Exhibit 10.2
 
Schedule 1
 
Each of the following executive officers and directors are entitled to the
following stock options pursuant to Employee and Director Retention Grants:

Officer / Director
 
Stock Options
 
Ashleigh Palmer, Chief Executive Officer
    660,000  
Gregory Mayes, President and General Counsel
    287,582  
Nozer Mehta, Chief Scientific Officer
    190,601  
Brian Zietsman, Chief Financial Officer
    39,600  
Thomas Sabatino, Jr., Director
    7,500  
Joel Tune, Director
    17,500  
Jack Wyszomierski, Director
    7,500  
Theron Odlaug, Director
    12,500  

The Employee and Director Retention Grants were each issued on September 27,
2012 at an exercise price of $0.25 and shall vest and become exercisable in two
equal installments on each of August 1, 2013 and August 1, 2014, provided that
such employee or director remains employed with the Company through the vesting
date.  The term of the Employee and Director Retention Grants is 10 years.
 
 
 

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UNIGENE LABORATORIES, INC.
FORM OF STOCK OPTION AGREEMENT

AGREEMENT dated as of ______________ between UNIGENE LABORATORIES, INC., a
Delaware corporation, with principal offices at 81 Fulton Street, Boonton, NJ
07005 (the “Company”), and _______________, residing at
_____________________________ (the “Optionee”).

W I T N E S S E T H :

WHEREAS, the Company has granted to the Optionee a non-qualified stock option to
purchase shares of the Company’s Common Stock having a par value of $.01 per
share (“Common Stock”), which was approved by the Board of Directors of the
Company on September 20, 2012.  In the event the Company obtains shareholder
approval within one year of the date of grant, the stock option shall be issued
as an Incentive Stock Option to the extent permitted by applicable law.

NOW, THEREFORE, to evidence the stock option so granted, the Company and the
Optionee hereby agree as follows:

1.         Confirmation of Grant; Option Price.              The Company hereby
evidences and confirms its grant to the Optionee, effective ______________
(“date of grant”), of a non qualified stock option (the “Option”) to purchase a
total of _____________ shares of Common Stock at an option price of $_____ per
share, exercisable as hereinafter set forth.  The Option shall be subject to the
terms and conditions of this Agreement including the Supplemental Terms to Stock
Option Agreement in the form of Exhibit A, a copy of which is annexed hereto.

 
2.
Installments; Expiration Date. The Option is exercisable as follows:

 
Installment Number
Date Installment becomes Exercisable
No. of shares per Installment
                 

 
 
 

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Subject to the provisions of this Agreement and Exhibit A, each installment may
be exercised in whole or in part, on a cumulative basis, on or after the date
when it becomes exercisable as set forth above, but no later than the expiration
date of the Option or earlier termination date as hereinafter set forth.
 
This Option expires at midnight (New York Time) on _______________ (“Termination
Date”) (being ten (10) years from the date of grant of this Option), unless
sooner terminated as provided in this Agreement or Exhibit A.
 
3.        Death of Optionee or Other Termination of Employment.
 
(a)           Provided that the Option has not theretofore expired, the Option
shall terminate upon termination of the Optionee’s employment with the Company,
whether by death or otherwise, and no shares of Common Stock may thereafter be
purchased pursuant to such Option, except that:
 
(i)           Upon termination of employment (other than by death or for Cause),
the Optionee may, within three (3) months after the date of termination of
employment, purchase all or any part of the shares of Common Stock which such
Optionee was entitled to purchase under the Option on the date of termination of
employment.

(ii)          Upon the death of any Optionee while employed by the Company or
within the three (3) month period referred to in Paragraph 3(a)(i) above, the
Optionee’s estate or the person to whom the Optionee’s rights under the Option
are transferred by Will or the laws of descent and distribution may, within one
hundred eighty (180) days after the date of the Optionee’s death, purchase all
or any part of the shares of Common Stock which the Optionee was entitled to
purchase under the Option on the date of death.

Nothing in this Paragraph 3 shall authorize the exercise of the Option after the
expiration of the exercise period herein provided, nor later than ten (10) years
after the date of grant.
 
