EXHIBIT 10.67

Portions of this Exhibit were omitted and filed separately with the Secretary of
the Commission pursuant to an application for confidential treatment filed with
the Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
Such omissions are designated as ***.

LICENSE AGREEMENT

by and between

UNIGENE LABORATORIES, INC.

and

TARSA THERAPEUTICS, INC.

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

          Page ARTICLE I DEFINITIONS    2

Section 1.1.

   Certain Defined Terms    2

Section 1.2.

   Rules of Construction and Interpretation    13 ARTICLE II GRANT OF RIGHTS   
13

Section 2.1.

   License to Tarsa    13

Section 2.2.

   License to Unigene    15

Section 2.3.

   Manufacturing of Calcitonin API    15

Section 2.4.

   Licensed *** Product    17

Section 2.5.

   Right to Sublicense    18

Section 2.6.

   Marking    19

Section 2.7.

   R&D Services    19

Section 2.8.

   Additional Services    20

Section 2.9.

   Non-Solicitation    20

Section 2.10.

   Useful Improvements    20 ARTICLE III DEVELOPMENT AND COMMERCIALIZATION OF
LICENSED PRODUCTS    21

Section 3.1.

   Commercialization    21

Section 3.2.

   Product Safety    24

Section 3.3.

   Coordination of Development Activities    25

Section 3.4.

   Limits on Competing Products    25 ARTICLE IV PAYMENTS AND ROYALTIES    25

Section 4.1.

   Reimbursement for Phase III Trials    25

Section 4.2.

   Royalties    26

Section 4.3.

   Milestone Payments    28

Section 4.4.

   Payment    28

Section 4.5.

   Sales Reports and Royalty Payments    28

Section 4.6.

   Tax Withholding; Restrictions on Payment    29

Section 4.7.

   Sales Record Audit    29

--------------------------------------------------------------------------------

ARTICLE V CONFIDENTIAL INFORMATION    29

Section 5.1.

   Confidentiality Obligations    29

Section 5.2.

   Exclusions    30

Section 5.3.

   Limited Disclosure and Use    30

Section 5.4.

   Publicity    31

Section 5.5.

   Use of Name; Press Release    31 ARTICLE VI INTELLECTUAL PROPERTY    31

Section 6.1.

   Licensed IP    31

Section 6.2.

   Improvements    31

Section 6.3.

   Inventorship    32 ARTICLE VII PROVISIONS CONCERNING THE FILING, PROSECUTION
AND MAINTENANCE OF LICENSED PATENT RIGHTS    32

Section 7.1.

   Cooperation    32

Section 7.2.

   Patent Filing, Prosecution and Maintenance    32

Section 7.3.

   Notice of Infringement    34

Section 7.4.

   Infringement of Unigene-Controlled Patent Rights, Improvements and Unigene
Patent Rights    34 ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS    36

Section 8.1.

   Unigene    36

Section 8.2.

   Tarsa    39

Section 8.3.

   No Warranties    39

Section 8.4.

   Indemnification    39

Section 8.5.

   LIMITATION OF LIABILITY    40

Section 8.6.

   Insurance    41 ARTICLE IX TERM AND TERMINATION    41

Section 9.1.

   Term    41

Section 9.2.

   Termination by Unigene    41

Section 9.3.

   Termination by Tarsa    43

Section 9.4.

   Effect of Termination by Unigene for Material Breach of Tarsa, by Tarsa
Without Cause or for Insolvency    43

Section 9.5.

   Tarsa’s Remedies for Material Breach by Unigene    44

Section 9.6.

   Remedies    45

 

- ii -

--------------------------------------------------------------------------------

Section 9.7.

   Surviving Provisions    45

Section 9.8.

   Bankruptcy Rights    45 ARTICLE X MISCELLANEOUS    45

Section 10.1.

   Notification    45

Section 10.2.

   Language    46

Section 10.3.

   Governing Law; Jurisdiction    46

Section 10.4.

   Entire Agreement    47

Section 10.5.

   Waiver    47

Section 10.6.

   Headings    47

Section 10.7.

   Assignment    47

Section 10.8.

   Force Majeure    47

Section 10.9.

   Construction    47

Section 10.10.

   Severability    48

Section 10.11.

   Status    48

Section 10.12.

   Further Assurances    48

Section 10.13.

   Counterparts    48

 

- iii -

--------------------------------------------------------------------------------

LIST OF SCHEDULES

 

Schedule 1    Assigned Contracts Schedule 2    Licensed Patents Schedule 3   
*** Specifications Schedule 4    Development Timeline Schedule 5    Form of
Calcitonin IND Assignment Schedule 6    Assigned Contracts Consents Schedule 7
   Unigene Knowledge List

--------------------------------------------------------------------------------

LICENSE AGREEMENT

This License Agreement (this “Agreement”), dated as of October 19, 2009 (the
“Effective Date”), is made by and between Unigene Laboratories Inc., a Delaware
corporation with a place of business at 81 Fulton Street, Boonton, NJ 07005 USA
(“Unigene”), and Tarsa Therapeutics, Inc., a Delaware corporation with a place
of business at Old City Hall, 45 School Street, Boston MA 02108 (“Tarsa”).
Unigene and Tarsa are each hereinafter referred to individually as a “Party” and
together as the “Parties.”

RECITALS

WHEREAS, Unigene Controls (as defined below) certain proprietary technology
related to the manufacture and delivery of peptide-based drugs, including
calcitonin and ***;

WHEREAS, the Parties have entered into that certain Contribution Agreement,
dated as of the date hereof (the “Contribution Agreement”), pursuant to which
Unigene is acquiring shares of common stock of Tarsa, as provided therein; and

WHEREAS, pursuant to the Contribution Agreement, Unigene has agreed to grant to
Tarsa certain exclusive and non-exclusive licenses to develop, test,
manufacture, use and sell the Licensed Products in the Territory (each as
defined below), on the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. Certain Defined Terms. The following terms shall have the meanings
set forth below:

“Affiliate” means, with respect to a Party, any corporation, firm, limited
liability company, partnership or other legal entity that controls, is
controlled by or is under common control with such Party, where “control” means,
for purposes of this definition, (a) beneficial ownership of at least fifty
percent (50%) of the voting securities of a corporation or other business
organization with voting securities (or such lesser percentage which is the
maximum allowed by a foreign corporation in a particular jurisdiction); (b) a
fifty percent (50%) or greater interest in the net assets or profits of a
partnership or other business organization without voting securities; or (c) the
ability to direct the affairs of any such entity. For purposes of this
Agreement, notwithstanding anything to the contrary herein, neither Unigene nor
any other shareholders of Tarsa shall be deemed to be an Affiliate of Tarsa,
other than a holder of all of the outstanding capital stock of Tarsa.

“Agent” has the meaning set forth in Section 2.5(b).

 

- 2 -

--------------------------------------------------------------------------------

“Agreement” has the meaning set forth in the introductory paragraph hereof.

“Amidating Enzyme” means a recombinant enzyme used to convert non amidated
peptides or proteins to amidated peptides or proteins.

“Assigned Contracts” means all agreements between Unigene and a Third Party in
effect on the Effective Date that solely relate to the development of Licensed
Calcitonin Products, as listed on Schedule 1, Part I, but excluding, for
avoidance of doubt, those agreements listed on Schedule 1, Part II.

“Assigned Contract Party” means, with respect to each Assigned Contract, each
Third Party counterparty and its affiliates, if applicable, to such Assigned
Contract.

“Assignment Agreement” has the meaning set forth in Section 3.1(f).

“Bankruptcy Code” has the meaning set forth in Section 9.8.

“Calcitonin API” means *** calcitonin or *** calcitonin.

“Calcitonin API Specifications” means the API Specifications, as defined in the
CM Agreement.

“Calcitonin *** Product” means any product that comprises a Calcitonin Product
and *** that is not a Calcitonin Product.

“Calcitonin IND” means Unigene’s Investigational New Drug Application No. ***
and any foreign counterparts, including ***.

“Calcitonin-*** Combination Product” means a Calcitonin Combination Product
comprised of the Calcitonin Product and at least one ingredient that is a ***
agent.

“Calcitonin Product” means the oral drug product in development by Unigene as of
the Effective Date, and ***, containing (a) Calcitonin API as its sole
pharmacologically active ingredient, or (b) any *** form of Calcitonin API as
its sole pharmacologically active ingredient.

“CM Agreement” has the meaning set forth in Section 2.3(a).

“Collaboration Improvements” means all Technology and other intellectual
property, whether or not patentable, that are conceived of, discovered,
developed or authored after the Effective Date (a) in the course of performing
activities under, or in connection with, this Agreement by or on behalf of a
Party, whether alone or together with the other Party or Third Parties, or
(b) by or on behalf of Tarsa, whether alone or together with Unigene or Third
Parties, whether or not in connection with this Agreement, in each case that
relate to or are an improvement to or derivative of any Licensed IP or
Confidential Information of Unigene. For purposes of this definition, a Party
shall be deemed to have conceived, discovered, developed or authored Technology
or any other intellectual property if at least one individual or individuals
under an obligation to assign their rights to such Technology or intellectual
property to such Party and/or its Affiliates was involved in such conception,
discover, development or authoring.

 

- 3 -

--------------------------------------------------------------------------------

“Collateral Assignment” has the meaning set forth in Section 2.5(b).

“Combination Product” means the Calcitonin *** Product and *** Product.

“Commercially Reasonable Efforts” means, for each Party, the carrying out of
obligations in a diligent and sustained manner using such effort and employing
such resources as would normally be exerted or employed by a similarly-situated
pharmaceutical company for a product of similar market potential, and at a
similar stage of its development or product life, taking into consideration
safety and efficacy, development costs, operating costs, the anticipated
prescription label, the nature of the Licensed Product, the clinical setting in
which it is expected to be used, competitiveness of the marketplace, regulatory
environment, the patent or other proprietary position of the Licensed Product,
and other conditions then prevailing. Commercially Reasonable Efforts shall be
determined country-by-country.

“Confidential Information” means, with respect to a Party, all proprietary or
confidential information and materials (whether or not patentable) disclosed by
one Party to the other, including all trade secrets, processes, formulae, data,
know-how, improvements, inventions, chemical or biological materials, assays,
techniques, marketing plans, strategies, and customer lists, regardless of
whether any of the foregoing are marked “confidential” or “proprietary” or
communicated to the other Party by the disclosing Party in oral, written,
graphic, or electronic form. All submissions to Regulatory Authorities,
Regulatory Approvals and data that are or will be assigned to Tarsa hereunder
shall be deemed Confidential Information of Tarsa.

“Contribution Agreement” has the meaning set forth in the recitals hereof.

“Control” or “Controlled” means with respect to any Technology or Patent Rights,
the ownership by a Party of rights in and to such Technology or Patent Rights,
or the possession by a Party of rights under such Technology or Patent Rights,
such that it has the right to grant the licenses or sublicenses to such
Technology or Patent Rights as provided for herein, in each case without
violating the terms of, or increasing the amount of any payments required under
(other than requiring such Party to pay the applicable Third Party a portion of
any royalties, milestone payments or other consideration received by such Party
(but not any upfront payments) required to be paid by such Party to such Third
Party, in accordance with the terms of the then-current arrangement or agreement
between such Party and such Third Party), any arrangement or agreements between
such Party and any other Person, and with respect to such rights obtained from a
third party, for as long as such rights from such third party are in effect. In
the event that Unigene or any of its Affiliates is acquired by or merges with
any Person, the term “Control” shall not include any Technology or Patent Rights
owned or Controlled by such Person or any of the Affiliates of such Person
(other than Unigene and Unigene’s Affiliates immediately prior to such
acquisition) unless such Person otherwise agrees in writing.

“Cover” means, with respect to any Patent Rights, that the manufacture, use,
offer for sale, sale or import of any article or composition of matter, or the
practice of any process or method, infringes at least one (1) Valid Claim of
such Patent Rights.

“CPI” means the Consumer Price Index for All Urban Consumers (CPI-U), as
published by the Bureau of Labor Statistics, U.S. Department of Labor, or any
replacement index if applicable.

 

- 4 -

--------------------------------------------------------------------------------

“Development Timeline” has the meaning set forth in Section 3.1(a).

“Effective Date” has the meaning set forth in the introductory paragraph hereof.

“Effective Time” has the meaning set forth in the Assignment Agreement.

“EMEA” means the European Medicines Agency and any successor agency or authority
thereto.

“FDA” means the United States Food and Drug Administration and any successor
agency or authority thereto.

“First Commercial Sale” means, with respect to a Licensed Product, the date of
the first arm’s length transaction, transfer or disposition for value to a Third
Party of such Licensed Product by or on behalf of Tarsa or any Affiliate or
Sublicensee of Tarsa.

“Field” means all uses, including the prevention, treatment, diagnosis or
control of any disease, disorder or condition in humans and animals, but
excluding the Unigene Field. For the avoidance of doubt, the Field shall include
the use of all Fixed Dose Combinations of drugs other than those combinations
specifically included within the Unigene Field.

“Fixed Dose Combination” means a fixed proportion of two (2) or more active
pharmaceutical ingredients in one (1) pill, capsule, tablet or other oral
preparation.

“FTE Rate” has the meaning set forth in Section 2.7.

“Gilligan” means James Gilligan, an individual employed separately by both
Unigene and Tarsa on the Effective Date.

***

***

***

*** has the meaning set forth in Section 2.4.

*** Agreement” has the meaning set forth in Section 2.4.

“Improvements” means, individually and collectively, each of the Collaboration
Improvements, Unigene Sole Improvements, Tarsa Sole Improvements and Joint
Improvements, as the context requires.

“Indemnifying Party” has the meaning set forth in Section 8.4.

“Indemnitee” means any Person indemnified under Section 8.4.

 

- 5 -

--------------------------------------------------------------------------------

“Intermediates” means any Calcitonin API precursors generated during the process
of manufacturing Calcitonin API.

“IP Term” means (a) with respect to the Calcitonin Product *** the period
commencing on the Effective Date and ending *** years after the Effective Date,
and (b) with respect to Calcitonin *** Product, the period commencing on the
Effective Date and ending *** years after the Effective Date.

“Joint Improvements” means all Technology and other intellectual property,
whether or not patentable, that are conceived of, discovered, developed or
authored after the Effective Date in the course of performing activities under,
or in connection with, this Agreement jointly by or on behalf of both Parties,
other than the Collaboration Improvements; provided, however, that
notwithstanding the foregoing, any Technology or other intellectual property
that is conceived of, discovered, developed or authored by Gilligan after the
Effective Date in the course of performing activities under, or in connection
with, this Agreement, other than Collaboration Improvements, shall be deemed to
be a Joint Improvement. For purposes of this definition, a Party shall be deemed
to have conceived, discovered, developed or authored Technology or any other
intellectual property if at least one individual or individuals under an
obligation to assign their rights to such Technology or intellectual property to
such Party and/or its Affiliates was involved in such conception, discover,
development or authoring.

“Lending Parties” means Victory Park Management, LLC and Victory Park Special
Situations Master Fund, Ltd., and their successors and assignees under the VPC
Financing Agreement.

“Liability” means any debt, liability, commitment or obligation of any kind,
character or nature whatsoever, whether known or unknown, secured or unsecured,
accrued, fixed, absolute, potential, contingent or otherwise, and whether due or
to become due, including any liability for taxes.

“License” has the meaning set forth in Section 2.1.

“Licensed Calcitonin Formulation IP” means the Licensed Calcitonin Formulation
Know-How and Licensed Calcitonin Formulation Patent Rights.

“Licensed Calcitonin Formulation Know-How” means the (a) Technology Controlled
by Unigene or its Affiliates as of the Effective Date or during the IP Term that
is Necessary for the development, testing, manufacture, use or sale of the
Licensed Calcitonin Product and (b) the Technology comprised within the
Collaboration Improvements and the Unigene Sole Improvements, to the extent
Controlled by Unigene or its Affiliates during the Term, in each case that is
Necessary or useful for the development, testing, manufacture, use or sale of
the Licensed Calcitonin Product.

“Licensed Calcitonin Formulation Patent Rights” means (a) the Patent Rights
Controlled by Unigene or its Affiliates as of the Effective Date or during the
IP Term, including those that are listed in Schedule 2 to this Agreement, that
Cover the Licensed Calcitonin Product and are Necessary for the development,
testing, manufacture, use or sale of the Licensed Calcitonin Product, (b) any
continuations, continuations-in-part and divisionals of such Patent Rights that
are filed after the Effective Date and patents issuing from such applications,
in each case to the extent claiming priority from such Patent Rights, (c) all
reissues, reexaminations, extensions and foreign counterparts of the Patent
Rights specified in clauses (a) and (b) above that are issued or granted after
the Effective Date and (d) any Patent Rights Controlled by Unigene or its
Affiliates during the Term that Cover the Collaboration Improvements or the
Unigene Sole Improvements and which are Necessary or useful for the development,
testing, manufacture, use or sale of the Licensed Calcitonin Product.

 

- 6 -

--------------------------------------------------------------------------------

“Licensed Calcitonin IP” means the Licensed Calcitonin Formulation IP and the
Licensed Calcitonin Manufacturing IP.”

Licensed Calcitonin Manufacturing IP” means the Licensed Calcitonin
Manufacturing Know-How and the Licensed Calcitonin Manufacturing Patent Rights.

“Licensed Calcitonin Manufacturing Know-How” means (a) the Technology Controlled
by Unigene or its Affiliates as of the Effective Date or during the IP Term that
are Necessary for the manufacture of Calcitonin API, Amidating Enzyme or any
Intermediates, including the Technology licensed to *** under the *** License
Agreement as of the Effective Date, at such time as such Technology becomes
Controlled by Unigene during the Term, and (b) the Technology comprised within
the Collaboration Improvements or the Unigene Sole Improvements, to the extent
Controlled by Unigene or its Affiliates during the Term, which are Necessary or
useful for the manufacture of Calcitonin API, Amidating Enzyme or any
Intermediates.

