agreement relating to the Senior Debt or securing any of the
Senior Debt, (b) any exercise or non-exercise of any right, power or remedy
under or in respect of the Senior Debt or any instrument or agreement relating
thereto, or securing any of same, or (c) any waiver, consent, release,
indulgence, extension, renewal, modification, delay or other action, inaction or
omission in respect of any Senior Debt or any instrument or agreement relating
thereto, or securing any of same, all whether or not the holders of the
Subordinated Debt shall have had notice or knowledge of any of the foregoing.
Each Subordinated Creditor hereby authorizes Tail Wind to execute and file on
behalf of such Subordinated Creditor any and all UCC Financing Statement
amendments necessary or desirable to evidence the subordination contained herein
for the Collateral covered by Article 9 of the New Jersey Uniform Commercial
Code.
3. Payments. So long as any part of the Senior Debt shall be unpaid, no
payment of or with respect to any of the Subordinated Debt shall be made at any
time by the Company or received by any of the Subordinated Creditors, unless
concurrently with such payment to any Subordinated Creditor (the "Levy
Payment"), the Company pays to Tail Wind an amount of the Senior Debt equal to
the product of (a) the amount of such Levy Payment, multiplied by (b) the
quotient of (i) the aggregate principal amount of the Tail Wind Note outstanding
immediately prior to the making of such Levy Payment, divided by (ii) the sum of
(A) the aggregate principal amount of the Tail Wind Note outstanding immediately
prior to the making of such Levy
2
Payment, plus (B) the aggregate principal amount of the Subordinated Debt
outstanding immediately prior to the making of such Levy Payment. To the extent
that a Subordinated Creditor receives any payment or portion thereof to which it
is not entitled pursuant to the terms of this Section 3, such Subordinated
Creditor shall either (a) receive and hold any such payment in trust for the
benefit of Tail Wind and promptly remit the same to Tail Wind or (b) immediately
return the full amount of the Levy Payment (including without limitation all
amounts which such Subordinated Creditor would otherwise have been entitled to
retain) to the Company.
4. Rights to Collect Prior to Subordinated Debt. In the event of, and
commencing with the date of, any dissolution, winding up, liquidation,
reorganization or other similar proceeding relating to the Company, its
creditors or its property (whether voluntary or involuntary, partial or
complete, and whether in bankruptcy, insolvency or receivership, or upon
assignment for the benefit of creditors, or any other marshalling of the assets
and liabilities of the Company or any sale of the assets of the Company), and
notwithstanding that the Collateral Agreements may have been held to be invalid
or unenforceable by a court of competent jurisdiction or that the Collateral
Agreements, or any transfer of any right, title or interest in, or granting of
security interest in, property of the Company may have been held to be a
preferential transfer or fraudulent conveyance, the Senior Debt shall be
satisfied in full in cash or otherwise to the reasonable satisfaction of Tail
Wind before the Subordinated Creditors shall be entitled to receive and/or
retain any payment, distribution, asset or other property of the Company in
respect of the Subordinated Debt and, in order to implement the foregoing, all
payments, distributions or transfers of property of any kind in respect of the
Subordinated Debt to which any Subordinated Creditor would be entitled but for
the provisions of this Agreement shall be made directly to Tail Wind (and each
Subordinated Creditor hereby directs any person making such payment or
distribution to make such payment or distribution directly to Tail Wind). If a
Subordinated Creditor receives any payment to which Tail Wind is entitled
pursuant to the terms of this Section 4, such Subordinated Creditor shall
receive and hold any such payment in trust for the benefit of Tail Wind and
shall promptly remit the same to Tail Wind.
5. Postponement of Enforcement. Each Subordinated Creditor hereby
agrees that he or she shall not attempt to assert, enforce or take any action in
furtherance of any rights or remedies granted pursuant to the Levy Liens unless
and until the Senior Debt shall have been satisfied in full in cash or otherwise
to the reasonable satisfaction of Tail Wind; provided that the foregoing shall
not terminate or otherwise void the rights granted to the Subordinated Creditors
pursuant to the Levy Liens.
