Document:

SEVERANCE AGREEMENT
                               -------------------

          This Agreement is entered into by and between Mr. Mark E. Foley, Vice
President, Commercial Lending (the "Executive") and Ipswich Savings Bank (the
"Bank") and shall be effective as of the 8th day of August, 2000 (the "Effective
Date").

WHEREAS, the Board of Directors of the Bank desires to assure that the
Executive, in the Executive's capacity as an officer of the Bank, will consider
the prospect of a "change of control" (as defined in Section 1(A) below) of the
Bank in an objective manner; and

WHEREAS, the Executive desires to commit himself to serve the Bank to the best
of his ability;

NOW, THEREFORE, in consideration of the foregoing and the agreements of the
parties herein contained, the parties hereto agree as follows:

1. Consequences of Termination of the Executive's Employment Following Change of
Control. If there is a "change of control" (as defined in subsection (A) below)
during the "Term" (as defined in Section 3 below), the provisions of this
Section shall apply and shall continue to apply throughout the remainder of the
Term. If, within three months following a "change of control" (as defined in
subsection (A) below), the Executive's employment is terminated by the Executive
following a reduction of the Executive's annual compensation (other than a
reduction which is based on the Bank's financial performance and is similar to
the reduction made to the compensation provided to each other officer of the
Bank), the Executive (or the Executive's estate, if applicable) shall receive
such compensation as is provided to the Executive pursuant to subsection (C)
below. Similarly, if the Executive's employment is terminated without "cause"
(as defined in subsection (B) below) by the Bank within six months following a
"change of control" (as defined in subsection (A) below), the Executive (or the
Executive's estate, if applicable) shall receive such compensation as is
provided to the Executive pursuant to subsection (C) below.

          (A) For the purposes of this Section "change of control" shall mean
the occurrence of any one or more of the following three events:

               (1) after the Effective Date, any "person" (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), other than
the Bank, becomes a "beneficial owner" (as such term is defined in Rule 13d-3 as
promulgated under the Securities Exchange Act of 1934) directly or indirectly of
securities representing 25% or more of the total number of votes that may be
cast for the election of Directors of the Bank and two thirds of the Board of
Directors of the Bank (the "Board") has not consented to such event prior to its
occurrence or within sixty (60) days thereafter, provided that if the consent
occurs after the event, it shall only be valid for the purposes of this
paragraph (i) if a majority of the consenting Board is comprised of Directors of
the Bank who were Directors of the Bank immediately prior to the event;

               (2) within two years after a merger, consolidation or sale of
assets involving the Bank, or a contested election of a Bank Director, or any
combination of the foregoing, the individuals who were Directors of the Bank
immediately prior thereto shall cease to constitute a majority of the Board; or

               (3) within two years after a tender offer or exchange offer for
voting securities of the Bank (other than by the Bank), the individuals who were
Directors of the Bank immediately prior thereto shall cease to constitute a
majority of the Board; or

               (4) within two years after an acquisition in which the Bank
becomes a wholly-owned subsidiary of a bank holding company, individuals who
were Directors of the Bank immediately prior to such acquisition shall not
constitute a majority of the Board of Directors of the parent bank holding
company.

          (B) For purposes of this Section 1, "cause" shall mean activities
which have had an adverse effect on the financial strength or stability of the
Bank; neglect of duties for which employed (other than on account of a medically
determinable disability which renders the Executive incapable of performing such
services); committing fraud, misappropriation or embezzlement in the performance
of duties as an employee of the Bank; conviction of a felony involving a crime
of moral turpitude; or engaging in conduct injurious to the Bank.

          (C) If the Executive becomes entitled to receive compensation pursuant
to this Section, he shall receive a lump-sum payment from the Bank within 30
days of the termination of his employment in the amount of nine (9) months
salary of the Executive (at the then applicable annual base salary rate of the
Executive, exclusive of bonuses).

2. Employment Status. This Agreement is not an agreement for the employment of
the Executive and shall confer no rights on the Executive except as herein
expressly provided.

3. Term and One-Year Extension. The term of this Agreement shall be one year
commencing with the Effective Date hereof (the "Term"). The Term of this
Agreement will, however, be automatically extended for additional periods of one
year commencing on the first anniversary of the Effective Date and on each
subsequent anniversary thereafter, unless either party notifies the other in
writing at least one month prior to the date of such anniversary of the
Effective Date that the Agreement is not to be extended.

