EXHIBIT 10.1

                               PURCHASE AGREEMENT


                  THIS PURCHASE  AGREEMENT  ("Agreement") is made as of the 29th
day of  June,  1998  by and  between  Unigene  Laboratories,  Inc.,  a  Delaware
corporation  (the  "Company"),  and The Tail Wind Fund,  Ltd., a British  Virgin
Islands limited liability company (the "Investor").

                  In  consideration  of the mutual  promises made herein and for
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

         1.       Definitions.  The  following  terms, as used herein, have  the
following meanings:

                  1.1 "Affiliate"  means, with respect to any Person,  any other
Person which  directly or indirectly  controls,  is  controlled  by, or is under
common control with, such Person.

                  1.2  "Transaction   Agreements"  means  this  Agreement,   the
Registration Rights Agreement, the Debentures and the Warrants.

                  1.3  "Closing"  means  the  consummation  of the  transactions
contemplated  by this  Agreement,  which  shall  occur  simultaneously  with the
execution hereof.

                  1.4 "Common Stock" means the common stock,  par value $.01 per
share, of the Company.

                  1.5 "Control"  means the  possession , directly or indirectly,
of the power to direct or cause the direction of the  management and policies of
a person,  whether  through the ownership of voting  securities,  by contract or
otherwise.

                  1.6 "Debentures" mean the Convertible Debentures issued to the
Investor in the aggregate  principal amount of $4,000,000,  the form of which is
attached hereto as Exhibit A.

                  1.7 "Material  Adverse Effect" means a material adverse effect
on the (i) condition  (financial or  otherwise),  business,  assets,  results of
operations or prospects of the Company and its  subsidiaries,  taken as a whole;
(ii) ability of the Company to perform any of its material obligations under the
terms of this Agreement;  or (iii) rights and remedies of the Investor under the
terms of this Agreement.

                  1.8 "Person"  means an individual,  corporation,  partnership,
trust, business trust,  association,  joint stock company,  joint venture, pool,
syndicate,  sole  proprietorship,   unincorporated  organization,   governmental
authority or any other form of entity not specifically listed herein.

                  1.9  "Registration  Rights  Agreement"  means the Registration
Rights  Agreement  relating  to  the  Common  Stock  issuable  pursuant  to  the
conversion  of the  Debentures  and the  exercise of the  Warrants,  in the form
attached  hereto as Exhibit B, to be entered into as of the date hereof  between
the Company and the Investor.
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                  1.10 "SEC" means the United  States  Securities  and  Exchange
Commission.

                  1.11 "SEC Filings" has the meaning set forth in Section 4.5.

                  1.12  "Securities"  means the  Debentures,  the  Common  Stock
issuable  upon the  conversion  of, or  payable  as  accrued  interest  on,  the
Debentures,  the  Warrants and the Common  Stock  issuable  upon the exercise of
Warrants.

                  1.13 "1933 Act" means the  Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  1.14 "1934 Act" means the Securities  Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

                  1.15 "Warrants" mean the Warrants issuable upon the conversion
or redemption of the Debentures, the form of which is attached hereto as Exhibit
C.

         2. Purchase and Sale of Debentures.  In  consideration  of the purchase
price and subject to the terms and conditions of this Agreement, and in reliance
on the  representations  and warranties  contained  herein,  the Investor hereby
purchases  and the Company  hereby sells and issues to the  Investor  $4,000,000
principal amount of Debentures in Debenture forms of $200,000 face amount each.

         3. Payment of Purchase Price. Simultaneously with its execution hereof,
the Investor  shall cause the  applicable  purchase  price to be paid in full by
wire  transfer to an  account(s)  designated  to such Investor in writing by the
Company.

         4.  Representations  and Warranties of the Company.  The Company hereby
represents and warrants to the Investor that:

                  4.1 Organization, Good Standing and Qualification. The Company
is a corporation duly incorporated,  validly existing and in good standing under
the laws of the State of  Delaware  and has all  requisite  corporate  power and
authority to carry on its business and own its  properties  as now conducted and
owned. The Company and each of its subsidiaries is duly qualified or licensed to
do business as a foreign  corporation and in good standing in each  jurisdiction
in which the  conduct of its  business or its  ownership  or leasing of property
makes such qualification or licensing necessary unless the failure to so qualify
or be licensed would not have a Material Adverse Effect.

                  4.2  Authorization.  The Company has full corporate  power and
authority  and has  taken  all  requisite  corporate  action  on the part of the
Company,  its  officers,  directors  and  stockholders  necessary  for  (i)  the
authorization,  execution and delivery of the Transaction  Agreements,  (ii) the
performance of all obligations of the Company hereunder or thereunder, and (iii)
the authorization, issuance (and reservation for issuance, in the case of Common
Stock issuable upon conversion of, and as payment of interest on,  Debentures or
exercise  of  Warrants  in  accordance  with their  terms) and  delivery  of the
Securities  in  accordance  with the terms hereof.  The  Transaction  Agreements
constitute the legal, valid and binding obligations of the Company,  enforceable
against the Company in  accordance  with their terms except as such  enforcement
may  be  limited  by  (a)  applicable  bankruptcy,  insolvency,  reorganization,
voidable preference,  fraudulent conveyance and other similar laws affecting the
rights or  remedies  of  creditors  generally  and (b) the  exercise of judicial
discretion in accordance with general principles of equity (whether applied by a
court of law or of equity).
<PAGE>
                  4.3      Valid Issuance.

                           (a) The  Company  has  reserved  3,852,500  shares of
Common Stock for issuance upon conversion of, and as payment of interest on, the
Debentures  and  exercise  of the  Warrants,  and such  shares,  when  issued in
accordance with the respective terms of the Debentures and the Warrants, will be
duly authorized,  validly issued, fully paid,  non-assessable and free and clear
of all  encumbrances  and  restrictions,  except for  restrictions  on  transfer
imposed by applicable securities laws.

                           (b)  The  authorized  capital  stock  of the  Company
consists solely of 60,000,000 shares of Common Stock, of which 38,537,222 shares
are issued and outstanding, and there are no other outstanding shares of capital
stock of the Company.  All of the issued and outstanding shares of the Company's
Common Stock have been duly  authorized  and validly  issued and are fully paid,
nonassessable and free of preemptive rights. No Person is entitled to preemptive
or similar statutory or contractual rights with respect to any securities of the
Company.  Except as set forth on Schedule 4.3 and other than options  granted to
employees,  directors  and  consultants,  there  are  no  outstanding  warrants,
options,  convertible securities or other rights,  agreements or arrangements of
any character under which the Company is or may be obligated to issue any equity
securities  of any kind, or to transfer any equity  securities of any kind,  and
the Company and its  subsidiaries  do not have any present  plan or intention to
issue any equity securities of any kind, or to transfer any equity securities of
any kind owned by them other than as contemplated herein. Except as set forth on
Schedule 4.3, the Company does not know (and has not conducted an investigation)
of any voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among any of the  securityholders  of
the Company  relating  to the  securities  held by them.  Except as set forth on
Schedule  4.3,  the  Company has not granted any Person the right to require the
Company to register any securities of the Company under the 1933 Act, whether on
a demand basis or in  connection  with the  registration  of  securities  of the
Company for its own account or for the account of any other Person.

                           (c) There are  currently  1,913,215  shares of Common
Stock  issuable  pursuant  to  outstanding  options  granted  by the  Company to
directors, employees and consultants. The number of outstanding shares of Common
Stock, as indicated in Section 4.3(b) above, plus the number of shares of Common
Stock  issuable  pursuant to outstanding  rights and agreements  (other than the
Securities)  on a  fully  diluted  basis,  assuming  the  complete  exercise  or
conversion  of all  rights  to  acquire  capital  stock  of the  Company  at the
conversion or exercise  price in effect on the date hereof until such rights and
subsequent  rights  incident to exercise or  conversion  are fully  exercised or
converted for Common Stock, together represent 46,032,308 shares of Common Stock
on the date hereof.

                  4.4  Consents.   Assuming  the  accuracy  of  the   Investor's
representations contained herein, the execution, delivery and performance by the
Company  of the  Transaction  Agreements  and the  offer,  issue and sale of the
Securities  require no consent of,  action by or in respect of, or filing  with,
any Person,  governmental  body,  agency,  or official  other than  filings made
pursuant  to the  Registration  Rights  Agreement,  filings  that have been made
pursuant to applicable state  securities laws and post-sale  filings pursuant to
applicable  state and federal  securities  laws and the  requirements of Nasdaq,
which the Company undertakes to file within the applicable time periods.
<PAGE>
                  4.5  Delivery  of  SEC  Filings;  Business.  The  Company  has
delivered to the Investor true and correct  copies of (i) its most recent Annual
Report on Form 10-K,  (ii) its  quarterly  reports on Form 10-Q for each  fiscal
quarter  subsequent to that fiscal year end, and (iii) any other documents filed
with the SEC since  the  filing of its most  recent  Annual  Report on Form 10-K
(collectively,  the "SEC Filings"). The Company and its subsidiaries are engaged
only in the business described in the SEC Filings and the SEC Filings contain an
accurate description of the business of the Company and its subsidiaries.

                  4.6  Use  of  Proceeds.  The  proceeds  of  the  sale  of  the
Securities  hereunder  shall be used by the Company  for  working and  operating
capital.

                  4.7 No  Material  Adverse  Change.  Since  the  filing  of the
Company's most recent Annual Report on Form 10-K or as otherwise  identified and
described in subsequent  reports filed by the Company  pursuant to the 1934 Act,
there has not been:

                           (i)   any   change   in  the   consolidated   assets,
liabilities,  financial  condition or operating results of the Company from that
reflected in the  financial  statements  included in the  Company's  most recent
Quarterly Report on Form 10-Q, except changes in the ordinary course of business
which have not had, in the aggregate, a Material Adverse Effect;

                           (ii) any  declaration or payment of any dividend,  or
any authorization or payment of any distribution, on any of the capital stock of
the Company, or any redemption or repurchase of any securities of the Company;

                           (iii)  any  material  damage,  destruction  or  loss,
whether or not covered by insurance,  to any assets or properties of the Company
or any of its subsidiaries;

                           (iv)  any  waiver  by  the  Company  or  any  of  its
subsidiaries of a valuable right or of a material debt owed to it;

                           (v) any  satisfaction or discharge of any lien, claim
or  encumbrance  or  payment  of any  obligation  by the  Company  or any of its
subsidiaries,  except  in the  ordinary  course  of  business  and  which is not
material to the assets,  properties,  financial condition,  operating results or
business of the Company and its subsidiaries  taken as a whole (as such business
is presently conducted and as it is proposed to be conducted);

                           (vi) any  material  change or amendment to a material
contract or arrangement by which the Company or any of their subsidiaries or any
of its assets or properties is bound or subject;

                           (vii)  any  material   change  in  any   compensation
arrangement  or  agreement  with  any  employee  of  the  Company  or any of its
subsidiaries  who now earns,  or who would earn as a result of such  change,  in
excess of $100,000 per annum,  or any other officer of the Company or any of its
subsidiaries;

                           (viii)  any  labor   difficulties   or  labor   union
organizing  activities  with  respect to  employees of the Company or any of its
subsidiaries;

                           (ix) any  transaction  entered into by the Company or
any of its  subsidiaries  other  than in the  ordinary  course  of  business  or
pursuant to this Agreement; or
<PAGE>
                           (x) any other  event or  condition  of any  character
that might have a Material Adverse Effect.

