Exhibit 10.38
PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT (the "Agreement") is entered into as of this
13th day of March, 2001 by and between UNIGENE LABORATORIES, INC., a Delaware
corporation, having its principal place of business at 110 Little Falls Road,
Fairfield, New Jersey 07004 (the "Company"), and Jay Levy, a resident of New
Jersey (the "Secured Party").
WITNESSETH:
WHEREAS, the Secured Party has agreed to loan the Company $300,000
contemporaneously with execution and delivery hereof (the "New Loan"); which New
Loan is evidenced by a promissory note dated the date hereof (the "New Note")
and
WHEREAS, the Secured Party, in his sole and absolute discretion, may in the
future make additional loans ("Future Loans") to the Company which loans shall
be evidenced by promissory notes ("Future Notes"); and
WHEREAS, in order to induce the Secured Party to make the New Loan and any
Future Loans, the Company has agreed to grant the Secured Party a security
interest in the Collateral (as hereinafter defined) to secure payment by the
Company of the Obligations (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises, the mutual promises made
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. The following terms when used herein shall have the following
definitions:
1.1 "Collateral" shall mean (i) the United States patents identified on
Exhibit A hereto, (ii) the United States patent applications identified on
Exhibit A hereto and any and all patents that issue with respect thereto, (iii)
all renewals thereof, (iv) all income, royalties, damages and payments now and
hereafter due and/or payable under and with respect thereto, including, without
limitation, payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements thereof, (v) the right to
sue for past, present and future infringements thereof, (vi) the goodwill of the
Company's business related to the foregoing and in connection therewith, and
(vii) all of the Company's rights corresponding thereto throughout the world.
1.2 "Event of Default" shall mean:
(a) an "Event of Default" as defined in (i) the Restated Note, (ii)
the July 30 Note or (iii) the August 5 Note;
(b) any occurrence specified in Section 3 of the New Note;
(c) any event of default specified in any Future Note; and
(d) any material breach of any representation made by the Company in
Section 4 hereof.
1.3 "Obligations" shall mean all indebtedness, obligations and liabilities
of every kind and nature of the Company now or hereafter existing under or
arising out of or in connection with the New Note, all Future Notes (if any),
and this Agreement and all extensions, amendments or renewals hereof or thereof,
whether for principal, premium, interest, or fees, and all or any portion of
such indebtedness, obligations or liabilities that are paid to the extent all or
any part of such payment is avoided or recovered directly or indirectly from the
Secured Party as a preference, fraudulent transfer or otherwise.
2. Grant of Security. As security for the due and punctual performance of the
Obligations, the Company hereby grants to the Secured Party a security interest
in the Collateral.
3. Release and Satisfaction. Upon the termination of this Agreement, the Secured
Party shall promptly deliver to the Company upon request therefor and at the
Company's expense, releases and satisfactions of all registrations of the
security interests granted hereunder.
4. Representations and Warranties. The Company hereby represents and warrants to
the Secured Party that, as of the date hereof:
4.1. The Company owns all of the Collateral free and clear of any lien,
encumbrance, mortgage, security agreement, pledge or charge other than a license
agreement, dated as of July 15, 1997, between the Company and Warner-Lambert
Company, pursuant to which the Company has licensed to Warner-Lambert Company
the right to use United States patent No. 5,912,014.
4.2. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business and own its properties as
now conducted and owned. The Company is duly qualified to do business as a
foreign corporation and in good standing in the State of New Jersey.
4.3. The Company has full corporate power and authority to execute, deliver
and perform this Agreement and has taken all requisite corporate action
necessary for (i) the authorization, execution and delivery of this Agreement
and (ii) the performance of all obligations of the Company hereunder. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as such
enforcement may be limited by (a) applicable bankruptcy, insolvency,
reorganization, voidable preference, fraudulent conveyance and other similar
laws affecting the rights or remedies of creditors generally and (b) the
exercise of judicial discretion in accordance with general principles of equity
(whether applied by a court of law or equity).
5. Further Actions. The Company agrees that from time to time, at the expense of
the Company, the Company will promptly execute and deliver all further
instruments and documents and take all further action that the Secured Party
reasonably may request in order to perfect the security interest granted hereby,
including the execution, recording and filing of such recordation
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statements, financing or continuation statements, or amendments thereto, and
such other instruments, documents or notices, as the Secured Party reasonably
may request.
6. Covenants. During the term hereof, the Company shall:
(a) not use or permit any Collateral to be used unlawfully or in violation
of any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral;
(b) pay all applicable maintenance fees and other statutory fees due and
payable with respect to the Collateral;
(c) take all actions reasonably necessary to defend the validity of the
Collateral;
(d) use its best efforts to maintain in full force and effect the
Collateral;
(e) pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the
Collateral, except to the extent the validity thereof is being contested in good
faith;
(f) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except (i) as permitted by this Agreement and
(ii) that the Company may dispose of Collateral that has become obsolete;
(g) 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; and
(h) not enter into any agreement, including, without limitation, any
license agreement, inconsistent with this Agreement without the Secured Party's
prior written consent.
7. 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 reimbursed by the Company promptly.
8. Enforcement. Upon the occurrence of an Event of Default, the Secured Party
shall have all the rights, privileges, powers and remedies of a secured party
under the Uniform Commercial Code and all other applicable laws and such
additional rights as are set forth herein. In addition to any other rights and
remedies the Secured Party may have, the Secured Party may file and record with
the United States Patent and Trademark Office an absolute assignment (as opposed
to a collateral assignment) of the Collateral to the Secured Party. Upon such
assignment, the Secured Party may sell, retain, or otherwise dispose of the
Collateral in the same manner as any other property of the Company which
constitutes security for the Obligations. In addition, the Company hereby
irrevocably constitutes and appoints the Secured Party (which appointment is
coupled with an interest) as its true and lawful attorney-in-fact with full
power and authority and in the place and stead of the Company and in the name of
the Company or in his own name, from time to time, in the Secured Party's
discretion, for the purpose upon the occurrence of an Event
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of Default of executing and filing such assignment of the Collateral, and
executing on behalf and in the name of the Company any and all instruments and
documents and to take any and all appropriate action in furtherance of the
foregoing.
9. Use of Income. Until the occurrence of an Event of Default, the Company
reserves the right to receive all income and royalties from the Collateral.
10. Termination. This Agreement shall terminate at such time as all of the
Obligations shall have been indefeasibly fully paid and satisfied and, until
such time, the Secured Party shall retain all security in the Collateral held by
it hereunder.
11. Binding Effect. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Secured Party and
his heirs, executors, administrators, successors and assigns.
12. Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
(i) on the same day if given by personal delivery, (ii) on the following
business day if given by telecopier with confirmation of receipt, or (iii) on
the following business day if given by nationally recognized overnight air
courier, in each case addressed to the party to be notified at:
110 Little Falls Road
Fairfield, New Jersey, 07004,
Attention: Warren P. Levy, President
Facsimile: 973-227-6088
or at such other address as such party may designate by ten days' advance
written notice given hereunder to any other party.
13. Waiver. No delay or failure on the part of 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 and then only to the
extent therein set forth.
14. Modifications and Amendments. This Agreement constitutes the complete
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto. This Agreement may not be
changed, modified or amended orally, but only by a writing signed by all parties
hereto.
15. Applicable Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New Jersey without giving effect to
conflicts of laws principles.
16. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original and all of which shall constitute the
same instrument.
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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: /s/ Ronald S. Levy
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Name: Ronald S. Levy
Title: Executive Vice President
/s/ Jay Levy
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JAY LEVY