4. Exclusivity Covenant; Non-Competition.

          (A) Except with the prior written consent of the Board, the Executive
will not while in the employ of the Bank, undertake or engage in any other
employment occupation or business enterprise. Further, the Executive agrees not
to acquire, assume or participate in, directly or indirectly, any position,
investment or interest, in the areas where the Bank maintains banking offices,
adverse or antagonistic to the Bank, its business or prospects, financial or
otherwise, or take any action towards any of the foregoing, except for any
investment representing less than one percent (1%) of the voting shares of any
publicly-held corporation.

          (B) During the Executive's employment by the Bank hereunder and during
a period of one year following the date of termination of his employment with
the Bank for any reason, the Executive will not, directly or indirectly whether
as owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, or through any Person (as defined below), compete in the Bank's
market area (defined as Essex County, Massachusetts) with the banking or any
other business conducted by the Bank or any Subsidiary during the period of his
employment hereunder, nor will he attempt to hire any employee of the Bank,
assist in such hiring by any other Person, encourage any such employee to
terminate his or her relationship with the Bank or encourage any customer to
conduct with any other Person any business or activity which such customer
conducts or could conduct with the Bank.

          For purposes of this subsection, (i) the Executive shall not be deemed
to be competing with the Bank if he is employed outside of the Bank's market
area for a bank or corporation which has its headquarters outside of the Bank's
market area, even if such bank or corporation has a branch or office in the
Bank's market area and (ii) the term "Person" shall mean an individual, a
corporation, an association, a partnership, an estate, a trust and any other
entity or organization.

5. Assignment. This Agreement and the rights and obligations of the parties
hereto shall bind and inure to the benefit of each of the parties hereto and
shall also bind and inure to the benefit of any successor or successors of the
Bank by reorganization, merger or consolidation and any assignee of all or
substantially all of its business and properties, but, except as to any such
successor or assignee of the Bank, neither this Agreement nor any rights or
benefits hereunder may be assigned by the Bank or by the Executive.

6. Withholding. All payments made by the Bank under this Agreement shall be net
of any tax or other amounts required to be withheld by the Bank under applicable
Federal and state law.

7. Governing Law. This Agreement shall be construed in accordance with, and
governed for all purposes by, the laws of the Commonwealth of Massachusetts,
without regard to its principles of conflicts of laws.

8. Interpretation. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.

9. Enforcement. Any legal expenses incurred by the Executive in enforcing his
rights hereunder (regardless of whether the provisions of this Agreement have
terminated) shall be paid by the Bank, provided that both the Executive prevails
on the merits of his claim or claims and the Bank's rights of appeal with
respect to such claim or claims have been exhausted or have otherwise expired.
The Bank shall pay such legal expenses (or reimburse the Executive, if
appropriate) within thirty (30) days after the later of the date on which the
conditions specified in the previous sentence are fulfilled or the date on which
the Executive submits evidence of such legal expenses to the Board.

10. Amendment and Waiver. This Agreement may not be amended, supplemented or
waived except by a writing signed by the party against which such amendment or
waiver is to be enforced. The waiver by any party of a breach of any provision
of this Agreement shall not operate to, or be construed as a waiver of, any
other breach of that provision nor as a waiver of any breach of another
provision.

11. Binding Effect. Subject to the provisions of Section 4 hereof, this
Agreement shall be binding on the successors and assigns of the parties hereto.

12. Notices. Any notices, requests, demands and other communications provided
for by the Agreement shall be sufficient if in writing and delivered in person
or sent by registered or certified mail, postage prepaid, to the Executive at
the last address the Executive has filed in writing with the Bank or, in the
case of the Bank, at its main office, attention of the President (with a copy to
Carol Hempfling Pratt, Foley, Hoag & Eliot, One Post Office Square, Boston,
Massachusetts 02109).

13. Counterparts. This Agreement may be executed in any number of counterparts,
each of which is an original but which shall together constitute one and the
same instrument.

IN WITNESS WHEREOF, the Bank and the Executive have executed this Agreement
under seal as of the date first set forth above.