                  4.8      SEC Filings; Material Contracts.

                           (a) As of its filing  date,  each report filed by the
Company  with the SEC  pursuant  to the  1934  Act,  complied  as to form in all
material  respects with the requirements of the 1934 Act and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein,  in the light of the circumstances
under which they were made, not misleading.

                           (b) Each  registration  statement  and any  amendment
thereto  filed by the  Company  pursuant  to the 1933  Act,  as of the date such
statement or  amendment  became  effective,  complied as to form in all material
respects  with  the 1933  Act and did not  contain  any  untrue  statement  of a
material fact or omit to state any material  fact required to be stated  therein
or necessary to make the statements therein not misleading;  and each prospectus
filed pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of
the  closing of any sale of  securities  pursuant  thereto  did not  contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein,  in the light of the circumstances
under which they were made, not misleading.

                           (c) Except those filed as exhibits to the SEC Filings
and as set forth on Schedule 4.3 hereto,  there are no agreements or instruments
currently  in force and effect that  constitute a "material  contract"  (as such
term is defined in Item  601(b)(10)  of  Regulation  S-K) of the Company or that
constitute a warrant, option,  convertible security or other right, agreement or
arrangement  of any character  under which the Company is or may be obligated to
issue any equity security of any kind, or to transfer any equity security of any
kind, other than options issued to directors, employees and consultants.

                  4.9 No Breach,  Violation or Default. The execution,  delivery
and  performance of the  Transaction  Agreements by the Company and the issuance
and sale of the Securities  (assuming the accuracy of the representations of the
Investor  contained  herein)  will not result in a breach or violation of any of
the terms and  provisions  of, or  constitute  a default  under (i) any statute,
rule,  regulation  or order of any  governmental  agency  or body or any  court,
domestic or foreign,  having  jurisdiction over the Company or any subsidiary of
the  Company  or any of their  properties,  or (ii)  except to the  extent  such
breach,  violation  or default  would not have a Material  Adverse  Effect,  any
agreement or instrument  to which the Company or any such  subsidiary is a party
or by which the Company or any such subsidiary is subject, or the Certificate of
Incorporation or By Laws of the Company or any such subsidiary.

                  4.10  Tax   Returns   and   Payments.   The  Company  and  its
subsidiaries  have  correctly  and  timely  prepared  and filed all tax  returns
required to have been filed by it with all appropriate federal,  state and local
governmental  agencies  and  timely  paid all taxes owed by them.  The  charges,
accruals  and  reserves  on the books of the  Company  and its  subsidiaries  in
respect of taxes for all fiscal  periods are adequate in all material  respects,
and there are no material  unpaid  assessments  of the Company or any subsidiary
nor,  to the  knowledge  of the  Company,  any basis for the  assessment  of any
additional  taxes,  penalties or interest for any fiscal period or audits by any
federal,  state or local taxing authority except such as which are not material.
<PAGE>
All  material  taxes and other  assessments  and levies  that the Company or any
subsidiary  is required  to  withhold  or to collect for payment  have been duly
withheld and  collected and paid (if due) to the proper  governmental  entity or
third party.  There are no tax liens or claims pending or threatened against the
Company or any subsidiary or any of their respective  assets or property.  There
are no outstanding tax sharing agreements or other such arrangements between the
Company or any subsidiary and any other corporation or entity.

                  4.11  Title to  Properties.  Except  as  disclosed  in the SEC
Filings  or  Schedule  4.11,  the  Company  and its  subsidiaries  have good and
marketable  title to all real  properties  and all other  properties  and assets
owned by them, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use made or
currently planned to be made thereof by them; and except as disclosed in the SEC
Filings,  the  Company  and its  subsidiaries  hold any leased  real or personal
property  under  valid and  enforceable  leases  with no  exceptions  that would
materially  interfere with the use made or currently  planned to be made thereof
by them.

                  4.12  Certificates,  Authorities and Permits.  The Company and
its subsidiaries possess adequate certificates, authorities or permits issued by
appropriate  governmental  agencies or bodies  necessary to conduct the business
now operated by them and have not received any notice of proceedings relating to
the  revocation or  modification  of any such  certificate,  authority or permit
that, if determined  adversely to the Company or any of its subsidiaries,  would
individually or in the aggregate have a Material Adverse Effect.

                  4.13 No Labor Disputes. No labor dispute with the employees of
the Company or any  subsidiary  exists or, to the  knowledge of the Company,  is
imminent that might have a Material Adverse Effect.

                  4.14  Intellectual  Property.  Except as set forth in Schedule
4.14, the Company and its subsidiaries  own or possess  adequate  trademarks and
trade  names  and  have all  other  rights  to  inventions,  know-how,  patents,
copyrights,   confidential   information   and   other   intellectual   property
(collectively,  "Intellectual  Property  Rights"),  free and clear of all liens,
security interests,  charges,  encumbrances,  equities and other adverse claims,
necessary to conduct the business now operated by them, or presently employed by
them, and presently  contemplated  to be operated by them, and have not received
any notice of  infringement  of or conflict with asserted  rights of others with
respect to any Intellectual Property Rights that, if determined adversely to the
Company or any of its subsidiaries,  would individually or in the aggregate have
a Material  Adverse  Effect.  Schedule 4.14 sets forth a description of all U.S.
patents  owned  or  possessed  by the  Company  or any of its  subsidiaries.  No
proprietary  technology of any Person was used in the design or  development  by
the Company of (or otherwise with respect to) any of the  Intellectual  Property
Rights,  which  technology  was not  properly  acquired by the Company from such
Person.

                  4.15 Environmental Matters. Neither the Company nor any of its
subsidiaries is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court,  domestic or foreign,  relating
to the use,  disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the  environment or human exposure to hazardous
or toxic substances  (collectively,  "Environmental Laws"), owns or operates any
real  property   contaminated   with  any  substance  that  is  subject  to  any
Environmental  Laws,  is  liable  for any  off-site  disposal  or  contamination
pursuant to any  Environmental  Laws, or is subject to any claim relating to any
Environmental  Laws,  which violation,  contamination,  liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that might lead to such a claim.
<PAGE>
                  4.16 Litigation. Except as disclosed in the SEC Filings, there
are no pending actions,  suits or proceedings  against or affecting the Company,
any of  its  subsidiaries  or  any  of  their  respective  properties  that,  if
determined  adversely  to  the  Company  or  any  of  its  subsidiaries,   would
individually  or in the aggregate  have a Material  Adverse  Effect or which are
otherwise  material  in the  context of the sale of the  Securities;  and to the
Company's  knowledge,  no such actions,  suits or proceedings  are threatened or
contemplated.

                  4.17 Financial  Statements.  The financial statements included
in each SEC Filing  present fairly and  accurately  the  consolidated  financial
position  of the Company  and its  subsidiaries  as of the dates shown and their
consolidated  results of operations  and cash flows for the periods  shown,  and
such  financial  statements  have been  prepared in  conformity  with  generally
accepted accounting principles applied on a consistent basis.

                  4.18  Insurance  Coverage.  The Company  and its  subsidiaries
maintain  in full force and effect  insurance  coverage  that is  customary  for
comparably  situated companies for the business being conducted,  and properties
owned or leased, by the Company and its subsidiaries, and the Company reasonably
believes such insurance coverage to be adequate against all liabilities,  claims
and risks  against which it is customary for  comparably  situated  companies to
insure.

                  4.19 Compliance with Nasdaq  Continued  Listing  Requirements.
The  Company  is in  compliance  with  all  applicable  Nasdaq  National  Market
continued listing  requirements.  There are no proceedings pending or threatened
against the Company relating to the continued listing of the Common Stock on the
Nasdaq  National  Market and the Company has not  received any notice of, nor to
the knowledge of the Company is there any basis for, the delisting of the Common
Stock from the Nasdaq National Market.

                  4.20  Acknowledgment  of  Dilution.  The  number  of shares of
Common  Stock   issuable  upon   conversion  of  the   Debentures  may  increase
substantially in certain circumstances,  including the circumstances wherein the
trading price of the Common Stock declines. The Company's executive officers and
directors have studied and fully  understand the nature of the Securities  being
sold hereunder and recognize  that they have a potential  dilutive  effect.  The
board of  directors  of the Company  has  concluded  in its good faith  business
judgment that such issuance is in the best interests of the Company. The Company
acknowledges  that its obligations to issue shares of Common Stock in accordance
with the terms of the Debentures  upon conversion of the Debentures or to redeem
Debentures are binding upon it and  enforceable  regardless of the dilution that
such issuance may have on the ownership  interest of the other  stockholders  of
the Company. In addition,  the Company  acknowledges that in the event there are
insufficient  shares  of  Common  Stock  to  fund  the  full  conversion  of all
Debentures,  it will have an obligation to redeem the balance of the  Debentures
for cash.

                  4.21  Brokers  and  Finders.  The  Company has taken no action
which  would give rise to any claim by any  Person  for a  broker's  commission,
finder's fee or similar  payment by the Company or any Investor  related to this
Agreement or the  transactions  contemplated  hereby,  except for amounts  which
shall be paid exclusively by the Company pursuant to separate agreement.

                  4.22 No  Directed  Selling  Efforts or  General  Solicitation.
Neither  the  Company  nor any Person  acting on its behalf  has  conducted  any
general  solicitation  or  general  advertising  (as  those  terms  are  used in
Regulation D under the 1933 Act) in connection  with the offer or sale of any of
the Securities.
<PAGE>
                  4.23 No  Integrated  Offering.  Neither the Company nor any of
its  Affiliates,  nor any Person acting on its or their behalf has,  directly or
indirectly,  made any offers or sales of any security or solicited any offers to
buy any security,  under  circumstances  that would require  registration of the
offer and sale of the Securities  pursuant to this Agreement  under the 1933 Act
or cause  the  offering  of the  Securities  pursuant  to this  Agreement  to be
integrated  with any prior  offering(s)  by the Company for purposes of the 1933
Act or any applicable shareholder approval provisions, including those under the
rules of Nasdaq.

                  4.24  Disclosures.  No  representation or warranty made by the
Company under any Section hereof or in the Transaction Agreements,  contains any
untrue  statement of a material fact or omits to state a material fact necessary
to make the respective  statements  contained herein or therein, in light of the
circumstances under which the statements were made, not misleading.

         5. Representations and Warranties of the Investor.  The Investor hereby
represents and warrants to the Company that:

                  5.1  Organization  and  Existence.  The  Investor is a validly
existing  corporation  or  limited  liability  company  and  has  all  requisite
corporate  or limited  liability  company  power and  authority to invest in the
Securities pursuant to this Agreement.

                  5.2 Authorization.  The execution, delivery and performance by
the Investor of the Transaction Agreements have been duly authorized and each of
the Transaction  Agreements constitutes the valid and legally binding obligation
of the Investor, enforceable against the Investor in accordance with its terms.