“Licensed Calcitonin Manufacturing Patent Rights” means (a) the Patent Rights
Controlled by Unigene or its Affiliates as of the Effective Date or during the
IP Term, including those that are listed in Schedule 2 to this Agreement,
including the Technology licensed to *** under the *** License Agreement as of
the Effective Date, at such time as such Technology becomes Controlled by
Unigene during the Term, in each case that Cover and are Necessary for the
manufacture of Calcitonin API, Amidating Enzyme or any Intermediates, (b) any
continuations, continuations-in-part and divisionals of such Patent Rights that
are filed after the Effective Date and patents issuing from such applications,
in each case to the extent claiming priority from such Patent Rights, (c) all
reissues, reexaminations, extensions and foreign counterparts of the Patent
Rights specified in clauses (a) and (b) above that are issued or granted after
the Effective Date and (d) any Patent Rights Controlled by Unigene or its
Affiliates during the Term that Cover the Collaboration Improvements or the
Unigene Sole Improvements and which are Necessary or useful for the manufacture
of Calcitonin API, Amidating Enzyme or any Intermediates.

“Licensed Calcitonin Patent Rights” means the Licensed Calcitonin Formulation
Patent Rights and the Licensed Calcitonin Manufacturing Patent Rights.

“Licensed Calcitonin Product” means, individually and collectively, the
Calcitonin Product and Calcitonin *** Product, each in finished pharmaceutical
form suitable for oral administration.

“Licensed IP” means the Licensed Calcitonin IP and the Licensed *** IP.

 

- 7 -

--------------------------------------------------------------------------------

“Licensed Patent Rights” means the Licensed Calcitonin Patent Rights and the
Licensed *** Patent Rights.

“Licensed Products” means the Licensed Calcitonin Product and the Licensed ***
Product.

“Licensed *** IP” means the Licensed *** Know-How and the Licensed *** Patent
Rights.

“Licensed *** Know-How” means (a) the Technology Controlled by Unigene or its
Affiliates as of the Effective Date or during the IP Term that is Necessary for
the manufacture of ***, including the Technology licensed to *** under the ***
Agreement as of the Effective Date, at such time as such Technology becomes
Controlled by Unigene during the Term, and (b) the Technology comprised within
the Collaboration Improvements or the Unigene Sole Improvements, to the extent
Controlled by Unigene or its Affiliates during the Term, in each case that is
Necessary or useful for the manufacture of ***. “Licensed *** Know-How” excludes
the *** IP.

“Licensed *** Patent Rights” means (a) the Patent Rights Controlled by Unigene
or its Affiliates as of the Effective Date or during the IP Term, including
those that are listed in Schedule 2 of the Agreement, and the Patent Rights
licensed to *** under the *** Agreement as of the Effective Date, at such time
as such Patent Rights become Controlled by Unigene, that Cover and are Necessary
for the manufacture of ***, (b) any continuations, continuations-in-part and
divisionals of such Patent Rights that are filed after the Effective Date and
patents issuing from such applications, in each case to the extent claiming
priority from such Patent Rights, (c) all reissues, reexaminations, extensions
and foreign counterparts of the Patent Rights specified in clauses (a) and
(b) above that are issued or granted after the Effective Date and (d) any Patent
Rights Controlled by Unigene and its Affiliates during the Term that Cover the
Collaboration Improvements or the Unigene Sole Improvements and which are
Necessary or useful for the manufacture of ***. “Licensed *** Patent Rights”
excludes the *** IP.

“Licensed *** Product” means, individually and collectively, the *** Product and
*** Product, each in finished pharmaceutical form.

“Licensed Tarsa Improvements” means the Tarsa Sole Improvements Controlled by
Tarsa and its Affiliates during the Term that are Necessary for the development,
testing, manufacture, use or sale of the products included in the Unigene Field.

“Lien” means any lien, statutory lien, pledge, mortgage, deed of trust, security
interest, charge, covenant, claim, restriction, right, option, conditional sale
or other title retention agreement, or encumbrance of any kind or nature.

“Manufacturing Commencement Date” has the meaning set forth in Section 2.3(a).

“Necessary” means, (a) with respect to the rights granted to Tarsa hereunder,
intellectual property that is necessary (i) to develop, test, manufacture, use
or sell the Licensed Calcitonin Product as it exists on the Effective Date, to
the extent necessary to obtain or maintain Regulatory Approval for such Licensed
Calcitonin Product as required by a Regulatory Authority, (ii) to develop, test,
manufacture, use, sell or obtain or maintain Regulatory Approval for any
Calcitonin *** Product, (iii) to manufacture *** as it is manufactured by
Unigene as of the Effective Date and (iv) to manufacture Calcitonin API as it is
manufactured by Unigene as of the Effective Date and, (b) with respect to the
rights granted to Unigene hereunder, intellectual property that is necessary to
develop, test, manufacture, use, sell or obtain or maintain Regulatory Approval
of an oral calcitonin product in the Unigene Field.

 

- 8 -

--------------------------------------------------------------------------------

“Net Sales” means the gross invoiced sales price for all Licensed Products sold
by Tarsa, its Affiliates or Sublicensees to unrelated Third Parties throughout
the Territory, less the following customary and reasonable amounts incurred or
paid by Tarsa or its Affiliates or Sublicensees with respect to sales of
Licensed Products to the extent specifically related to such Licensed Products
and taken by the selling person or otherwise paid for or accrued by the selling
person: (a) trade, cash and quantity discounts or rebates actually allowed or
taken; (b) credits or allowances actually given or made for rejection or return
of previously sold Licensed Products or for rebates or retroactive price
reductions (including Medicare, Medicaid and similar types of rebates and
chargebacks); (c) any charges for insurance, freight, and other transportation
costs directly related to the delivery of Licensed Products to the extent
itemized separately, included in the gross invoiced sales price and paid by the
purchaser of Licensed Products; (d) credits or allowances given or made for
indigent patient programs used by Tarsa for Licensed Products; and (e) any sales
and excise taxes and other taxes levied on or measured by the billing amount,
other than franchise or income tax of any kind whatsoever. Such amounts shall be
determined from the books and records of Tarsa, which shall be maintained in
accordance with United States generally accepted accounting principles.

Notwithstanding the foregoing, the following shall not be included in Net Sales:
(1) Tarsa’s or any of its Affiliates’ or Sublicensee’s transfer of Licensed
Products to another Tarsa Affiliate that are subsequently sold to unrelated
Third Parties, (2) Licensed Products provided by Tarsa or its Affiliates for
administration to patients enrolled in clinical trials or distributed through a
not-for-profit foundation at no charge to eligible patients, provided that
Tarsa, its Affiliates and Sublicensees receive no consideration from such
clinical trials or not-for-profit foundation for such use of Licensed Products
and (3) Licensed Products used as samples to promote additional Net Sales, in
amounts consistent with normal business practices in the industry for similar
products with similar indications.

Notwithstanding the foregoing, in the event a Licensed Product is sold as a
Combination Product in a country, Net Sales shall be calculated by multiplying
the Net Sales of the Combination Product by the fraction A/(A+B), where A is the
gross invoice price of the Licensed Product when sold separately in such
country, and B is the gross invoice price of the other clinically active
prophylactic or therapeutic product(s) included in the Combination Product when
sold separately in such country. In the event no such separate sales are made by
Tarsa or its Affiliates or Sublicensees in such country, Net Sales of the
Combination Product shall be calculated in a manner to be negotiated and agreed
upon by the Parties, reasonably and in good faith, prior to any sale of such
Combination Product, which shall be based upon the respective cost of goods sold
of the active components of such Combination Product.

*** has the meaning set forth in Section 2.3(a).

 

- 9 -

--------------------------------------------------------------------------------

*** Drug Products” has the meaning set forth in the *** License Agreement.

*** License Agreement” has the meaning set forth in Section 2.3(a).

“Party” and “Parties” have the meaning set forth in the introductory paragraph
hereof.

“Patent Rights” means all rights arising under patents or patent applications
(including any patents issuing therefrom), as well as any continuations,
continuations-in-part, divisionals thereof and all reissues, reexaminations and
extensions thereof.

“Person” means an individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization or other similar entity or
governmental authority.

*** means ***.

*** Product” means any product that comprises a *** Product and at least ***
that is not a *** Product.

*** means a product that (a) contains *** supplied by Unigene or manufactured by
Tarsa or its Affiliates or Sublicensees under the license granted in Section 2.1
and (b) is administered using the *** licensed from ***.

*** Specifications” means the *** specifications attached hereto as Schedule 3.

*** has the meaning set forth in Section 3.1(h).

*** License Agreement” has the meaning set forth in Section 3.1(h).

*** License” has the meaning set forth in Section 2.1.

*** Patents” has the meaning set forth in Section 2.1.

“Regulatory Approvals” means the technical, medical and scientific licenses,
registrations, authorizations and approval required for the manufacture, use,
storage, import, transport, marketing, promotion, selling, and placing on the
market of a Licensed Product approved by any Regulatory Authority in the
Territory. This includes any authorization necessary for the development,
manufacture, distribution, marketing, promotion, offer for sale, use, import,
export or sale of the Licensed Products within the Territory.

“Regulatory Authority” means any government authority or agency charged with
issuing approvals, licenses, registrations or authorizations necessary for the
manufacture, use, storage, import, transport, marketing, promotion, selling, and
placing on the market of a Licensed Product in a country in the Territory.

“Regulatory Materials” means all regulatory submissions and applications,
Regulatory Approvals, minutes of meetings with Regulatory Authorities, data
arising out of pre-clinical and clinical development activities and any other
information, documentation, data or materials necessary for obtaining or
maintaining Regulatory Approvals, in each case regarding the Calcitonin Product
that is a Licensed Calcitonin Product.

 

- 10 -

--------------------------------------------------------------------------------

“Relinquishing Party” has the meaning set forth in Section 7.2(c).

“Right of Reference” has the meaning set forth in 21 C.F.R. § 314.3(b) and any
foreign counterpart to such regulation.

“ROFO/ROFR Agreement” has the meaning set forth in Section 2.5(b).

“Royalty-Bearing Licensed *** Product” shall have the meaning set forth in
Section 4.2(c).

“Salmon Calcitonin Materials” means, individually and collectively, the API
(“Salmon Calcitonin API”), Intermediate and Amidating Enzyme, as each such term
is defined in the *** License Agreement.

“Sandoz” has the meaning set forth in Section 2.3(a).

“Sandoz Agreement” has the meaning set forth in Section 2.3(h).

“SEC” has the meaning set forth in Section 5.1.

“Sublicense” means each sublicense agreement entered into by Tarsa pursuant to
Section 2.5.

“Sublicensee” means any Third Party or Affiliate of Tarsa to whom Tarsa grants a
Sublicense of the rights granted to Tarsa under this Agreement, as provided
under Section 2.5.

“Tarsa” has the meaning set forth in the introductory paragraph hereof.

“Tarsa Sole Improvements” means all Technology and other intellectual property,
whether or not patentable, that are conceived of, discovered, developed or
authored after the Effective Date in the course of performing activities under,
or in connection with, this Agreement, solely by or on behalf of Tarsa, whether
alone or together with Third Parties, other than the Collaboration Improvements.
For purposes of this definition, Tarsa shall be deemed to have conceived,
discovered, developed or authored Technology or any other intellectual property
if at least one individual or individuals under an obligation to assign their
rights to such Technology or intellectual property to Tarsa and/or its
Affiliates was involved in such conception, discover, development or authoring.

“Tarsa Indemnitees” has the meaning set forth in Section 8.4(a).

“Technology” means all cell lines, cell banks, clones, vectors, cassettes,
separations, purifications, ideas, inventions, discoveries, biologic materials,
data, instructions, formulae, designs, specifications, methods, processes,
formulations, techniques, know-how, technical information (including structural
and functional information), manufacturing process information, pre-clinical
information, clinical information, and any and all proprietary biological,
chemical, pharmacological, physical, analytical, toxicological, pre-clinical,
clinical, assay, safety, control and manufacturing data and materials. For
avoidance of doubt, Technology does not include any trademarks, software or
information technology systems.

 

- 11 -

--------------------------------------------------------------------------------

“Term” has the meaning set forth in Section 9.1.

“Territory” means worldwide, excluding the People’s Republic of China.

“Third Party” means any Person other than Tarsa, Unigene and their respective
Affiliates.

“Unigene” has the meaning set forth in the introductory paragraph hereof.

“Unigene-Controlled Patent Rights” has the meaning set forth in Section 7.2(b).

“Unigene Drug Product” has the meaning set forth in the *** License Agreement.

“Unigene Field” means the development and commercialization of any calcitonin
product in *** with one (1) or more *** or analogs or derivatives thereof, in
each case for the ***.

“Unigene Indemnitees” has the meaning set forth in Section 8.4(b).

“Unigene Patent Rights” has the meaning set forth in the *** License Agreement;
provided that, at such time that Unigene Controls the Patent Rights included
within such definition, such Patent Rights shall cease to be considered Unigene
Patent Rights and, to the extent they would be Licensed Calcitonin Manufacturing
Patent Rights, shall be considered Licensed Patent Rights hereunder.

“Unigene’s Knowledge” means the actual knowledge of the individuals listed on
Schedule 7 as of the Effective Date.

“Unigene’s Oral Product” has the meaning set forth in the *** License Agreement.

“Unigene Sole Improvements” means all Technology and other intellectual
property, whether or not patentable, that are conceived of, discovered,
developed or authored after the Effective Date in the course of performing
activities under, or in connection with, this Agreement solely by or on behalf
of Unigene, whether alone or together with Third Parties, other than
Collaboration Improvements. For purposes of this definition, Unigene shall be
deemed to have conceived, discovered, developed or authored Technology or any
other intellectual property if at least one individual or individuals under an
obligation to assign their rights to such Technology or intellectual property to
Unigene and/or its Affiliates was involved in such conception, discover,
development or authoring.

“Valid Claim” means a claim in an unexpired and issued patent or pending patent
application that has not been disclaimed, revoked or held invalid or
unenforceable by a final unappealable decision of a government agency or court
of competent jurisdiction, or unappealed within the time limit allowed for
appeal, or which has not been admitted to be invalid or unenforceable through
reissue, reexamination or disclaimer or otherwise; provided that, on a
country-by-country basis, a patent application pending for more than *** years
from the date of filing of such application as a utility, non-provisional
application shall not be considered to have any Valid Claim for purposes of this
Agreement from and after such *** year date unless and until a patent with
respect to such application issues.

 

- 12 -

--------------------------------------------------------------------------------

“VPC Financing Agreement” means the Financing Agreement, dated as of
September 30, 2008, by and among Unigene and the Lending Parties (as amended,
supplemented, restated or otherwise modified from time to time).

Section 1.2. Rules of Construction and Interpretation.

(a) The definitions of the terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”. The word “will” shall be construed to have the same
meaning and effect as the word “shall”. The word “any” means “any and all”
unless otherwise clearly indicated by context. “$” as used in this Agreement
means the lawful currency of the United States. Where either Party’s consent is
required hereunder, except as otherwise specified herein, such Party’s consent
may be granted or withheld in such Party’s sole discretion.

(b) Unless the context requires otherwise, (i) any definition of or reference to
any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or therein), (ii) any
reference to any laws herein shall be construed as referring to such laws as
from time to time enacted, repealed or amended, (iii) any reference herein to
any Person shall be construed to include the Person’s successors and assigns,
(iv) the words “herein”, “hereof” and “hereunder”, and words of similar import,
shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, and (v) all references herein to Articles, Sections
or Schedules, unless otherwise specifically provided, shall be construed to
refer to Articles, Sections and Schedules of this Agreement.

ARTICLE II

GRANT OF RIGHTS

Section 2.1. License to Tarsa. Subject to the terms and conditions of this
Agreement, including the performance of Tarsa’s payment obligations hereunder,
Unigene grants to Tarsa, and Tarsa accepts, during the Term the following
licenses (the “License”):

(a) a royalty-bearing, non-transferable (except as set forth in Section 10.7),
sublicenseable (to the extent permitted by Section 2.5) and exclusive ***
license, under the Licensed Calcitonin Formulation IP and Unigene’s interest in
the Joint Improvements, solely to research, develop, use, sell, offer for sale,
import and otherwise commercialize the Licensed Calcitonin Products in the Field
in the Territory, provided that the license granted under this Section 2.1(a)
does not include the right to manufacture or have manufactured Calcitonin API,
which rights are granted under Section 2.1(b);

(b) subject to Section 2.3, a royalty-bearing, non-transferable (except as set
forth in Section 10.7), sublicenseable (to the extent permitted by Section 2.5)
and co-exclusive license with Unigene, under the Licensed Calcitonin
Manufacturing IP and Unigene’s interest in the Joint Improvements, to
manufacture and have manufactured Calcitonin API, Amidating Enzyme and
Intermediates anywhere in the Territory solely for use in the Licensed
Calcitonin Products licensed under Section 2.1(a) above that are researched,
developed or commercialized by Tarsa, its Affiliates or sublicensees;

 

- 13 -

--------------------------------------------------------------------------------

(c) subject to Section 2.4, a royalty-bearing, non-transferable (except as set
forth in Section 10.7), sublicenseable (to the extent permitted by Section 2.5)
and non-exclusive license, under the Licensed *** IP and Unigene’s interest in
the Joint Improvements, solely to manufacture and have manufactured Licensed ***
Products in the Territory; and

(d) a royalty-free, non-transferable (except as set forth in Section 10.7),
sublicenseable (to the extent permitted by Section 2.5) and non-exclusive
license under the *** solely to research, develop, manufacture, have
manufactured, use, sell, offer for sale, import and otherwise commercialize
Licensed *** Products in the Field in the Territory.