(iii)          If the employment of the Optionee by the Company terminates by
reason of discharge for Cause, the Option shall terminate upon the giving of
notice of termination to the Optionee or on the termination date stated in the
Option, whichever is earlier.  The term Cause shall mean discharge from
employment because of fraud, disclosure of trade secrets, activities in
competition with the business of the Company, misappropriation of assets of the
Company, intentional acts materially harmful to the Company or its business, or
conviction of a crime involving moral turpitude.

(b)          Anything hereinabove to the contrary notwithstanding, the Option
may be terminated sooner than hereinabove provided, in accordance with other
provisions of this Agreement or Exhibit A..
 
(c)          Whether the Optionee’s absence from employment by reason of illness
or military or government service shall constitute termination of employment for
the purposes of this Option shall be determined by the Board or the Committee in
accordance with the Company’s applicable policies.
 
(d)          The grant of this Option shall not be deemed to confer upon the
Optionee the right to continued employment by the Company.
 
4.        Notice of and Requirements With Respect to Exercise.
 
(a)        The Option shall be exercised only by written Notice of Exercise
delivered to the Company, signed by the Optionee or, in the event of the
Optionee’s death or incompetence, by the person or persons entitled to exercise
the same under Paragraph 5 hereof, specifying the number of shares in respect of
which the Option is being exercised. The Option shall be exercised only with
respect to whole shares and no fractional shares will be issued. Such Notice of
Exercise shall be in the form annexed hereto as Exhibit B, subject to such
changes as may be prescribed from time to time and communicated to the
Optionee.  The exercise of the Option shall not be deemed to be complete until
full compliance with subparagraphs (a), (b), (c) and (d) of the Paragraph 4 and
the Company shall have no obligation to issue any shares in the absence of such
compliance.
 
(b)        Due exercise of the Option is conditioned upon the payment in full of
the option price of the shares with respect to which the Option is exercised and
any applicable taxes and withholding, and such payment shall accompany the
Notice of Exercise.
 
 
 

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(c)        In the event of the exercise of the Option by the person or persons
entitled to exercise the same upon the death or incompetence of the Optionee as
provided in Paragraph 5  hereof, the Notice of exercise shall be accompanied by
a certified copy of the Optionee’s last will and testament, if any, with proof
of admission to probate, proof of appointment of the committee for an
incompetent Optionee, current letters testamentary or letters of administration,
necessary estate tax waivers, and any other proof as counsel to the Company may
reasonably request as to the right of such person or persons to exercise the
Option and as to compliance with estate and inheritance tax laws.
 
           (d)       The Optionee agrees that at the time of exercise of the
Option, the Optionee or, in the event of the Optionee’s death or incompetence,
the person exercising the Option pursuant to Paragraph 5 hereof, shall, in
writing, make such investment representation and agreement restricting the
transfer of the shares issued to the Optionee or to such person, as the Company
shall,  from time to time on advice of counsel, deem necessary or advisable to
comply with the provisions of Paragraph 8 hereof and with the Securities Act of
1933, as amended  (“Act”), or any Blue Sky Law or similar law, rule or
regulation of any jurisdiction.  Such investment representation and agreement
may, at the option of the Company, be incorporated in the form of Notice of
Exercise of the Option.  The Optionee agrees that if the Company, on advice of
counsel, shall deem it necessary or advisable, the stock certificates
representing such shares and any shares issued with respect thereto, shall bear
legends in such form and substance as the Company may determine, from time to
time, relating to any such representation and agreement and any restrictions on
transfer under the Act, or other applicable law and that they will, promptly
after demand by the Company, deliver to the Company for endorsement of such
legends, all stock certificates representing such shares.
 
5.           Non-Transferability of and Persons Entitled to Exercise the
Option.  The Option is not assignable or transferable by the Optionee otherwise
than by will or the laws of descent and distribution and any attempted transfer
in violation of this provision shall be void.  During the lifetime of the
Optionee, the Option shall be exercisable only by the Optionee or the duly
appointed committee of an incompetent Optionee.  After the Optionee’s death, the
Option shall be exercisable only by the Optionee’s personal representatives or
the person or persons to whom the right to exercise the same shall pass by will
or the laws of descent and distribution.  This Agreement shall in all respects
be binding upon such transferees.
 