                  5.3 Purchase  Entirely for Own Account.  The  Securities to be
received  by  such  Investor  hereunder  are  being  acquired  entirely  for the
Investor's  own  account,  not as nominee  or agent,  and not with a view to the
resale or  distribution  of any part  thereof,  and the  Investor has no present
intention of selling,  granting any participation in, or otherwise  distributing
the same. The Investor is not a registered broker dealer or an entity engaged in
the business of being a broker dealer.

                  5.4 Investment  Experience.  The Investor acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and  experience in financial or business  matters that it
is capable of  evaluating  the merits and risks of the  investment  contemplated
hereby.

                  5.5  Disclosure  of  Information.  The  Investor  has  had  an
opportunity to ask questions and receive  answers from  authorized  officers and
other representatives of the Company regarding the Company, its business and the
terms and  conditions of the offering of the  Securities  and has been furnished
with  all  information  such  Investor  deemed  necessary  to make  an  informed
investment  decision with respect to the Securities.  Neither such inquiries nor
any other due diligence  investigation  conducted by the Investor  shall modify,
amend or affect the  Investor's  right to rely on the Company's  representations
and warranties contained in this Agreement.

                  5.6 Restricted  Securities.  The Investor understands that the
Securities  are  characterized  as  "restricted  securities"  under the  federal
securities  laws  inasmuch  as they are being  acquired  from the  Company  in a
transaction  not  involving  a public  offering  and that  under  such  laws and
applicable  regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
<PAGE>
                  5.7  Legends.   Subject  to  subparagraph  (c)  below,  it  is
understood  that  certificates  evidencing the Securities may bear one or all of
the following legends:

                           (a) "The securities  represented by this  certificate
have  not  been  registered  under  the  Securities  Act of  1933  or any  state
securities  laws.  Such securities have been acquired for investment and may not
be  pledged,  offered,  sold  or  transferred  except  in  compliance  with  the
registration  requirements  of the Securities  Act of 1933 and applicable  state
securities  laws or unless an exemption from such  registration  requirements is
available  and upon  delivery to the  Company,  if  requested,  of an opinion of
counsel reasonably  acceptable to the Company, in form and substance  reasonably
satisfactory to the Company, that registration is not required."

                           (b) If  required by the  authorities  of any state in
connection with the issuance of sale of the  Securities,  the legend required by
such state authority.

                           (c) Upon  registration  for resale under the 1933 Act
pursuant to the Registration Rights Agreement,  all certificates  evidencing the
Common Stock so registered shall be issued free of such restrictive legends.

                  5.8  Accredited  Investor.   The  Investor  is  an  accredited
investor as defined in Rule 501(a) of Regulation  D, as amended,  under the 1933
Act.

                  5.9 No General Solicitation. The Investor did not learn of the
investment in the  Securities as a result of any public  advertising  or general
solicitation.

         6.  Registration  Rights Agreement.  The parties  acknowledge and agree
that part of the inducement for the Investor to enter into this Agreement is the
Company's  execution  and delivery of the  Registration  Rights  Agreement.  The
parties acknowledge and agree that simultaneously with the execution hereof, the
Registration  Rights  Agreement  is being duly  executed  and  delivered  by the
parties thereto.

         7. Covenants and Agreements of the Company.

                  7.1 Capital Raising Limitations.  From the date hereof through
the  180-day  period  following  the  later  of (i)  the  effective  date of the
registration  statement  contemplated by the Registration Rights Agreement,  and
(ii) January 1, 1999,  plus that number of days during which any Blackout Period
(as defined in the Registration Rights Agreement) has been in existence, without
the prior written consent of the Investor (which consent may be withheld in such
Investor's  sole  discretion),  the Company shall not issue or sell, or agree to
issue  or  sell,  for  cash in a  non-public  offering  (a) any  debt or  equity
securities  that are  convertible  into,  exchangeable  or  exercisable  for, or
include the right to receive  additional  shares of Common Stock either (i) at a
conversion,  exercise or exchange  rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the  initial  issuance of such debt or equity  securities;  or (ii) with a
fixed  conversion,  exercise or exchange price that is subject to being reset at
some future date after the initial  issuance of such debt or equity  security or
upon the  occurrence  of specified or contingent  events  directly or indirectly
related to the  business of the Company or the market for the Common  Stock (but
<PAGE>
excluding standard stock split  anti-dilution  provisions) or (b) any securities
of the Company  pursuant to an "equity line"  structure  which  provides for the
sale,  from time to time, of securities of the Company which are  registered for
resale pursuant to the 1933 Act (the transactions described in this sentence are
collectively  referred to as the "Variable Rate  Transactions").  For so long as
the  Investor  holds a  Debenture,  Warrant  or  Common  Stock  issued  upon the
conversion or exercise of Debentures or Warrants, the Company shall give written
notice to the Investor of the  Company's  intention to engage in a Variable Rate
Transaction at least ten days prior to the date on which the Company  intends to
execute an agreement  with respect  thereto,  and for so long as the  Investor's
consent is required hereunder, request the Investor's written consent thereto.

                  7.2 Opinion of  Counsel.  The  Company  has  delivered  to the
Investor,  simultaneously with the execution and delivery of this Agreement, the
opinion of  Covington & Burling,  counsel to the Company,  in the form  attached
hereto as Exhibit D.

                  7.3  Reports.  So long as the  Investor  holds  Debentures  or
Warrants,  the Company will deliver to such Investor at the address provided for
in Section 11.4 the following  reports by overnight courier (except as otherwise
provided in subparagraph (d) below):

                           (a) Quarterly Reports. As promptly as practicable and
in any event within five days after the same is issued or filed,  the  Company's
Form 10-Q or, in the absence of a Form 10-Q,  consolidated balance sheets of the
Company  and  its  subsidiaries  as at the end of such  period  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
such period and for the portion of the  Company's  fiscal year ended on the last
day of such  quarter,  all in  reasonable  detail and  certified  by a principal
financial  officer  of the  Company to have been  prepared  in  accordance  with
generally  accepted  accounting  principles,   subject  to  year-end  and  audit
adjustments.

                           (b) Annual Reports. As promptly as practicable and in
any event within five days after the same is issued or filed, the Company's Form
10-K or, in the  absence  of a Form  10-K,  consolidated  balance  sheets of the
Company  and  its  subsidiaries  as at the  end of such  year  and  the  related
consolidated  statements  of earnings,  stockholders'  equity and cash flows for
such  year,  all in  reasonable  detail  and  accompanied  by the report on such
consolidated  financial statements of an independent certified public accountant
selected by the Company.

                           (c)  Securities  Filings.  As promptly as practicable
and in any event within five days after the same are issued or filed,  copies of
(i) all notices, proxy statements,  financial statements,  reports and documents
that the Company or any subsidiary shall send or make available generally to its
stockholders  or to  financial  analysts,  and (ii)  all  periodic  and  special
reports,  documents and registration  statements  (other than on Form S-8) which
the Company or any subsidiary  furnishes or files, or any officer or director of
the  Company or any of its  subsidiaries  (in such  person's  capacity  as such)
furnishes or files with the SEC.

                           (d)  Press  Releases.  Any  press  release  or  other
publicity concerning the Transaction Agreements or the transactions contemplated
thereby  shall be  submitted  by  facsimile to the Investor for comment at least
forty-eight (48) hours prior to issuance.
<PAGE>
                           (e)  Other   Information.   Such  other   information
relating to the Company or its  subsidiaries as from time to time may reasonably
be requested by the Investor,  provided the Company produces such information in
its ordinary course of business.

                  7.4 No Conflicting Agreements.  The Company will not, and will
not permit its  subsidiaries  to, take any action,  enter into any  agreement or
make any  commitment  that would  conflict or interfere in any material  respect
with its obligations to the Investor under the Transaction Agreements.

                  7.5  Insurance.  So long as the Investor  holds  Debentures or
Warrants,  the Company shall,  and shall cause each  subsidiary to, have in full
force and effect (a) insurance  reasonably believed by Company to be adequate on
all assets and activities of a type customarily  insured by companies  similarly
situated to the Company,  covering property damage and loss of income by fire or
other  casualty,  and (b)  insurance  reasonably  believed  by the Company to be
adequate  protection against all liabilities,  claims and risks against which it
is  customary  for  companies   similarly   situated  to  the  Company  and  the
subsidiaries to insure.

                  7.6  Compliance  with Laws.  The Company  will use  reasonable
efforts,  and will cause each of its subsidiaries to use reasonable  efforts, to
comply in all material  respects with all applicable laws,  rules,  regulations,
orders  and  decrees  of all  governmental  authorities,  except  to the  extent
non-compliance  (in one instance or in the aggregate)  would not have a Material
Adverse Effect.

         8. Covenants and Agreements of the Investor.

                  (a) Resales.  The  Investor  agrees that it shall not make any
offers  or  sales  of the  Securities  other  than  pursuant  to a  registration
statement under the 1933 Act or pursuant to an exemption from registration under
the 1933 Act. The Investor agrees that it will comply with applicable prospectus
delivery requirements.

                  (b) Low Trades.  The Investor agrees that it will not directly
or indirectly  engage in any activity that is intended to reduce the closing bid
price for the Common Stock on the Nasdaq  National Market System on any day that
is within  the period of  eighteen  (18)  trading  days  immediately  prior to a
Conversion Date (as defined in the Debenture) for such Investor.

         9. Survival. All representations,  warranties, covenants and agreements
contained in this Agreement shall be deemed to be  representations,  warranties,
covenants  and  agreements as of the date hereof and shall survive the execution
and  delivery of this  Agreement  for a period of five years and six months from
the date of this Agreement;  provided, however, that the provisions contained in
Section 7 hereof shall survive in accordance with the terms thereof.

         10.      Arbitration.

                  10.1 Scope. Resolution of any and all disputes arising from or
in connection with the Transaction Agreements,  whether based on contract, tort,
common  law,  equity,  statute,  regulation,  order or  otherwise  ("Disputes"),
including disputes arising in connection with claims by third persons,  shall be
exclusively  governed by and settled in accordance  with the  provisions of this
Section 10; provided,  that the foregoing shall not preclude  equitable or other
judicial  relief to enforce the provisions of this Section 10 or to preserve the
status quo pending resolution of Disputes hereunder.
<PAGE>
                  10.2. Binding Arbitration.  The parties hereby agree to submit
all Disputes to arbitration for final and binding  resolution.  Either party may
initiate such  arbitration  by delivery of a demand  therefor (the  "Arbitration
Demand") to the other party.  The arbitration  shall be conducted in Washington,
D.C. by a sole arbitrator selected by agreement of the parties not later than 10
days after  delivery of the  Arbitration  Demand,  or,  failing such  agreement,
appointed  pursuant  to  the  Commercial   Arbitration  Rules  of  the  American
Arbitration Association,  as amended from time to time (the "AAA Rules"). If the
arbitrator becomes unable to serve, his successor(s) shall be similarly selected
or appointed.

                  10.3.  Procedure.  The arbitration shall be conducted pursuant
to the Federal  Arbitration Act and such procedures as the Parties may agree or,
in the  absence  of or  failing  such  agreement,  pursuant  to the  AAA  Rules.
Notwithstanding  the  foregoing  (a) each  party  shall  provide  to the  other,
reasonably  in  advance of any  hearing,  copies of all  documents  that a party
intends to present in such  hearing;  (b) all hearings  shall be conducted on an
expedited schedule;  and (c) all proceedings shall be confidential,  except that
either party may at its expense make a stenographic record thereof.

