Exhibit
10.12




SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
 
 THIS SECOND AMENDMENT to the
Employment Agreement, dated as of January 1, 2000, as amended by the First
Amendment to Employment Agreement, dated as of December 22, 2008, (the
“Agreement”) is made as of this 17th day
of March, 2010 by and between UNIGENE LABORATORIES, INC.(the “Company” or “Unigene”)and Ronald Levy (the
“Executive”).
  WHEREAS,the Company and the
Executive desire to amend the Agreement; and
  WHEREAS,capitalized terms not
otherwise defined herein shall have the meanings ascribed to them bythe
Agreement.
  NOW, THEREFORE, the Company
and the Executive, intending to be legally bound, hereby amend the Agreement as
follows:
  1.           In
consideration for Executive signing this Second Amendment, Section 6 is hereby
amended and restated to read in its entirety as follows:
  “6.  Compensation.  As
compensation for the services to be rendered hereunder, the Company agrees as
follows:
 
 (a) to
pay the Executive an annual salary of $280,250, subject to withholding for
income and other applicable taxes to the extent required by law, to be reviewed
annually by the Compensation Committee but which shall not in any event be less
than $280,250;
  (b) to
participate in such employee benefit plans as are made available by the Company
to its employees generally; and
  (c) as of
the date Executive signs this Second Amendment, to grant Executive options to
purchase 100,000 shares of the Company’s common stock, exercisable at $1.20 per
share.  The options to be granted under this Section 6(c) will be
evidenced by the Company’s standard form of stock option agreement, except that
the options to be granted under this Section 6(c) will vest upon the three-month
anniversary of the hiring and appointment of a new Chief Executive Officer of
the Company and will be exercisable (to the extent vested) by Executive until
the earlier of (i) 3 1/2 (three and one half) years following the vesting date
or (ii) ten (10) years following the grant date.”
  2.           Section
10 is hereby amended and restated to read in its entirety as
follows:
  
 “10.     Termination Without
Cause.  The Company may terminate the employment of the
Executive without “cause” (as defined in Section 9), subject to compliance with
this Section 10.
  (a)           In
the event the Executive’s employment is terminated without cause:
  (1)           Executive
shall be entitled to a severance payment consisting of:
  (A)      a
lump-sum payment equal to the Executive’s then-current annual salary, payable as
soon as practicable following the six-month anniversary of the termination of
Executive’s employment with the Company; and
  (B)     a
payment equal to six (6) months of Executive’s then-current annual salary, which
will be paid over a six (6) month period in accordance with Company’s regular
payroll cycle as such may be amended from time to time, commencing with the
first regular pay cycle following both the 60-day period referred to in Section
10(b) and the twelve-month anniversary of the termination of Executive’s
employment with Company;
  (2)           Executive
shall be entitled to a payment in cash equal to the cash value of all accrued
vacation days, payable as soon as practicable following the termination date,
but no later than 90 days thereafter;
  (3)          If
permitted pursuant to the Unigene healthcare plan governing documents in effect
as of the date of this Agreement, Executive will continue to receive healthcare
benefits under Unigene’s healthcare plan, with Unigene paying that portion of
the premium associated with the coverage that it would pay if Executive was then
a current eligible employee and with family coverage at least as favorable to
Executive as the most extensive healthcare benefit offered by Unigene to any
employee, for a period of eighteen (18) months following the date of
termination, at which time Executive’s healthcare benefits under Unigene’s
healthcare plan will end, and Executive will receive a notification of COBRA
rights.  If for any reason Unigene cannot continue Executive’s
healthcare coverage under the terms of the immediately preceding sentence under
Unigene’s regular healthcare plan after the date of termination, Unigene will
pay Executive’s COBRA payments for a period of eighteen (18) months following
the date of termination.  In no event shall Unigene be required to
provide individual or family healthcare coverage to Executive or his family
except as part of Unigene’s regular healthcare plan or under
COBRA.  Unigene shall not be required to amend its healthcare plan to
comply with this paragraph;
  (4)         All
options currently issued and held by Executive under the terms of the 2006
Stock-Based Incentive Compensation Plan, as amended (the “Plan”) (or any
predecessor plan) at the time of his termination, including any and all options
awarded in 2001, but excluding options granted pursuant to paragraph 6(c) above,
will vest (if not already vested) immediately upon the satisfaction of Section
10(b), and Executive will thereafter be entitled to exercise all such options
until the earlier of (i) 3 1/2 (three and one half) years following such
termination or (ii) the expiration date of the option.
  
