Exhibit 10.3

EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (“Agreement”), dated as of September 12, 2010, is
entered into by and between Unigene Laboratories, Inc., a Delaware corporation
(the “Company”), and Gregory T. Mayes (the “Executive”).
 
WITNESSETH:
 
WHEREAS, the Company desires to employ the Executive and to enter into this
Agreement embodying the terms of such employment; and
 
WHEREAS, the Executive desires to enter into this Agreement and to accept such
employment, subject to the terms and provisions of this Agreement;
 
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
 
1. Engagement.  The Company hereby employs the Executive as its Vice President,
Corporate Affairs and General Counsel, and the Executive hereby accepts such
employment, on the terms and conditions hereinafter set forth.
 
2. Term of Employment.  The Company shall employ Employee full time effective
October 4, 2010 (“Effective Date”), until such time as the employment is
terminated pursuant to Section 9, 10, 11 or 12 of this Agreement (the “Term”).
 
3. Duties.  During the Term of this Agreement, the Executive shall serve as the
Company’s Vice President, Corporate Affairs and General Counsel and shall have
such duties and responsibilities as are set forth in the Company’s Bylaws and
such other responsibilities as may be assigned to him from time to time by the
Chief Executive Officer or the Board of Directors of the Company (the “Board of
Directors”).  The Executive shall use his best efforts to perform, and shall act
in good faith in performing, all duties required to be performed by him under
this Agreement.
 
4. Availability.  During the Term of this Agreement, the Executive shall not be
engaged in any other business activity, with or without compensation, that would
interfere with the performance of his duties to the Company without the express
written approval of the Board of Directors, except that, without such written
approval, the Executive may engage in a reasonable level of professional
activities such as are typical for individuals of a comparable professional
stature provided such activities do not provide any compensation to Executive.
 
5. Business Expenses.  The Company shall reimburse the Executive promptly (but
in no event by later than the last day of the year following the year in which
the underlying expense was incurred), upon prompt presentation by the Executive
of itemized vouchers, for all ordinary and necessary business expenses incurred
by the Executive in the performance of his duties hereunder.
 
 
 

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6. Compensation.  As compensation for the services to be rendered hereunder, the
Company agrees as follows:
 
(a) during the Term of this Agreement, to pay the Executive an initial annual
salary of $265,000 (“Base Salary”), payable in accordance with the Company’s
payroll procedures.  The Company may review the Base Salary on an annual basis
and may adjust the Base Salary by such amount as the Company, in its sole
discretion, shall deem appropriate.  The term “Base Salary” as used in this
Agreement shall refer to the Base Salary as it may be so adjusted.
 
(b) subject to approval by the Company’s Board of Directors, as of the Effective
Date, to grant the Executive options to purchase 600,000 shares of the Company’s
common stock (the “Common Stock”), exercisable at the closing price per share on
the Effective Date.  The options to be granted under this Section 6(b) will be
evidenced by the Company’s standard form of stock option agreement, except that
one-third of the options granted under this Section 6(b) will vest upon the
one-year anniversary of the Effective Date provided that Executive remains
continuously employed by Company from the Effective Date through the one-year
anniversary of the Effective Date, one-third of the options granted under this
Section 6(b) will vest upon the two-year anniversary of the Effective Date
provided that Executive remains continuously employed by Company from the
Effective Date through the two-year anniversary of the Effective Date, and
one-third of the options granted under this Section 6(b) will vest upon the
three-year anniversary of the Effective Date provided that Executive remains
continuously employed by Company from the Effective Date through the three-year
anniversary of the Effective Date;
 
(c) to permit Executive to participate in the Company’s regular bonus program;
 
(d) to permit Executive to participate in such employee benefit plans as are
made available by the Company to its employees generally.  The Executive
acknowledges that salary and all other compensation payable under this Agreement
shall be subject to withholding for income and other applicable taxes to the
extent required by law.
 