                  10.4.  Timing.  The arbitrator shall complete all hearings not
later than 90 days after his or her selection or  appointment,  and shall make a
final award not later than 30 days  thereafter.  The arbitrator  shall apportion
all costs and expenses of the arbitration,  including the arbitrator's  fees and
expenses,  and fees and expenses of experts  ("Arbitration  Costs")  between the
prevailing  and  non-prevailing  party as the  arbitrator  shall  deem  fair and
reasonable.  In  circumstances  where a Dispute  has been  asserted  or defended
against  on grounds  that the  arbitrator  deems  manifestly  unreasonable,  the
arbitrator may assess all Arbitration Costs against the non-prevailing party and
may include in the award the prevailing  party's attorney's fees and expenses in
connection  with any and all proceedings  under this Section 9.  Notwithstanding
the  foregoing,  in no event  may the  arbitrator  award  multiple  or  punitive
damages.

         11.      Miscellaneous.

                  11.1  Successors  and  Assigns.  This  Agreement  may  not  be
assigned by a party hereto without the prior written  consent of the other party
hereto,  except that without the prior written consent of the Company, but after
notice duly given,  the  Investor  may assign its rights and delegate its duties
hereunder  to an  Affiliate,  and  without  the  prior  written  consent  of the
Investor,  but after  notice duly  given,  the Company may assign its rights and
delegate its duties  hereunder to any  successor-in-interest  corporation in the
event  of a  merger  or  consolidation  of the  Company  with  or  into  another
corporation,  or any merger or consolidation of another corporation with or into
the Company that results  directly or indirectly  in an aggregate  change in the
ownership  or  control  of more  than 50% of the  voting  rights  of the  equity
securities  of the  Company,  or the  sale  of all or  substantially  all of the
Company's assets.  The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective  permitted  successors and assigns
of the parties.  Nothing in this Agreement,  express or implied,  is intended to
confer  upon  any  party  other  than the  parties  hereto  or their  respective
successors and assigns any rights, remedies,  obligations,  or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

                  11.2  Counterparts.  This  Agreement may be executed in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.
<PAGE>
                  11.3 Titles and  Subtitles.  The titles and subtitles  used in
this  Agreement  are used for  convenience  only and are not to be considered in
construing or interpreting this Agreement.

                  11.4 Notices.  Unless otherwise provided,  any notice required
or permitted  under this Agreement shall be given in writing and shall be deemed
effectively  given  only  upon  delivery  to each  party to be  notified  by (i)
personal delivery, (ii) telex or telecopier,  upon receipt of the correct answer
back, or (iii)  internationally  recognized overnight air courier,  addressed to
the party to be notified at the address as follows,  or at such other address as
such party may designate by ten days' advance  written notice given hereunder to
the other party:

                           If to the Company:

                                    Unigene Laboratories, Inc.
                                    110 Little Falls Road
                                    Fairfield, NJ 07004
                                    Attn:  Dr. Warren Levy
                                    Telephone:  (973) 882-0860
                                    Facsimile:   (973) 227-6088

                                    with a copy to:

                                    Covington & Burling
                                    1201 Pennsylvania Avenue, N.W.
                                    Washington, D.C. 20044-7566
                                    Attn:  D. Michael Lefever, Esq.
                                    Telephone:  (202) 662-5276
                                    Facsimile:   (202) 662-6291

                           If to the Investor:

                                    The Tail Wind Fund, Ltd.
                                    Windermere House
                                    404 East Bay Street
                                    P.O. Box SS-5539
                                    Nassau, Bahamas
                                    Attn:  Sherrill Pletscher
                                    Telephone:  242-393-8777
                                    Facsimile:   242-393-9021

                                    with a copy to:

                                    The Tail Wind Fund, Ltd.
                                    c/o European American Securities, Inc.
                                    One Regent Street, 4th Floor
                                    London SW1Y 4NS
                                    England
                                    Attn:  David Crook
                                    Telephone:  44-171-468-7660
                                    Facsimile:   44-171-468-7657

                                    and with a copy to:

                                    Bryan Cave LLP
                                    700 Thirteenth Street, N.W.
                                    Washington, D.C.  20005
                                    Attn:  LaDawn Naegle
                                    Telephone:  202/508-6046
                                    Facsimile:   202/508-6200
<PAGE>
                  11.5  Expenses.  The Company shall pay at the Closing only the
expenses of Tail Wind Inc. in the amount of $40,000.

                  11.6 Acknowledgment of Common Stock Issuance  Limitation.  The
parties  hereto  acknowledge  and agree that the  Company  shall be  required to
reserve for  issuance  and issue a maximum of  3,852,500  shares of Common Stock
upon the conversion  of, and payment of interest on,  Debentures and exercise of
the  Warrants,  and in no event shall the Company be required to issue in excess
of  3,852,500  shares  of  Common  Stock in  connection  with  the  transactions
contemplated by the Transaction Agreements.  In the event the conversion of, and
payment of interest on, Debentures and exercise of Warrants would require in the
aggregate  in excess of  3,852,500  shares  of  Common  Stock,  the terms of the
Debenture and Warrants provide, in lieu thereof,  for payments by the Company to
the Investor(s) and  Warrantholder(s)  in cash,  which payments  include certain
redemption premiums and may include additional interest charges.

                  11.7 Amendments and Waivers. Any term of this Agreement may be
amended and the  observance of any term of this  Agreement may be waived (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  only with the written  consent of the Company and the Investor.
Any amendment or waiver  effected in  accordance  with this  paragraph  shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.

                  11.8 Severability. If one or more provisions of this Agreement
is held to be  unenforceable  under  applicable  law,  such  provision  shall be
excluded  from  this  Agreement  and the  balance  of this  Agreement  shall  be
interpreted  as if such  provision  were so excluded and shall be enforceable in
accordance with its terms.

                  11.9 Entire Agreement. This Agreement,  including the Exhibits
and Schedules  hereto,  and the  Registration  Rights  Agreement  constitute the
entire  agreement  between the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements and  understandings,  both
oral and written,  between the parties with respect to the subject matter hereof
and thereof.

                  11.10  Further  Assurances.  The  parties  shall  execute  and
deliver  all such  further  instruments  and  documents  and take all such other
actions as may reasonably be required to carry out the transactions contemplated
hereby and to evidence the fulfillment of the agreements herein contained.

                  11.11 Applicable Law. This Agreement shall be governed by, and
construed in accordance  with, the laws of the State of Delaware  without regard
to principles of conflicts of laws.
 <PAGE>


                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
as of the date first above written.

The Company:                                     UNIGENE LABORATORIES, INC.


                                                 By:    /S/ WARREN P. LEVY
                                                        ------------------
                                                 Name:  Warren P. Levy
                                                 Title: President

The Investor:                                    THE TAIL WIND FUND, LTD.


                                                 By:    /S/ SHERRILL PLETSCHER
                                                        ----------------------
                                                 Name:  Sherrill Pletscher
                                                 Title: Authorized Signatory

Amount: $4 million
        $4,000,000


<PAGE>
                              CONVERTIBLE DEBENTURE
                                                                       Exhibit A

$4,000,000.00                                                      June 29, 1998

                  FOR VALUE RECEIVED,  the  undersigned,  Unigene  Laboratories,
Inc., a Delaware  corporation (the  "Company"),  promises to pay to the order of
The Tail Wind Fund,  Ltd., or the holder hereof (the "Holder"),  on December 31,
2001 ("Due Date"), the principal sum of Four Million Dollars  ($4,000,000),  or,
if less, the unpaid  principal  amount  outstanding at such time, in either case
together with all accrued and unpaid interest thereon. This Debenture may not be
redeemed or prepaid by the  Company,  in whole or in part,  except as  expressly
provided herein.

                  The  Company  also  promises  to pay to  the  Holder  interest
semi-annually  from the date hereof on the unpaid  principal  amount hereof at a
rate of five  percent  (5%)  per  annum.  Interest  on this  Debenture  shall be
computed on the basis of a 360-day year of twelve 30-day  months,  provided that
for any period  shorter than a month,  interest  shall be computed on the actual
number of days elapsed. Interest through the last day of the preceding six-month
period  shall be payable on or before  the fifth day of each  January  and July,
commencing in July, 1998.

                  This  Debenture  is one of the  Debentures  referred to in and
issued  pursuant to the  Purchase  Agreement  dated June 29,  1998,  between the
Company and the Investor identified therein (the "Purchase  Agreement"),  and is
entitled to the  benefits  of, and subject to, the terms and  provisions  of the
Purchase Agreement.

                  1.       Payments

                  All  payments  by the  Company  hereunder  shall be payable in
lawful  money  of the  United  States  in  immediately  available  funds by wire
transfer to an account  designated  in writing by the Holder,  or in the case of
conversion  of  principal  and,  at the option of the Company  unless  otherwise
specified herein, payment of interest, in shares of common stock of the Company,
par value $.01 per share (the "Common  Stock"),  valued at the Conversion  Price
(for the  conversion of  principal)  and at the Market Price (for the payment of
interest),  not later  than 5:00 p.m.,  Eastern  time on the day when due to the
Holder at the address set forth on the Conversion  Notice (defined below), or at
such other place as the Holder hereof may from time to time designate in writing
to the Company. Whenever any payment to be made pursuant to this Debenture shall
be stated to be due on a public holiday, Saturday or Sunday, such payment may be
made on the next  succeeding  business day. Such  extension of time shall not in
such case be included in computing  interest,  if any, in  connection  with such
payment.

                  2.       Conversion of Debenture

                  (a)  Subject  to the  limitations  set forth in  Section  2(l)
below,  from time to time,  until all unpaid principal of and accrued and unpaid
interest on this Debenture is paid, the Holder of this Debenture  shall have the
right to  convert  at any time from and after  January  1,  1999,  up to fifteen
percent  of the  original  principal  amount of this  Debenture  per month (on a
non-cumulative  basis)  (the  "Conversion  Limit")  into (i) an  amount  of duly
authorized,  fully paid and non-assessable  shares of Common Stock determined by
dividing such amount to be so converted by the Conversion Price (defined below),
<PAGE>
and (ii) warrants  expiring five years after the Conversion Date (defined below)
in the form attached as Exhibit C to the Purchase  Agreement to acquire (subject
to the terms of such  warrants) a number of shares of Common Stock equal to four
percent (4%) of the number of shares of Common Stock issuable pursuant to clause
(i)  above at an  exercise  price  per  share  of  Common  Stock of one  hundred
twenty-five  percent  (125%)  of the  Conversion  Price,  all upon the terms and
subject  to  the  conditions  hereinafter  specified  in  this  Section  2.  The
Conversion Limit shall cease to apply and the Holder shall not be limited in the
amounts it may convert of this Debenture in the event the Company  consummates a
Variable Rate Transaction (as defined in Section 7.1 of the Purchase Agreement).
The Conversion Limit shall be twenty percent of the original principal amount of
this Debenture for any calendar month in which on the last  Conversion  Date (as
defined  below) in such month the Market Price (as defined below) is equal to or
greater  than one  hundred  twenty  percent  (120%) of the Cap Price (as defined
below).