6. Further Assurances; Transfer; Power of Attorney.
(a) Each Subordinated Creditor hereby agrees to execute any and all
such further agreements, documents and instruments, and to take or refrain from
taking any further action, as Tail Wind reasonably may request to carry into
effect the intent of this Agreement.
(b) No Subordinated Creditor shall assign or transfer any of his or
her right, title or interest in or to the Subordinated Debt without the prior
written consent of Tail Wind, which consent shall not be unreasonably withheld
or delayed. No Levy Note shall be amended, exchanged, assigned or participated
without the prior written consent of Tail Wind (provided that consent to such
assignment or participation shall not be unreasonably withheld or delayed);
3
provided that this Section 6(b) shall in no way limit the rights of the Company
to borrow additional funds from the Subordinated Creditors in accordance with
the provisions of the Collateral Agreements.
(c) If, after the occurrence of an Event of Default (as defined in
the Tail Wind Note), any Subordinated Creditor fails to execute any agreement,
document or instrument, or to take or refrain from taking any action, that Tail
Wind reasonably requests to effectuate the subordination provided for in this
Agreement or otherwise enforce its rights under the Collateral Agreements within
five business days after Tail Wind provides notice of such request to such
Subordinated Creditor, then such Subordinated Creditor irrevocably (i)
authorizes and directs Tail Wind, and its successors and assigns and any trustee
in bankruptcy, receiver or assignee for the benefit of creditors of the Company,
whether in voluntary or involuntary liquidation, dissolution or reorganization,
to take such action in the name of such Subordinated Creditor as Tail Wind
reasonably may deem to be necessary or appropriate to effectuate the
subordination provided for in this Agreement and (ii) appoints Tail Wind and its
successors and assigns as the attorney-in-fact of such Subordinated Creditor for
such purpose, with full powers of substitution and resubstitution. The powers of
attorney that may be granted herein are powers coupled with an interest and are,
therefore, irrevocable.
7. Representations.
(a) The Company hereby represents and warrants to Tail Wind that (i)
it has not granted any mortgage lien on or security interest in the Collateral
except for the Levy Liens, (ii) since June 1, 2001, the Company has not made any
payment to the Subordinated Creditors in respect of the Subordinated Debt, (iii)
the aggregate outstanding principal amount of the Levy Notes as of the date
hereof is as stated in the Recitals hereto and the Company does not have any
outstanding indebtedness to any members of the Levy family or their affiliates
as of the date hereof except as evidenced by the Levy Notes and (iv) none of the
Levy Liens (or agreements governing them) have been assigned or participated.
(b) Each of the Subordinated Creditors hereby represents and
warrants to Tail Wind that (i) to his or her knowledge, the Company has not
granted any mortgage lien on or security interest in the Collateral except for
the Levy Liens, (ii) since June 1, 2001, he or she has not received any payment
from the Company in respect of the Subordinated Debt, (iii) to his or her
knowledge, the aggregate outstanding principal amount of the Levy Notes as of
the date hereof is as stated in the Recitals hereto and the Company does not
have any outstanding indebtedness to any members of the Levy family or their
affiliates as of the date hereof except as evidenced by the Levy Notes and (iv)
none of the Levy Liens (or agreements governing them) have been assigned or
participated.
8. Term. Subject to Section 16 below (to the extent of which this
Agreement shall remain in full force and effect) this Agreement shall remain in
full force and effect until all Senior Debt has been satisfied in full in cash
or otherwise to the reasonable satisfaction of Tail Wind notwithstanding the
death or incompetency of any of the Subordinated Creditors.
9. Binding Effect. This Agreement including, without limitation, the
subordination provided for herein, shall be binding upon the Company and the
Subordinated Creditors and each
4
of their respective, heirs, executors, administrators, successors and permitted
assigns and shall inure to the benefit of Tail Wind and its successors and
assigns.
10. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) on the same day if given by personal delivery, (ii) on the
following business day if given by telecopier with confirmation of receipt, or
(iii) on the second business day if given by internationally recognized
overnight air courier, in each case addressed:
If to the Company:
Unigene Laboratories, Inc.