7. Ownership of Intellectual Property.  All rights, title and interest of every
kind and nature whatsoever in and to discoveries, inventions, improvements,
patents (and applications therefor), copyrights, ideas, know-how, notes,
creations, properties and all other proprietary rights arising from, or in any
way related to, the Executive’s employment hereunder shall become and remain the
exclusive property of the Company, and the Executive shall have no interest
therein.  Executive agrees that during the Term of this Agreement and
thereafter, at Company’s request and expense, Executive will assist Company or
its designee to vest Company with such full and exclusive right, title and
interest.
 
 
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8. Trade Secrets and Confidential Information.  The Executive covenants and
agrees with the Company that he will not, during the Term of this Agreement or
thereafter, disclose to anyone (except to the extent reasonably necessary for
the Executive to perform his duties hereunder or as may be required by law) any
confidential information concerning the business or affairs of the Company (or
of any affiliate or subsidiary of the Company), including but not limited to
lists of customers, business plans, financial or cost information, and
confidential scientific and clinical information (whether of the Company or
entrusted to the Company by a third party under a confidentiality agreement or
understanding), which the Executive shall have acquired in the course of, or
incident to, the performance of his duties pursuant to the terms of this
Agreement or pursuant to his prior employment by or relationship with the
Company (or any affiliate or subsidiary of the Company).  Executive recognizes
that he may in the course of his employment obtain confidential information or
trade secrets of the Company that may not be protected by the Rules of
Professional Conduct or the attorney-client privilege.  Nothing in this Section
shall restrict the Executive’s ability to practice law or to expand the
confidential nature of information obtained by Executive in the course of
performing legal functions beyond the scope of the Rules of Professional
Conduct. In the event of a breach or threatened breach by the Executive of the
provisions of this Section 8, the Company, without being required to post a
bond, shall be entitled to an injunction restraining the Executive from
disclosing, in whole or in part, such information or from rendering any services
to any person, firm, corporation, association or other entity to whom such
information has been disclosed or is threatened to be disclosed.  Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
available to the Company for such breach or threatened breach, including the
recovery of damages from the Executive. Nothing herein shall be construed as
prohibiting the Executive from disclosing to anyone any information which is, or
which becomes, available to the public (other than by reason of a violation of
this Section 8) or which is a matter of general business knowledge or
experience.  Where disclosure of such confidential information is required by
law, Executive agrees to use his best efforts to notify, consult, and cooperate
with Company prior to such disclosure.  Company’s obligations to make any
payments or confer any benefit under this Agreement, other than to pay for
compensation and benefits accrued but unpaid, will automatically and immediately
terminate in the event that the Executive breaches any of his obligations under
this Section.
 
9. Termination For Cause.  The Company may terminate the employment of the
Executive for cause in the event that the Company determines that any of the
following events have occurred or presently exist:  (1) any failure on the part
of Executive to faithfully and professionally carry out Executive’s duties,
including failure to meet or achieve annual and long-term goals set by the
Company, or to comply with any other material provision of this Agreement; (2)
Executive’s dishonesty or disloyalty, which includes without limitation any
misuse or misappropriation of Company’s assets, or other willful misconduct,
which includes without limitation any conduct on the part of Executive intended
to or likely to injure the business of Company; (3) Executive’s conviction for
any felony or other crime involving moral turpitude as determined solely by
Company, whether or not relating to Executive’s employment; (4) Executive’s
insobriety or use of drugs, chemicals, or controlled substances either (A) in
the course of performing Executive’s duties and responsibilities under this
Agreement or (B) otherwise affecting the ability of Executive to perform the
same; (5) Executive’s failure to comply with a lawful written direction of
Company after being notified that such failure will result in Termination for
Cause; or (6) any wanton or willful dereliction of duties by Executive.  If the
employment of the Executive under this Agreement is terminated under this
Section 9, the Company shall be relieved of all further obligations under this
Agreement, except for the payment of accrued salary and reimbursement under
Section 5 for reimbursable expenses incurred prior to termination.
Notwithstanding such termination of employment, the Executive shall continue to
be bound by the provisions in Sections 7, 8, and 13.
 
 
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10. Termination Without Cause by the Company or for Good Reason by the
Executive.  The Company may terminate the employment of the Executive for any
reason other than “cause” (as defined in Section 9) at any time, subject to
compliance with this Section 10.
 