 (b)           The
payments and benefits described in Sections 10(a)(1) and 10(a)(3)-(4), to which
Executive would not otherwise be entitled, are contingent and conditioned upon
Executive’s execution and nonrevocation of a general release of all claims
against the Company and all related entities or persons within 60 days of
Executive’s termination of employment.  In the event that Executive
fails to satisfy the obligation in this Section 10(b), Executive agrees that
Company may recover any payments it previously made on Executive’s
behalf  under Section 10(a)(3).
  (c)           Termination
of employment under this Section 10 shall not terminate the Executive’s
obligations under Sections 7, 8 or 13.”
  3.           Section
11(d) of the Employment Agreement, dated as of January 1, 2000, is renumbered
Section 11(e), and Sections 11(a)-(d) are hereby amended and restated to read in
their entirety as follows:
  “11.     Resignation by the Executive
for Good Reason.
  (a)           The
Executive may resign for good reason if one or both of the following
occur:
  (1)           a
Change of Control at Unigene (as defined in paragraph (e) below);
or
  (2)           a
material diminution in the Executive’s responsibilities as Executive Vice
President without the Executive’s consent.  If Unigene hires and
appoints a new Chief Executive Officer, Unigene agrees that that will constitute
a material diminution in the Executive’s responsibilities without the
Executive’s consent, and Executive agrees that he may not resign for good reason
due to a material diminution in the Executive’s responsibilities until three
months after the hiring and appointment of a new Chief Executive
Officer.
  (b)           In
the event the Executive resigns for good reason:
  (1)        Executive
shall be entitled to a severance payment consisting of:
  (A)           a
lump-sum payment equal to the Executive’s then-current annual salary, payable as
soon as practicable following the six-month anniversary of the termination of
Executive’s employment with the Company; and
  (B)            a
payment equal to six (6) months of Executive’s then-current annual salary, which
will be paid over a six (6) month period in accordance with Company’s regular
payroll cycle as such may be amended from time to time, commencing with the
first regular pay cycle following both the 60-day period referred to in Section
11(c) and the twelve-month anniversary of the termination of Executive’s
employment with Company;
  
 (2)          Executive
shall be entitled to a payment in cash equal to the cash value of all accrued
vacation days, payable as soon as practicable following the termination date,
but no later than 90 days thereafter;
  (3)         If
permitted pursuant to the Unigene healthcare plan governing documents in effect
as of the date of this Agreement, Executive will continue to receive healthcare
benefits under Unigene’s healthcare plan, with Unigene paying that portion of
the premium associated with the coverage that it would pay if Executive was then
a current eligible employee and with family coverage at least as favorable to
Executive as the most extensive healthcare benefit offered by Unigene to any
employee, for a period of eighteen (18) months following the date of
termination, at which time Executive’s healthcare benefits under Unigene’s
healthcare plan will end, and Executive will receive a notification of COBRA
rights.  If for any reason Unigene cannot continue Executive’s
healthcare coverage under the terms of the immediately preceding sentence under
Unigene’s regular healthcare plan after the date of termination, Unigene will
pay Executive’s COBRA payments for a period of eighteen (18) months following
the date of termination.  In no event shall Unigene be required to
provide individual or family healthcare coverage to Executive or his family
except as part of Unigene’s regular healthcare plan or under
COBRA.  Unigene shall not be required to amend its healthcare plan to
comply with this paragraph;
  (4)         All
options currently issued and held by Executive under the terms of the Plan, as
amended (or any predecessor plan) at the time of his termination will vest (if
not already vested) immediately upon the satisfaction of Section 11(c),
including any and all options awarded in 2001, but excluding options granted
pursuant to paragraph 6(c) above, and Executive will thereafter be entitled to
exercise all such options until the earlier of (i) 3 1/2 (three and one half)
years following such termination or (ii) the expiration date of the
option.
  (c)     The
payments and benefits described in Sections 11(b)(1) and 11(b)(3)-(4), to which
Executive would not otherwise be entitled, are contingent and conditioned upon
Executive’s execution and nonrevocation of a general release of all claims
against the Company and all related entities or persons within 60 days of
Executive’s termination of employment.  In the event that Executive
fails to satisfy the obligation in this Section 11(c), Executive agrees that
Company may recover any payments it previously made on Executive’s
behalf  under Section 11(b)(3).
  (d)   
Termination of employment under this Section 11 shall not terminate the
Executive’s obligations under Sections 7, 8 or 13.”
  
 
 4.           Section
13 of the Agreement is hereby amended and restated to read in its entirety as
follows:
  “13.  Non-Competition,
Non-Solicitation, and Non-Disparagement.
 