Notwithstanding anything to the contrary herein, Unigene reserves all rights in
and to, and Tarsa receives no license hereunder to, the Licensed IP in the
Unigene Field, and except as expressly provided hereunder, Unigene reserves all
rights in and to the Licensed IP. For avoidance of doubt, Tarsa’s rights under
Section 2.1(c) to manufacture and have manufactured *** are granted only with
respect to the right to manufacture or have manufactured *** for use in the
Licensed *** Product in the Field in the Territory. No license is granted by
Unigene hereunder with respect to any Patent Rights or Technology that cover any
therapeutic, prophylactic or diagnostic ingredient or component other than
Calcitonin API and ***, and no license is granted by Unigene hereunder with
respect to any *** other than ***.

Tarsa shall not use the Licensed IP for any purpose except as expressly set
forth in this Agreement. Tarsa’s rights under the License are limited to the
Territory, and Tarsa shall not, directly or indirectly, (i) seek customers for
any Licensed Product outside the Territory, (ii) sell any Licensed Product to
customers outside of the Territory or market or sell any Licensed Product for
use in the Unigene Field, (iii) sell any Licensed Product to customers within
the Territory or in the Field if Tarsa knows or believes that such customers
will sell, ship or otherwise distribute any Licensed Product to jurisdictions
outside of the Territory or use any Licensed Product in the Unigene Field or
(iv) otherwise establish a distribution or sales network for any Licensed
Product outside the Territory. Likewise, Unigene shall not, directly or
indirectly, (A) seek customers for any Licensed Product inside the Territory
other than in the Unigene Field, (B) sell any Licensed Product to customers
inside of the Territory, other than in the Unigene Field, or market or sell any
Licensed Product for use in the Field, (C) sell any Licensed Product to
customers outside the Territory or in the Unigene Field if Unigene knows or
believes that such customers will sell, ship or otherwise distribute any
Licensed Product to jurisdictions inside of the Territory to use any Licensed
Product in the Field or (D) otherwise establish a distribution or sales network
for any Licensed Product inside the Territory, other than in the Unigene Field.
Notwithstanding anything to the contrary herein, Tarsa’s rights under the
License to any Patent Rights included in the Licensed IP that derive from the
license to certain patents (the *** Patents”) granted to Unigene by the *** (the
*** License”) shall be non-exclusive and are limited to the United States.

 

- 14 -

--------------------------------------------------------------------------------

Section 2.2. License to Unigene. Subject to the terms and conditions of this
Agreement, Tarsa grants to Unigene, and Unigene accepts, during the Term, (a) a
non-exclusive, royalty-free, worldwide, non-transferable (except as set forth in
Section 10.7), sublicenseable (to the extent permitted by Section 2.5(c))
license under the Licensed Tarsa Improvements and Tarsa’s interest in the Joint
Improvements solely to research, develop, manufacture, have manufactured, use,
sell, offer for sale, import and otherwise commercialize products in the Unigene
Field, and (b) a non-exclusive, non-transferable (except as set forth in
Section 10.7), non-sublicenseable (except as permitted by Section 2.5(c)) and
royalty-free license under each of the rights exclusively licensed to Tarsa
under Section 2.1, solely to perform its obligations under this Agreement.

Section 2.3. Manufacturing of Calcitonin API.

(a) ***. Accordingly, Tarsa agrees that the license granted pursuant to
Section 2.1(b) shall not be effective with respect to the Salmon Calcitonin
Materials until, and Tarsa shall not manufacture or have manufactured any Salmon
Calcitonin Materials under this Agreement, nor shall Tarsa exercise any rights
granted to it hereunder with respect to the Licensed Calcitonin Manufacturing IP
relating to the Salmon Calcitonin Materials, until *** (each such date, the
“Manufacturing Commencement Date”). ***. Notwithstanding the foregoing, Tarsa
shall not be precluded under this Agreement from entering into a direct supply
agreement for Salmon Calcitonin API with Sandoz for use in the Licensed
Calcitonin Product (the “Sandoz Agreement”). Tarsa shall use Commercially
Reasonable Efforts to provide that the Sandoz Agreement shall (i) protect the
confidentiality of all Unigene Confidential Information that may be disclosed to
or used by Sandoz or Tarsa on terms at least as protective as those set forth in
the CM Agreement, (ii) preserve for Unigene ownership of any improvements made
in connection with the Sandoz Agreement that would be owned by Unigene if made
under the CM Agreement, (iii) preserve for Unigene license rights to
improvements made in connection with the Sandoz Agreement that would be licensed
to Unigene if made under the CM Agreement, and (iv) provide that Tarsa has
assumed Unigene’s minimum purchase obligations under Section 4(3) of the CM
Agreement. Tarsa will provide Unigene with a copy of the proposed Sandoz
Agreement, in substantially final form, and Unigene shall have *** to review
such proposed Sandoz Agreement and to provide Tarsa with comments with respect
to the matters addressed in the foregoing, which comments Tarsa shall duly and
reasonably consider and discuss with Unigene, but shall thereafter be free to
accept or reject such comments in its sole discretion. Until the Manufacturing
Commencement Date, unless Tarsa has entered into the Sandoz Agreement, Tarsa
shall order all of its requirements for Salmon Calcitonin API for use in the
Licensed Calcitonin Product from Sandoz through Unigene, to the extent required
by and subject to the terms of this Section 2.2 and the CM Agreement.

(b) Tarsa shall submit forecasts and firm orders for Salmon Calcitonin API to
Unigene pursuant *** acknowledges and agrees that such forecasts and orders
shall be binding upon Tarsa in the manner specified in the CM Agreement. ***.

(c) The prices charged to Tarsa by Unigene for Salmon Calcitonin API shall be
***.

 

- 15 -

--------------------------------------------------------------------------------

(d)***.

(e) Unigene shall have no liability or responsibility for any Salmon Calcitonin
API ordered by or delivered to Tarsa, other than to submit Tarsa’s forecasts and
orders for Salmon Calcitonin API to Sandoz, provided that (i) Unigene shall be
liable for any failure to accurately and correctly perform analysis of samples
for compliance with the Calcitonin API Specifications, provided that, in the
event of a dispute between Unigene and Tarsa regarding such analysis, the
accuracy and correctness of such analysis shall be determined in accordance with
the procedures outlined in Section 22(4) of the CM Agreement (with Tarsa having
the same rights under this Agreement as Unigene has under the CM Agreement),
***. Upon Tarsa’s receipt of Regulatory Approval by the FDA or EMEA for the
Licensed Calcitonin Product, Tarsa shall be required, unless otherwise agreed to
by the Parties, to purchase a minimum quantity of *** of Salmon Calcitonin API
per calendar year or pay the corresponding amount to Unigene for payment to
Sandoz to the extent required by the CM Agreement.

(f)***.

(g) Unigene agrees that during the Term:

(i) Unigene shall use Commercially Reasonable Efforts to fulfill its obligations
under the CM Agreement to the extent that failure to do so would adversely
affect Tarsa or its rights hereunder, except where due to an act or omission of
Tarsa;

(ii) Unigene shall not enter into any subsequent agreement with Sandoz that
modifies or amends the CM Agreement in any way that would materially and
adversely affect Tarsa’s rights or economic interest under this Agreement
without Tarsa’s prior written consent, and shall provide Tarsa with a copy of
all modifications to or amendments of the CM Agreement, regardless of whether
Tarsa’s consent was required with respect thereto;

(iii) Unigene shall not terminate the CM Agreement in whole or in part, directly
or indirectly, without Tarsa’s prior written consent if such termination would
materially and adversely affect Tarsa’s license granted hereunder;

(iv) Unigene shall promptly furnish Tarsa with copies of all material
communications Unigene receives from Sandoz under the CM Agreement that directly
relate to the supply of Salmon Calcitonin API to Tarsa pursuant to this
Agreement, except where such disclosure is prohibited by the CM Agreement, in
which case Unigene shall seek from Sandoz permission to make such disclosure to
Tarsa;

(v) Unigene shall promptly furnish Tarsa with copies of all material reports and
other communications that Unigene furnishes to Sandoz that directly relate to
the supply of Salmon Calcitonin API to Tarsa pursuant to this Agreement; and

(vi) Unigene shall furnish Tarsa with copies of all notices received by Unigene
relating to any alleged breach or default by Unigene under the CM Agreement
within *** business days after Unigene’s receipt thereof and, if Unigene cannot
or chooses not to cure or otherwise resolve any such alleged breach or default,
Unigene shall so notify Tarsa within *** business days thereafter.

 

- 16 -

--------------------------------------------------------------------------------

(h) Notwithstanding anything to the contrary contained in this Agreement, the
terms of Section 2.2(b) through Section 2.2(g) shall be in effect only until
Tarsa enters into the Sandoz Agreement. Upon the execution of the Sandoz
Agreement, Tarsa shall no longer be obligated to order any of its requirements
for Salmon Calcitonin API through Unigene and neither Party shall be thereafter
required to comply with any provisions in Section 2.2(b) through Section 2.2(g).
However, following the execution of the Sandoz Agreement, the provisions of
Section 2.2(a) shall remain in effect.

(i) ***.

(j) Tarsa acknowledges that neither Sandoz nor Unigene currently manufactures or
has any plan to manufacture Calcitonin API that is ***. Accordingly, if Tarsa
wishes to have such *** manufactured and supplied by Unigene pursuant to this
Agreement, Tarsa shall so notify Unigene in writing and the Parties shall
discuss and negotiate in good faith any additional terms or conditions necessary
for the manufacture and supply by Unigene of such *** calcitonin.

Section 2.4. Licensed *** Product.

(a) Tarsa acknowledges that Unigene has entered into a license agreement with
***, dated *** (the *** Agreement”) pursuant to which Unigene has licensed ***
certain intellectual property rights relating to ***. *** Section 2.1(c). The
license granted under Section 2.1(c) shall not be effective, and Tarsa shall not
exercise any rights granted under Section 2.1(c) or any other rights hereunder
with respect to the Licensed *** IP, until Unigene provides Tarsa with written
notice that ***.

(b) Subject to this Section 2.4(b), Unigene shall supply such reasonable
quantities of *** in bulk form either out of its inventory of *** existing at
the Effective Date or manufactured by Unigene for Tarsa, at Tarsa’s sole
discretion, as shall be reasonably requested by Tarsa from time to time solely
for Tarsa’s use in research and development of the Licensed *** Product through
clinical trials. Tarsa agrees that if it uses the *** supplied by Unigene for
any purpose other than in the research and development of the Licensed ***
Product, then *** shall have the right to enforce this Section 2.4(b) of this
Agreement on behalf of Unigene with respect to such misuse of the *** supplied
by Unigene. Such ***, if ordered from Unigene’s inventory, shall be delivered to
Tarsa within *** days of Unigene’s receipt of Tarsa’s written order therefor,
and shall be shipped FOB, Unigene’s facility. If Tarsa requests that *** be
manufactured by Unigene, the Parties shall first enter into negotiations to
agree upon lead times, delivery schedules, minimum purchase requirements and
other matters relevant to Unigene’s manufacture of *** pursuant to this
Section 2.4(b). All *** supplied by Unigene to Tarsa under this Agreement shall
comply in all material respects with the *** Specifications, Current Good
Manufacturing Practices as defined in 21 CFR § 210 et seq. and applicable law.
Unigene shall provide Tarsa with certificates of analysis, certificates of
compliance and documentation of storage conditions for any *** supplied to Tarsa
under this Section 2.4(b). The purchase price for *** shall be *** per gram from
Unigene’s inventory. For *** Unigene manufactures for Tarsa pursuant to this
Section 2.4(b), the purchase price shall be equal to ***; provided, however,
that such purchase price shall in no event, during the *** after the Effective
Date, ***, Unigene shall not be required to manufacture *** for Tarsa unless
Tarsa agrees to pay ***. Payment shall be made within *** days following receipt
of any shipment of *** to Tarsa; provided that such shipment has been
accompanied by an invoice for the purchase price and provided further that Tarsa
has not rejected the *** in such shipment, which Tarsa may do only in writing
within *** days of receipt of such shipment and only if such shipment does not
comply in all material respects with the *** Specifications. At Tarsa’s request
made at any time, Tarsa and Unigene shall, in good faith, enter into
negotiations for a *** supply agreement.

 

- 17 -

--------------------------------------------------------------------------------

Section 2.5. Right to Sublicense.

(a) Tarsa may sublicense any of the rights granted to it hereunder to any
Affiliate or Third Party, including the right to grant further sublicenses,
subject to compliance with the terms of this Agreement, except that Tarsa shall
not sublicense the technologies described in, or any rights granted hereunder
with respect to, the *** Patents except to the extent permitted by the ***
License. Not later than *** days prior to granting any Sublicense of its rights
under this Agreement to an Affiliate or Third Party, Tarsa shall provide Unigene
with a true and correct copy of the proposed Sublicense agreement for Unigene’s
review, and Tarsa shall reasonably consider any comments provided by Unigene
with respect to such Sublicense agreement; provided, however, that Tarsa shall
be permitted to accept or reject any such comments in its sole discretion.

(b) Each Sublicense granted by Tarsa to a permitted Sublicensee pursuant to this
Section 2.5 shall be subject and subordinate to the terms and conditions of this
Agreement and shall contain terms and conditions consistent with those in this
Agreement and shall not in any way diminish, reduce or eliminate any of Tarsa’s
obligations under this Agreement. Without limiting the foregoing, each
Sublicense agreement with a permitted Sublicensee shall be in writing and shall
contain the following provisions: (i) a requirement that such Sublicensee submit
applicable sales or other reports consistent with the requirements of this
Agreement, (ii) a requirement to keep books and records, and to permit Unigene
and any licensor to Unigene to audit (either directly or through an independent
auditor) such books and records, consistent with the requirement of this
Agreement, (iii) a requirement that such Sublicensee comply with the
confidentiality provisions of this Agreement, (iv) a requirement to comply with
all other applicable terms of this Agreement, including complying with Unigene’s
*** under Section 3.1(a), (v) a requirement that each Sublicensee allow Tarsa
and Unigene to inspect its facilities upon reasonable notice consistent with the
compliance of the terms and conditions of this Agreement, (vi) a provision
specifying that Unigene shall be a third party beneficiary of such Sublicense
agreement with the independent right to enforce its terms against the
Sublicensee to the extent reasonably necessary to protect Unigene’s rights and
(vii) a provision whereby such Sublicensee acknowledges that this Agreement and
such Sublicense are subject to the terms and conditions of (A) that certain
Collateral Assignment of Agreement, dated as of the Effective Date, by and
between Victory Park Management, LLC (“Agent”) and Unigene (as amended,
restated, modified or supplemented from time to time, the “Collateral
Assignment”) and (B) that certain ROFO/ROFR Agreement, dated as of the Effective
Date, by and among Tarsa, Agent, and the “Investors” party thereto (as amended,
restated, modified or supplemented from time to time, the “ROFO/ROFR
Agreement”). Tarsa shall provide Unigene with a copy of each such executed
Sublicense agreement within thirty (30) days after the execution thereof;
provided that any such copy may be redacted by Tarsa to the extent that any such
redaction does not impair Unigene’s ability to ensure compliance with this
Agreement. Tarsa shall diligently enforce compliance by each of its Sublicensees
with the applicable Sublicense agreement. Any act or omission of a Sublicensee
shall be deemed an act or omission of Tarsa under this Agreement. If Tarsa
discovers that a Sublicensee has taken any action or failed to take any action
that would, if done so by Tarsa, constitute a breach of this Agreement that
continues beyond all applicable grace periods, Tarsa promptly shall notify
Unigene thereof, and in addition to taking all actions reasonably necessary to
cause the cessation of such breach, Tarsa shall take such remedial action as may
be reasonably requested by Unigene, including termination of such Sublicensee’s
agreement as reasonably requested by Unigene.

 

- 18 -

--------------------------------------------------------------------------------

(c) Unigene may sublicense any of the rights granted to it hereunder to any
Affiliate or Third Party, including the right to grant further sublicenses,
provided that not later than *** days prior to granting any sublicense of its
rights under this Agreement to an Affiliate or Third Party, Unigene shall
provide Tarsa with a true and correct copy of the proposed sublicense agreement
for Tarsa’s review, and Unigene shall reasonably consider any comments provided
by Tarsa with respect to such sublicense agreement; provided, however, that
Unigene shall be permitted to accept or reject any such comments in its sole
discretion.

(d) Notwithstanding anything to the contrary in this Agreement, neither Tarsa
nor any of its Affiliates or Sublicensees may sublicense or otherwise convey any
rights to or under the Licensed Calcitonin IP to *** or any of *** affiliates
for or in connection with any *** Drug Product.

Section 2.6. Marking. Tarsa shall label or mark each Licensed Product or the
Licensed Product container or package with the patent number or numbers of any
issued or pending Licensed Patent Rights that Cover the Licensed Product. The
content, form, location and language used for such marking shall be in
accordance with the laws and practices of each country in which the Licensed
Products are sold or the patents have issued or are pending.

Section 2.7. R&D Services. Unigene shall use Commercially Reasonable Efforts to
provide all research, development, technology transfer and other services
relating to the Licensed Products that are agreed to by the Parties pursuant to
a written statement of work, as described below, and Tarsa shall pay Unigene
***, for this assistance. If at any time Tarsa desires that Unigene perform such
services, including technology transfer services relating to the Licensed
Calcitonin Manufacturing IP when the Manufacturing Commencement Date shall have
occurred, the Parties shall in good faith negotiate one or more statements of
work that set forth the details of the services that would be provided by
Unigene, including a description and scope of the particular services to be
provided by Unigene, the desired timeframe for such services and the necessary
materials and equipment and personnel resources. Unigene shall not be required
to provide any such services until the execution of such statement of work by
both Parties, unless otherwise required by the terms of this Agreement. All such
statements of work shall include a reference to this Agreement and upon
execution by both Parties shall become an integral part of, and subject to the
terms of, this Agreement. In the event of any conflict between the terms of a
statement of work and the terms of this Agreement, the terms of this Agreement
shall control. Unless otherwise specifically agreed in a statement of work, all
services provided by Unigene to Tarsa under a statement of work shall be
provided at a rate of *** per person-year (“FTE Rate”), plus reimbursement of
Unigene’s reasonable out-of-pocket Third Party costs and expenses. The FTE Rate
shall be ***, and (b)***. Unigene shall keep and maintain timesheets and formal
documentation for all work to be reimbursed by Tarsa at the FTE Rate.