IPSWICH SAVINGS BANK

By:
    ----------------
    David L. Grey, President
    Thereunto duly authorized

"EXECUTIVE"

---------------------
Mark E. FoleyEXHIBIT 10.1

                             JOINT VENTURE CONTRACT

                             on the establishment of

                     "SHIJIAZHUANG - UNIGENE PHARMACEUTICAL
                              CORPORATION LIMITED"

                                     between

                 Shijiazhuang Pharmaceutical Group Company, Ltd.

                                       And

                           Unigene Laboratories, Inc.

                                  June 15, 2000

<PAGE>

                                TABLE OF CONTENTS

Chapter I GENERAL PROVISIONS...............................................3
Chapter II CONTRACTING PARTIES.............................................3
Chapter III ESTABLISHMENT OF THE JOINT VENTURE.............................3
Chapter IV PURPOSE, SCOPE AND SCALE OF OPERATION...........................4
Chapter V TOTAL INVESTMENT AND REGISTERED CAPITAL..........................5
Chapter VI RESPONSIBILITIES OF CONTRACT PARTIES............................7
Chapter VII TECHNOLOGY CONTRIBUTION........................................8
Chapter VIII SALES OF PRODUCTS............................................10
Chapter IX BOARD OF DIRECTORS.............................................11
Chapter X MANAGEMENT ORGANIZATION.........................................13
Chapter XI PURCHASE OF EQUIPMENT..........................................13
Chapter XII MANAGEMENT OF LABOR...........................................13
Chapter XIII TRANSFER OF JV RIGHTS........................................14
Chapter XIV TAXATION, ACCOUNTING AND AUDITING.............................15
Chapter XV PROFITS AND LOSSES.............................................16
Chapter XVI REPRESENTATIONS, WARRANTIES AND COVENANTS.....................16
Chapter XVII TERM OF JOINT VENTURE CONTRACT...............................17
Chapter XVIII EFFECT OF CONTRACT EXPIRATION OR TERMINATION................17
Chapter XIX INSURANCE.....................................................18
Chapter XX CONTRACT AMENDMENT, ALTERATION AND TERMINATION.................18
Chapter XXI RESPONSIBILITIES OF CONTRACT BREACH...........................19
Chapter XXII FORCE MAJEURE................................................20
Chapter XXIII APPLICABLE LAWS.............................................20
Chapter XXIV RESOLUTION OF DISPUTES.......................................20
Chapter XXV LANGUAGES.....................................................20
Chapter XXVI MISCELLANEOUS................................................20

<PAGE>

                     CHAPTER I       GENERAL PROVISIONS

This contract for the  establishment of an equity joint venture in Shijiazhuang,
Hebei Province,  People's Republic of China (the "PRC"), is entered into on June
15, 2000,  through  friendly  negotiation  based on  principles  of equality and
mutual  benefits,  by and between  Shijiazhuang  Pharmaceutical  Group  Company,
Ltd.("Party A") and Unigene Laboratories, Inc.("Party B") pursuant to the Law of
the PRC on Joint Ventures Using Chinese and Foreign  Investment  (the "Law") and
other relevant laws and regulations.

                    CHAPTER II      CONTRACTING PARTIES

ARTICLE 1. Parties to the Contract

1.1. Party A is Shijiazhuang  Pharmaceutical Group Company, Ltd., a legal person
established under the laws of the PRC, registered with the Administrative Bureau
for Industry and Commerce of Shijiazhuang,  Hebei Province,  PRC. Legal Address:
276 Zhongshan West Road Shijiazhuang,  Hebei Province, PRC Legal Representative:
Mr. Cai Dong Chen Position: Chairman and President Nationality: Chinese

1.2. Party B is Unigene Laboratories, Inc., established and registered under the
laws of the State of Delaware,  United States of America  (USA).  Legal Address:
110 Little Falls Road, Fairfield,  New Jersey, 07004, USA, Legal Representative:
Dr. Warren P. Levy Position: President Nationality: American

1.3.  Party A and Party B are each referred to as a "JV Party" and  collectively
referred to as the "JV Parties".

                    CHAPTER III   ESTABLISHMENT OF THE JOINT VENTURE

ARTICLE 2. Establishment of JV

Party A and Party B hereby  establish  "Shijiazhuang  -  Unigene  Pharmaceutical
Corporation  Limited" (hereafter referred to as the "JV") in the PRC pursuant to
this Contract, the Law and other relevant PRC laws and regulations.