(a) In the event the Executive’s employment is terminated by the Company for any
reason other than cause, except as otherwise provided in Section 11 or Section
12 of this Agreement, or is terminated by the Executive for Good Cause (as
defined below) the Executive shall be entitled to: (a) a severance payment equal
to four (4) months of Executive’s Base Salary, which severance payment will be
paid in accordance with the Company’s regular payroll cycle as such may be
amended from time to time, (b) payment of the applicable premiums for coverage
of Executive and his family under the Company’s health plans for a period of
four (4) months following the termination of employment, provided that Executive
timely and properly elects continuation coverage under the aforementioned plans
pursuant to the provisions of COBRA and remains eligible for such coverage, and
(c) immediate vesting of one-third of the stock options described in Section
6(b) and such stock options that are vested pursuant to this Section 10(a) will
be exercisable by Executive until the earlier of (i) three (3) years following
the date of Executive’s termination of employment or (ii) ten (10) years
following the grant date of such stock options. The benefits provided in this
section, to which Executive would not otherwise be entitled, are contingent and
conditioned upon Executive’s execution and the effectiveness of a general
release of all claims against the Company and all related entities or persons,
in a form satisfactory to Company, within sixty (60) days of the termination of
Executive’s employment.  This severance benefit will commence on the sixty first
(61st) day following the Executive’s termination of employment pursuant to this
section.
 
(b) For the purpose of this Agreement, “Good Reason” shall mean, without
Executive’s permission, (i) Company’s failure to continue to employ Executive in
an executive position, (ii) a material diminution of Executive’s salary and
benefits in the aggregate, or (iii) a relocation of Executive’s regular work
location of more than seventy-five (75) miles from Executive’s regular work
location immediately prior to the relocation.  Notwithstanding the foregoing,
Executive shall not be entitled to terminate his employment for Good Reason
unless he has notified Company in writing, within thirty (30) days of the event
giving rise to the Good Reason, of his intent to terminate his employment for
Good Reason and the Company fails to cure such Good Reason within sixty (60)
days of receiving such written notice and such termination occurs within one
hundred (100) days of the event giving rise to the Good Reason.
 
(c) Termination of employment under this Section 10 shall not terminate the
Executive’s obligations under Sections 7, 8, or 13.
 
11. Termination Due to Change in Control.  In the event the Executive’s
employment is terminated by the Company within six (6) months following a Change
in Control for any reason other than cause, except as otherwise provided in
Section 12 of this Agreement, the Executive shall, in lieu of any benefits
provided under Section 10 of this Agreement, be entitled to: (a) a severance
payment equal to four (4) months of Executive’s Base Salary, which severance
payment will be paid in accordance with the Company’s regular payroll cycle as
such may be amended from time to time, (b) payment of the applicable premiums
for coverage of Executive and his family under the Company’s health plans for a
period of four (4) months following the termination of employment, provided that
Executive timely and properly elects continuation coverage under the
aforementioned plans pursuant to the provisions of COBRA and remains eligible
for such coverage, and (c) immediate vesting of one-third of the stock options
described in Section 6(b) and such stock options that are vested pursuant to
this Section 11 will be exercisable by Executive until the earlier of (i) three
(3) years following the date of Executive’s termination of employment or (ii)
ten (10) years following the grant date of such stock options.  The benefits
provided in this section, to which Executive would not otherwise be entitled,
are contingent and conditioned upon Executive’s execution and the effectiveness
of a general release of all claims against the Company and all related entities
or persons, in a form satisfactory to Company, within sixty (60) days of the
termination of Executive’s employment.  This severance benefit will commence on
the sixty first (61st) day following the Executive’s termination of employment
pursuant to this section.
 