6.           Rights as a Stockholder.  Neither the Optionee nor any other person
shall have any rights as a stockholder with respect to any share covered by this
Option unless and until they shall have become the holder of record of such
shares.
 
7.           Adjustments, Termination and Acceleration of Options in Certain
Events.  To the extent deemed equitable and appropriate by the Board or the
Committee, in its sole discretion, the number, price and class of shares covered
by the Option shall be appropriately adjusted to reflect any stock dividend,
stock split or share combination of the Common Stock or any recapitalization of
the Company, spin-off, split-up, rights offering, and any merger or
consolidation, reorganization, exchange of shares, or other change in the
corporate structure (“corporate change”), liquidation or dissolution.  The
Option may pertain to the securities and other property which holders of Common
Stock would be entitled to receive in connection with such
event.  Notwithstanding the foregoing, and unless the acquiring, surviving or
continuing corporation agrees in writing to assume the obligations under the
Option, in the event of a dissolution or liquidation of the Company, or a
transfer of all or substantially all of its assets, or a merger or
consolidation, or corporate change, the Board or the Committee may, in its sole
discretion, terminate the Option as of the effective date of such event or
accelerate the date when any or all installments of the Option shall become
exercisable.  Options granted need not be treated identically by the Board or
the Committee with respect to termination, acceleration or assumption.  All
decisions of the Board or the Committee hereunder shall be final and binding
upon the Optionee.
 
8.           Restrictions on Exercise and Transfer.   Notwithstanding any of the
other provisions of this Agreement, the Optionee agrees that the Option shall
not be exercisable and the shares issued pursuant to the exercise of the Option
shall not be issued to the Optionee or thereafter transferred by the Optionee
(a) if the Board or the Committee determines that the exercise of the Option or
the issuance by the Company of shares pursuant to such exercise or the
subsequent transfer of the shares issued upon the exercise of such Option would
constitute a violation by the Optionee or by the Company of any provisions of
any law, rule or regulation of any governmental or regulatory body or stock
exchange or (b) if the Board or the Committee, on advice of counsel, shall
determine such exercise, issuance or transfer to be undesirable prior to
registration of such shares for issuance and/or resale under the Act, and/or
listing of such shares with a securities exchange and/or receipt of the consent
or approval of any governmental or regulatory body or stock exchange, as the
case may be.  In no event shall the Company be obligated to issue or transfer
any shares upon the exercise of any Option or upon subsequent transfer of such
shares unless a registration statement under the Act is then in effect and
current with respect to the issue or transfer of such shares or the Company, on
advice of counsel, determines that exemption from registration under the Act is
then available.  Any determination made in good faith by the Company in this
connection shall be final, binding and conclusive on all persons whomsoever for
all purposes.  The Company shall have no obligation to register the shares
issuable upon exercise of the Option under the Act or to list such shares on any
stock exchange or to continue such registration or listing.  The Company shall
in no event be obligated to take any affirmative action in order to cause the
exercise of the Option or the issuance of shares pursuant thereto or any
subsequent transfer of such shares to comply with any law or regulation of any
governmental or regulatory authority or stock exchange.  For purposes of this
Agreement, a securities exchange or stock exchange shall include a national
securities market system.
 
 
 

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9.           Withholding.  The Optionee agrees that the Company may withhold
from any sums owed to the Optionee for any reason or require payment to the
Company of any or all taxes or withholding which it reasonably believes may be
required by law to be paid or withheld in connection with the grant or exercise
of the Option or the disposition of any shares acquired in connection
therewith.  To avoid delaying the issuance of shares upon the exercise of the
Option by reason of non-payment of required taxes and withholding, the Optionee
should confirm the amount to be paid with the Company before delivering the
Notice of Exercise to the Company.
 
10.           Interpretation.  Any dispute or disagreement which shall arise
under this Agreement shall be determined by the Company, in its sole judgment
and discretion, and such determination by the Company shall be final, binding
and conclusive on all persons for all purposes.
 