 

- 19 -

--------------------------------------------------------------------------------

Section 2.8. Additional Services. Unigene agrees and acknowledges that Tarsa
will hire Gilligan on the Effective Date as Chief Scientific Officer of Tarsa,
and initially Tarsa intends to employ Gilligan on a part-time basis of *** of
his normal working hours (based on an eight (8) hour work day, Monday through
Friday, excluding holidays and vacation time), and that such employment shall
not violate Section 2.9 hereof. Tarsa shall be directly responsible to Gilligan
for payment of Gilligan’s salary based on his employment with Tarsa. Unigene
hereby waives any provision of any agreement between Gilligan and Unigene that
would preclude Gilligan from being an employee of Tarsa, including, without
limitation, any non-compete provisions of any such agreements. Any employment
agreement between Tarsa and Gilligan shall contain a provision pursuant to which
Gilligan shall agree not to disclose to Tarsa any confidential information of
Unigene or any Third Party with respect to which Gilligan has an obligation to
Unigene or such Third Party not to disclose, nor shall Tarsa request Gilligan to
disclose such information. Any Improvements made by or contributed by Gilligan
while employed by or acting as a consultant of Tarsa shall be owned by the
Parties in accordance with the terms of this Agreement. This Section 2.8 is not
an agreement for joint employment; the Parties agree that Gilligan shall be
employed separately by each Party and that each Party is separately liable for
any obligations arising out of that Party’s employment of Gilligan.

Section 2.9. Non-Solicitation. During the Term and for *** years thereafter,
neither Party shall solicit for employment any employees of the other Party. For
the purposes of this Section 2.9, “solicit” shall mean that a Party shall not
initiate any contact or communication for the purpose of inviting or requesting
any of the other Party’s employees to become employed by such Party. The
foregoing shall not limit a Party’s right to advertise job openings in public
media.

Section 2.10. Useful Improvements.

(a) During the IP Term, if Unigene shall Control any rights to Technology or
Patent Rights that would be useful for the development, testing, manufacture,
use, sale or other commercialization of a Licensed Product and which rights are
not included in the license granted to Tarsa under Section 2.1, Unigene promptly
shall notify Tarsa thereof in writing. If Tarsa wishes to obtain a license to
any such Technology or Patent Rights, Tarsa shall notify Unigene thereof in
writing and the Parties agree to engage in good faith negotiation, not to exceed
ninety (90) days after receipt of Unigene’s notice unless otherwise mutually
agreed to by the Parties, of commercially reasonable terms upon which Unigene
would license such Technology or Patent Rights to Tarsa for use with the
applicable Licensed Product in the Field in the Territory.

(b) During the period that is *** years after the Effective Date, if Tarsa shall
Control any rights to any Tarsa Sole Improvement that would be useful for the
development, testing, manufacture, use, sale or other commercialization of
products in the Unigene Field and which rights are not included in the license
granted to Unigene under Section 2.2, Tarsa promptly shall notify Unigene
thereof in writing. If Unigene wishes to obtain a license to any such Tarsa Sole
Improvement, Unigene shall notify Tarsa thereof in writing and the Parties agree
to engage in good faith negotiation, not to exceed *** days after receipt of
Tarsa’s notice unless otherwise mutually agreed to by the Parties, of
commercially reasonable terms upon which Tarsa would license such Tarsa Sole
Improvement to Unigene for use with products in the Unigene Field.

 

- 20 -

--------------------------------------------------------------------------------

ARTICLE III

DEVELOPMENT AND COMMERCIALIZATION

OF LICENSED PRODUCTS

Section 3.1. Commercialization.

(a) Tarsa shall be fully responsible for, and shall have full control and
authority over, the research, development and commercialization of the Licensed
Products and all costs and expenses related thereto, including (i) all
activities related to human clinical trials, including the proposed Phase III
oral calcitonin clinical trial at all sites, (ii) subject to Section 2.3 and
Section 2.4, all activities relating to manufacture and supply of all Licensed
Products and (iii) all activities relating to any regulatory filings,
registrations, applications and Regulatory Approvals relating to any of the
foregoing, in each case in accordance with the Development Timeline.
Notwithstanding the foregoing, until such time as Unigene assigns to Tarsa each
Calcitonin IND and the Assigned Contracts in accordance with the terms hereof,
Unigene shall take all actions in connection with the development of the
Licensed Calcitonin Products, including conducting clinical trials and
interactions with Regulatory Authorities (which, in the case of correspondence,
shall be subject to Tarsa’s prior approval or, in the case of meetings, shall
include Tarsa representatives as attendees), as may be reasonably requested by
Tarsa at Tarsa’s direction and expense (including payment to Unigene at the FTE
Rate for work performed by Unigene and reimbursement of Unigene’s reasonable
out-of-pocket expenses); provided that, Unigene shall not be required without
its consent to take actions pursuant to this sentence for a period longer than
*** days from the Effective Date. The “Development Timeline,” which is attached
to this Agreement as Schedule 4 and made an integral part hereof and which may
be amended as set forth in this Agreement, sets forth the following timelines
for development and commercialization of a Licensed Calcitonin Product:
(A) completion of the proposed ***; (B) filing of ***; (C) obtaining of ***;
(D) Tarsa’s identification of and ***; and (E) if Tarsa elects not to ***. Tarsa
shall own all applications for Regulatory Approval filed by Tarsa or its
Sublicensees and all Regulatory Approvals issuing therefrom for the Licensed
Products and all data associated therewith. Unigene shall have a *** with
respect to the following data and information included in all *** and *** for
the Licensed Calcitonin Products obtained or submitted by Tarsa or any
Sublicensee and any other *** made by Tarsa or any Sublicensee with respect to
the Licensed Calcitonin Products, solely for the purpose of obtaining *** for
*** in the *** data. Tarsa promptly will provide, and cause its Sublicensees to
provide, a signed statement to effect this ***, if requested by Unigene, in
accordance with *** or any foreign counterpart to such ***.

 

- 21 -

--------------------------------------------------------------------------------

(b) Diligence. Tarsa shall exercise Commercially Reasonable Efforts in
evaluating, developing and commercializing the Licensed Calcitonin Products in
the Field in the Territory, and in fulfilling its obligations under the
Development Timeline, as such may be amended based on the occurrence of an
External Factor, as defined below, in accordance with this Section 3.1(b). Tarsa
agrees that failure to fulfill its obligation under this Section 3.1(b) will
constitute a material breach of this Agreement, except to the extent caused by
Unigene’s failure to provide any services required to be provided by Unigene
pursuant to a statement of work entered into by the Parties pursuant to
Section 2.7 or to comply with any of its obligations under this Agreement. Each
date indicated in the Development Timeline (and any subsequent dates) shall be
extended automatically to reflect any delay in the achievement of the applicable
event attributable to External Factors. For purposes of this Section 3.1(b), an
“External Factor” shall mean that one or more of the following events or
circumstances has occurred in development, manufacturing or regulatory
conditions relating to a Licensed Calcitonin Product that delays the further
development of such Licensed Calcitonin Product or results in delayed
achievement of the applicable event; provided that (i) such events or
circumstances were not caused by the negligent, intentional or fraudulent act or
omission of Tarsa or any of its Affiliates or Sublicensees and (ii) Tarsa or its
Affiliates or Sublicensees have taken all Commercially Reasonable Efforts to
overcome such events or circumstances: (A) ***, if prepared and submitted in
accordance with all applicable laws, rules and regulations, *** outside the
United States; (B) *** a Licensed Calcitonin Product ***, or by or on behalf of
Tarsa or its Affiliates or Sublicensees reasonably based on ***, or by Tarsa’s
reasonable *** Licensed Calcitonin Product; (C) ***, as specified in the
applicable *** for the Licensed Calcitonin Product; (D) receipt of *** Licensed
Calcitonin Product; (E) decisions, communications *** the Licensed Calcitonin
Product that ***, including *** the Licensed Calcitonin Product ***; (F) *** the
Licensed Calcitonin Product, including *** or any failure by Unigene with
respect to its supply obligations hereunder; (G) any material breach by Unigene
of its obligations under this Agreement; (H) changes in applicable laws relating
to the development or manufacture of a Licensed Calcitonin Product which
materially and adversely affect Tarsa’s or its Affiliates’ or Sublicensees’
ability to develop or manufacture the Licensed Calcitonin Product in accordance
with the Development Timeline, or (I) other external factors not in the
reasonable control of Tarsa or its Affiliates or Sublicensees. External Factors
shall be determined on a country-by-country basis. Promptly after learning of
the occurrence of an External Factor, Tarsa shall notify Unigene in writing of
the External Factor, and shall provide Unigene with all information reasonably
requested by Unigene regarding such External Factor and with Tarsa’s plan to
overcome such External Factor, which plan shall provide for *** for the Licensed
Calcitonin Product, *** as soon as reasonably practicable. The relevant date(s)
in the Development Timeline (and any subsequent dates) shall be extended by
mutual agreement of the Parties based upon Tarsa’s reasonable assessment of the
period of time required to reach the applicable milestone event in light of the
relevant External Factors.

(c) Transfer of IND. On the Effective Date, Unigene shall execute and deliver to
Tarsa letters addressed to the applicable Regulatory Authority of each country
in which Unigene has filed a Calcitonin IND, a form of which, applicable to the
United States, is attached hereto as Schedule 5, pursuant to which Unigene
assigns, or seeks permission from such Regulatory Authority to assign, to Tarsa
each such Calcitonin IND (the “IND Assignments”). Subject to Unigene’s receipt
of the payment specified in Section 4.1, Tarsa shall have the right to file the
IND Assignments with the applicable Regulatory Authorities or to cause Unigene
to file such IND Assignments in those countries where Tarsa is not permitted by
such Regulatory Authority to make such filing on Unigene’s behalf. Until such
time as the assignment of each Calcitonin IND becomes effective, Unigene hereby
grants to Tarsa a Right of Reference in the Field in the Territory to the data
included in all regulatory filings by Unigene related to the Licensed Calcitonin
Product to the extent necessary or useful to fully exercise the rights granted
to Tarsa hereunder. Unigene will provide a signed statement to effect this Right
of Reference, if requested by Tarsa, in accordance with 21 C.F.R. § 314.50(g)(3)
or any foreign counterpart to such regulation, for the purpose of Tarsa
exercising its rights or performing its obligations under this Agreement.
Without limiting the foregoing, Unigene agrees to execute, acknowledge and
deliver any such further documents and to do such other acts as may be
reasonably necessary or reasonably appropriate in order to carry out the purpose
and intent of this Section 3.1(c), at Tarsa’s cost and expense, provided that
Unigene shall notify Tarsa of any such costs and expenses that Unigene would
expect to be incurred prior to taking any such acts, and such costs and expenses
shall be approved by Tarsa in writing prior to Unigene’s taking such acts, it
being understood that if Tarsa refuses to approve such costs and expenses,
Unigene shall have no obligation to take such acts.

 

- 22 -

--------------------------------------------------------------------------------

(d) Calcitonin API. Unigene shall, upon Tarsa’s written request, use
Commercially Reasonable Efforts to provide to Tarsa reasonable quantities of
Calcitonin API from Unigene’s current stock of Calcitonin API, or manufacture
for Tarsa reasonable quantities of Calcitonin API, for use in research,
development and clinical studies for Licensed Calcitonin Products, provided that
Unigene shall provide to or manufacture for Tarsa the requested Calcitonin API
only to the extent that doing so would not violate the terms of the CM
Agreement, including any exclusive purchase obligations thereunder. Any
Calcitonin API delivered under this Section 3.1(d) shall, subject to
Section 2.3(e), comply in all material respects with Current Good Manufacturing
Practices as defined in 21 CFR § 210 et seq., Calcitonin API Specifications as
contemplated by Clause 15 of the CM Agreement and applicable law. Unigene shall
provide Tarsa with certificates of analysis, certificates of compliance and
documentation of storage conditions for any Calcitonin API supplied to Tarsa
under this Section 3.1(d). Tarsa shall reimburse Unigene for its manufacture of
Calcitonin API under this Section 3.1(d) at *** Calcitonin API.

(e) Data Transfer. Promptly after the Effective Date and subject to Section 2.3
and Section 2.4, Unigene shall provide Tarsa with a copy of (i) all readily
available data and other documentation (including Regulatory Materials) under
Unigene’s Control that are necessary to obtain or maintain Regulatory Approval
of the Calcitonin Product that is a Licensed Calcitonin Product and which
Unigene is permitted to disclose to Tarsa and (ii) all Assigned Contracts.

(f) Assignment of Assigned Contracts. On the Effective Date, Unigene shall
execute and deliver to Tarsa an instrument of assignment mutually agreed to by
the Parties (the “Assignment Agreement”), pursuant to which Unigene shall
assign, and Tarsa shall accept, subject to the terms and conditions of such
Assignment Agreement, all of Unigene’s right, title and interest in, to and
under the Assigned Contracts. Unigene shall maintain all Assigned Contracts in
full force and effect until the Effective Time, and Tarsa shall be responsible
for amounts required to be paid by Unigene to Third Parties under the Assigned
Contracts from the Effective Date until the Effective Time, after which Tarsa
shall be responsible for Assumed Liabilities under and in accordance with the
Assignment Agreement.

(g) Updates and Reports. In addition to royalty information reports to be
provided by Tarsa pursuant to Section 4.5 hereof, Tarsa shall provide Unigene
with written semi-annual reports, summarizing Tarsa’s efforts to conduct *** and
commercialization of the Licensed Products as contemplated hereunder, provided
that Tarsa shall not have to provide such reports or updates with respect to the
*** during such time that Unigene is solely responsible for developing ***
pursuant to services being provided pursuant to Section 2.7. For the avoidance
of doubt, such reports shall at minimum discuss in a reasonably detailed fashion
the steps Tarsa has taken in the immediately preceding six (6) months with
respect to its obligations under this ARTICLE III. In addition, Tarsa shall
provide Unigene with prompt written notice of the occurrence of the First
Commercial Sale of each of the Licensed Products. All such reports and updates
shall be considered Confidential Information of Tarsa, subject to the terms of
ARTICLE V hereof.

 

- 23 -

--------------------------------------------------------------------------------

(h) ***. If Tarsa wishes to have research services performed on its behalf by
***, pursuant to the ***, dated ***, between Unigene and ***, Tarsa shall notify
Unigene thereof and the Parties shall discuss in good faith the terms thereof.
Unigene is a party to a ***, dated ***, with ***. As of the Effective Date,
there is no intellectual property licensed from *** under the *** License
Agreement that will be Necessary or useful for the development, testing,
manufacture, use or sale of any Licensed Calcitonin Product in the Field in the
Territory. If Unigene becomes licensed under the *** License Agreement and
Controls any intellectual property that (i) arose before or during the IP Term
or for which an application was filed before or during the IP Term and (ii) is
Necessary for the development, testing, manufacture, use or sale of any Licensed
Calcitonin Product, then Unigene shall notify Tarsa thereof in writing and, upon
Tarsa’s written request, such intellectual property shall be deemed Licensed
Calcitonin IP without any further action by the Parties.

(i) ***. Unigene agrees, upon Tarsa’s written request, to use its Commercially
Reasonable Efforts, at Tarsa’s expense, to either (A) *** or other conveyance
*** under Section 7.2 of the *** Agreement to enable Tarsa to *** and *** (as
such terms are defined under the ***) for the *** or (B) waive a portion of
Unigene’s right of *** under Section 7.2 of the *** to permit Tarsa *** to ***
and *** for the ***, as mutually agreed by the Parties.

Section 3.2. Product Safety. In the event that either Party receives a complaint
from a Regulatory Authority or becomes aware of any adverse event regarding a
Licensed Product, including receipt of any notice from *** or *** if relating to
any components that are common to a Licensed Product and any *** or *** product,
of any adverse event regarding a Licensed Product, then such Party immediately
shall inform the other Party of the nature of the complaint or such adverse
event and the need for resolution. Tarsa shall be solely responsible for the
record keeping and timely reporting of all adverse events and other safety
related issues relating to the Licensed Products sold by or on behalf of Tarsa
or its Sublicensees. In the event of any market withdrawal or recall of any such
Licensed Products at the request of any Regulatory Authority, or if Tarsa
reasonably believes such action is otherwise warranted, Tarsa shall be solely
responsible for such market withdrawal or recall of such Licensed Products sold
by or on behalf of Tarsa or its Sublicensees. Subject to the provisions of the
CM Agreement, Tarsa shall bear all costs and expenses incurred in connection
with such withdrawal or recall (whether or not incurred while this Agreement is
in effect), unless and to the extent that such withdrawal or recall is the
result of any failure by Unigene to accurately and correctly perform analysis of
samples of Calcitonin API for compliance with the Calcitonin API Specifications
pursuant to Section 2.3(b). Upon Tarsa’s written request, Unigene shall
reasonably cooperate with Tarsa, at Tarsa’s expense, in performing testing and
defect analysis of any such Licensed Product that is withdrawn or recalled.

 

- 24 -

--------------------------------------------------------------------------------

Section 3.3. Coordination of Development Activities. Unigene shall consult with
Tarsa prior to undertaking any clinical trials in the Unigene Field, and Tarsa
shall consult with Unigene prior to undertaking any clinical trials in the
Field, and each Party shall consider the other Party’s comments in good faith;
provided, however, that Sublicensees of a Party shall not be obligated to
consult with the other Party regarding clinical trials or otherwise be obligated
to the other Party pursuant to this Section 3.3.

Section 3.4. Limits on Competing Products.