                  (b) If the Market  Price  (defined  below) on the business day
immediately  preceding the Conversion  Date (defined  below) is equal to or less
than $1.1156, and a Holder elects to convert all or part of the principal amount
of the Debenture as otherwise permitted  hereunder,  the Company, at its option,
may redeem the principal amount of the Debenture that is the subject of a Notice
of Conversion  (defined  below) at a price equal to such  principal  amount plus
interest on such amount from the date hereof to the Conversion Date at a rate of
twelve percent (12%) per annum payable only in cash (the "Redemption Amount") in
lieu of  converting  such  principal  amount,  provided  that the Company  gives
written  notice  to such  holder  of the  Company's  intention  to  redeem  such
principal  amount by 8:00 p.m.  Eastern time on the next  business day following
the date such Notice of  Conversion  is  received;  provided  further  that upon
receipt  of such  notice  from the  Company  of its  intention  to  redeem  such
principal amount, the holder shall have the right within one (1) business day to
rescind such Notice of Conversion.  In addition,  upon any such redemption,  the
Company  shall issue to such holder a five year warrant in the form  attached as
Exhibit C to the  Purchase  Agreement  to acquire  (subject to the terms of such
warrants) a number of shares of Common Stock equal to twenty-five  percent (25%)
of the shares of Common  Stock that would have been issued upon such  conversion
at an exercise price per share equal to one hundred  thirty-five  percent (135%)
of the  Conversion  Price on the  Conversion  Date  specified  in the  Notice of
Conversion.  If the  Company so elects to redeem  such  principal  amount,  upon
surrender of the Debenture as described in Section 2(c) below, the Company shall
pay the Redemption  Amount by wire transfer of immediately  available  funds and
issue the warrant to such Holder  within three (3) business days of surrender in
accordance  with such  Holder's  instructions,  or it shall forfeit its right to
redeem  under this  Section  2(b) with  respect  to all of the then  outstanding
principal  amount of the  Debenture,  and the Holder  may,  at its  election  by
written notice to the Company,  within the next five (5) business days,  proceed
to convert the principal amount of the Debenture in accordance with the original
Notice of Conversion or rescind such Notice of Conversion.  If no such notice is
received  within  such  five  day  period  after  the  Company  fails to pay the
Redemption  Amount,  the Holder  shall be deemed to have elected to proceed with
conversion in accordance with the original Notice of Conversion.  The Holder may
at any time submit to the Company a written request to advise the Holder whether
the Company  would,  if presented  with a Notice of Conversion  within seven (7)
business days of such request,  elect to redeem under this Section 2(b), and the
Company  shall  answer  such  request in writing by the close of business on the
following business day of such request or forfeit its right to so redeem on such
a conversion actually noticed within such seven (7) days of the request.
<PAGE>
                  (c) In order to convert this  Debenture  into shares of Common
Stock, the Holder shall: (i) fax a copy of a fully executed notice of conversion
in the form  attached  hereto  ("Notice  of  Conversion")  to the Company at the
office  of the  Company  or its  designated  transfer  agent,  if  any,  for the
Debentures,  which  notice  shall  specify  the  amount of the  Debenture  to be
converted,  the applicable  Conversion Price, and a calculation of the number of
shares of Common Stock issuable upon such conversion prior to 6:00 p.m., Eastern
time (the "Conversion  Notice Deadline") on the date of conversion  specified on
the Notice of  Conversion;  and (ii)  surrender  the  original  Debenture  being
converted,  along  with the  original  of the  Notice of  Conversion  as soon as
practicable  thereafter  (and in any case no later than the fifth  business  day
following  the  Conversion  Date) to the office of the  Company or the  transfer
agent,  if any,  for the  Debentures;  provided  that the  Company  shall not be
obligated to issue  certificates  evidencing the shares of Common Stock issuable
upon such conversion  unless either the Debenture is delivered to the Company or
its transfer agent as provided  above, or the Holder notifies the Company or its
transfer agent that such original  Debenture has been lost,  stolen or destroyed
and provides indemnity or security satisfactory to the Company. In the case of a
dispute  as to the  calculation  of the  Conversion  Price,  the  Company  shall
promptly  issue such number of shares of Common  Stock that are not  disputed in
accordance with  subparagraph  (d) below.  The Company shall submit the disputed
calculations  to its outside  accountant  via facsimile  within two (2) business
days of receipt of the Notice of  Conversion.  The  accountant  shall  audit the
calculations  and notify the Company and the Holder of the results no later than
the fifth business day after the date it receives the disputed calculations. The
accountant's calculation shall be deemed conclusive absent manifest error.

                  (d)  Subject  to the  limitations  set forth in  Section  2(l)
below, upon the surrender of the Debenture as described above accompanied by the
Notice of  Conversion,  the Company  shall issue and,  within three (3) business
days (the  "Delivery  Period")  after such surrender (or, in the case of a lost,
stolen  or  destroyed   Debenture,   after   provision   of  an  agreement   and
indemnification  by the  Holder to the  Company  satisfactory  to the  Company),
direct its transfer agent to deliver to or upon the order of the Holder (i) that
number of shares of Common Stock for the portion of the  Debenture  converted as
shall be  determined  in  accordance  herewith,  (ii) the warrants  described in
Section 2(a) above,  and (iii) a new Debenture  representing  the balance of the
principal  amount of the Debenture  surrendered  but not  converted,  if any. In
addition to any other remedies available to the holder, including actual damages
and/or  equitable  relief,  the Company shall pay to the Holder $250 in cash for
the third day beyond the last day of such Delivery Period that the Company fails
to deliver Common Stock or the warrants issuable upon surrender of the Debenture
with a Notice of Conversion,  and $500 per day in cash for each day  thereafter,
until such time as the earlier of the date that the Company  has  delivered  all
such Common Stock and warrants,  and the fifth day beyond such Delivery  Period.
Such  cash  amount  shall be paid to the  Holder  by the  fifth day of the month
following  the month in which it has accrued.  In the event the Company fails to
deliver such Common Stock and warrants  prior to the  expiration of the five (5)
business  day period  after the last day of the  Delivery  Period for any reason
(whether due to a requirement of law or a stock exchange or otherwise), (i) such
holder shall be entitled to (in addition to any other remedies  available to the
holder)  Redemption  Default  Payments in  accordance  with  Section 2(i) hereof
beginning on the  expiration of such five (5) business day period,  and (ii) the
right to cancel the conversion.

                  (e) No  fractional  shares will be issued upon a conversion of
the Debenture.  If any conversion of this Debenture would result in a fractional
share of Common  Stock or the  right to  acquire  a  fractional  share of Common
Stock, such fractional share shall be disregarded.
<PAGE>
                  (f) The  "Conversion  Date" shall be the date specified in the
Notice of  Conversion,  provided,  that (i) the  advance  copy of the  Notice of
Conversion  is faxed to the  Company  before  6:00 p.m.,  Eastern  time,  on the
Conversion Date, and (ii) the original  Debenture is surrendered  along with the
original of the Notice of Conversion as soon as practicable  thereafter  (but no
later than the fifth  business day after the  Conversion  Date) to the office of
the  Company or the  transfer  agent for the  Debentures.  The person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record  holder or holders of such  securities as
of the  Conversion  Date and all  rights  with  respect to the  Debenture  fully
surrendered shall forthwith  terminate except the right to receive the shares of
Common Stock or other securities or property issuable on such conversion.

                  (g) The  Conversion  Price per share  ("Conversion  Price") at
which shares of Common Stock shall be issuable upon conversion of this Debenture
shall be equal to the lesser of (i) one hundred  and ten  percent  (110%) of the
average of the closing bid prices of the Common  Stock as reported by the Nasdaq
Stock  Market for each trading day in the fourth  calendar  quarter of 1998 (the
"Cap Price"),  and (ii) 100% of the Market Price on the business day immediately
preceding the Conversion Date. "Market Price" shall mean the average of the four
lowest  closing bid prices of the Common  Stock as reported by The Nasdaq  Stock
Market over the eighteen (18) trading day period ending on the date in question.

                  (h) In order to  prevent  dilution  of the  conversion  rights
granted  under  this  Section  2,  the  Conversion  Price  shall be  subject  to
adjustment from time to time as follows:

                            (i) If at any time the number of outstanding  shares
of Common Stock is changed by a stock split,  reverse stock split,  subdivision,
combination or stock dividend or other distribution payable in additional shares
of Common  Stock,  then and in each such event the Cap Price shall be  equitably
adjusted to reflect such change in number of shares.

                            (ii) If at any time or from  time to time  after the
date  hereof  there is a capital  reorganization  of the  Common  Stock in which
Common Stock  issuable upon the conversion of the Debentures is changed into the
same or a  different  number of shares of any other  class or  classes of stock,
whether by  recapitalization,  reclassification  or otherwise,  then and in each
such event and as a part of such reorganization, provision shall be made so that
the Holder of this  Debenture  shall  thereafter  be  entitled  to receive  upon
conversion of the Debentures  the number of shares of stock or other  securities
or  property  to  which a  holder  of the  number  of  shares  of  Common  Stock
deliverable upon conversion if effected immediately prior to such reorganization
would  have been  entitled  on such  capital  reorganization.  In any such case,
appropriate  adjustment  shall be made in the  application  of the provisions of
this Section  2(h) with  respect to the rights of the Holders of this  Debenture
after the  reorganization  to the end that the  provisions  of this Section 2(h)
shall be  applicable  after  that  event and be as nearly  equivalent  as may be
practicable,  including, by way of illustration and not limitation, by equitably
adjusting the Cap Price.

                            (iii) If any event  occurs of the type  contemplated
by the  provisions of this Section 2(h) but not  expressly  provided for by such
provisions (including,  without limitation, the granting generally to holders of
Common Stock of stock appreciation rights,  phantom stock rights or other rights
with equity  features),  then the  Company's  board of  directors  shall make an
appropriate  adjustment  in the Cap  Price so as to  protect  the  rights of the
Holder of this Debenture.
<PAGE>
                            (iv)   Immediately   upon  any   adjustment  of  the
Conversion Price, the Company shall give written notice thereof to the Holder of
this  Debenture,   setting  forth  in  reasonable   detail  and  certifying  the
calculation of such adjustment.