11.           Notices.
 
(a)           Notice to the Company.  Notices intended for the Company shall be
deemed validly given only if delivered in person to, or duly sent, postage and
fees prepaid, by registered mail or national courier service addressed to the
Company at its principal office and to the attention of the Controller, or to
such other address or officer as the Company or its successors may hereafter
designate by written notice pursuant to subparagraph (b) of this Paragraph 11.
 
(b)           Notice to the Optionee and Permitted Transferees.  Notices
intended for the Optionee shall be deemed validly given only if delivered in
person or duly sent, postage and fees prepaid, by mail or national courier
service to the last known address of the Optionee as it appears on the records
of the Company or to such other address as the Optionee or his permitted
transferees shall designate by written notice pursuant to subparagraph (a) of
this Paragraph 11.
 
(c)           General.  All notices shall be in writing and shall be effective
at the time of delivery in person or, in the case of delivery by mail or courier
service, when duly deposited in the mails or with the national courier service,
postage and fees prepaid, provided however, a Notice of Exercise of Option shall
be effective only upon actual receipt by the Company.
 
12.           Miscellaneous.  The provisions of this Agreement shall survive the
exercise of the Option and the issuance of shares pursuant to such exercise.
 
IN WITNESS WHEREOF, The Company has caused this Agreement to be executed and its
seal to be affixed hereto by its officers hereunto duly authorized, and the
Optionee has signed this Agreement, as of the date first above written.
 
UNIGENE LABORATORIES, INC.

BY           _____________________________
         Chief Executive Officer
A T T E S T:

_______________________________
       Secretary

[ S E A L ]

Agreed to and Countersigned By:

________________________________
       [Optionee]

 
 

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Exhibit A

UNIGENE LABORATORIES, INC.
SUPPLEMENTAL TERMS OF STOCK OPTION AGREEMENT

 
Section 1.        Definitions.  As used herein, the following definitions shall
apply:
 
1.1.           “Award” means this award of an option to purchase shares of the
Company’s Common Stock (as defined below).
 
1.2.           “Award Agreement” means this written agreement evidencing an
Award.
 
1.3.           “Board” means the Board of Directors of the Company.
 
1.4.           “Cause” means,
 
(a)           if the applicable Participant is party to an effective employment,
consulting, severance or similar agreement with the Company or a Subsidiary,
“Cause” shall have the same meaning as such term is defined therein;
 
(b)           if the applicable Participant is not a party to an effective
employment, consulting, severance or similar agreement or if no definition of
“Cause” is set forth in the applicable employment, consulting, severance or
similar agreement, “Cause” shall have the same meaning as such term is defined
in the applicable Award Agreement;
 
(c)           if neither (a) nor (b) applies, then “Cause” shall mean (i) the
Participant’s willful misconduct or gross negligence in connection with the
performance of the Participant’s duties for the Company or its Subsidiaries;
(ii) the Participant’s conviction of, or a plea of nolo contendere to, a felony
or a crime involving fraud or moral turpitude; (iii) the Participant’s engaging
in any business that directly or indirectly competes with the Company or  its
Subsidiaries; (iv) disclosure of trade secrets, customer lists or confidential
information of the Company, its Subsidiaries or Affiliates to a competitor or
unauthorized person; as determined by the Committee in its sole discretion.
 
1.5.           “Change in Control” means, unless otherwise determined by the
Committee or provided in an Award Agreement,
 
(a)           the acquisition in one or more transactions by any “Person” (as
such term is used for purposes of section 13(d) or section 14(d) of the 1934
Act) but excluding, for this purpose, the Company or its Subsidiaries, any
Stockholder of the Company or any employee benefit plan of the Company or its
Subsidiaries, of “Beneficial Ownership” (within the meaning of Rule 13d-3 under
the 1934 Act) of thirty-five percent (35%) or more of the combined voting power
of the Company’s then outstanding voting securities (the “Voting Securities”);
 
(b)           the individuals who constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election by the Company’s
Stockholders, of any new director was approved by a vote of at least a majority
of the Incumbent Board, such new director shall be considered as a member of the
Incumbent Board, and provided further that any reductions in the size of the
Board that are instituted voluntarily by the Incumbent Board shall not
constitute a Change in Control, and after any such reduction the “Incumbent
Board” shall mean the Board as so reduced;
 
