Exhibit
10.13




SEPARATIONAGREEMENT
  This
Separation Agreement (“Agreement”) is between Jay Levy (“Executive”) and Unigene
Laboratories, Inc. (“Unigene”), dated the 16th day of March, 2010.
  WHEREAS,
Executive was employed by Unigene pursuant to an Employment Agreement dated
January 1, 2000, as amended by a First Amendment dated December 22, 2008;
and
 
 WHEREAS,
Unigene will terminate Employee’s employment without “cause,” as that term is
defined in Employee’s Employment Agreement, effective as of the occurrence of
the First Restated Closing under that certain Amended and Restated Financing
Agreement, dated as of March 16, 2010, by and among Unigene, the lenders party
thereto and Victory Park Management, LLC, as agent (the “Termination
Date”).
  NOW,
THEREFORE, in consideration of the mutual promises set forth below, the parties
agree as follows:
  1.           Compensation and
Benefits.
  (a)           Unigene
will pay severance to Executive in a lump sum equal to Executive’s current
annual salary ($71,250), which will be paid as soon as practicable following the
Termination Date, but no later than 90 days thereafter.
  (b)           All
options currently issued and held by Executive as of the Termination Date,
including any under the terms of Unigene’s 2006 Stock-Based Incentive
Compensation Plan, as amended (or any predecessor plan) (the “Plan”), will
remain exercisable until the earlier of (i) three and one-half (3 1/2) years
after Executive’s Termination Date or (ii) the date the exercise period for the
options would have expired if Executive had remained in his current positions as
a director and employee.
  
 (c)           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’s 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 one (1) year following the Termination Date, 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 Termination Date, Unigene will pay Executive’s COBRA payments for a
period of one (1) year following the Termination Date.  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.
  2.           Resignation of Board
Position.  In exchange for the good and valuable consideration
set forth above, Executive will immediately resign from his position as Chairman
of Unigene’s Board of Directors, which resignation shall be effective upon the
Termination Date.  Notwithstanding his resignation, Executive will be
invited as an observer to all future meetings of Unigene’s Board of Directors,
provided Executive executes and delivers to Unigene a confidentiality agreement
in a form satisfactory to Unigene prior to any such meeting.
  3.           D&O Coverage and
Indemnification.  In addition to any rights to indemnification
to which Executive is entitled under Unigene’s Certificate of Incorporation and
Bylaws, Unigene shall indemnify Executive at all times after his employment
terminates pursuant to this agreement 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 Unigene.  At all times during and after the termination of
Executive’s employment, 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 Unigene.
  -2-
 4.           Binding
Effect.  This Agreement is binding upon and shall inure to the
benefit of anyone who succeeds to the rights, interests or responsibilities of
the parties.
  5.           Entire
Agreement.  This Agreement is the entire agreement between
Executive and Unigene with respect to Executive’s termination of employment and
position as Chairman of the Board.  It supersedes any existing oral or
written agreements with respect to Executive’s employment or termination of
employment with Unigene and position as Chairman of the Board.
  6.           Amendment.  This
Agreement cannot be amended, except by a written document signed by the party
against whom enforcement of any such amendment is sought.
  7.           Governing
Law.  This Agreement shall be interpreted in accordance with
the laws of the State of New Jersey, without regard to its principles of
conflicts of law.
 
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text on this page]
 
 
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 IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the day and year above written.
 
 /s/ Jay
Levy
 JAY
LEVY
 
 Dated:  March
16, 2010
 
 
 UNIGENE
LABORATORIES, INC.
 
 
 By: /s/ William
Steinhauer
 
 Name:
William Steinhauer
 Title:  Vice
President of Finance
 
 Dated:  March
16, 2010