000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a Subordinated Creditor, to his or her address as follows:
Xxxx Xxxx
0000 Xxxxxx Xxxxxx
Xxx. 00X
Xxxx Xxx, XX 00000
Xxx Xxxx
0000 Xxxxxx Xxxxxx
Xxx. 00X
Xxxx Xxx, XX 00000
Xxxxxx X. Xxxx
00 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Xxxxxx X. Xxxx
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
5
If to Tail Wind:
The Tail Wind Fund, Ltd.
c/o Tail Wind Advisory and Management Ltd.
Xxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attn: Xxxxx Xxxxx
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
with a copy to:
Xxxxx X. Xxxxxxx, P.C.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as any party may designate by ten days' advance written
notice given hereunder to the other parties.
11. Waiver. No delay or failure on the part of any party in exercising
any right, privilege, remedy or option hereunder shall operate as a waiver of
such or any other right, privilege, remedy or option, and no waiver shall be
valid unless in writing and signed by each party and then only to the extent
therein set forth.
12. Modifications and Amendments. This Agreement constitutes the
complete agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements with respect thereto. This Agreement may not
be changed, modified or amended orally, but only by a writing signed by all
parties hereto.
13. Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New Jersey, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive law of
another jurisdiction.
14. Severability. If one or more provisions of this Agreement is held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which shall
constitute the same instrument.
6
16. Payment Set Aside. To the extent that the Company or any
Subordinated Creditor makes a payment or payments to Tail Wind hereunder or
pursuant to the Tail Wind Note or Tail Wind enforces or exercises its rights
hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a Subordinated Creditor, a trustee, receiver or any other person or entity under
any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
UNIGENE LABORATORIES, INC.
By:______________________________________
Name:
Title:
THE TAIL WIND FUND, LTD.
By: TAIL WIND ADVISORY AND
MANAGEMENT LTD., its investment
manager
By:__________________________________
Name: Xxxxx Xxxxx
Title: CEO
_________________________________________
XXXX XXXX
_________________________________________
XXX XXXX
_________________________________________
XXXXXX X. XXXX
_________________________________________
XXXXXX X. XXXX
7
ACKNOWLEDGEMENT
---------------
STATE OF )
) ss.:
COUNTY OF )
On this ___ day of April, 2002, before me, the undersigned, personally appeared
____________________ , the ____________ of UNIGENE LABORATORIES, INC., a
Delaware corporation, who, I am satisfied, is the person who signed the
foregoing instrument, and he did acknowledge under oath that he signed, sealed
with the corporate seal, and delivered the same in his capacity as such officer
and that the foregoing instrument is the voluntary act and deed of such
corporation, made by virtue of the authority of its board of directors.
_________________________
Notary Public
ACKNOWLEDGEMENT
---------------
STATE OF
SS.:
COUNTY OF
On this ___ day of April, 2002, before me, the undersigned, personally
appeared XXXX XXXX, who I am satisfied, is the person who signed the foregoing
instrument, and he did acknowledge under oath that he signed, and delivered the
same and that the foregoing instrument is a voluntary act and deed.
_________________________
Notary Public
ACKNOWLEDGEMENT
---------------
STATE OF
SS.:
COUNTY OF
On this ___ day of April, 2002, before me, the undersigned, personally
appeared XXX XXXX, who I am satisfied, is the person who signed the foregoing
instrument, and he did acknowledge under oath that he signed, and delivered the
same and that the foregoing instrument is a voluntary act and deed.
_______________________________
Notary Public
8
ACKNOWLEDGEMENT
---------------
STATE OF
SS.:
COUNTY OF
On this ___ day of April, 2002, before me, the undersigned, personally
appeared XXXXXX X. XXXX, who I am satisfied, is the person who signed the
foregoing instrument, and he did acknowledge under oath that he signed, and
delivered the same and that the foregoing instrument is a voluntary act and
deed.
_____________________________________
Notary Public
ACKNOWLEDGEMENT
---------------
STATE OF
SS.:
COUNTY OF
On this ___ day of April, 2002, before me, the undersigned, personally
appeared XXXXXX X. XXXX, who I am satisfied, is the person who signed the
foregoing instrument, and he did acknowledge under oath that he signed, and
delivered the same and that the foregoing instrument is a voluntary act and
deed.