 
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(c)           a merger or consolidation involving the Company if the
Stockholders of the Company, immediately before such merger or consolidation, do
not own, directly or indirectly, immediately following such merger or
consolidation, more than seventy percent (70%) of the combined voting power of
the outstanding Voting Securities of the corporation resulting from such merger
or consolidation;
 
(d)           a complete liquidation or dissolution of the Company or a sale or
other disposition of all or substantially all of the assets of the Company; or
 
(e)           acceptance by Stockholders of the Company of shares in a share
exchange if the Stockholders of the Company immediately before such share
exchange, do not own, directly or indirectly, immediately following such share
exchange, more than seventy percent (70%) of the combined voting power of the
outstanding Voting Securities of the corporation resulting from such share
exchange.
 
(f)           for the avoidance of doubt, the transaction consummated
onSeptember 21, 2012 between the Company and Victory Park Capital, including the
matters contemplated thereby, is excluded from this definition
 
1.6.           “Code” means the Internal Revenue Code of 1986, as amended.  A
reference to any provision of the Code shall include reference to any successor
provision of the Code.
 
1.7.           “Common Stock” means the common stock of the Company, par value
$.01 per share.
 
1.8.           “Company” means Unigene Laboratories, Inc., a Delaware
corporation, or any successor corporation.
 
1.9.           “Committee” means the committee of two or more directors
appointed by the Board to the Company’s Compensation Committee, each of whom
shall be a “non-employee director” as defined in Rule 16b-3 under the Exchange
Act and an “outside director” as defined in Section 162(m) of the Code and the
regulations issued thereunder.  In the absence of the appointment of any such
Committee, any action permitted or required to be taken hereunder by the
Committee shall be deemed to refer to the Board.
 
1.10.           “Disability” means a “disability” within the meaning of Section
409A of the Code and the regulations and guidance thereunder.
 
1.11.           “Employee” means an officer or other employee of the Company or
a Subsidiary, including a director who is such an employee.
 
1.12.           “Exchange Act” means the Securities Exchange Act of 1934, as
amended. A reference to any provision of the Exchange Act or rule promulgated
under the Exchange Act shall include reference to any successor provision or
rule.
 
1.13.           “Fair Market Value” means, on any given date (i) if Common Stock
is then listed on a national stock exchange, the closing price per share of
Common Stock on the exchange for such date, or if no sale was made on such date
on the exchange, on the last preceding day on which a sale occurred; (ii) if
Common Stock is not then listed on a national exchange, but is then quoted on
NASDAQ or a similar quotation system, the closing price per share of Common
Stock as quoted on NASDAQ or a similar quotation system on such date, or if no
sale was made on such date on the exchange, on the last preceding day on which a
sale was made; or (iii) if (i) and (ii) do not apply, such value as the
Committee in its discretion may in good faith determine in accordance with
Section 409A of the Code (and, with respect to Incentive Stock Options, Section
422 of the Code) and the applicable guidance thereunder.
 
 
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1.14.           “Incentive Stock Option” means an Option or portion thereof
intended to meet the requirements of an incentive stock option as defined in
Section 422 of the Code and designated as an Incentive Stock Option.
 
1.15.           “Non-Employee Director” means a member of the Board who is not
an Employee.
 
1.16.           “Non-Qualified Option” means an Option or portion thereof not
intended to be an Incentive Stock Option, and designated as a Non-Qualified
Option.
 
1.17.           “Option” means a right granted to purchase a specified number of
shares of Common Stock at a specified price.  An Option may be an Incentive
Option or a Non-Qualified Option.
 
1.18.           “Participant” means any Employee or Non-Employee Director who
receives an Award.
 
1.19.             “Subsidiary” means any corporation, partnership, joint venture
or other business entity of which 50% or more of the outstanding voting power is
beneficially owned, directly or indirectly, by the Company.
 
1.20.           “Ten Percent Shareholder” means a person who on any given date
owns, either directly or indirectly (taking into account the attribution rules
contained in Section 424(d) of the Code), stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or a
Subsidiary.
 
Section 2.        Eligibility.  Any Employee or Non-Employee Director shall be
eligible to receive an Award; provided, however, that only persons who are
employees of the Company or any subsidiary corporation (within the meaning of
Section 424(f) of the Code) may be granted Options which are intended to qualify
as Incentive Stock Options.
 