 (a)           The
Executive hereby agrees that for a period of one year following
the  termination for any reason of his employment under this
Agreement, he will not,  directly or indirectly, engage in any
business involving (a) the development, production  or sale of
Calcitonin products or (b) the development, production or sale of
amidated  peptides anywhere in the world.
 
 (b)           The
Executive hereby agrees that for a period of one year following the termination
for any reason of his employment under this Agreement, he will not directly or
indirectly solicit for employment, employ, engage, advise or recommend to any
other person or entity that they employ or solicit for employment or retention
as an employee or consultant, or otherwise interfere with the relationship of
Company with any person who is an employee of, or exclusive consultant to,
Company.  For a period of one year following the termination for any
reason of his employment under this Agreement, Executive further agrees that he
will not solicit, encourage, or induce any contact, contractor, agent, client,
customer, or the like of Company to terminate its/his/her relationship
(contractual or otherwise) with Company (in whole or in part), or to refrain
from entering into a relationship (contractual or otherwise) with Company,
including without limitation any prospective contact, contractor, agent, client,
customer, or the like of Company.
 
 (c)           Neither
Executive, nor any person acting on behalf of Executive, shall disparage or
cause to be disparaged, whether directly or indirectly, Company or any of its
directors, officers, managers, or employees in any forum or through any medium
of communication.  Neither Company, nor any of its directors or
officers, or anyone acting on their behalf, shall disparage or cause to be
disparaged, whether directly or indirectly, Executive, in any forum or through
any medium of communication.  This subsection shall not preclude
either Executive or Company from enforcing their rights under this Agreement or
from making true statements in response to a statement made by one about the
other.
 
 (d)           The
Executive agrees that the provisions of this Section 13 are necessary and
reasonable to protect the Company in the conduct of its business.  If
any restriction contained in this Section 13 shall be deemed to be invalid or
unenforceable by reason of the extent, duration of geographic scope thereof,
then the Company shall have the right to reduce such extent, duration,
geographic scope or other  provisions thereof, and in their reduced
form such restrictions shall then be enforceable in the manner contemplated
hereby.  The parties agree and intend that Executive’s obligations
under this Section 13 shall be tolled during any period that Executive is in
breach of any of the obligations under this Section 13, so that Company is
provided with the full benefit of the restrictive periods set forth
herein.  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 up to the date of termination, will automatically and
immediately terminate in the event that Executive breaches any of his
obligations under this Section 13.”
 
 
 5.           Section
18 of the Agreement is hereby amended and restated to read in its entirety as
follows:
 
 “18.           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, except that nothing in
this Agreement affects the Nonqualified Deferred Compensation Agreement dated
February 1, 2006, as amended December 22, 2008, which remains in full force and
effect.”
 
 6.           Section
22 of the Agreement is hereby amended and restated to read in its entirety as
follows:
  “22.           Survival
of Terms. If this Agreement is terminated for any reason, the provisions of
Sections 7, 8, 13, and 24 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.”
 
 7.           Section
23 of the Agreement is hereby amended and restated to read in its entirety as
follows:
  “23.  Compliance
with Code Section 409A.
 
 (a)           Notwithstanding
anything to the contrary in this Agreement, no portion of the severance payments
under Section 10 or Section 11 will be payable until Executive has a “separation
from service” from the Company within the meaning of Code
Section 409A.
 
 (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.”
 
 
 8.           A
new Section 24 of the Agreement shall read as follows:
  “24.           D&O
Coverage and Indemnification.  In addition to any rights to
indemnification to which Executive is entitled under the Company’s Certificate
of Incorporation and Bylaws, the Company shall indemnify Executive at all times
during and after his employment terminates for any reason to the maximum extent
permitted under the Delaware General Corporation Law or any successor provision
thereof, including its provisions regarding advancement of costs and attorneys’
fees, in connection with any action, suit, investigation or proceeding based in
whole or in part upon Executive’s actions, inaction, or status as an employee,
officer, or director of Company.  At all times during and after the
Employment Period, Executive shall be covered to the same extent as directors of
the Board or officers under any directors and officers liability insurance
policy maintained in effect by the Company.”
  9.           Except
as expressly amended hereby, the Agreement shall remain unmodified and in full
force and effect.
  
 
  IN
WITNESS WHEREOF, the parties have executed this Second Amendment as of the day
and year first above written.
 
 UNIGENE
      LABORATORIES, INC.By: 
      /s/ William SteinhauerPrinted
      Name:  William SteinhauerTitle:  Vice
      President of FinanceEXECUTIVE/s/ Ronald
      LevyRonald
      Levy