(a) Tarsa agrees that, during the Term, it shall not, whether on its own or with
or for a Third Party, research, develop or commercialize in the Territory any
*** product, other than the Licensed Calcitonin Products. Tarsa further agrees
that, if Tarsa ***, whether through exercise by Tarsa or its Sublicensees of the
licenses granted by Unigene pursuant to Section 2.1(c) or purchase by Tarsa or
its Sublicensees of *** through Unigene pursuant to Section 2.4, then Tarsa
shall not, during the Term, whether on its own or with or for a Third Party,
research, develop or commercialize in the Territory any product *** using such
*** other than the ***.

(b) Unigene agrees that, during the Term, it shall not, whether on its own or
with or for a Third Party, research, develop or commercialize in the Territory
any *** product of any *** or otherwise *** that (i) provides only a *** versus
***, (ii) would obtain *** via any process other than *** of the *** or any
foreign counterparts or (iii) *** in each case for the *** other than (A) in the
Unigene Field or (B) *** for any research, development or commercialization by
*** of the oral calcitonin product currently in Phase III studies conducted by
*** on the Effective Date, or as otherwise required under the *** License
Agreement (as in effect on the Effective Date).

ARTICLE IV

PAYMENTS AND ROYALTIES.

Section 4.1. Reimbursement for Phase III Trials.

(a) No later than *** after the Effective Date, Tarsa will reimburse Unigene for
(i) *** documented out-of-pocket Third Party costs directly related to execution
of its Phase III oral calcitonin clinical trial, *** (ii) *** incurred by
Unigene before the Effective Date and directly paid by Unigene to *** pursuant
to the *** and (iii) *** pursuant to the ***. As of October 15, 2009, the total
out-of-pocket costs associated with activities under clause (i) were
approximately ***. As of the Effective Date, the *** under clause (ii) are ***
and the *** under clause (iii) are ***. For the avoidance of doubt, Tarsa shall
be solely responsible for all costs and expenses incurred by Tarsa or Unigene
relating to the execution of such Phase III clinical trial described in clause
(i) after the Effective Date.

(b) Without limitation of Section 2.7, Tarsa will reimburse Unigene for all ***
directly related to (i) the conduct of the Phase III oral calcitonin clinical
trial, subject to and in accordance with Section 3.1(a) and (ii) filings for
Regulatory Approval made on behalf of Tarsa, subject to and in accordance with
Section 3.1(c), in each case that are incurred by Unigene from and after the
Effective Date until the Effective Time. Unigene shall obtain Tarsa’s prior
approval for any such Third Party costs that are expected to exceed ***.

 

- 25 -

--------------------------------------------------------------------------------

Section 4.2. Royalties. In consideration of the grant of the License by Unigene
hereunder, and subject to the other terms of this Agreement, commencing on the
date of the First Commercial Sale of a Licensed Product and continuing on a
country-by-country basis in the Territory as set forth below, Tarsa shall pay to
Unigene the following royalty amounts:

(a) with respect to all countries where at least one (1) Valid Claim of the
Licensed Calcitonin Patent Rights Cover the Licensed Calcitonin Product:

(i) for Net Sales of Licensed Calcitonin Product (other than the ***) equal to
or less than *** in the aggregate in any calendar year following the First
Commercial Sale date, Tarsa shall pay to Unigene a royalty payment, in
immediately available cash, equal to *** of such Net Sales;

(ii) for Net Sales of Licensed Calcitonin Product (other than the ***) that are
greater than *** in the aggregate in any calendar year following the First
Commercial Sale date, Tarsa shall pay to Unigene a royalty payment, in
immediately available cash, equal to *** of such Net Sales;

(iii) for Net Sales of the *** Product equal to or less than *** in the
aggregate in any calendar year following the First Commercial Sale date, Tarsa
shall pay to Unigene a royalty payment, in immediately available cash, equal to
*** of such Net Sales, notwithstanding the provisions set forth in the third
paragraph of the definition of “Net Sales” set forth in Section 1.1;

(iv) for Net Sales of the *** Product that are greater than *** in the aggregate
in any calendar year following the First Commercial Sale date, Tarsa shall pay
to Unigene a royalty payment, in immediately available cash, equal to *** of
such Net Sales, notwithstanding the provisions set forth in the third paragraph
of the definition of “Net Sales” set forth in Section 1.1; and

For purposes of example, if Net Sales of a Licensed Calcitonin Product (other
than a *** Product) in a calendar year are *** the royalties due and payable to
Unigene shall be calculated as *** of the first *** plus *** of the next ***.

(b) with respect to all countries where no Valid Claim under the Licensed
Calcitonin Patent Rights Covers a particular Licensed Calcitonin Product, Tarsa
shall pay to Unigene royalty payments at a rate of *** of the amounts set forth
in Section 4.2(a) above. Royalties under this Section 4.2(b) shall be payable in
respect of each country where no Valid Claim under the Licensed Calcitonin
Patent Rights Cover the applicable Licensed Calcitonin Product until the date
that is *** years after the First Commercial Sale of such Licensed Calcitonin
Product in such country, provided that if, after First Commercial Sale of the
applicable Licensed Calcitonin Product in a country, such Licensed Calcitonin
Product is not actively offered for sale in such country for any period of time,
then the period of time during which royalties under this Section 4.2(b) are
payable shall be extended by the amount of time during which such Licensed
Calcitonin Product was not actively offered for sale in such country. For the
avoidance of doubt, without limitation of Section 4.2(a), with respect to each
Licensed Calcitonin Product where at least one (1) Valid Claim of the Licensed
Calcitonin Patent Rights has Covered the Licensed Calcitonin Product in a
country for *** years or more after the First Commercial Sale of such Licensed
Calcitonin Product in such country, and such Licensed Calcitonin Product was
actively offered for sale in such country for at least *** years after such
First Commercial Sale, no further payments shall be due under this
Section 4.2(b) in such country based on Net Sales of such Licensed Calcitonin
Product;

 

- 26 -

--------------------------------------------------------------------------------

(c) with respect to all countries where at least one (1) Valid Claim of the
Licensed *** Patent Rights Covers the manufacture of a Licensed *** Product
containing *** manufactured by Tarsa or its Affiliates or Sublicensees under the
license granted pursuant to Section 2.1(c) (a “Royalty-Bearing Licensed ***
Product”), Tarsa shall pay to Unigene, following First Commercial Sale of such
Royalty-Bearing Licensed *** Product, a royalty payment, in immediately
available cash, equal to *** of Net Sales of such Royalty-Bearing Licensed ***
Product;

(d) with respect to all countries where no Valid Claim under the Licensed ***
Patent Rights Covers the manufacture of a particular Royalty-Bearing Licensed
*** Product, Tarsa shall pay to Unigene royalty payments at the same rate set
forth in Section 4.2(c) above. Royalties under this Section 4.2(d) shall be
payable in respect of each country where no Valid Claim under the Licensed ***
Patent Rights Covers a particular Royalty-Bearing Licensed *** Product until the
date that is *** years after the First Commercial Sale of such Royalty-Bearing
Licensed *** Product in such country, provided that if, after First Commercial
Sale of the applicable Royalty-Bearing Licensed *** Product in a country, such
Royalty-Bearing Licensed *** Product is not actively offered for sale in such
country for any period of time, then the period of time during which royalties
under this Section 4.2(d) are payable shall be extended by the amount of time
during which such Royalty-Bearing Licensed *** Product was not actively offered
for sale in such country. For the avoidance of doubt, without limitation of
Section 4.2(c), with respect to each Royalty-Bearing Licensed *** Product where
at least one (1) Valid Claim of the Licensed *** Patent Rights has Covered the
Royalty-Bearing Licensed *** Product in a country for *** years or more after
the First Commercial Sale of such Royalty-Bearing Licensed *** Product in such
country, and such Royalty-Bearing Licensed *** Product was actively offered for
sale in such country for at least *** years after such First Commercial Sale, no
further payments shall be due under this Section 4.2(d) in such country based on
Net Sales of such Royalty-Bearing Licensed *** Product;

(e) If Tarsa’s outside patent counsel reasonably determines in good faith that,
in order to avoid infringement of any patent not licensed hereunder, it is
necessary to obtain a license from a Third Party in order to make, use, sell,
offer for sale, supply, cause to be supplied or import a Licensed Calcitonin
Product in a country in the Territory or to manufacture *** under the license
granted to Tarsa by Section 2.1(c), and to pay a royalty or other consideration
under such license (including in connection with the settlement of a patent
infringement claim), or shall be subject to a final court or other binding order
or ruling or settlement agreement requiring any payments, including the payment
of a royalty to a Third Party patent holder in respect of sales of any Licensed
Product in a country in the Territory, then, without limiting Unigene’s
obligations under ARTICLE VII, the amount of Tarsa’s royalty payments under
Section 4.2 with respect to Net Sales for such Licensed Products in such country
shall be reduced by *** of the amount payable by Tarsa to such Third Party;
provided, however, that:

(i) in no event will a deduction, or deductions, under this Section 4.2(e) in
the aggregate, reduce any royalty payment made by Tarsa in respect of Net Sales
of such Licensed Product pursuant to Section 4.2 by more than *** (the “Royalty
Reduction Limit”);

 

- 27 -

--------------------------------------------------------------------------------

(ii) in the event any royalty payment reductions pursuant to the terms of
Section 4.2(b) apply, such Royalty Reduction Limit shall be calculated as *** of
such reduced royalty payment amounts.

Section 4.3. Milestone Payments. In addition to the royalties payable under
Section 4.2, Tarsa shall pay to Unigene, within *** days after the end of the
*** in which each of the following milestones are first achieved:

(a) *** when aggregate Net Sales for Licensed Calcitonin Product first exceed
***; and

(b) *** when aggregate Net Sales for all *** Products first exceed ***.

Tarsa shall notify Unigene of the occurrence of the foregoing milestone events
within *** days after the end of the *** in which the applicable milestone has
been achieved. The foregoing milestones shall be triggered by the achievement of
the specified event by the applicable Licensed Product whether by Tarsa, its
Affiliates and/or its Sublicensees. The foregoing milestone payment shall be
non-refundable and non-creditable.

Section 4.4. Payment. All payments to be made by Tarsa hereunder shall be made
in United States Dollars by wire transfer of immediately available funds to such
United States bank account as shall be designated by Unigene within *** days of
any applicable due date, and shall be computed in United States dollars at the
exchange rate prevailing in each country in the Territory at the close of the
last business day of the applicable calendar quarter. The exchange rates used
for such conversion shall be those set forth in the Wall Street Journal, New
York edition. Late payments shall bear interest at the rate of *** of the
outstanding balance per month as prorated, or the maximum amount permitted by
law, whichever is less.

Section 4.5. Sales Reports and Royalty Payments. After the First Commercial Sale
of a Licensed Product and during the Term, Tarsa shall furnish to Unigene a
written report, with respect to such Licensed Product, within *** days after the
end of each calendar quarter (or portion thereof, if this Agreement terminates
during a calendar quarter), showing the amount of royalty due for the
immediately preceding calendar quarter (or portion thereof). Royalty payments
for each calendar quarter shall be due within *** days after the end of each
calendar quarter (or portion thereof, if this Agreement terminates during a
calendar quarter). Each written report shall include a full and accurate
accounting of:

(a) the gross sales and quantity of each Licensed Product sold by Tarsa, its
Affiliates, and Sublicensees in the preceding calendar quarter;

 

- 28 -

--------------------------------------------------------------------------------

(b) the calculation of Net Sales from such gross sales, including each
deduction; and

(c) the royalties payable in United States Dollars which shall have accrued
hereunder in respect of such Net Sales.

If no royalty or payment is due for any royalty period hereunder, Tarsa shall so
report to Unigene in writing.

Section 4.6. Tax Withholding; Restrictions on Payment. All payments hereunder
shall be made free and clear of any taxes, duties, levies, fees or charges,
except for withholding taxes (to the extent mandated by applicable law). Tarsa
shall make any applicable withholding payments due on behalf of Unigene and
shall provide Unigene upon request with such written documentation regarding any
such payment as is available to Tarsa.

Section 4.7. Sales Record Audit. Tarsa shall keep, and shall cause each of its
Affiliates, and Sublicensees, if any, to keep, full and accurate books of
accounting in accordance with U.S. generally accepted accounting principals, as
may be reasonably necessary for the purpose of calculating the royalties payable
to Unigene. Such books of accounting (including those of Tarsa’s Affiliates, and
Sublicensees, if any) shall be kept at their principal place of business and,
with all necessary supporting data, shall during all reasonable times for the
three (3) years next following the end of the calendar year to which each shall
pertain, be open for inspection at reasonable times upon written notice by
Unigene and at Unigene’s sole cost (except as provided below), no more than once
per year, by an independent certified public accountant, agent or Unigene
employee selected by Unigene, for the purpose of verifying royalty statements
for compliance with this Agreement. Such accountant, agent or employee shall
have agreed in writing to maintain all information learned in confidence, except
as necessary to disclose to Unigene such compliance or noncompliance by Tarsa.
The results of each inspection, if any, shall be binding on both Parties.
Unigene shall pay for such inspections, except that in the event there is any
upward adjustment in aggregate royalties payable for the period of such
inspection of more than *** of the amount actually paid to Unigene, Tarsa shall
pay for the reasonable out-of-pocket Third Party costs of such audit.

ARTICLE V

CONFIDENTIAL INFORMATION

Section 5.1. Confidentiality Obligations. Each of Unigene and Tarsa agree that
during the Term and for *** thereafter, it shall keep confidential, and shall
cause its employees, consultants, Affiliates, agents, subcontractors, and
sublicensees to keep confidential, all Confidential Information of the other
Party. Unigene further agrees that neither Unigene nor its Affiliates shall
disclose to any Third Party any Confidential Information of Unigene relating to
the Licensed Products or the data or results from any clinical study, the
subject of which is a Licensed Product, without first obtaining from such Third
Party obligations of confidentiality substantially the same as those set forth
in this ARTICLE V, with such changes as may commercially reasonable under the
circumstances, provided that the foregoing shall not be deemed to require
Unigene to amend the terms of any of Unigene’s existing agreements with Third
Parties, and Unigene may disclose its Confidential Information to such Third
Parties under the terms of such agreements without violating the requirements
set forth in this sentence, including under the terms of the VPC Financing
Agreement. Neither Unigene nor Tarsa nor any of their employees, consultants,
Affiliates, agents, subcontractors, or sublicensees shall use Confidential
Information of the other Party for any purpose whatsoever other than to exercise
any rights granted to it or reserved by it hereunder or to carry out its
responsibilities hereunder. Without limiting the foregoing but subject to
Section 5.2, Section 5.3 and Section 5.4 below, each Party may disclose
information to the extent such disclosure is reasonably necessary to (a) file
and prosecute patent applications and/or maintain patents which are filed or
prosecuted in accordance with the provisions of this Agreement, (b) file,
prosecute or defend litigation in accordance with the provisions of this
Agreement, or (c) comply with applicable laws, regulations or court orders or
the requirements of the U.S. Securities and Exchange Commission (“SEC”) or any
nationally recognized securities exchange, quotation system or over-the-counter
market on which such Party has its securities listed or traded; provided,
however, that if a Party is required to make any such disclosure of the other
Party’s Confidential Information in connection with any of the foregoing, it
shall give reasonable advance notice to the other Party of such disclosure
requirement and shall use reasonable efforts to assist such other Party in
efforts to secure confidential treatment of such information required to be
disclosed. Notwithstanding anything to the contrary herein, Unigene shall have
the right to disclose Tarsa Confidential Information to the Lending Parties
solely for use by the Lending Parties and solely to the extent necessary to
protect their interests under the VPC Financing Agreement, provided that (i) the
Lending Parties shall agree in writing with Unigene to maintain the
confidentiality of such Tarsa Confidential Information on terms substantially
the same as those set forth in this ARTICLE V prior to the delivery of such
Tarsa Confidential Information to the Lending Parties, (ii) Tarsa is a third
party beneficiary of such written agreement between the Lending Parties and
Unigene and (iii) Unigene provides Tarsa with prior written notice of any such
disclosure of Tarsa Confidential Information to the Lending Parties.

 

- 29 -

--------------------------------------------------------------------------------

Section 5.2. Exclusions. The obligations of confidentiality and non-use imposed
by this ARTICLE V shall not apply to any information, data or materials that a
receiving Party can demonstrate by written records or other tangible evidence,
(a) as of the date of disclosure is demonstrably known to the receiving Party or
its Affiliates other than by virtue of a prior confidential disclosure to such
Party or its Affiliates; (b) as of the date of disclosure is in, or subsequently
becomes publicly known, through no fault or omission of the receiving Party or
its Affiliates; (c) is obtained from a Third Party having a lawful right to make
such disclosure free from any obligation of confidentiality to the disclosing
Party; or (d) is independently developed by or for the receiving Party or its
Affiliates without reference to or reliance upon any Confidential Information of
the disclosing Party.

Section 5.3. Limited Disclosure and Use. Unigene and Tarsa each agree that any
disclosure of the other Party’s Confidential Information to any of its
employees, consultants, Affiliates, agents, subcontractors, or sublicensees
shall be made only if and to the extent necessary to carry out its rights and
responsibilities under this Agreement, shall be limited to the maximum extent
possible consistent with such rights and responsibilities, and shall only be
made if such Persons are bound by written confidentiality obligations to
maintain the confidentiality thereof and not to use such Confidential
Information except as expressly permitted by this Agreement. Unigene and Tarsa
each further agree not to disclose or transfer the other Party’s Confidential
Information to any Third Parties under any circumstance without the prior
written approval from the other Party, except as otherwise required by law, and
except as otherwise expressly permitted by this Agreement. Each Party shall take
such action, and shall cause its employees, consultants, Affiliates, agents,
subcontractors, and sublicensees to take such action, to preserve the
confidentiality of each other Party’s Confidential Information as it would
customarily take to preserve the confidentiality of its own Confidential
Information. Each Party, upon the termination of this Agreement, shall return
all the Confidential Information disclosed or transferred to it by the other
Party pursuant to this Agreement, including all copies and extracts of documents
and all manifestations of Confidential Information in any form; provided,
however, that a Party may retain (a) any Confidential Information of the other
Party relating to any license which expressly survives such termination provided
such Confidential Information shall remain subject to obligations of
confidentiality, and (b) one (1) copy of all other Confidential Information in
inactive archives solely for the purpose of maintaining a record of information
and materials deemed to be Confidential Information hereunder.