2.1.           Options.  Options give a Participant the right to purchase a
specified number of shares of Common Stock from the Company for a specified time
period at a fixed exercise price.  Options may be either Incentive Stock Options
or Non-Qualified Stock Options; provided that Incentive Stock Options may not be
granted to Non-Employee Directors or Consultants.  The grant of Options shall be
subject to the following terms and conditions:
 
(a)           Exercise Price.  The price per share at which Common Stock may be
purchased upon exercise of an Option shall be not less than the Fair Market
Value of a share of Common Stock on the date of grant (110% of Fair Market Value
in the case of an Incentive Stock Option granted to a Ten Percent Shareholder).
 
(b)           Term of Options.  The term of an Option shall in no event be
greater than ten years (five years in the case of an Incentive Stock Option
granted to a Ten Percent Shareholder).
 
 
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(c)           Exercise of Option.  Each Option grant shall specify the time or
times at which an Option may be exercised in whole or in part and the terms and
conditions applicable thereto, including (i) a vesting schedule based upon the
passage of time, (ii) whether the exercise price for an Option shall be paid in
cash, with shares of Common Stock, with any combination of cash and shares of
Common Stock, or with other legal consideration that the Committee may deem
appropriate, (iii) the methods of payment, which may include payment by
attestation of shares and through cashless exercise arrangements, to the extent
permitted by applicable law, and (iv) the methods by which, or the time or times
at which, Common Stock will be delivered or deemed to be delivered to
Participants upon the exercise of such Option.  Payment of the exercise price
shall in all events be made within three days after the date of exercise of an
Option.  Unless otherwise determined by the Committee, each Option shall be
exercisable for a period of 90 days following termination of employment other
than for Cause and 180 days following the Participant’s death or Disability, to
the extent the Option was otherwise exercisable at the time of such termination,
death or Disability.  Unless otherwise determined by the Committee, for any
other termination of employment, the Option shall not be exercisable following
termination of employment.
 
(d)           Incentive Stock Options.  Each Participant awarded an Incentive
Stock Option shall notify the Company in writing immediately after the date he
or she makes a disqualifying disposition (as defined in Section 421(b) of the
Code) of any shares of Common Stock acquired pursuant to the exercise of such
Incentive Stock Option.  The Company may, if determined by the Committee and in
accordance with procedures established by it, retain possession of any shares
acquired pursuant to the exercise of an Incentive Stock Option as agent for the
applicable Participant until the end of the period described in the preceding
sentence, subject to complying with any instructions from such Participant as to
the sale of such shares.
 
Section 3.        Exchange and Buy Out Provisions.  The Committee may at any
time exchange or buy out any previously granted Award, or may provide in any
Award Agreement terms and conditions under which the Participant must sell, or
offer to sell, to the Company any unexercised Award, whether or not vested, or
any Common Stock acquired pursuant to such Award for a payment in cash, Common
Stock or other property based on such terms and conditions as the Committee
shall determine and communicate to the Participant at the time that such offer
is made or as may be set forth in the Award Agreement.
 
Section 4.        Change in Control.  Notwithstanding any provision to the
contrary and unless otherwise provided in the applicable Participant’s Award
Agreement, upon the occurrence of a Change in Control, the following provisions
shall apply:
 
4.1.           Options.  Upon a Change in Control, unless otherwise provided by
the Committee or in an Award Agreement, the Committee, in its discretion, may
take one or more of the following actions with respect to all Options that are
outstanding and unexercised as of such  Change in Control: (i) accelerate the
vesting and exercisability of all such Options to the extent unvested and
unexercisable, such that all outstanding Options are fully vested and
exercisable, (ii) cancel all outstanding vested Options in exchange for a cash
payment in an amount equal to the excess, if any, of the Fair Market Value of
the Common Stock underlying the unexercised portion of the Option as of the date
of the Change in Control over the exercise price of such portion, (iii)
terminate all Options immediately prior to the Change in Control, provided that
the Company provide the Optionee an opportunity to exercise the Option within a
specified period following the Optionee’s receipt of a written notice of such
Change in Control and of the Company’s intention to terminate the Option prior
to such Change in Control, or (iv) require the successor corporation, following
a Change in Control if the Company does not survive such Change in Control, to
assume all outstanding Options and to substitute such Options with awards
involving the common stock of such successor corporation on terms and conditions
necessary to preserve the rights of Optionees Grantees with respect to such
Options.
 