                  (i) The  Company  represents  that it has  reserved  3,852,500
shares of Common  Stock  (the  "Reserved  Shares")  solely for the  purposes  of
effecting the conversion (and paying interest  thereon) of all Debentures issued
pursuant to the  Purchase  Agreement  and the  exercise of warrants  issued upon
conversion  or  redemption of such  Debentures  and covenants  that it will keep
reserved  such  number of shares  until the same are  issued (if  necessary)  as
described  above.  The Company  covenants that all shares of Common Stock issued
upon conversion of (and in payment of interest on) this Debenture, shall be duly
and  validly  issued,  fully  paid  and  non-assessable.  If  conversion  is not
permitted by reason of Section 2(l) below upon receipt of a Conversion Notice in
accordance  with the terms of  Section  2(c) of this  Debenture  (a  "Conversion
Prohibition"),  the Company shall redeem this  Debenture in cash at a redemption
price equal to 120% of the then  outstanding  principal amount of the Debenture,
plus accrued but unpaid interest on the Debenture within three (3) business days
of receipt of such Conversion  Notice.  Within three days of the occurrence of a
Conversion  Prohibition,  the Company shall notify each holder of a Debenture in
writing of such  occurrence  and shall  redeem  all  outstanding  Debentures  in
accordance  with this  Section  2(i) upon receipt by the Company of a Conversion
Notice and the Debenture to which such Conversion Notice relates. If the Company
fails  to  redeem  the  outstanding  principal  balance  of and pay the  accrued
interest  in  cash on this  Debenture  within  three  (3)  business  days of the
occurrence of the  Conversion  Prohibition  (a  "Redemption  Default"),  then in
addition to the foregoing,  the rate of interest on this Debenture shall, to the
maximum  extent  allowed by  applicable  law, be  permanently  increased  by two
percent (2%) per annum (i.e.,  from 5% to 7%) commencing on the first day of the
thirty (30) day period (or part  thereof)  following a  Redemption  Default;  an
additional two percent (2%) per annum commencing on the first day of each of the
second  and  third  such  thirty  (30) day  periods  (or part  thereof);  and an
additional  one  percent  (1%) per annum on the  first  day of each  consecutive
thirty (30) day period (or part thereof)  thereafter  until such securities have
been duly redeemed as herein provided;  provided that in no event shall the rate
of interest exceed the lesser of (i) twenty percent (20%) per annum and (ii) the
highest rate permitted by applicable law to be charged on commercial  loans. All
such interest  shall be payable  monthly in cash and any such interest  which is
not paid when due shall, to the maximum extent permitted by law, accrue interest
until  paid at the  rate  from  time  to  time  applicable  to  interest  on the
Debentures as to which the  Redemption  Default has  occurred.  In the event the
Company  pays any  interest on the  Debentures  and it is  determined  that such
interest  was paid at a rate in  excess  of the legal  maximum  rate,  then that
portion of the interest  payment  representing  an amount in excess of the legal
maximum rate shall be deemed a payment of principal and shall be applied against
the principal of the Debenture. Nothing herein shall limit the Holder's right to
pursue the  immediate  redemption  of the  Debenture  and payment of accrued but
unpaid  interest  upon a Redemption  Default,  and in addition to the rights and
remedies  provided in this  Section  2(i),  each holder  shall have the right to
pursue  all  remedies  available  at law or in  equity  (including  a decree  of
specific performance and/or injunctive relief).
<PAGE>
                  (j)   Notwithstanding   anything  to  the   contrary   herein,
conversion of this Debenture shall not be permitted, the Holder shall not submit
a Notice of  Conversion  and the  Company  shall not pay any  amounts due to the
Holder  of this  Debenture  in the  form of  shares  of  Common  Stock,  if such
conversion or payments would result in the Holder of this Debenture  owning more
than  4.99% of the  issued  and  outstanding  shares of Common  Stock  following
conversion or payment (such  percentage to be calculated in accordance with Rule
13d-3 promulgated under the Securities Exchange Act of 1934).

                  (k) The  issuance  of  certificates  for  shares of the Common
Stock upon the conversion of this Debenture  shall be made without charge to the
Holder  hereof  for  any  issuance  tax in  respect  of  the  issuance  of  such
certificates  or other cost  incurred  by the  Company in  connection  with such
conversion and the related issuance of shares of Common Stock.

                  (l)  Notwithstanding  anything  herein  to the  contrary,  the
Company  shall have no  obligation  to issue more than an aggregate of 3,852,500
shares of Common Stock (i) upon the conversion of all Debentures issued pursuant
to the Purchase Agreement,  (ii) as payment of interest on such Debentures,  and
(iii) upon the exercise of any warrants  issued upon conversion or redemption of
such  Debentures.  In the event such shares are  insufficient for such purposes,
the provisions of Section 2(i) shall apply.

                  3. Covenant. The Company agrees at all times that it will not,
by any  amendment of the  Company's  Articles of  Incorporation,  or through any
consolidation, merger, reorganization, transfer of assets, dissolution, issue or
sale of securities or any other voluntary  action,  seek to avoid the observance
or performance  hereof, but will at all times take such actions as are necessary
or appropriate in order to protect the rights of the Holder of this Debenture.

                  4.       Events of Default

                  (a) An "Event of Default"  shall exist if any of the following
occurs and is continuing:

                            (i)  Failure  to make any  payment of  principal  or
interest  on the  Debenture  when such  payment is due (other  than a failure to
comply with the  provisions of Section  2(i),  which is addressed by the default
provisions therein contained) or any provision of the Purchase;

                            (ii)  Failure to comply  with or breach of any other
material  provision of this  Debenture  (other than a failure to comply with the
provisions of Section 2(i), which is addressed by the default provisions therein
contained) or any provision of the Purchase Agreement and such failure continues
for more than five (5) business  days after the earlier of (i) the Holder hereof
having given written  notice of such failure to the Company and (ii) the Company
obtaining knowledge of such failure;

                            (iii) Any levy,  seizure,  attachment,  execution or
similar process shall be levied on a material portion of the Company's property;
or

                            (iv) A receiver, custodian, liquidator or trustee of
the Company,  or of any of the  property of the  Company,  is appointed by court
order;  or the  Company is  adjudicated  bankrupt  or  insolvent;  or any of the
property  of the  Company  is  sequestered  by court  order;  or a  petition  to
reorganize the Company under any bankruptcy, reorganization or insolvency law is
filed against the Company and is not dismissed within sixty (60) days after such
filing;  or the Company  files a  voluntary  bankruptcy  petition or  requesting
<PAGE>
reorganization   or   arrangement   under  any  provision  of  any   bankruptcy,
reorganization  or  insolvency  law, or  consents to the filing of any  petition
against it under any such law; or the Company makes a general assignment for the
benefit of its  creditors,  or admits in writing its  inability to pay its debts
generally  as they become due,  or  consents to the  appointment  of a receiver,
trustee or  liquidator  of the Company or of all or any part of the  property of
the Company.

                  (b) If an Event of Default  occurs,  then this Debenture shall
accrue additional  interest on all unpaid amounts of principal and interest from
the date of the Event of  Default  at a rate  equal to the  lesser of (i) twenty
percent (20%) per annum or (ii) the highest amount allowable by law.

                  (c) If an Event of  Default  exists,  then the  holder of this
Debenture may exercise any right,  power or remedy conferred upon it by law, and
shall have the right to declare by written  notice the entire  principal and all
interest  accrued on such  Debenture to be, and such Debenture  shall  thereupon
become, forthwith due and payable without any declaration,  presentment, demand,
protest  or  notice of any kind and the  Company  shall  immediately  pay to the
Holder of this  Debenture  the entire unpaid  principal and interest  accrued on
such Debenture.

                  5. Extraordinary Transactions. If at any time (i) there occurs
any consolidation or merger of the Company with or into any other corporation or
other  entity or person and the Company is the  surviving  corporation  or there
occurs any other  corporate  reorganization  or transaction or series of related
transactions,  and as a result thereof the current  shareholders  of the Company
after such merger, consolidation, reorganization or other transaction own in the
aggregate  less than 50% of the voting  power and common  equity of the ultimate
parent  corporation  or other entity  surviving  or resulting  from such merger,
consolidation,  reorganization or other transaction,  (ii) the Company transfers
all or substantially all of the Company's assets to another corporation or other
entity  or  person  or  (iii)  the  Company  shall  fix a  record  date  for the
declaration  of a special  distribution  or dividend,  whether  payable in cash,
securities  or assets  (other  than shares of Common  Stock) (an  "Extraordinary
Transaction"),  then and in each such event  thirty  (30) days  advance  written
notice  of such  Extraordinary  Transaction  shall be given  to the  Holder  and
provision shall be made so that the Holder of this Debenture, at its option, (a)
may participate in any such  Extraordinary  Transaction  with the holders of the
Common Stock on the same basis as if the  outstanding  principal  amount of this
Debenture  had  been  converted  one  day  prior  to the  announcement  of  such
Extraordinary  Transaction  regardless of any conversion  limitations imposed by
Section 2(a) above (provided,  however, that the Holder shall not be entitled to
vote on such  transaction  or have any other  approval  rights as a Common Stock
holder by reason of the Holder's  ownership of this Debenture absent conversion)
and provided  that the Company may not exercise  its right of  redemption  under
Section  2(b);  or (b) may require that the Company  redeem this  Debenture at a
redemption price equal to 120% of the then  outstanding  principal amount of the
Debenture,  plus  accrued but unpaid  interest on the  Debenture.  Notice of the
Holder's election under this Section 6 shall be given not less than fifteen (15)
days prior to the effective date of such Extraordinary Transaction.

                  6.  Registration.  The Holder of this Debenture is entitled to
the  benefit of certain  registration  rights in respect of the shares of Common
Stock into which this Debenture may be converted  pursuant to that  Registration
Rights Agreement dated effective June 29, 1998. In the event that at any time or
from time to time  there is a  Blackout  Period  (as that term is defined in the
<PAGE>
Registration  Rights Agreement),  the Due Date hereunder shall be extended for a
period  equal  to 1.5  times  the  number  of  days  in  such  Blackout  Period.
Furthermore, additional provisions pertaining to the suspension of effectiveness
of such  registration  statement set forth in the Registration  Rights Agreement
shall be  applicable  in the event of a Blackout  Period,  and are  specifically
incorporated by reference herein.

                  7.       Miscellaneous

                  (a) In the case of an Event of Default,  the  Company,  to the
extent permitted by law, waives  presentment,  demand,  notice,  protest and all
other demands or notices in connection with the enforcement of this Debenture.

                  (b) No delay or  omission by the Holder  hereof in  exercising
any right or remedy  hereunder  shall  constitute  a waiver of any such right or
remedy.  A waiver on one occasion shall not operate as a bar to or waiver of any
such right or remedy on any future occasion.

                  (c) The Company shall pay all reasonable costs and expenses of
collection,  including attorney's fees, incurred or paid by the Holder hereof in
enforcing this Debenture and the obligations evidenced hereby.

                  (d) This Debenture may be amended only by written agreement of
the Company and the Holder hereof.

                  (e) This  Debenture  is  governed  by the laws of the State of
Delaware.

                  (f) In the event that the Holder  notifies  the  Company  that
this Debenture has been mutilated,  lost, stolen or destroyed,  the Company will
issue  a  replacement  Debenture  identical  in all  respects  to  the  original
Debenture  (except for registration  number and the then  outstanding  principal
amount,  if different than that shown on the original  Debenture)  provided that
the Holder surrenders for cancellation its Debenture  certificate in the case of
a mutilated  certificate or provides  evidence of lost, theft or destruction and
security or indemnity  satisfactory to the Company in the case of a lost, stolen
or destroyed certificate.

                  (g) The Holder may,  subject to  compliance  with the Purchase
Agreement and applicable  federal and state securities laws,  transfer or assign
this Debenture or any interest herein and may mortgage, encumber or transfer any
of its rights or  interest  in and to this  Debenture  or any part  hereof  and,
without limitation,  each assignee,  transferee and mortgagee (which may include
any  affiliate  of the  Holder)  shall have the right to  transfer or assign its
interest.  The  Debenture  shall in all cases be binding on the  Company and its
successors  and  inure to the  benefit  of the  Holder  and its  successors  and
assigns.

                  IN WITNESS  WHEREOF,  the Company has caused this Debenture to
be executed and delivered by its duly authorized  officer as of the day and year
first written above.