 

- 30 -

--------------------------------------------------------------------------------

Section 5.4. Publicity. Neither Party may publicly disclose the existence or
terms or any other matter of fact regarding this Agreement without the prior
written consent of the other Party; provided, however, that either Party may
make such a disclosure (a) to the extent required to comply with applicable
laws, regulations or court orders or the requirements of the SEC or any
nationally recognized securities exchange, quotation system or over-the-counter
market on which such Party has its securities listed or traded, or (b) to any
actual or prospective sublicensees, investors, lenders, other financing sources,
acquirors, or companies being acquired by such Party who are obligated in
writing to keep such information confidential on terms as protective as terms of
this ARTICLE V. The Party desiring to make any such disclosure under clause
(a) above shall inform the other Party of the proposed announcement or
disclosure in reasonably sufficient time prior to public release, which shall be
at least three (3) business days, and shall provide the other Party with a
written copy thereof. Each Party agrees that it shall cooperate fully with the
other with respect to all disclosures regarding this Agreement to the SEC and
any other governmental or regulatory agencies, including requests for
confidential treatment of proprietary information of either Party included in
such disclosure.

Section 5.5. Use of Name; Press Release. Neither Party shall employ or use the
name of the other Party in any promotional materials or advertising without the
prior express written permission of the other Party. After execution of this
Agreement by the Parties, each of the Parties shall have the right to issue a
press release, provided that the other Party is provided with an opportunity to
review the press release at least three (3) days in advance of its proposed
release date, and such other Party shall have the right to object to and
prohibit the disclosure of any of its Confidential Information included in such
press release.

ARTICLE VI

INTELLECTUAL PROPERTY

Section 6.1. Licensed IP. As between the Parties, Unigene shall retain sole
ownership of all rights, title and interest in and to the Licensed IP and ***
IP.

Section 6.2. Improvements.

 

- 31 -

--------------------------------------------------------------------------------

(a) Unigene shall exclusively own all Collaboration Improvements and Unigene
Sole Improvements. Tarsa shall exclusively own all Tarsa Sole Improvements. Each
Party shall own an equal, undivided interest in and to the Joint Improvements,
and each Party shall be free to exploit any Joint Improvement throughout the
world without restriction, without the consent of the other Party and without
any payment of compensation or duty of accounting to the other.

(b) Each Party promptly shall notify the other Party of any Improvements made by
it. Each Party hereby assigns to the other Party such of its rights, title and
interest in the Improvements and any intellectual property rights therein or
related thereto to the extent necessary to give effect to the provisions of this
Section 6.2, without the need of any additional consideration or any further
action. If a separate express assignment of rights from one Party to the other
is required in order to give full force and effect to this Section 6.2, the
assigning Party agrees, at the other Party’s expense, to execute any instrument
necessary to accomplish the intent of the foregoing. Each Party shall ensure
that any Person involved in the development of any Improvement has assigned its
rights in such Improvement to such Party so that such Party can make the
assignment required under this Section 6.2.

Section 6.3. Inventorship. Inventorship and authorship of inventions and other
intellectual property rights conceived, reduced to practice and/or authored in
connection with this Agreement shall be determined in accordance with the laws
of the United States.

ARTICLE VII

PROVISIONS CONCERNING THE FILING, PROSECUTION

AND MAINTENANCE OF LICENSED PATENT RIGHTS

Section 7.1. Cooperation. The Parties agrees to cooperate with all reasonable
requests of the other Party in the filing and prosecution of the Licensed Patent
Rights and any Patent Rights relating to the *** IP or Improvements.

Section 7.2. Patent Filing, Prosecution and Maintenance.

(a) Subject to the other terms of this ARTICLE VII, Tarsa, at its expense, shall
have the sole right but not the obligation to prepare, file, prosecute and
maintain, throughout the world, any Patent Rights relating to the Tarsa Sole
Improvements, including seeking any extensions thereto and supplementary
protection certificates therefor. Tarsa shall have the first right but not the
obligation to file or continue prosecution or maintenance of any application for
any such Patent Right relating to any Tarsa Sole Improvement using patent
counsel selected by Tarsa and acceptable to Unigene. Before filing an
application for any such Patent Right, Tarsa shall give Unigene a reasonable
opportunity to review and comment upon the text of the application. Tarsa shall
consult with Unigene with respect to any such application, shall not
unreasonably refuse to address or incorporate or reflect any of Unigene’s
comments with respect to such application to the extent relevant to the rights
licensed to Unigene hereunder, and shall supply Unigene with a copy of each such
application as filed, together with notice of its filing date and serial number.
Tarsa shall also keep Unigene advised of the status of prosecution of all such
patent applications included within the Patent Rights relating to Tarsa Sole
Improvements and shall address or incorporate Unigene’s reasonable comments with
respect thereto if relevant to the rights licensed to Unigene hereunder, and
provide Unigene with a reasonable opportunity to comment, if relevant to the
rights licensed to Unigene hereunder, on all material correspondence received
from and all material submissions to be made to any government patent office or
authority with respect to any such patent application or patent. In addition, if
Tarsa elects not to file in any country in the world a patent application on
Tarsa Sole Improvements, or to cease the prosecution or maintenance of such
Patent Rights related to Tarsa Sole Improvements in any country in the world,
Tarsa shall provide Unigene with prompt written notice upon the decision to not
file or continue the prosecution of such patent application or maintenance of
such patent in sufficient time to allow Unigene to file, continue prosecution of
such application or maintain such patent in a timely manner. Under no
circumstances will this written notice occur less than thirty (30) days prior to
such required action for the filing, maintenance or prosecution of such patents.
In such event, Tarsa shall permit Unigene, at Unigene’s reasonable discretion,
to file or continue prosecution or maintenance of such Patent Rights related to
the Tarsa Sole Improvements in the applicable country at Unigene’s own expense,
provided, however, that any such action does not violate the terms of any
judgment, settlement, compromise or other resolution binding upon Tarsa.

 

- 32 -

--------------------------------------------------------------------------------

(b) Subject to the other terms of this ARTICLE VII, Unigene, at its expense,
shall have the sole right but not the obligation to prepare, file, prosecute and
maintain, throughout the world, the Licensed Patent Rights (including the Patent
Rights relating to any Collaboration Improvements and Unigene Sole Improvements)
and the *** IP (collectively, the “Unigene-Controlled Patent Rights”), including
seeking any extensions thereto and supplementary protection certificates
therefor. Before filing an application for any such Patent Right, Unigene shall
give Tarsa a reasonable opportunity to review and comment upon the text of the
application. Unigene shall consult with Tarsa with respect to any such
application, shall not unreasonably refuse to address or incorporate or reflect
any of Tarsa’s comments with respect to such application to the extent relevant
to the rights licensed to Tarsa hereunder, and shall supply Tarsa with a copy of
each such application as filed, together with notice of its filing date and
serial number. Unigene shall also keep Tarsa advised of the status of
prosecution of all such patent applications included within the
Unigene-Controlled Patent Rights and shall address or incorporate Tarsa’s
reasonable comments with respect thereto if relevant to the rights licensed to
Tarsa hereunder, and provide Tarsa with a reasonable opportunity to comment on
all material correspondence received from and all material submissions to be
made to any government patent office or authority with respect to any such
patent application or patent. Subject to *** rights under the *** License
Agreement and *** rights under the *** Agreement, if Unigene elects not to file
in any country in the Territory a patent application on a Unigene-Controlled
Patent Right, or to cease the prosecution or maintenance of such
Unigene-Controlled Patent Rights, Unigene shall provide Tarsa with prompt
written notice upon the decision to not file or continue the prosecution of such
patent application or maintenance of such patent in sufficient time to allow
Tarsa to file, continue prosecution of such application or maintain such patent
in a timely manner. Under no circumstances will this written notice occur less
than thirty (30) days prior to such required action for the filing, maintenance
or prosecution of such patents. In such event, and subject to *** rights under
the *** License Agreement and *** rights under the *** Agreement, Unigene shall
permit Tarsa, at Tarsa’s reasonable discretion, to file or continue prosecution
or maintenance of such Unigene-Controlled Patent Rights in the applicable
country at Tarsa’s own expense, provided, however, that any such action does not
violate the terms of any judgment, settlement, compromise or other resolution
binding upon Unigene.

 

- 33 -

--------------------------------------------------------------------------------

(c) In the case of Joint Improvements, the Parties shall decide whether or not
to secure patent protection and which Party shall bear the primary
responsibility for preparing, filing and prosecuting the patent applications
resulting therefrom. Patent-related expenses for Joint Improvements are to be
shared equally by the Parties. If the Parties cannot agree which Party shall
bear the primary responsibility for preparing, filing, and prosecuting patent
applications resulting from a Joint Improvement, then counsel mutually agreeable
to the Parties shall prepare, file and prosecute the patent applications and the
Parties shall equally share the expenses related thereto. Each Party shall
promptly render all necessary assistance reasonably requested by the other Party
in applying for and prosecuting the patent applications. Neither Party shall
file any patent application on Joint Improvements which shall lead to the
disclosure of the other Party’s Confidential Information, unless the other Party
has first agreed in writing to the filing. If a Party responsible for the
prosecution or maintenance of a patent or patent application directed to a Joint
Improvement elects not to continue prosecution or maintenance of such patent or
patent application, the Party will give the other Party notice of such election
within a reasonable period prior to allowing such patent or patent application
to lapse or become unenforceable, and the other Party will have the right to
continue prosecution or maintenance of such patent or patent application. If a
Party (the “Relinquishing Party”) declines to pay its share of patent-related
expenses for any patent application or patent directed to a Joint Improvement,
the other Party may assume payment of the Relinquishing Party’s share of the
patent-related expenses, and the Relinquishing Party will assign title to such
patent application or patent to Party assuming payment.

Section 7.3. Notice of Infringement. If, during the Term, either Party learns of
any actual, alleged or threatened infringement by a Third Party of any
Unigene-Controlled Patent Rights or Patent Rights relating to any Improvement,
such Party shall promptly notify the other Party and shall provide such other
Party with available evidence of such infringement.

Section 7.4. Infringement of Unigene-Controlled Patent Rights, Improvements and
Unigene Patent Rights.

(a) Where not precluded by agreements with Third Parties entered into prior to
the Effective Date, including the *** License Agreement and *** Agreement as set
forth in Section 2.3 and Section 2.4, respectively, Tarsa shall have the first
right (but not the obligation), at its own cost and expense and with legal
counsel of its own choice, to bring suit (or take other appropriate legal
action) against any actual, alleged or threatened infringement of the
(i) Unigene-Controlled Patent Rights (excluding the *** IP) and Patent Rights
relating to Joint Improvements, each in the Field in the Territory and to the
extent relevant to the Licensed Products and (ii) the Patent Rights relating to
the Tarsa Sole Improvements. Unigene shall have the right, at its own cost and
expense, to be represented in any such action, to the extent involving the
Unigene-Controlled Patent Rights or Patent Rights relating to Joint
Improvements, brought by Tarsa by counsel of Unigene’s own choice; provided,
however, that under no circumstances shall the foregoing affect the right of
Tarsa to control the suit as described in the first sentence of this
Section 7.4.

 

- 34 -

--------------------------------------------------------------------------------

(b) Where Tarsa is precluded by agreements with Third Parties entered into prior
to the Effective Date from having the first right to bring suit for infringement
of the Unigene-Controlled Patent Rights in the Field in the Territory and to the
extent relevant to the Licensed Products, Unigene, at Tarsa’s direction and
expense, shall, to the extent permitted by any such agreements, bring suit (or
take other appropriate legal action) against any actual, alleged or threatened
infringement of such patents (excluding the *** IP). Any such suit or legal
action that Tarsa has required Unigene to file shall be directed and controlled
by Tarsa through counsel of its own choice that is reasonably acceptable to
Unigene, provided such suit or legal action shall be conducted at Tarsa’s sole
expense, including payment of all attorney and expert witness fees. Tarsa shall
reimburse Unigene for all of its out-of-pocket Third Party costs and expenses
incurred in any suit or action required by Tarsa to be filed under this
Section 7.4(b), and if Tarsa requires any Unigene personnel to expend time in
connection with any such suit or action, Tarsa shall reimburse Unigene for such
personnel at the FTE Rate.

(c) Where Unigene is precluded by the *** License Agreement from granting to
Tarsa the first right to bring suit for infringement of the Unigene Patent
Rights in the Field within the Territory to the extent relevant to the Licensed
Products, Unigene, at Tarsa’s direction and expense, shall bring suit (or take
other appropriate legal action) against any actual, alleged or threatened
infringement of such patents to the extent permitted by the *** License
Agreement. Any such suit or legal action that Tarsa has required Unigene to file
shall be directed and controlled by Tarsa through counsel of its own choice that
is reasonably acceptable to Unigene, provided that such suit or legal action
shall be conducted at Tarsa’s sole expense, including payment of all attorney
and expert witness fees. Tarsa shall reimburse Unigene for all of its
out-of-pocket Third Party costs and expenses incurred in any suit or action
required by Tarsa to be filed under this Section 7.4(c), and if Tarsa requires
any Unigene personnel to expend time in connection with any such suit or action,
Tarsa shall reimburse Unigene for such personnel at the FTE Rate.

(d) Notwithstanding Section 7.4(b) and Section 7.4(c), Unigene shall not be
required to bring any suit or legal action if doing so reasonably could be
expected to result in, as determined by the opinion of Unigene’s outside
counsel, an infringement claim against Unigene by the Third Party or its
affiliates against which Tarsa wishes to bring such suit or legal action. Each
Party shall bear its own costs and expenses in connection with this
Section 7.4(d).

(e) If Tarsa does not, on its own initiative, file any suit or other legal
action against any such infringement or direct Unigene to do so to the extent
permitted by this Agreement within *** days after the earliest of notice under
Section 7.3, then Unigene shall have the right to bring suit or take other
appropriate legal action against such actual, alleged or threatened infringement
with respect to the Unigene-Controlled Patent Rights, in Unigene’s name, upon
written notice delivered to Tarsa within *** days of the expiration of such ***
day period.

(f) The Parties shall not settle, compromise or otherwise resolve any suit or
legal action addressed by this Section 7.4, nor make any admissions, filings,
statements or other disclosures in any such suit or legal action, that would
restrict, waive or otherwise encumber or impair the rights licensed to the
applicable Party hereunder with respect to the Unigene-Controlled Patent Rights
or Patent Rights relating to Joint Improvements, or subject the other Party to
any liability or obligations in connection therewith, without the prior written
consent of that affected Party.

 

- 35 -

--------------------------------------------------------------------------------

(g) Any damages, monetary awards or other amounts recovered, whether by judgment
or settlement, pursuant to any suit or other legal action taken under this
Section 7.4, shall be applied as follows:

(i) first, to reimburse the Parties for their respective costs and expenses
(including reasonable attorneys’ fees and costs) incurred in prosecuting such
enforcement action; and

(ii) any amounts remaining shall be allocated as follows: (A) if Tarsa is the
Party bringing or taking, or requiring that Unigene bring or take, such suit or
other legal action pursuant to Section 7.4(b) or (c), all such amounts shall be
retained by Tarsa, subject to such amounts being treated as Net Sales for which
royalties shall be due to Unigene pursuant to Section 4.2 and (B) if Unigene is
the Party bringing such suit or taking such other legal action, all such amounts
shall be retained by Unigene.

(h) Notwithstanding the foregoing, Tarsa acknowledges and agrees that (i) ***
may have the right to join in any suit or other legal action brought by Unigene
that is covered by this Section 7.4 and to share in any recoveries obtained in
connection therewith in accordance with the terms and conditions of the ***
License Agreement, and (ii) *** may have the initial right to bring a suit or
other legal action that is covered by this Section 7.4, and as a result Tarsa’s
rights under this Section 7.4 may be circumscribed if *** or *** exercise their
respective rights with respect to any such suit or other legal action. In
addition, Tarsa acknowledges that Unigene does not have the initial right to
enforce the *** Patents and that Tarsa’s rights under this Section 7.4 shall be
limited to the right to require Unigene to enforce such *** Patents as set forth
in Section 7.4(b) if and when Unigene shall obtain such enforcement rights.

(i) If a Party brings any such suit or legal action hereunder, the other Party
agrees to be joined as Party plaintiff if necessary to prosecute such suit or
legal action, and to give the Party bringing such action or proceeding
reasonable assistance and authority to file and prosecute the suit; provided,
however, that neither Party shall be required to transfer any right, title or
interest in or to any property to the other Party or any Third Party to confer
standing on a Party hereunder.