 
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4.2.           Committee Authority.  The judgment of the Committee with respect
to any matter referred to in this Section 9 shall be conclusive and binding upon
each Participant.
 
Section 5.        Adjustments upon Changes in Capitalization.
 
5.1.           In the event that the Committee shall determine that any stock
dividend, recapitalization, forward split or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase or share exchange,
extraordinary or unusual cash distribution or other similar corporate
transaction or event, affects the Common Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of
Participants, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of shares of Common Stock which may
thereafter be issued in connection with Awards, (ii) the number and kind of
shares of Common Stock issuable in respect of outstanding Awards, and (iii) the
exercise or grant price relating to any Award or, if deemed appropriate, make
provision for a cash payment with respect to any outstanding Award.
 
Section 6.        Termination and Amendment.
 
Section 7.       No Right to Award, Employment or Service.  No Participant shall
have any claim to be granted any award, and there is no obligation that the
terms of Awards be uniform or consistent among Participants.  No action taken
hereunder shall be construed as giving any Employee any right to be retained in
the employ of the Company or any Subsidiary.  Transfer of employment between the
Company and its Subsidiaries and affiliates shall not be deemed a termination of
employment.
 
Section 8.        Taxes.  Each Participant must make appropriate arrangement for
the payment of any taxes relating to an Award granted hereunder.  The Company or
any Subsidiary is authorized to withhold from any payment relating to an Award,
including from a distribution of Common Stock or any payroll or other payment to
a Participant amounts of withholding and other taxes due in connection with any
transaction involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company and Participants to satisfy obligations
for the payment of withholding taxes and other tax obligations relating to any
Award.  This authority shall include the ability to withhold or receive Common
Stock or other property and to make cash payments in respect thereof in
satisfaction of a Participant’s tax obligations.  Withholding of taxes in the
form of shares of Common Stock from the profit attributable to the Award shall
not occur at a rate that exceeds the minimum required statutory federal and
state withholding rates.
 
Section 9.        Limits on Transferability; Beneficiaries.  No Award or other
right or interest of a Participant shall be pledged, encumbered, or hypothecated
to, or in favor of, or subject to any lien, obligation, or liability of such
Participant to, any party, other than the Company, any Subsidiary or affiliate,
or assigned or transferred by such Participant otherwise than by will or the
laws of descent and distribution, and such Awards and rights shall be
exercisable during the lifetime of the Participant only by the Participant or
his or her guardian or legal representative.  Notwithstanding the foregoing, the
Committee may, in its discretion, provide that Awards (other than Incentive
Stock Options) or other rights or interests of a Participant be transferable,
without consideration, to immediate family members (i.e., children,
grandchildren or spouse), to trusts for the benefit of such immediate family
members and to partnerships in which such family members are the only
partners.  The Committee may attach to such transferability feature such terms
and conditions as it deems advisable.  In addition, a Participant may, in the
manner established by the Committee, designate a beneficiary (which may be a
person or a trust) to exercise the rights of the Participant, and to receive any
distribution, with respect to any Award upon the death of the Participant.  A
beneficiary, guardian, legal representative or other person claiming any rights
from or through any Participant shall be subject to all terms and conditions of
the Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional restrictions deemed necessary
or appropriate by the Committee.
 
 
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Section 10.      Securities Law Requirements.
 
10.1.           No shares of Common Stock may be issued hereunder if the Company
shall at any time determine that (i) the listing upon any securities exchange,
registration or qualification under any state or federal law of any Common Stock
otherwise issuable pursuant an Award granted hereunder, or (ii) the consent or
approval of any regulatory body or the satisfaction of withholding tax or other
withholding liabilities, is necessary or appropriate in connection with such
issuance.  In any of the events referred to in clause (i) or clause (ii) above,
the issuance of such shares shall be suspended and shall not be effective unless
and until such withholding, listing, registration, qualifications or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company in its sole discretion, notwithstanding any termination of any Award
or any portion of any Award during the period when issuance has been suspended.
 