 
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(a) For the purpose of this Agreement, a “Change in Control” shall have occurred
if:
 
(1) any individual, entity or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) acquires beneficial ownership (within the meaning of Rule l3d-3
promulgated under the Exchange Act) of more than 50% of either (A) the then
outstanding shares of Common Stock or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Voting Securities”); provided, however, that any
acquisition by the Company, by any employee benefit plan (or related trust) of
the Company, or by any corporation with respect to which, following such
acquisition, more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Common Stock and Voting Securities immediately
prior to such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the Common Stock and Voting
Securities, as the case may be, shall not constitute a Change of Control;
 
(2) individuals who, as of the Effective Date, constitute the Board of Directors
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board of Directors, provided that any individual becoming a director
subsequent to the Effective Date whose election was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
deemed a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office is in settlement of an actual
or threatened election contest relating to the election of the directors of the
Company; or
 
(3) the stockholders of the Company approve (A) a reorganization, merger or
consolidation, in each case, with respect to which all or substantially all of
the persons who were the respective beneficial owners of the Common Stock and
the Voting Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation or (B) a complete liquidation or
dissolution of the Company or of the sale or other disposition of all or
substantially all of the assets of the Company.
 
 
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12. Voluntary Resignation; Disability; Death.
 
(a) The Executive may voluntarily terminate the Executive’s employment with the
Company by providing the Company with sixty (60) days advance written notice of
the Executive’s resignation.  In the case of Executive’s resignation pursuant to
this Section, the Company will pay the Executive all compensation and benefits
accrued but unpaid up to the date of termination, but the Executive will be
entitled to no additional compensation or benefits.  At the Company’s sole
option, the Company may choose to relieve the Executive of the Executive’s
duties for some or all of the sixty (60) day notice period provided for in this
Section, in which case the Company will continue to pay/provide the Executive’s
regular compensation and benefits during the notice period.  Should the Company
choose to relieve the Executive of the Executive’s duties during the sixty (60)
day notice period, the Executive will not be entitled to payments or benefits
provided in Section 10.  Termination of employment under this Section shall not
terminate the Executive’s obligations under Sections 7, 8, or 13.
 
(b) Disability.  If the Executive becomes disabled such that the Executive is
unable to perform the essential functions of the Executive’s position for more
than one hundred eighty (180) days (whether consecutive or not) in any twelve
(12) month period, the Company has the right to terminate the Executive’s
employment without further liability upon notice to the Executive.  In the case
of a termination for Disability, the Company will pay the Executive all
compensation and benefits accrued but unpaid up to the date of termination. The
Executive will be entitled to no additional compensation or benefits from the
Company except as set forth in this Section 12(b) and except for any benefits
that may be available pursuant to any group benefit plan or policy in effect at
the Company.  Termination of employment under this Section shall not terminate
the Executive’s obligations under Sections 7, 8, or 13.
 
(c) Death.  In the event of the death of the Executive, this Agreement
automatically terminates, and any obligation to continue to pay compensation and
benefits ceases as of the date of the Executive’s death.  The Executive’s estate
will be entitled to no additional compensation or benefits from the Company
except as set forth in this Section 12(c) and except for any benefits that may
be available pursuant to any group benefit plan or policy in effect at the
Company.
 
13. Non-Disparagement.  While the Executive is employed by the Company and
thereafter, neither Executive, nor any person acting on behalf of Executive,
shall disparage or cause to be disparaged in any forum or through any medium of
communication, whether directly or indirectly, Company or any of its directors,
officers, managers, or employees in any forum or through any medium of
communication.
 
14. Return of Company Property.  In the event of the termination of Executive’s
employment with Company for any reason, Executive agrees to immediately return
to Company, and not retain, all of its property, including documents, data, and
equipment (and any copies thereof) of any nature and in whatever medium.
 
 
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15. Cooperation Following
Termination.                                                                Executive
agrees that, following termination of his employment for any reason, he will
cooperate fully with Company in all matters relating to the completion of his
pending work on behalf of Company and the orderly transition of such work to
such other employees or other persons as Company may designate.  Executive
further agrees that following termination of his employment he will cooperate
fully with Company as to any and all claims, controversies, disputes, or
complaints of which he has any knowledge or that may relate to him or his
employment with Company, unless he is an adverse party or potentially an adverse
party.  Such cooperation includes but is not limited to providing Company with
all information known to him related to such claims, controversies, disputes, or
complaints and appearing and giving testimony in any forum.
 
16. Compliance with Code Section 409A.
 
(a) Notwithstanding anything to the contrary in this Agreement, no portion of
the severance payments under Section 10 or 11 will be payable until Executive
has a “separation from service” from the Company within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”).
 