_____________________________________
Notary Public
9
ACKNOWLEDGEMENT
---------------
STATE OF
SS.:
COUNTY OF
On this ___ day of April, 2002, before me, the undersigned, personally
appeared XXXXX XXXXX and signed the foregoing instrument, and did acknowledge
under oath, to my satisfaction, that:
(a) he is the Chief Executive Officer of Tail Wind Advisory and
Management Ltd., a U.K. limited liability company ("TWAM");
(b) TWAM is the investment manager of The Tail Wind Fund, Ltd.
("Tail Wind"), the limited liability company named in the foregoing instrument,
and pursuant to the investment management agreement between TWAM and Tail Wind,
Tail Wind has power of attorney and authority to execute the foregoing
instrument on behalf of Tail Wind;
(c) he signed and delivered the foregoing instrument in his
capacity as such Chief Executive Officer of TWAM, and TWAM executed the
foregoing instrument in its capacity as investment manager; and
(d) the foregoing instrument is the duly authorized, voluntary act
and deed of Tail Wind and TWAM.
_____________________________
Notary Public
10
EXHIBIT A
All the real property located in the Township of Fairfield, County of
Essex, State of New Jersey and more particularly described as follows:
BEGINNING at a point on the West side of Little Falls Road distant
805.68 feet northerly from the intersection of the West side of Little
Falls Road and the North side of Pier Lane; thence
(1) Running through the lands formerly of Xxxxxx XxXxxx, South 40
degrees 57 minutes West, 506.81 feet to a point; thence
(2) Still through the lands of Xxxxxx XxXxxx, North 89 degrees 09
minutes West, 59.13 feet to the West line of lands formerly of
Xxxxxx XxXxxx; thence
(3) Running along the West line of lands formerly of Xxxxxx
XxXxxx, North 6 degrees 18 minutes East, 352.04 feet to a
point; thence
(4) Still along the West line of lands formerly of Xxxxxx Xxxxxx,
North 54 degrees 15 minutes East, 262.37 feet to the Xxxx xxxx
xx Xxxxxx Xxxxx Xxxx; thence
(5) Running along the West side of Little Falls Road, South 49
degrees 03 minutes East, 185.00 feet to the point and place of
Beginning.
NOTE: Being Lot(s) 22, Block 2801, Tax Map of the Township of
Fairfield,
BEING commonly known as 000 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx,
Xxx Xxxxxx.
BEING the same premises conveyed to the Mortgagor herein
by deed recorded on June 23, 1982 in the Essex County Register's Office
in Book 4754, page 450.
A-1
EXHIBIT B
1. Mortgage made by Unigene Laboratories, Inc., to Xxxx Xxxx, dated
February 10, 1995, recorded February 10, 1995, in Book 6486, page 846
of Register's Office of Essex County, New Jersey; Securing $650,000.00.
Said mortgage was modified by Modification of Mortgage and Security
Agreement, dated March 20, 1995, recorded April 20, 2001 in Release
Book 398, page 601 of Register's Office of Essex County, New Jersey.
2. Mortgage made by Unigene Laboratories, Inc., to Xxx Xxxx, dated July
13, 1999, recorded August 27, 1999, in Book 7342, page 254 of
Register's Office of Essex County, New Jersey; Securing $1,600,000.00.
Said mortgage was modified by Modification of Mortgage and Security
Agreement, dated August 5, 1999, recorded October 28, 1999 in Release
Book 428, page 264 of Register's Office of Essex County, New Jersey,
(where additional indebtedness in the aggregate amount of $270,000 was
secured by said mortgage).
3. Financing Statement (UCC-1) filed with the Register's Office of Essex
County, New Jersey on August 27, 1999 as File No. 088513.
4. Financing Statement (UCC-1) filed with the Register's Office of Essex
County, New Jersey on February 27, 1995 as File No. 77387.
5. Financing Statement (UCC-1) filed with the Secretary of State of New
Jersey, File No. 1922680.
B-1