10.2.           The Committee may require, as a condition to the issuance of
shares hereunder, representations, warranties and agreements to the effect that
such shares are being purchased or acquired by the Participant for investment
only and without any present intention to sell or otherwise distribute such
shares and that the Participant will not dispose of such shares in transactions
which, in the opinion of counsel to the Company, would violate the registration
provisions of the Securities Act of 1933, as then amended, and the rules and
regulations thereunder.  The certificates issued to evidence such shares shall
bear appropriate legends summarizing such restrictions on the disposition
thereof.
 
Section 11.      Fractional Shares.  The Company will not be required to issue
any fractional shares of Common Stock.  The Committee may provide for the
elimination of fractions and settlement of such fractional shares of Common
Stock in cash.
 
Section 12.      Discretion.  In exercising, or declining to exercise, any grant
of authority or discretion hereunder, the Committee may consider or ignore such
factors or circumstances and may accord such weight to such factors and
circumstances as the Committee alone and in its sole judgment deems appropriate
and without regard to the effect such exercise, or declining to exercise such
grant of authority or discretion, would have upon the affected Participant, any
other Participant, any employee, the Company, any Subsidiary, any affiliate, any
stockholder or any other person.
 
Section 13.       Governing Law.  The validity and construction of the Award
Agreements shall be construed and enforced in accordance with the laws of the
State of Delaware, but without giving effect to the choice of law principles
thereof.
 
 
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Exhibit B

NOTICE OF EXERCISE OF STOCK OPTION

________________________
(Date)

Unigene Laboratories, Inc.
81 Fulton Street
Boonton, NJ  07005

Attention:                         Human Resources

I hereby exercise the ______________________installment(s) of my stock option to
the extent of ___________shares of the Common Stock of Unigene Laboratories,
Inc. (the “Company”).  I enclose herewith my check to the order of the Company
for $__________, which is the total option price for said shares, together with
my further check in the sum of $__________representing taxes and withholding
payable by me in connection with this exercise of the Option.

I expressly agree to remain liable for and to pay for any underpayment or
additional payment of taxes and withholding payable by me in connection with the
exercise of the Option or the subsequent transfer of shares issued to me upon
exercise of the Option and authorize you, at your sole option, to deduct any or
all of such amounts from any sums owed or hereafter owing to me by the Company.

Please deliver the stock certificate(s) therefore to me at the following
address:

__________________________________________________________________________________________________________________________________.

I also acknowledge that you have advised me to consult my tax advisor with
respect to the tax treatment on the grant or exercise of the Option and
disposition of these shares, including, but not limited to, the holding period
requirements hereof, if any.

I acknowledge that if I am an officer or director or other “affiliate” of the
Company at the time of the grant of the Option or become such at any time
thereafter, I should consult a securities law advisor.  In particular, you have
advised me that:

(a)
if I dispose of any of the shares acquired upon the exercise of the Option
within six (6) months from the date of grant, the grant itself may not be exempt
from Rule 16 (b) of the Exchange Act of 1934, as amended; and

 
 
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(b)
notwithstanding that there may be a Registration Statement with respect to the
issuance of the shares to me upon the exercise of the Option, as an “affiliate”
of the Company, these shares are restricted stock and the stock certificate(s)
to be issued to me representing said shares shall bear appropriate legends in
accordance with the applicable laws including the following legend:

 
“The shares represented hereby have not been registered under the United States
Securities Act of 1933, as amended, and may not be sold, transferred, assigned,
pledged, or hypothecated absent an effective registration thereof under such Act
or compliance with Rule 144 promulgated under such Act, or unless the Company
has received an opinion of counsel, satisfactory to the Company and its counsel,
that such registration is not required.”

 
 
Very truly yours,

 
 
___________________________________

 
 
(Signature of Optionee)

 
 
___________________________________

 
 
(Print Name of Optionee Here)

 
 
___________________________________

 
 
(Address of Optionee)

 
 
___________________________________

 
 
(Social Security Number)

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