ARTICLE 3. Name and Address of the JV

3.1 The name of the JV in Chinese is "____________________"; and the name of the
JV in English is "Shijiazhuang - Unigene Pharmaceutical Corporation Limited."

                                       3
<PAGE>

3.2 The JV's legal  address is High and New  Technology  Industrial  Development
Zone, Shijiazhuang, Hebei Province.

ARTICLE 4. The JV is established  under the Law of the PRC and all activities of
the JV shall conform to the pertinent  laws,  decrees,  rules and regulations of
the PRC.

ARTICLE  5. The JV takes the form of a limited  liability  company.  Party A and
Party B are  liable  up to  amount  of  their  respective  capital  contribution
subscribed.  Each party is  entitled  to the profits and liable to the risks and
losses equivalent to such party's  Distribution Ratio (as defined below), as set
forth in Article 56.

ARTICLE  6. The JV shall be deemed to have been  established  as of the date its
business license is issued pursuant to the Law (the "Establishment  Date"). This
Contract  shall be  effective  as of the  date it is  approved  by the  National
Administration  of  High  and  New  Technology   Industrial   Development  Zone,
Shijiazhuang, Hebei Province (the "Effective Date").

ARTICLE 7. Promptly  following the Establishment  Date, the parties hereto shall
cause the JV to ratify this Contract,  whereby the JV shall agree to be bound by
the  provisions  of this Contract as if it were a party hereto in its own right.
An instrument  evidencing  such  ratification  shall be furnished to each of the
parties.

ARTICLE  8. The JV  Parties  hereby  adopt and shall  execute  the  Articles  of
Association for the JV.

ARTICLE 9. Promptly  after the first capital  contributions  required by Article
15.1(a)  and  15.2(a)  have  been made by each  party,  the JV and Party B shall
execute a Technology  Transfer Agreement (the "Technology  Transfer  Agreement")
pursuant to which Party B will (a) license the  Technology to the JV (as defined
in  the  Technology  Transfer  Agreement);  (b)  agree  to  sell  to  the JV its
requirements  of AE (as  defined  below);  and (c)  agree  to sell to the JV its
requirements  of JV Products and bulk  Calcitonin  until such time as the JV can
manufacture  such  JV  Products  and  Calcitonin  at  the  JV  Facility,  all in
accordance with the terms and conditions of the Technology Transfer Agreement.

                CHAPTER IV   PURPOSE, SCOPE AND SCALE OF OPERATION

ARTICLE  10.  In  the  spirit  of   strengthening   economic   cooperation   and
technological exchanges, the purpose of the JV is to use advanced technology and
scientific  operational  management  expertise to carry out the  manufacture  of
pharmaceutical-grade   recombinant   salmon  calcitonin  (the  "Calcitonin")  in
injectable and nasal  formulations  (the "JV Products"),  using the processes of
Party B that  include the use of an amidating  enzyme that the JV will  purchase
from Party B (the "AE") in accordance  with the Technology  Transfer  Agreement,
and the  distribution  and sale of JV Products in the PRC and such other regions
as decided by the Board of  Directors  of the JV (the  "Territory")  in order to
obtain a  satisfactory  return on  investment  for all  parties  and to build up
competitiveness in both domestic and international  markets  (collectively,  the
"JV Business").

ARTICLE  11.  The  business  scope of the JV is (a) to  construct,  equip,  own,
manage,  and operate a manufacturing  facility in the PRC that complies with all
regulations  and  guidelines   applicable

                                       4
<PAGE>

to such a manufacturing  facility  ("Applicable  Regulations")  and that has the
capacity to manufacture  Calcitonin in accordance  with the terms and conditions
of the Contract (the "JV

*omitted and filed  separately  with the United States  Securities  and Exchange
Commission pursuant to a request for confidential treatment.

Facility")  and  prepare,   fill,   label  and  package   injectable  and  nasal
formulations thereof; and (b) to market,  distribute and sell the JV Products in
the Territory.

ARTICLE 12. In order to fully utilize the time necessary for construction of the
JV Facility  and  nurture the market for the JV  Products,  the  production  and
operation  of the JV  shall  be  carried  out in two (2)  phases,  which  are as
follows:

Phase I: The JV shall import  finished JV Products  from Party B and package and
distribute,  market and sell such JV Products  in the PRC and shall  import bulk
Calcitonin from Party B, formulate JV Products therefrom, and distribute, market
and sell such JV Products in the Territory.