                                                      UNIGENE LABORATORIES, INC.


                                                     By:    ____________________
                                                     Title: ____________________
[Corporate Seal]


<PAGE>
                           UNIGENE LABORATORIES, INC.
                              CONVERTIBLE DEBENTURE
                              NOTICE OF CONVERSION


UNIGENE LABORATORIES, INC.
110 Little Falls Road
Fairfield, NJ 07004

         The  undersigned  hereby  elects  to  convert  $_______________  of the
outstanding  principal  amount of the Convertible  Debenture  represented by the
within  certificate at a Conversion Price of  $___________,  for, and to acquire
thereunder  _______________  shares of Common  Stock  ("Conversion  Shares")  as
provided for therein,  and requests that  certificates for the Conversion Shares
be issued as follows:

                           --------------------------------
                           Name
                           --------------------------------
                           Address
                           --------------------------------

                           --------------------------------
                           Federal Tax Identification No.
                           or Social Security No.

and, if the amount of the principal of the Convertible Debenture being converted
hereby shall not be all of the principal amount of such  Convertible  Debenture,
that a new Convertible  Debenture for the balance of such Convertible  Debenture
be  issued  forthwith  to the  Holder  or the  undersigned's  Assignee  as below
indicated and delivered to the address stated below.

Dated:___________________, ____

Note: The signature must correspond with the name    Signature:_________________
of the registered Holder as written on the first
page of the Convertible Debenture in every
particular, without alteration or enlargement or
any change whatever, unless the Convertible
Debenture has been assigned.
                                                     ___________________________
                                                     Name (please print)

                                                     ___________________________

                                                     ___________________________

                                                     Address

                                                     ___________________________
                                                     Federal Identification or
                                                     Social Security No.

                                                     Assignee:
                                                     ___________________________
                                                     ___________________________
                                                     ___________________________
                                                     ___________________________

<PAGE>


                                                                       Exhibit B
                          REGISTRATION RIGHTS AGREEMENT



For Registration  Rights  Agreement see Exhibit 10.2 to the Company's  Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.

<PAGE>
                                                                       Exhibit C

         THIS WARRANT HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933,
AS AMENDED,  AND MAY NOT BE SOLD,  TRANSFERRED,  PLEDGED OR  HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION  STATEMENT  COVERING THIS WARRANT UNDER SAID ACT OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT.

         VOID AFTER 5:00 P.M.  EASTERN  TIME ON _______  __,  20__  ("EXPIRATION
DATE").


                           UNIGENE LABORATORIES, INC.

                      WARRANT TO PURCHASE ______ SHARES OF
             COMMON STOCK, PAR VALUE $.01 PER SHARE ("Common Stock")

         This is to  certify  that,  for VALUE  RECEIVED,  _____________________
("Warrantholder"),  is entitled to purchase,  subject to the  provisions of this
Warrant, from Unigene Laboratories, Inc., a Delaware corporation ("Company"), at
any time not later than 5:00 P.M.,  Eastern time, on the Expiration  Date, at an
exercise  price per share  equal to $____ (the  exercise  price in effect  being
herein called the "Warrant Price"),  ______ shares ("Warrant  Shares") of Common
Stock.  The number of Warrant Shares  purchasable  upon exercise of this Warrant
and the  Warrant  Price  shall be  subject  to  adjustment  from time to time as
described herein.

         Section 1.  Registration.  The  Company  shall  maintain  books for the
transfer  and  registration  of the  Warrant.  Upon the initial  issuance of the
Warrant,  the Company  shall issue and  register  the Warrant in the name of the
Warrantholder.

         Section  2.  Transfers.   As  provided  herein,   the  Warrant  may  be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended  ("Securities  Act") or an exemption  from  registration
thereunder. Subject to such restrictions, the Company shall transfer the Warrant
from  time to time  upon the  books to be  maintained  by the  Company  for that
purpose, upon surrender thereof for transfer properly endorsed or accompanied by
appropriate  instructions for transfer upon any such transfer, and a new Warrant
shall be issued to the transferee and the surrendered  Warrant shall be canceled
by the Company.

         Section 3. Exercise of Warrant.  Subject to the provisions  hereof, the
Warrantholder  may  exercise  the  Warrant  in whole or in part at any time upon
surrender of the Warrant,  together with  delivery of the duly executed  Warrant
exercise form attached hereto (the "Exercise Agreement"),  to the Company during
normal business hours on any business day at the Company's  principal  executive
offices (or such other  office or agency of the Company as it may  designate  by
notice to the holder hereof). The Warrantholder will not be required to make any
cash payment  upon  exercise  hereunder,  but shall only be entitled to effect a
cashless exercise of this Warrant for that number of Warrant Shares indicated in
the Exercise  Agreement.  The Warrant Shares so purchased  shall be deemed to be
issued to the holder  hereof or such holder's  designee,  as the record owner of
such shares, as of the close of business on the date on which this Warrant shall
have been  surrendered  (or evidence of loss,  theft or destruction  thereof and
security or indemnity  satisfactory  to the Company) and the completed  Exercise
Agreement  shall have been  delivered.  Certificates  for the Warrant  Shares so
purchased, representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof within a reasonable time, not
<PAGE>
exceeding  three (3)  business  days,  after  this  Warrant  shall  have been so
exercised.  The certificates so delivered shall be in such  denominations as may
be requested by the holder  hereof and shall be  registered  in the name of such
holder or such other name as shall be designated by such holder. If this Warrant
shall have been exercised only in part,  then,  unless this Warrant has expired,
the Company shall, at its expense, at the time of delivery of such certificates,
deliver  to the holder a new  Warrant  representing  the  number of shares  with
respect to which this Warrant shall not then have been exercised.

                  To effect  the  cashless  exercise,  the  Warrantholder  shall
include  in the  Exercise  Agreement  a  calculation  of the number of shares of
Common Stock to be issued determined by multiplying the number of Warrant Shares
to which it would  otherwise be entitled by a fraction,  the  numerator of which
shall be the  difference  between the Market Price per share of the Common Stock
on the date of exercise  and the Warrant  Price,  and the  denominator  of which
shall be such Market Price per share of the Common Stock. For this purpose,  the
"Market  Price" of the Common  Stock  shall be the  closing  price of the Common
Stock as  reported  by the  Nasdaq  National  Market  on the  trading  day first
preceding the date in question.

                  Each exercise hereof shall constitute the  representation  and
warranty  of the  Warrantholder  to the  Company  that the  representations  and
warranties  contained in Article 5 of the Purchase  Agreement (as defined below)
are true and correct in all material respects as of the time of such exercise.

         Section 4.  Compliance  with the Securities  Act of 1933.  Neither this
Warrant nor the Common Stock issued upon exercise  hereof nor any other security
issued or issuable  upon  exercise of this Warrant may be offered or sold except
as provided in this  agreement and in conformity  with the  Securities  Act, and
then only  against  receipt of an agreement of such person to whom such offer of
sale is made to comply with the provisions of this Section 4 with respect to any
resale or other  disposition of such security.  The Company may cause the legend
set forth on the first page of this  Warrant to be set forth on each  Warrant or
similar legend on any security issued or issuable upon exercise of this Warrant,
unless  counsel for the Company is of the opinion as to any such  security  that
such legend is unnecessary.

         Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes  attributable to the initial  issuance of Warrant Shares issuable upon the
exercise  of the  Warrant;  provided,  however,  that the  Company  shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any  certificates  for Warrant  Shares in a
name other than that of the registered holder of the Warrant in respect of which
such shares are issued,  and in such case,  the Company shall not be required to
issue or deliver any  certificate  for Warrant  Shares or any Warrant  until the
person requesting the same has paid to the Company the amount of such tax or has
established  to the  Company's  satisfaction  that such tax has been  paid.  The
holder shall be responsible  for income taxes due under federal or state law, if
any such tax is due.

         Section 6. Mutilated or Missing Warrants.  In case the Warrant shall be
mutilated,  lost, stolen, or destroyed,  the Company shall issue in exchange and
substitution of and upon  cancellation of the mutilated  Warrant,  or in lieu of
and  substitution  for the Warrant lost,  stolen or destroyed,  a new Warrant of
like tenor and for the  purchase  of a like number of Warrant  Shares,  but only
upon receipt of evidence  reasonably  satisfactory  to the Company of such loss,
theft or  destruction  of the  Warrant,  and with  respect to a lost,  stolen or
destroyed Warrant, reasonable indemnity or bond, if requested by the Company.
<PAGE>
         Section 7. Reservation of Common Stock.  The Company hereby  represents
and  warrants  that  there  have been  reserved,  and the  Company  shall at all
applicable  times keep reserved until issued (if necessary) as  contemplated  by
this Section 7, out of the  authorized  and  unissued  Common  Stock,  3,852,500
shares to provide for the exercise of the rights of purchase  represented by the
Warrant, the conversion of $4,000,000 principal amount of Convertible Debentures
(and the payment of  interest  thereon)  issued by the  Company  pursuant to the
Purchase  Agreement,  dated June 29, 1998,  between the Company and the Investor
named therein (the  "Purchase  Agreement"),  and all other warrants to be issued
upon conversion or redemption of such Debentures. The Company further represents
and warrants that the Registrar and Transfer Company, the transfer agent for the
Common Stock ("Transfer  Agent"),  and every  subsequent  transfer agent for the
Common Stock or other shares of the Company's  capital  stock  issuable upon the
exercise  of any of the right of  purchase  or  conversion  aforesaid,  shall be
irrevocably  authorized  and  directed  at all  times to issue  such  number  of
authorized  and unissued  shares of Common  Stock as shall be issuable  upon the
proper exercise  hereof.  The Company agrees that all Warrant Shares issued upon
exercise  of the Warrant  shall be, at the time of delivery of the  certificates
for such  Warrant  Shares,  duly  authorized,  validly  issued,  fully  paid and
non-assessable  shares of Common Stock of the  Company.  The Company will keep a
conformed  copy of this Warrant on file with the  Transfer  Agent and with every
subsequent  transfer agent for the Common Stock or other shares of the Company's
capital stock  issuable upon the exercise of the rights of purchase  represented
by the Warrant.  The Company  will supply from time to time the  Transfer  Agent
with duly executed stock certificates required to honor the outstanding Warrant.
Notwithstanding  anything  herein to the  contrary,  the  Company  shall have no
obligation  to issue more than an aggregate of 3,852,500  shares of Common Stock
(the  "Reserved  Shares")  (i)  upon the  conversion  of all  Debentures  issued
pursuant  to the  Purchase  Agreement,  (ii)  as  payment  of  interest  on such
Debentures,  and (iii) upon the exercise of this Warrant and all other  warrants
issued  upon  conversion  or  redemption  of such  Debentures.  In the event the
Company does not have a sufficient number of shares of Reserved Shares available
to satisfy an exercise  hereunder,  upon receipt of the Exercise Agreement on or
prior  to  the  Expiration  Date  the  Company  shall  immediately   notify  the
Warrantholder  of such fact and shall pay to the  Warrantholder in cash the cash
value of the Warrant Shares otherwise issuable pursuant to the cashless exercise
by  multiplying  that number of Warrant  Shares by the Market  Price (as defined
above) of the Common Stock.

         Section 8.        [Intentionally reserved.]