ARTICLE VIII

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 8.1. Unigene. Unigene represents and warrants and covenants to Tarsa
that:

(a) The execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all appropriate
Unigene corporate action;

 

- 36 -

--------------------------------------------------------------------------------

(b) This Agreement is a legal and valid obligation binding upon Unigene and
enforceable in accordance with its terms, and, except as otherwise set forth
herein, the execution, delivery and performance of this Agreement by Unigene
does not conflict with any agreement, instrument or understanding to which
Unigene is a Party or by which it is bound;

(c) Subject to Section 2.3 and Section 2.4, Unigene Controls the Licensed Patent
Rights existing as of the Effective Date. Unigene is entitled to grant the
licenses specified herein. The Licensed Patent Rights existing as of the
Effective Date constitute all of the Patent Rights Controlled by Unigene as of
the Effective Date that are Necessary to develop, manufacture, sell and
otherwise commercialize the Calcitonin Product that is a Licensed Calcitonin
Product as of the Effective Date. Except for the *** License Agreement, CM
Agreement and *** Agreement, and except for the security interests granted by
Unigene to (i) Victory Park Management LLC, and other lenders pursuant to the
Pledge and Security Agreement, dated September 30, 2008, and related financing
documents and (ii) JayNJean Levy Family Limited Partnership, Unigene has not
previously assigned, transferred, conveyed or otherwise encumbered its right,
title and interest in the Licensed Patent Rights and Licensed Know-How in the
Field within the Territory with respect to the Licensed Products, and shall not
do so during the Term;

(d) To Unigene’s Knowledge, there is no actual or threatened infringement of the
Licensed Patent Rights or Unigene Patent Rights in the Field by any Third Party;

(e) To Unigene’s Knowledge, the Licensed Patent Rights and Unigene Patent Rights
existing as of the Effective Date are subsisting and are not invalid or
unenforceable, in whole or in part. As of the Effective Date, there are no
claims, judgments or settlements against, or amounts with respect thereto owed
by, Unigene or any of its Affiliates relating to the Licensed Patent Rights or
Unigene Patent Rights. As of the Effective Date, no claim or litigation has been
brought against Unigene or to Unigene’s Knowledge against any Third Party, or to
Unigene’s Knowledge threatened by any Third Party, and to Unigene’s Knowledge
there is no reasonable basis for a claim, alleging that (i) the Licensed Patent
Rights or Unigene Patent Rights are invalid or unenforceable or (ii) the
Licensed Patent Rights or Unigene Patent Rights or the licensing or exploiting
of such Patent Rights violates, infringes or otherwise conflicts or interferes
with any intellectual property or proprietary right of any Third Party;

(f) As of the Effective Date, there are no claims, judgments or settlements
against or owed by Unigene or its Affiliates or, to Unigene’s Knowledge, pending
or threatened claims or litigations against Unigene or its Affiliates, relating
to the Licensed IP that are reasonably expected to impact activities under this
Agreement;

(g) Exhibit C sets forth a true and complete copy of each of the *** License
Agreement and CM Agreement that is in full force and effect as of the Effective
Date;

(h) To Unigene’s Knowledge, neither ***, Sandoz, *** nor any Assigned Contract
Party, on the one hand, nor Unigene, on the other hand, is in default with
respect to a material obligation under, and neither such party has claimed nor
has reasonable grounds upon which to claim that the other party is in default
with respect to a material obligation under, the *** License Agreement, CM
Agreement, *** Agreement or any Assigned Contract;

 

- 37 -

--------------------------------------------------------------------------------

(i) Except as set forth in Schedule 6, the assignment of the Assigned Contracts
as contemplated herein will not, with or without the giving of notice or the
lapse of time or both, violate, be in conflict with, constitute a default under,
permit the termination of, cause the acceleration of the maturity of any debt or
obligation of Unigene under, require the consent of any Assigned Contract Party,
constitute a breach of, create a Liability or loss of a benefit under or result
in the creation or imposition of any Lien upon any of the Assigned Contracts;

(j) Unigene has not waived or allowed to lapse any of its rights under the CM
Agreement with respect to material breaches thereof of which it had knowledge,
and no such rights have lapsed or otherwise expired or been terminated;

(k) As of the Effective Date, Unigene has prepared, maintained and retained all
Regulatory Materials required to be maintained or reported pursuant to and in
accordance with cGCP and cGLP, to the extent required, and applicable laws, and
the Regulatory Materials do not contain any materially false and misleading
statements;

(l) As of the Effective Date, Unigene has conducted, and to Unigene’s Knowledge
its contractors and consultants have conducted, any and all clinical studies
related to the Licensed Products in accordance with cGCP and cGLP, to the extent
required, and applicable laws;

(m) To Unigene’s Knowledge, Unigene has obtained from its employees and Third
Parties involved, for or on behalf of Unigene, in the development or manufacture
of the Licensed Product, rights to information (other than a Right of Reference
from ***) that are necessary to develop, test, manufacture, use and sell the
Licensed Products and that permit Unigene to grant to Tarsa the licenses and
other rights granted to Tarsa hereunder;

(n) Unigene has not been debarred and is not subject to debarment and will not
knowingly use in any capacity, in connection with Unigene’s obligations under
this Agreement, any Person who has been debarred pursuant to Section 306 of the
FD&C Act, or who is the subject of a conviction described in such section;

(o) The Calcitonin API being supplied to Unigene by Sandoz as of the Effective
Date is the Calcitonin API used by Unigene in the Calcitonin Product that is a
Licensed Calcitonin Product as of the Effective Date;

(p) Schedule 1 sets forth a list of each Assigned Contract. Each Assigned
Contract is in full force and effect as of the Effective Date, and true and
complete copies of each such agreement have been provided to Tarsa;

(q) The Licensed IP and the Assigned Contracts, together with Tarsa’s rights
under this Agreement, include all Patent Rights, Technology and Third Party
agreements (other than those listed on Schedule 1, Part II) of Unigene as of the
Effective Date that are Necessary for formulating, manufacturing, packaging,
labeling and storing of the Calcitonin Product that is a Licensed Calcitonin
Product in the Territory as such Licensed Calcitonin Product is formulated,
manufactured, packaged, labeled and stored by Unigene in the Field and in the
Territory as of the Effective Date; and

 

- 38 -

--------------------------------------------------------------------------------

(r) Unigene has not ceased the prosecution or maintenance of any domestic or
foreign patents or patent applications included in the Licensed Patent Rights.

Section 8.2. Tarsa. Tarsa represents, warrants and covenants to Unigene that:

(a) The execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all appropriate
Tarsa corporate action;

(b) This Agreement is a legal and valid obligation binding upon Tarsa and
enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement by Tarsa does not conflict with any agreement,
instrument or understanding to which Tarsa is a Party of or by which it is
bound;

(c) With respect to any obligations of Tarsa, including development and
commercialization activities of Tarsa hereunder, Tarsa shall comply in all
respects with all applicable laws, including by way of example and not
limitation, all regulatory requirements in the countries in which Tarsa files
for Regulatory Approval for a Licensed Products, including maintaining all
appropriate Regulatory Approvals for Licensed Products for any jurisdiction
within the Territory in which Tarsa is marketing or distributing the Licensed
Products

(d) Neither Tarsa nor any of its principals, executives, employees or investors
has been debarred or is subject to debarment, and Tarsa will not knowingly use
in any capacity, in connection with Tarsa’s rights or obligations under this
Agreement, any Person who has been debarred pursuant to Section 306 of the FD&C
Act, or who is the subject of a conviction described in such section; and

(e) Tarsa is not aware of any Third Party patent, patent application or other
intellectual property rights that as of the Effective Date would be infringed by
making, using or selling the Licensed Products.

Section 8.3. No Warranties. Except as expressly set forth in this Agreement,
NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND,
WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, AND EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, ALL SUCH WARRANTIES ARE HEREBY DISCLAIMED, INCLUDING
WARRANTIES ARISING BY COURSE OF DEALING, PERFORMANCE, CUSTOM OR USAGE IN THE
TRADE, AND IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.

Section 8.4. Indemnification.

(a) Tarsa Indemnity. Subject to Section 8.4(a), Tarsa shall indemnify, defend
and hold harmless Unigene, its Affiliates and their respective directors,
officers, employees, stockholders, agents, licensors, suppliers and
manufacturers and their respective successors, heirs and assigns (the “Unigene
Indemnitees”) from and against any liability, damage, loss or expense (including
reasonable attorneys’ fees and expenses of litigation) incurred by or imposed
upon such Unigene Indemnitees, or any of them, in connection with any Third
Party claims, suits, actions, demands or judgments, including product liability
matters, to the extent arising, (i) as a consequence of a material breach by
Tarsa of its representations, warranties, covenants or agreements hereunder,
(ii) the conduct by or on behalf of Tarsa of clinical trials and development and
commercialization activities relating to the Licensed Products, (iii) out of the
development, sale or use by any Person of any Licensed Products sold by or on
behalf of Tarsa or any of its Affiliates or Sublicensees under this Agreement or
(iv) from an Assumed Liability (as defined in the Assignment Agreement) under an
Assigned Contract from and after the Effective Date, except in each case to the
extent caused by the gross negligence, willful misconduct or fraud of Unigene.

 

- 39 -

--------------------------------------------------------------------------------

(b) Unigene Indemnity. Subject to Section 8.4(a) above, Unigene shall indemnify,
defend and hold harmless Tarsa, its Affiliates and their respective directors,
officers, employees, and agents, and their respective successors, heirs and
assigns (the “Tarsa Indemnitees”), from and against any liability, damage, loss
or expense (including reasonable attorneys’ fees and expenses of litigation)
incurred by or imposed upon such Tarsa Indemnitees, or any of them, in
connection with any Third Party claims, suits, actions, demands or judgments,
arising as a result of a material breach by Unigene of its representations,
warranties, covenants or agreements hereunder, except to the extent caused by
the gross negligence, willful misconduct or fraud of Tarsa.

(c) Indemnification Procedures. In the event that any Indemnitee is seeking
indemnification under this Section 8.4 from a Party (the “Indemnifying Party”),
the other Party shall notify the Indemnifying Party of such claim with respect
to such Indemnitee as soon as reasonably practicable after the Indemnitee
receives notice of the claim, and the Party (on behalf of itself and such
Indemnitee) shall permit the Indemnifying Party to assume direction and control
of the defense of the claim (including the right to settle the claim solely for
monetary consideration) and shall cooperate as requested (at the expense of the
Indemnifying Party) in the defense of the claim; it being understood and agreed
that the right to assume the direction and control of such litigation shall be
conditioned upon the ongoing existence of each of the following: (1) the
Indemnifying Party expressly agrees in writing to the Indemnified Party without
a reservation of rights that, as between the Parties, the Indemnifying Party
shall be solely obligated to fully satisfy and discharge the claim
notwithstanding any limitation with respect to indemnification included in this
Agreement; (2) such claim is solely for monetary damage, and (3) such claim
shall not involve a criminal matter or be a claim being brought by a
governmental authority. The indemnification obligations under this Section 8.4
shall not apply to any harm suffered as a direct result of any delay in notice
to the Indemnifying Party hereunder or to amounts paid in settlement of any
claim, demand, action or other proceeding if such settlement is effected without
the consent of the Indemnifying Party, which consent shall not be withheld or
delayed unreasonably. The Indemnitee, its employees and agents, shall reasonably
cooperate with the Indemnifying Party and its legal representatives in the
investigation of any claim, demand, action or other proceeding covered by this
Section 8.4.

Section 8.5. LIMITATION OF LIABILITY.

(a) NEITHER PARTY SHALL BE LIABLE TO THE OTHER, OR TO ANY THIRD PARTY CLAIMING
THROUGH OR UNDER THE OTHER PARTY, FOR ANY LOST PROFITS OR FOR ANY INDIRECT,
EXEMPLARY, SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY KIND ARISING OUT
OF THIS AGREEMENT, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, EXCEPT WITH RESPECT TO A BREACH OF EITHER PARTY’S OBLIGATIONS WITH
RESPECT TO ARTICLE V, A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 8.4, A
PARTY’S INFRINGEMENT OR MISAPPROPRIATION OF THE INTELLECTUAL PROPERTY RIGHTS OF
THE OTHER PARTY, OR A PARTY’S GROSS NEGLIGENCE OR FRAUD.

 

- 40 -

--------------------------------------------------------------------------------

(b) THE LIMITATIONS OF LIABILITY CONTAINED IN THIS AGREEMENT ARE A FUNDAMENTAL
PART OF THE BASIS OF EACH PARTY’S BARGAIN HEREUNDER, AND NEITHER PARTY WOULD
ENTER INTO THIS AGREEMENT ABSENT SUCH LIMITATION OF LIABILITY.

Section 8.6. Insurance. Tarsa agrees that during the Term and for *** thereafter
it shall keep and maintain the following insurance with reputable carriers
reasonably satisfactory to Unigene: comprehensive public liability, including
products liability coverage, with limits of (a) before receipt of Regulatory
Approval for any Licensed Product, not less than *** Dollars *** per incident
and (b) after receipt of Regulatory Approval for any Licensed Product, not less
than *** Dollars *** per incident or any such greater amount determined by the
board of directors of Tarsa, naming Unigene as an additional insured from the
Effective Date forward with respect to Tarsa’s performance hereof. Tarsa agrees
to provide Unigene certificates evidencing such coverage within *** after the
Effective Date and at least annually thereafter. Such insurance certificates
shall state that such insurance shall not be canceled or materially altered
except upon written notice to Unigene.

ARTICLE IX

TERM AND TERMINATION

Section 9.1. Term. The term of this Agreement (“Term”) shall commence on the
Effective Date and shall continue on a country-by-country and Licensed
Product-by-Licensed Product basis until no royalties are owed with respect to
Net Sales of such Licensed Product in such country. Following the termination of
this Agreement pursuant to the immediately preceding sentence, except as
otherwise provided in this ARTICLE IX, the licenses granted hereunder to Tarsa
with respect to such Licensed Product in such country shall become fully-paid
and perpetual.

Section 9.2. Termination by Unigene.

(a) Insolvency. Unigene shall have the right to terminate this Agreement, at
Unigene’ sole discretion, on written notice to Tarsa upon the filing by Tarsa in
any court or agency pursuant to any statute or regulation of the United States
or any other jurisdiction a petition in bankruptcy or insolvency or for
reorganization or similar arrangement for the benefit of creditors or for the
appointment of a receiver or trustee of Tarsa or its assets, or if Tarsa is
served with an involuntary petition against it in any insolvency proceeding,
upon the *** day after such service if such involuntary petition has not
previously been stayed or dismissed, or upon the making by Tarsa of an
assignment of substantially all of its assets for the benefit of its creditors.

 

- 41 -

--------------------------------------------------------------------------------

(b) Material Breach. Unigene shall have the right to terminate this Agreement,
on a Licensed Product-by-Licensed Product basis, at Unigene’s sole discretion,
upon delivery of written notice to Tarsa, in the event of any material breach by
Tarsa of any terms and conditions of this Agreement applicable to such Licensed
Product, if such breach has not been cured within (i) *** days with respect to a
material breach of Section 3.1(b) hereof, (ii) *** days with respect to a
material breach involving the failure to make a payment when due or (iii) ***
days, with respect to any other material breach of this Agreement, after written
notice thereof is given by Unigene to Tarsa specifying the nature of the alleged
breach, provided that, in the event of a material breach of Section 3.1(b)
hereof, if such breach has not been cured within such ***-day period, but Tarsa
has presented a reasonable plan to cure such breach that is reasonably
satisfactory to Unigene and has commenced and continued to use Commercially
Reasonable Efforts to cure such breach in accordance with such plan within such
***-day period, then Unigene shall not have the right to terminate this
Agreement with respect to the applicable Licensed Product pursuant to this
Section 9.2(b) as a result of such material breach unless Tarsa fails at any
time to continue to use Commercially Reasonable Efforts to cure such breach in
accordance with such plan, in which case Unigene shall have the right to
terminate this Agreement on *** days’ prior written notice, which notice shall
be effective at the end of such *** day period unless Tarsa has recommenced such
Commercially Reasonable Efforts.

(c) Failure to Commence Dosing.

(i) Termination Right of Unigene. If dosing of the *** in a Phase III clinical
trial for a Licensed Calcitonin Product has not commenced within *** days of the
Effective Date, and such failure to commence dosing is directly attributable to
an act, or omission of an act that would have been commercially reasonable for
Tarsa to take, Unigene shall have the right to terminate this Agreement with
respect to all Licensed Calcitonin Products if such act or omission is not cured
by Tarsa within *** days after Unigene submits to Tarsa written notice of such
failure. Notwithstanding the foregoing, Unigene’s right to terminate this
Agreement pursuant to this Section 9.2(c)(i) shall not apply in the event Tarsa
fails to commence dosing due to any External Factors.

(ii) Certain Notifications. In the event Tarsa believes that dosing of the first
patient in a Phase III clinical trial for a Licensed Calcitonin Product will not
commence, for any reason, within *** days of the Effective Date, Tarsa shall
promptly notify Unigene of such belief; provided, however, that any such
notification shall not be deemed to be an admission by Tarsa that Unigene has a
right to terminate this Agreement pursuant to Section 9.2(c)(i) above.

(d) Termination of Activities. If Tarsa ceases all of its development and
commercialization activities pertaining to a Licensed Calcitonin Product for a
period of *** days or longer, then Unigene shall have the right to terminate
this Agreement with respect to such Licensed Calcitonin Product if such
cessation continues *** days after Unigene submits to Tarsa written notice of
such cessation.

 

- 42 -

--------------------------------------------------------------------------------

Section 9.3. Termination by Tarsa.

(a) Insolvency. Tarsa shall have the right to terminate this Agreement, at
Tarsa’s sole discretion, on written notice to Unigene upon the filing by Unigene
in any court or agency pursuant to any statute or regulation of the United
States or any other jurisdiction a petition in bankruptcy or insolvency or for
reorganization or similar arrangement for the benefit of creditors or for the
appointment of a receiver or trustee of Unigene or its assets, or if Unigene is
served with an involuntary petition against it in any insolvency proceeding,
upon the *** day after such service if such involuntary petition has not
previously been stayed or dismissed, or upon the making by Unigene of an
assignment of substantially all of its assets for the benefit of its creditors.

(b) Material Breach. Tarsa may terminate this Agreement in the event of any
material breach by Unigene of any terms and conditions of this Agreement,
provided that such breach has not been cured within *** days after written
notice thereof is given by Tarsa to Unigene.

(c) Without Cause. Commencing on the earlier of (a) the *** of the Effective
Date and (b) acceptance by the FDA of an application for Regulatory Approval of
the Licensed Calcitonin Product, Tarsa may terminate this Agreement at any time
with or without cause on a Licensed Product-by-Licensed Product basis on ***
days prior written notice.