Phase II: The JV shall import AE from Party B and  manufacture  bulk  Calcitonin
therefrom, formulate JV Products therefrom, and distribute, market and sell such
JV Products in the Territory.

The JV shall actively explore market  opportunities  outside the PRC as provided
in Article 31 to accumulate foreign exchange.

ARTICLE 13. Once the JV has begun Phase II, the intended scale of production for
the JV Facility shall be as follows:

13.1 An annual  output of *of bulk  Calcitonin,  as well as JV  Products  in the
following approximate quantities:

         *

13.2  Both  parties  agree  that  full  consideration  shall  be  given  to  the
possibility for future expansion during  planning,  designing and  construction.
Proper  adjustment  will be made to reflect the  development  of operations  and
market changes.

               CHAPTER V    TOTAL INVESTMENT AND REGISTERED CAPITAL

ARTICLE 14. The total investment of the JV will be *

ARTICLE 15. The registered capital of the JV will be *

Party A shall contribute * in cash for an equity share of 55%;

Party B shall contribute cash and technology valued, in the aggregate,  at * for
an equity share of 45%.

                                       5
<PAGE>

Party A and Party B shall make their  respective  capital  contributions  in the
following manner.

*omitted and filed  separately  with the United States  Securities  and Exchange
Commission pursuant to a request for confidential treatment.

15.1  Party A shall  contribute  the  Renminbi  equivalent  of *, in cash.  Such
contribution shall be made as follows:

         (a) No later than * after the Establishment Date, Party A shall deposit
the Renminbi equivalent of * in cash into a bank account designated by the JV in
the name of the JV; and

         (b) No later than * after the Establishment Date, Party A shall deposit
the Renminbi equivalent of * in cash into a bank account designated by the JV in
the name of the JV.

15.2 Party B shall contribute cash and technology  valued, in the aggregate,  at
*. Such contribution shall be made as follows:

         (a) No later than ninety (90) days after the Establishment  Date, Party
B shall  deposit Four Hundred Five Thousand US Dollars  (US$405,000.00)  in cash
into a bank account designated by the JV in the name of the JV;

         (b) No later than two (2) years after the  Establishment  Date, Party B
shall deposit Four Hundred Ninety Five Thousand US Dollars ($495,000.00) in cash
into a bank account designated by the JV in the name of the JV;

         (c)  Pursuant  to the  Technology  Transfer  Agreement,  Party  A shall
transfer the Technology to the JV, which shall be deemed a  contribution  valued
at * made  upon  execution  of the  Technology  Transfer  Agreement.  All  data,
documentation  and  information  required for the  Technology  transfer  must be
provided by Party B according to the terms of the Technology  Transfer Agreement
and within two (2) years of the Establishment Date.

15.3 All cash capital  contributions  shall be denominated  in US Dollars.  Cash
contribution  of Renminbi shall be valued in terms of US Dollars at the official
exchange rate published by the PRC  Administration  of Foreign  Exchange Control
for the purchase of US Dollars with Renminbi on the day payment is made.

ARTICLE  16.  Party A shall  arrange,  on  behalf  of the JV,  such  third-party
financing as the JV may reasonably  require in connection with the establishment
and  operation  of the JV , in an amount not to exceed *. Party A shall  provide
any guarantees required by the lenders.

ARTICLE  17. In the  event  that the Board of  Directors  of the JV  unanimously
determines  that the JV requires  capital in addition to the  contributions  and
financing provided for in Articles 15 and 16, the Board shall solicit additional
capital  contributions  from the JV Parties in  proportion  to the  Distribution
Ratios  (as  defined  below) in effect at the time.  No JV Party  shall have any
obligation  to make  any  such  capital  contributions.  In the  event  that the
additional  capital  contributions  made in response to such solicitation  shall
fall short of the amount of additional capital required by the JV, Party A shall
arrange for third-party financing of the shortfall, provided, however, that such
financing shall be sought only in extraordinary  circumstances and

                                       6
<PAGE>

only with the prior  unanimous  written  approval of the Board of Directors.  No
capital increase after the establishment of the JV shall impact the Distribution
Ratio of any JV Party.  All  financial  loans by the JV shall be  guaranteed  by
Party A, as set forth in Article 16.