         Section 9. Adjustments.  Subject and pursuant to the provisions of this
Section  9, the  Warrant  Price and  number of  Warrant  Shares  subject to this
Warrant  shall  be  subject  to  adjustment  from  time  to  time  as set  forth
hereinafter.
<PAGE>
                  (a) If the  Company  shall  at any  time or from  time to time
while the Warrant is  outstanding,  pay a dividend or make a distribution on its
Common Stock in shares of Common  Stock,  subdivide  its  outstanding  shares of
Common Stock into a greater number of shares or combine its  outstanding  shares
into a smaller number of shares or issue by  reclassification of its outstanding
shares of Common  Stock any  shares of its  capital  stock  (including  any such
reclassification  in  connection  with a  consolidation  or  merger in which the
Company  is the  continuing  corporation),  then the  number of  Warrant  Shares
purchasable  upon  exercise  of the  Warrant  and the  Warrant  Price in  effect
immediately  prior to the date upon which such change  shall  become  effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the  Warrantholder  would have received if the Warrant
had been exercised  immediately  prior to such event.  Such adjustment  shall be
made successively whenever any event listed above shall occur.

                  (b) If any  capital  reorganization,  reclassification  of the
capital  stock of the  Company,  consolidation  or  merger of the  Company  with
another corporation in which the Company is not the survivor,  or sale, transfer
or other disposition of all or substantially all of the Company's  properties to
another   corporation   shall  be  effected,   then,  as  a  condition  of  such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition,   lawful  and  adequate   provision  shall  be  made  whereby  each
Warrantholder  shall  thereafter have the right to purchase and receive upon the
basis and upon the  terms and  conditions  herein  specified  and in lieu of the
Warrant Shares  immediately  theretofore  issuable upon exercise of the Warrant,
such shares of stock,  securities  or  properties  as may be issuable or payable
with  respect  to or in  exchange  for a number of Warrant  Shares  equal to the
number of Warrant Shares immediately  theretofore  issuable upon exercise of the
Warrant, had such reorganization, reclassification, consolidation, merger, sale,
transfer or other  disposition not taken place, and in any such case appropriate
provision  shall be made  with  respect  to the  rights  and  interests  of each
Warrantholder  to  the  end  that  the  provisions  hereof  (including,  without
limitations,  provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock,  securities or  properties  thereafter  deliverable  upon the exercise
thereof.  The Company  shall not effect any such  consolidation,  merger,  sale,
transfer  or  other  disposition  unless  prior  to or  simultaneously  with the
consummation  thereof  the  successor  corporation  (if other than the  Company)
resulting from such  consolidation or merger,  or the corporation  purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall
assume the  obligation  to deliver to the holder of the  Warrant  such shares of
stock,  securities  or assets as, in accordance  with the foregoing  provisions,
such holder may be entitled to  purchase  and the other  obligations  under this
Warrant.  The  provisions  of  this  paragraph  (b)  shall  similarly  apply  to
successive reorganizations,  reclassifications,  consolidations, mergers, sales,
transfers or other dispositions.

                  (c) In case  the  Company  shall  fix a  payment  date for the
making of a  distribution  to all holders of Common  Stock  (including  any such
distribution  made in  connection  with a  consolidation  or merger in which the
Company is the continuing  corporation)  of evidences of  indebtedness or assets
(other than cash  dividends or cash  distributions  payable out of  consolidated
earnings or earned surplus or dividends or distributions  referred to in Section
9(a)),  or  subscription  rights or warrants,  the Warrant Price to be in effect
after such payment date shall be determined by multiplying  the Warrant Price in
effect  immediately  prior to such payment date by a fraction,  the numerator of
<PAGE>
which shall be the total number of shares of Common Stock outstanding multiplied
by the Market Price per share of Common Stock (as determined pursuant to Section
3),  less the  fair  market  value  (as  determined  by the  Company's  Board of
Directors  in good  faith)  of said  assets  or  evidences  of  indebtedness  so
distributed,  or of such subscription rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock outstanding multiplied
by such Market Price per share of Common Stock.  Such  adjustment  shall be made
successively whenever such a payment date is fixed.

                  (d) If the  Company  shall  at any  time or from  time to time
after  the date of  issuance  hereof  issue or sell in a  financing  transaction
(which,  for the avoidance of doubt, shall not include any sales or issuances of
Common Stock after the date hereof pursuant to contractual obligations in effect
on the date hereof) in which the Company  receives at least $2 million,  (A) any
shares of Common Stock for a consideration per share less than the lesser of (i)
the Market  Price (as defined  above) on the date of such  issuance and (ii) the
Warrant Price, or (B) any securities  convertible into shares of Common Stock or
any  options,  warrants or other rights to purchase  Common Stock  ("Convertible
Securities") for which the conversion or exercise price (which, for the purposes
of this  Section  9(d),  shall be the total  obtained by dividing  (x) the total
amount  received  by the  Company  as  consideration  for the  issuance  of such
Convertible  Securities,  plus any amount payable to the Company upon conversion
or exercise  thereof,  by (y) the number of shares of Common Stock issuable upon
the  conversion  or exercise  thereof) is less than the lesser of (i) the Market
Price (as  defined  above)  on the date of such  issuance  and (ii) the  Warrant
Price,  then the  Warrant  Price  shall be reduced to a price  equal to such per
share consideration,  or conversion or exercise price. Such adjustments shall be
made successively whenever such sales are made.

                  (e) An adjustment shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately  after
the effective date of each other event which requires an adjustment.

                  (f) In the  event  that,  as a result  of an  adjustment  made
pursuant to Section  9(a),  the holder of the Warrant  shall become  entitled to
receive any shares of capital  stock of the Company  other than shares of Common
Stock,  the number of such  other  shares so  receivable  upon  exercise  of the
Warrant shall be subject  thereafter to adjustment from time to time in a manner
and on terms as nearly  equivalent as practicable to the provisions with respect
to the Warrant Shares contained in this Warrant.

                  (g) Shares of Common Stock owned by or held for the account of
the Company or any majority-owned subsidiary shall not be deemed outstanding for
the purpose of any computation under this Agreement.

         Section 10. Fractional  Interest.  The Company shall not be required to
issue  fractions  of Warrant  Shares upon the  exercise of the  Warrant.  If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable upon the exercise of the Warrant (or specified portions  thereof),  the
fractional share shall be disregarded and the number of shares to be issued upon
exercise shall be the number of whole shares only.

         Section 11.  Benefits.  Nothing in this  Warrant  shall be construed to
give  any  person,   firm  or  corporation  (other  than  the  Company  and  the
Warrantholder)  any legal or equitable  right,  remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.
<PAGE>
         Section 12. Notices to  Warrantholder.  Upon the happening of any event
requiring an adjustment of the Warrant Price,  the Company shall  forthwith give
written  notice  thereof to the  Warrantholder  at the address  appearing in the
records of the  Company,  stating the  adjusted  Warrant  Price and the adjusted
number of  Warrant  Shares  resulting  from  such  event  and  setting  forth in
reasonable  detail  the  method of  calculation  and the facts  upon  which such
calculation is based.  The  certificate of the Company's  independent  certified
public  accountants  shall be  conclusive  evidence  of the  correctness  of any
computation  made,  absent  manifest  error.  Failure to give such notice to the
Warrantholder or any defect therein shall not affect the legality or validity of
the subject adjustment.

         Section 13.  Identity of Transfer  Agent.  The  Transfer  Agent for the
Common Stock is Registrar and Transfer Company, 10 Commerce Drive,  Crawford, NJ
07016.  Forthwith upon the appointment of any subsequent  transfer agent for the
Common Stock or other shares of the Company's  capital  stock  issuable upon the
exercise of the rights of purchase  represented by the Warrant, the Company will
mail to the Warrantholder a statement setting forth the name and address of such
transfer agent.

         Section 14. Notices.  Any notice pursuant hereto to be given or made by
the  Warrantholder  to or on the Company shall be sufficiently  given or made if
sent by certified mail, return receipt requested,  postage prepaid, addressed as
follows:

                  Unigene Laboratories, Inc.
                  110 Little Falls Road
                  Fairfield, NJ  07004
                  Attn:  Dr. Warren Levy
                  Telephone:  (973) 882-0860
                  Facsimile:   (973) 227-6088

or such other  address as the  Company  may  specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.

         Any notice  pursuant hereto to be given or made by the Company to or on
the Warrantholder shall be sufficiently given or made if personally delivered or
if sent by an  internationally  recognized  courier  services  by  overnight  or
two-day service,  to the address set forth on the books of the Company or, as to
each of the Company  and the  Warrantholder,  at such other  address as shall be
designated  by such party by written  notice to the other party  complying as to
delivery with the terms of this Section 14. All such notices, requests, demands,
directions  and other  communications  shall,  when sent by courier be effective
three (3) days after  delivery to such  courier as  provided  and  addressed  as
aforesaid.

         Section 15. Registration  Rights. The initial holder of this Warrant is
entitled to the benefit of certain registration rights in respect of the Warrant
Shares as provided in the  Registration  Rights Agreement dated as of as of June
29, 1998.

         Section 16.  Successors.  All the covenants and provisions hereof by or
for the benefit of the Warrantholder  shall bind and inure to the benefit of its
respective successors and assigns hereunder.

         Section  17.  Governing  Law.  This  Warrant  shall be  deemed  to be a
contract made under the laws of the State of Delaware and for all purposes shall
be construed in accordance with the laws of said State.
<PAGE>


         IN WITNESS  WHEREOF,  the parties hereto have caused this Warrant to be
duly executed, as of the day and year first above written.

                                                 UNIGENE LABORATORIES, INC.



                                                 By:   _________________________
                                                 Name:
                                                 Title:



<PAGE>
                           UNIGENE LABORATORIES, INC.
                              WARRANT EXERCISE FORM


UNIGENE LABORATORIES, INC.
110 Little Falls Road
Fairfield, NJ  07004

         This  undersigned  hereby  irrevocably  elects to exercise the right of
purchase  represented  by the within  Warrant  ("Warrant")  for, and to purchase
thereunder  by  cashless  exercise  of the within  Warrant by  surrender  of the
Warrant,  _______________ shares of Common Stock ("Warrant Shares") provided for
therein,  and requests  that  certificates  for the Warrant  Shares be issued as
follows:

                           --------------------------------
                           Name
                           --------------------------------
                           Address
                           --------------------------------
                           --------------------------------
                           Federal Tax Identification No.
                           or Social Security No.

and,  if the  number  of  Warrant  Shares  shall not be all the  Warrant  Shares
purchasable upon exercise of the Warrant,  that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of the Warrant be registered in the
name of the undersigned  Warrantholder  or the  undersigned's  Assignee as below
indicated  and  delivered  to the address  stated  below.  The number of Warrant
Shares to be issued upon this  exercise was  calculated  using a Market Price of
$____________ as follows:


Dated:___________________, ____

Note:  The signature must correspond with      Signature:____________________ 
the name of the registered holder as written
on the first page of the Warrant in every      ______________________________
particular, without alteration or enlargement  Name (please print)
or any change whatever, unless the Warrant
has been assigned.                             ______________________________
                                                
                                     Address   ------------------------------

                                               ------------------------------
                                               Federal Identification or
                                               Social Security No.

                                    Assignee:

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