Section 9.4. Effect of Termination by Unigene for Material Breach of Tarsa, by
Tarsa Without Cause or for Insolvency. Upon any termination of this Agreement
pursuant to Section 9.2(a), Section 9.2(b), Section 9.3(a) (without limitation
of Section 9.8) or Section 9.3(c), the rights and obligations of the Parties
hereunder, and all licenses granted to Tarsa hereunder with respect to the
terminated Licensed Product, shall immediately cease (except as otherwise
provided in this Section 9.4), and:

(a) All amounts due or payable to Unigene prior to the effective date of
termination, and all non-cancelable costs and expenses incurred by Unigene in
connection with this Agreement, shall remain due and payable.

(b) Should Tarsa have any inventory of the terminated Licensed Product approved
and allocated for commercial sale prior to termination, other than upon the
occurrence of a material breach by Tarsa pursuant to Section 9.2(b), Tarsa shall
have the right to dispose of such inventory after termination of this Agreement
with respect to such terminated Licensed Product (subject to the payment to
Unigene of any royalties due hereunder thereon), provided however that such
terminated Licensed Product shall not be sold at a discount to a purchaser that
is greater than the average discount provided to such purchaser for the Licensed
Products in the Territory during the *** period preceding such termination and,
in addition, such sales shall not result in the applicable wholesaler inventory
levels for such terminated Licensed Product exceeding *** of the average levels
for the *** period preceding such termination. If Unigene terminates this
Agreement pursuant to Section 9.2(b), Tarsa and its Affiliates and Sublicensees
shall immediately cease all sales of the terminated Licensed Products.

(c) In the event the termination is with respect to the Licensed Calcitonin
Product, Tarsa shall be responsible for payment to Unigene in respect of
Calcitonin API that it has ordered or forecast in the amounts specified in
Clause 21(e) of the CM Agreement.

 

- 43 -

--------------------------------------------------------------------------------

(d) Except for a termination by Unigene pursuant to Section 9.2(b) arising as a
result of a breach by a Sublicensee of the terms, conditions and limitations set
forth herein, upon any termination of this Agreement where Tarsa has designated
a non-Affiliate as a Sublicensee as permitted hereunder, Unigene shall offer
such Sublicensee the right to enter into a license agreement directly with
Unigene on substantially the same terms and conditions under which such rights
and licenses were granted to such Sublicensee and pending the execution of this
license agreement, Unigene shall automatically grant each Sublicensee a
temporary continuation, not to exceed *** days, of the rights under this
Agreement originally sublicensed to the Sublicensee by Tarsa, provided that
Unigene shall have no obligations under this Section 9.4(d) such Sublicensee
(i) is in material compliance with the Sublicense terms; (ii) agrees in writing
with Unigene to be bound by the terms, conditions and limitations relating to
the Licensed IP and Confidential Information as set forth hereunder; and
(iii) such agreement does not include obligations upon Unigene that exceed the
obligations of Unigene under this Agreement.

(e) Each Party shall return (or purge its systems and files of, and suitably
account for) all tangible Confidential Information supplied to, or otherwise
obtained by, it from the other Party in connection with the terminated Licensed
Product, except that such Party shall be entitled to retain, through its legal
counsel, one (1) copy of such Confidential Information to the extent required
under any applicable law, rule or regulation. Each Party shall certify in
writing that it has fully complied with its obligations under this
Section 9.4(e) within *** days after its receipt of a request by the other Party
for such a certification.

(f) Tarsa shall assign and transfer, and shall cause its Sublicensees to assign
and transfer, at Tarsa’s expense, to Unigene (i) all regulatory filings,
registrations, applications, Regulatory Approvals and information and data
relating to the applicable terminated Licensed Products and (ii) any Assigned
Contracts applicable to such terminated Licensed Product requested by Unigene.

Section 9.5. Tarsa’s Remedies for Material Breach by Unigene. If Tarsa has the
right to terminate this Agreement with respect to a Licensed Product pursuant to
Section 9.3(b) due to a material breach of Unigene that is not cured in
accordance with Section 9.3(b), Tarsa may elect upon written notice to Unigene,
to either: (a) terminate this Agreement in its entirety with respect to such
Licensed Product and *** or (b) maintain this Agreement in full force and effect
(foregoing, for the avoidance of doubt, the right to terminate this Agreement
for such occurrence of such breach) and elect one of the following as its sole
and exclusive remedy for such occurrence of such breach: (i) seek any remedies
Tarsa may have at law or in equity with respect to such breach or (ii) have the
following provisions apply to the Licensed Product that is the subject of the
applicable breach by Unigene: (A) all *** in respect of such Licensed Product
payable by Tarsa under this Agreement following such election shall be subject
to a *** of ***, (B) Tarsa shall have *** in respect of such Licensed Product
*** such election and (C) Tarsa shall not be licensed under any Unigene Sole
Improvements or Collaboration Improvements in respect of such Licensed Product
conceived, discovered, developed or authored solely by or on behalf of Unigene
(whether alone or with Third Parties) after the date of such election. For the
avoidance of doubt, in the event Tarsa elects the remedy described in clause
(A) above, the *** applicable to such Licensed Product thereafter shall not be
subject to further *** pursuant to this Section 9.5.

 

- 44 -

--------------------------------------------------------------------------------

Section 9.6. Remedies. Except as otherwise expressly set forth in this
Agreement, the termination provisions of this ARTICLE IX are in addition to any
other relief and remedies available to either Party at law or in equity.

Section 9.7. Surviving Provisions. Notwithstanding any provision herein to the
contrary, the rights and obligations of the Parties set forth in Section 2.9
(Non-Solicitation), Section 3.1 (Unigene right of reference, except where this
Agreement has been terminated pursuant to Section 9.3(b)), Section 4.5 (Sales
Reports and Royalty Payment) (with respect to the last calendar quarter of the
Term), Section 4.7 (Sales Record Audit), Section 8.3 (No Warranties),
Section 8.4 (Indemnification) and Section 8.5 (Limitation of Liability) and
ARTICLE V (Confidential Information), ARTICLE VI (Intellectual Property),
ARTICLE IX (Term and Termination) and ARTICLE X (Miscellaneous) (and any
definitions referred to therein), as well as any rights or obligations otherwise
accrued hereunder (including any accrued payment obligations), shall survive the
termination of this Agreement for any reason.

Section 9.8. Bankruptcy Rights. All rights and licenses granted under or
pursuant to this Agreement by a Party are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights
to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code. The Parties agree that a Party, as a licensee of intellectual property
under this Agreement, shall retain and may fully exercise all of its rights and
elections under the U.S. Bankruptcy Code. The Parties further agree that, in the
event of a rejection of this Agreement by a Party in any bankruptcy proceeding
by or against such Party under the U.S. Bankruptcy Code, (a) the other Party
shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, which, if not already in such other Party’s possession,
shall be promptly delivered to it upon written request therefor, and (b) such
Party shall not interfere with the other Party’s rights to intellectual property
and all embodiments of intellectual property, and shall assist and not interfere
with the other Party in obtaining intellectual property and all embodiments of
intellectual property from another entity. The term “embodiments” of
intellectual property includes all tangible, intangible, electronic or other
embodiments of rights and licenses hereunder, including all compounds and
products embodying intellectual property, Licensed Products, regulatory filings
and related rights, and Licensed IP and Improvements.

ARTICLE X

MISCELLANEOUS

Section 10.1. Notification. All notices, requests and other communications
hereunder shall be in writing, shall be addressed to the receiving Party’s
address set forth below or to such other address as a Party may designate by
notice hereunder, and shall be either (a) delivered by hand, (b) made by
facsimile transmission (to be followed with written confirmation by the
delivering Party), (c) sent by private courier service providing evidence of
receipt, or (d) sent by registered or certified mail, return receipt requested,
postage prepaid. The addresses and other contact information for the Parties are
as follows:

 

If to Unigene:   

Unigene Laboratories, Inc.

81 Fulton Street, Boonton

NJ 07005 USA

Attn: Ronald S. Levy

Fax: 973-335-0972

 

- 45 -

--------------------------------------------------------------------------------

With a copy to:   

Dechert LLP

Suite 500

902 Carnegie Center

Princeton, NJ 08540-6531

Attn: James J. Marino

Fax: 609-955-3259

If to Tarsa:   

Tarsa Therapeutics, Inc.

c/o MVM Life Science Partners LLP

Old City Hall

45 School Street

Boston MA 02108

Attn: President

Fax: 617-383-2106

With a copy to:   

Ropes & Gray LLP

One International Place

Boston, MA 02110

Attn: Marc A. Rubenstein

Fax: 617-951-7050

All notices, requests and other communications hereunder shall be deemed to have
been given either (i) if by hand, at the time of the delivery thereof to the
receiving Party at the address of such Party set forth above, (ii) if made by
facsimile transmission, at the time that receipt thereof has been acknowledged
by the recipient, (iii) if sent by private courier, on the day such notice is
delivered to the recipient, or (iv) if sent by registered or certified mail, on
the fifth (5th) business day following the day such mailing is made.

Section 10.2. Language. This Agreement has been prepared in the English language
and the English language shall control its interpretation.

Section 10.3. Governing Law; Jurisdiction. This Agreement shall be deemed to
have been made in the State of New York, U.S.A., and its form, execution,
validity, construction and effect shall be determined in accordance with, and
any dispute arising from the performance or breach hereof shall be governed by
and construed in accordance with, the laws of the State of New York, excluding
its body of law controlling conflicts of law. Each of the Parties irrevocably
submits to the exclusive jurisdiction of the federal and state courts situated
in the State of New York for purposes of any suit, action or proceeding arising
out of this Agreement or any transaction contemplated hereby and agrees not to
commence any action, suit or proceeding related hereto except in such courts.
Neither Party shall challenge or contest the subject matter or personal
jurisdiction of any such court or its venue or assert the defense of forum
nonconveniens.

 

- 46 -

--------------------------------------------------------------------------------

Section 10.4. Entire Agreement. This Agreement, together with all of its
Schedules, constitutes the entire agreement between the Parties with respect to
the subject matter hereof and supersedes all prior representations,
understandings and agreements between the Parties with respect to the subject
matter hereof. No modification to this Agreement shall be effective unless in
writing with specific reference to this Agreement and signed by the Parties.

Section 10.5. Waiver. The terms or conditions of this Agreement may be waived
only by a written instrument executed by the Party waiving compliance. The
failure of either Party at any time or times to require performance of any
provision hereof shall in no manner affect its rights at a later time to enforce
the same. No waiver by either Party of any condition or term shall be deemed as
a continuing waiver of such condition or term or of another condition or term.

Section 10.6. Headings. Section and subsection headings are inserted for
convenience of reference only and do not form part of this Agreement.

Section 10.7. Assignment. This Agreement shall not be assignable by either Party
to any Affiliate or Third Party without the prior written consent of the other
Party hereto, except (a) pursuant to the Collateral Assignment, (b) in
connection with any Foreclosure Action or Third Party Sale (each, as defined in
the ROFO/ROFR Agreement) and (c) to an entity that acquires all or substantially
all of the capital stock, business or assets of the Party to which this
Agreement pertains (whether by merger, reorganization, acquisition, sale or
otherwise), provided that in each case the assigning Party provides written
notice to the other Party of such assignment and the assignee agrees in writing
to be bound by the terms and conditions of this Agreement. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. Any
purported assignment in violation of this Section 10.7 shall be null and void,
ab initio.

Section 10.8. Force Majeure. Except for obligations of payment arising
hereunder, neither Party shall be liable to the other for failure or delay in
the performance of any of its obligations under this Agreement for the time and
to the extent such failure or delay is caused by earthquake, riot, civil
commotion, terrorism, war, hostilities between nations, governmental law, order
or regulation, embargo, action by the government or any agency thereof, act of
God, storm, fire, accident, labor dispute or strike, sabotage, explosion or
other similar or different contingencies, in each case, beyond the reasonable
control of the respective Party. The Party affected by force majeure shall
provide the other Party with full particulars thereof as soon as it becomes
aware of the same (including its best estimate of the likely extent and duration
of the interference with its activities), and shall use its commercially
reasonable efforts to overcome the difficulties created thereby and to resume
performance of its obligations as soon as practicable. If the performance of any
obligation under this Agreement is delayed owing to a force majeure for any
continuous period of more than three (3) months, the Parties hereto shall
consult with respect to an equitable solution including the possible termination
of this Agreement.

Section 10.9. Construction. The Parties hereto acknowledge and agree that:
(a) each Party and its counsel reviewed and negotiated the terms and provisions
of this Agreement and have contributed to its revision; (b) the rule of
construction to the effect that any ambiguities are resolved against the
drafting Party shall not be employed in the interpretation of this Agreement;
and (c) the terms and provisions of this Agreement shall be construed fairly as
to all Parties hereto and not in favor of or against any Party, regardless of
which Party was generally responsible for the preparation of this Agreement.
Neither Party shall challenge the validity or enforceability of the terms,
conditions, obligations and covenants hereunder.

 

- 47 -

--------------------------------------------------------------------------------

Section 10.10. Severability. If any provision(s) of this Agreement are or become
invalid, are ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then current applicable law from time to time in effect
during the Term hereof, it is the intention of the Parties that the remainder of
this Agreement shall not be affected thereby provided that a Party’s rights
under this Agreement are not materially affected. The Parties hereto covenant
and agree to renegotiate any such term, covenant or application thereof in good
faith in order to provide a reasonably acceptable alternative to the term,
covenant or condition of this Agreement or the application thereof that is
invalid, illegal or unenforceable, it being the intent of the Parties that the
basic purposes of this Agreement are to be effectuated.

Section 10.11. Status. Nothing in this Agreement is intended or shall be deemed
to constitute a partner, agency, employer-employee, or joint venture
relationship between the Parties.

Section 10.12. Further Assurances. Each Party agrees to execute, acknowledge and
deliver such further instructions, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

Section 10.13. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

- 48 -

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representative.

 

UNIGENE LABORATORIES, INC.     TARSA THERAPEUTICS, INC. By:  

/s/ Warren P. Levy

    By:  

/s/ D. M. Brand

Name:  

Warren P. Levy

    Name:  

D. M. Brand

Title:  

President & CEO

    Title:  

President/CEO

--------------------------------------------------------------------------------

Schedule 1

Part I

Assigned Contracts

***

--------------------------------------------------------------------------------

Part II

Retained Agreements

***

 

ii

--------------------------------------------------------------------------------

Schedule 2

Licensed Patent Rights

Licensed Calcitonin Formulation Patent Rights

***

Licensed Calcitonin Manufacturing Patent Rights and Licensed *** Patent Rights

***

 

iii

--------------------------------------------------------------------------------

Schedule 3

*** Specifications

***

 

iv

--------------------------------------------------------------------------------

Schedule 4

Development Timeline

***

 

v

--------------------------------------------------------------------------------

Schedule 5

Form of Calcitonin IND Assignment

Scott E. Monroe, M.D.

Director, Division of Reproductive and Urology Products

Center for Drug Evaluation and Research

Food and Drug Administration

5901-B Ammendale Road

Beltsville, MD 20705-1266

 

Re:   

IND *** – Recombinant Salmon Calcitonin Tablets

  

Notice of IND Transfer

  

Serial No. ***

Dear Dr. Monroe,

Please be advised that Tarsa Therapeutics, Inc. located at Old City Hall, 45
School Street, Boston, MA 02108 hereby acknowledges transfer of ownership of IND
*** for *** for recombinant salmon calcitonin tablets from Unigene Laboratories,
Inc. to Tarsa Therapeutics, Inc.

As described in the attached letter from Unigene, Tarsa Therapeutics, Inc. has
received a complete copy of the IND from Unigene Laboratories, Inc. and accepts
responsibility for all agreements, commitments and conditions made by Unigene
Laboratories, Inc. in the IND.

The change in ownership is effective [Date], 2009. Accordingly, as of the
effective date, please direct all correspondence and communications regarding
IND *** to:

Dave Brand

Tarsa Therapeutics, Inc.

c/o MVM Life Science Partners

Old City Hall

45 School Street

Boston, MA 02108

267-386-4848

Should you have any questions or concerns regarding this matter, please do not
hesitate to contact me at 973-265-1100 or by email at rlevy@unigene.com.

Sincerely,

Ronald S. Levy, Ph.D.

Executive Vice President

Attachments: Copy of IND transfer letter from Unigene Laboratories, Inc.

 

vi

--------------------------------------------------------------------------------

Scott E. Monroe, M.D.

Director, Division of Reproductive and Urology Products

Center for Drug Evaluation and Research

Food and Drug Administration

5901-B Ammendale Road

Beltsville, MD 20705-1266

 

Re:   

IND *** – Recombinant Salmon Calcitonin Tablets

  

Notice of IND Transfer

  

Serial No. ***

Dear Dr. Monroe:

Reference is made to IND *** for *** for recombinant salmon calcitonin tablets
submitted to the Division of Metabolic and Endocrine Products on *** by *** and
subsequently transferred to Unigene Laboratories, Inc. on ***.

Please be advised that Unigene Laboratories, Inc., located at 81 Fulton Street,
Boonton, NJ 07005 hereby transfers ownership, including all rights and
responsibilities for this IND, to Tarsa Therapeutics, Inc., located at Old City
Hall, 45 School Street, Boston, MA 02108.

As described in the attached letter, Tarsa Therapeutics, Inc. has received a
complete copy of the IND from Unigene Laboratories, Inc. and accepts
responsibility for any agreements, commitments and conditions made by Unigene
Laboratories, Inc. in the IND.

The change in ownership is effective [Date], 2009. Accordingly, as of the
effective date, please direct all correspondence and communications regarding
IND *** to:

Dave Brand

Tarsa Therapeutics, Inc.

c/o MVM Life Science Partners

Old City Hall

45 School Street

Boston, MA 02108

267-386-4848

Should you have any questions or concerns regarding this matter, please do not
hesitate to contact me at 973-265-1100 or by email at rlevy@unigene.com.

Sincerely,

Ronald S. Levy, Ph.D.

Executive Vice President

 

vii

--------------------------------------------------------------------------------

Schedule 6

Assigned Contract Consents

***

 

viii

--------------------------------------------------------------------------------

Schedule 7

List of Unigene’s Knowledge

***

 

ix