(b) Further, if upon Executive’s separation from service, Executive is a
“specified employee” (within the meaning of Code Section 409A and the
regulations thereunder) of Company, and if any severance payments under this
Agreement would be subject to excise tax under Code Section 409A because such
payments are made within the 6-month period commencing upon the Executive’s
separation from service, then such payments shall be delayed until the first
payroll cycle following six (6) months after such separation from service and
paid in lump sum at such time.  Each applicable severance payment hereunder is
intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2)
of the Treasury Regulations.
 
(c) The foregoing provisions are intended to comply with, or be exempt from, the
requirements of Code Section 409A so that no portion of the severance payments
will be subject to the additional tax imposed under Section 409A, and any
ambiguities herein will be interpreted to so comply or be exempt.  Executive and
the Company agree to work together in good faith to consider amendments to the
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.  In no event will the
Company reimburse Executive for any taxes that may be imposed on Executive as a
result of Section 409A.
 
17. Capacity.  The Executive represents and warrants to the Company that he is
not now under any obligation, of a contractual nature or otherwise, to any
person, firm, corporation, association or other entity that is inconsistent or
in conflict with this Agreement or that would prevent, limit or impair in any
way the performance by him of his obligations hereunder.
 
18. Waiver.  No act, delay, omission or course of dealing on the part of any
party hereto in exercising any right, power or remedy hereunder shall operate
as, or be construed as, a waiver thereof or otherwise prejudice such party’s
rights, powers and remedies under this Agreement.
 
 
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19. Governing Law.  This Agreement shall be interpreted and construed under the
laws of the State of New Jersey without regard to principles of conflicts of
law.
 
20. Arbitration.  The Executive agrees to submit to binding arbitration all
claims arising out of his employment with the Company and/or this Agreement,
including all claims under federal law (including but not limited to Title VII
of the Civil Rights Act of 1964 as amended) as well as all claims under state
law (including but not limited to claims under the New Jersey Law Against
Discrimination and New Jersey Conscientious Employee Protection Act).  This
arbitration shall take place in New Jersey, under the then prevailing rules of
the American Arbitration Association.  Notwithstanding anything to the contrary,
claims under Section 8 of this Agreement need not be submitted to arbitration
and may be filed in any court of competent jurisdiction in New Jersey.
 
21. Assignability.  The rights and obligations contained herein shall be binding
on and inure to the benefit of the successors and assigns of the Company.  The
Company, but not Executive, may assign its rights or obligations under this
Agreement.
 
22. Completeness.  This Agreement sets forth all, and is intended by each party
to be an integration of all, of the promises, agreements and understandings
between the parties hereto with respect to the subject matter hereof.
 
23. Modification.  This Agreement may not be modified, altered, or amended
except by a writing signed by all parties.
 
24. Counterparts.  This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original, and all of which together shall
constitute one agreement binding on the parties hereto.
 
25. Severability.  Each provision of this Agreement shall be considered
severable and if for any reason any provision that is not essential to the
effectuation of the basic purpose of the Agreement is determined to be invalid
or contrary to any existing or future law, such provision shall be deemed to be
omitted from this Agreement and such invalidity shall not impair the operation
of or affect those provisions of this Agreement that are valid.
 
26. Headings.  Headings contained in this Agreement are inserted for reference
and convenience only and in no way define, limit, extend or describe the scope
of this Agreement or the meaning or construction of any of the provisions
hereof.
 
27. Survival of Terms.  If this Agreement is terminated for any reason, the
provisions of Sections 7, 8, and 13 shall survive, and the Executive and the
Company, as the case may be, shall continue to be bound by the terms thereof to
the extent provided therein.
 
IN WITNESS WHEREOF, the parties hereto have freely and voluntarily executed this
Agreement on the day and year first above written.
 
 
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UNIGENE LABORATORIES, INC.
            /s/ Gregory T. Mayes
 
By:
/s/ Ashleigh Palmer   Gregory T. Mayes     Ashleigh Palmer         Chief
Executive Officer            

 
 
 
 
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