              CHAPTER VI      RESPONSIBILITIES OF CONTRACT PARTIES

ARTICLE  18. In  addition to any other  express  obligations  of either JV Party
under this Contract,  the Articles of  Association  or the  Technology  Transfer
Agreement,  the  responsibilities  of  Party A and  Party B  shall  include  the
following:

18.1 Party A shall, at its sole cost and expense:

(a)  Offer support to the JV not inferior to other  substantially  similar joint
     ventures  in which Party A is  currently  engaged or will be engaged in the
     future;

(b)  Prepare the feasibility study concerning the JV Business, providing Party B
     with an English translation  thereof,  and submitting the feasibility study
     to the  appropriate  PRC government  authorities  after Party A and Party B
     have jointly agreed on the text thereof;

(c)  Obtain all  licenses  and  approvals  necessary,  and render all  necessary
     assistance,  (i) for the  establishment  of the JV as a legal  person  with
     limited liability; (ii) for the establishment of the JV Facility; (iii) for
     the  manufacture  and marketing of the JV Products in the PRC; (iv) for the
     purchase  of AE by the JV from  Party B; and (v) to enable the JV to secure
     sufficient  foreign  exchange for the payments to be made to Party B by the
     JV and to enable Party B to repatriate such amounts;

(d)  Endeavor to entitle the JV to all the  preferences  granted  under  Chinese
     laws   including   but  not  limited  to  taxation  and  market   promotion
     preferences,  and  ensure  to the  greatest  extent  possible  that  the JV
     qualifies  for (i)  such  "tax  holidays"  and  other  most  favorable  tax
     treatment as may be available to foreign  investment  enterprises from time
     to time,  and (ii) a tax rate  (without  regard to the tax holiday) that is
     not greater than the most  preferential  income tax treatment  available to
     foreign investment enterprises in the region;

(e)  Transfer  to the JV,  and  arrange  any  other  formalities  with  the Land
     Department related to, the land use right for the JV Facility, contract for
     the design and  construction  of the JV Facility and purchase all equipment
     and other materials needed for the production of the JV Products;

(f)  Assist  the JV  Facility  in  building,  validating  and  operating  the JV
     Facility in full compliance with all Applicable  Regulations and in causing
     the JV Facility to be fully operational under such Applicable Regulations;

(g)  Assist  the JV in  arranging  adequate  supply  of water,  electricity  and
     transportation and other infrastructure facilities;

(h)  Facilitate  the  acquisition  and  staffing  of the JV with  local  Chinese
     managers, technicians, workers and other types of workforce;

                                       7
<PAGE>

(i)  Facilitate  entry  visas,  work permits and other  travel  formalities  for
     foreign staff of the JV and Party B;

(j)  Assist the JV in developing a national  network for the  distribution of JV
     Products in the PRC, including,  without limitation,  developing  effective
     marketing  plans  and  strategies  for  each of the JV  Products,  securing
     suitable  advertising  for the JV Products,  and  generally  promoting  the
     market for the JV Products; and

(k)  Perform other matters entrusted to Party A by the JV.

18.2 Party B shall, at its sole cost and expense,  except as otherwise expressly
provided:

(a)  Offer support to the JV not inferior to other  substantially  similar joint
     ventures  in which Party B is  currently  engaged or will be engaged in the
     future;

(b)  Provide the JV with bulk  Calcitonin and AE necessary for the production of
     Calcitonin at the cost defined in the Technology Transfer Agreement;

(c)  Provide  technical  guidance and assistance  with respect to the Technology
     and with  respect to equipment  installation,  testing and  validation  for
     Phase II production, as set forth in the Technology Transfer Agreement;

(d)  Facilitate  entry visas to the United  States for  employees of Party A and
     the JV;

(e)  Provide  training to the  technicians and workers of the JV with respect to
     the Technology, as set forth in the Technology Transfer Agreement;

(f)  Transfer the Technology, which shall meet the designed capacity and quality
     requirements defined by the Technology Transfer Agreement;

(g)  Assist the JV in developing an  international  network for the distribution
     of JV Products in areas in the  Territory  but outside the PRC,  including,
     without limitation, developing effective marketing plans and strategies for
     each of the JV Products, securing suitable advertising for the JV Products,
     and generally promoting the market for the JV Products; and

(h)  Perform such other  matters  entrusted to Party B by the JV and accepted by
     Party B.

                    CHAPTER VII    TECHNOLOGY CONTRIBUTION

ARTICLE 19. For the purposes of the JV Business,  Party A and Party B agree that
Party  B  will  provide   advanced   technology   including   product   designs,
manufacturing processes,  testing methods, material recipe, quality standard and
training as set forth in the Technology Transfer Agreement.

ARTICLE  20.  Party  B  agrees  to  provide  certain  guarantees  regarding  the
Technology.

                                       8
<PAGE>

*omitted and filed  separately  with the United States  Securities  and Exchange
Commission pursuant to a request for confidential treatment.

1.   Provided  that  the  JV  constructs  and  operates  the  JV  Facility,  and
     manufactures the Calcitonin and the JV Products,  all in strict conformance
     with the requirements,  specifications, Technology and training provided by
     Party B from  time to time  and as set  forth  in the  Technology  Transfer
     Agreement,  Party B will guarantee, as set forth in the Technology Transfer
     Agreement:  (A) that the  Technology is identical to that in use by Party B
     in manufacturing the JV Products on a commercial basis at the time when the
     Technology Transfer Agreement enters into force; (B) that the Technology is
     suitable for the  achievement  of the JV's business  purpose;  (C) that the
     Technology  is suitable  for the  achievement  of the  product  quality and
     production capacity required by this Contract.
2.   Party B will provide the JV with the Technology.
3.   Party B will  provide the JV with a list of the  Technology  and  technical
     assistance calculated as capital contribution.
4.   Party B will  promptly  deliver the designs,  technical  know-how and other
     detailed materials as part of the Technology, as required by the Technology
     Transfer Agreement.
5.   Party B will  contribute its  proprietary  Technology for the production of
     Calcitonin.
6.   Party B will  guarantee  that it is not aware of any current legal disputes
     in any format  affecting  its use of the  Technology  in the PRC, or of any
     infringement  by its proposed use of the Technology in the PRC on any third
     party  patent or  intellectual  property  rights.  If Party B  fraudulently
     concealed such legal disputes or infringement,  Party B shall be liable for
     damages thus caused to Party A or the JV.

ARTICLE 21. In the event that the JV  constructs  and  operates the JV Facility,
and manufactures the Calcitonin and the JV Products,  all in strict  conformance
with the requirements, specifications, Technology and training provided by Party
B from time to time and as set forth in the Technology Transfer Agreement,  but,
as a result of  fraudulent  concealment  on the part of Party B in not providing
the  Technology  in  accordance  with the  Technology  Transfer  Agreement,  the
Technology  fails to reach the  originally  designed  capacity  set forth in the
Technology Transfer Agreement, Party B shall be liable for the damages to the JV
as set forth in the Technology Transfer Agreement.

ARTICLE  22.  Party B is free from  responsibility  for  damages  to the JV that
result,  in  whole  or in  part,  from  non-compliance  with  the  requirements,
specifications,  Technology,  training, guidelines and standards provided to the
JV by Party B with regard to the  construction  and operation of the JV Facility
and the manufacture of Calcitonin and the JV Products.

ARTICLE  23.  The   Technology   is  regarded  as  conforming  to  the  contract
specifications  if it can meet the  technical  indexes  listed  by Party B for *
batches after the Technology is officially put into trial operation,  which will
be jointly confirmed by representatives from Party A, Party B and the JV.

ARTICLE  24.  Both  Party A and  Party B are under  the  obligation  to keep the
Technology confidential in accordance with the Confidentiality Agreement between
the parties dated October 29, 1998.

                                        9
<PAGE>

*omitted and filed  separately  with the United States  Securities  and Exchange
Commission pursuant to a request for confidential treatment.

ARTICLE  25.  Party A and the JV shall not  provide  in any  format to any third
party the Technology  after Party B has provided the Technology to the JV unless
unanimously agreed by the JV Board. Party B shall not transfer the Technology to
any third party in the Territory after the Establishment Date.

ARTICLE 26. The JV will have access to improvements to the Technology  developed
by Party B after Party B has  provided  the  Technology  to the JV to the extent
permitted  by,  and on the terms and  conditions  provided  in,  the  Technology
Transfer Agreement.

ARTICLE 27. The JV shall be entitled to any new improvements  developed  through
its own  efforts on basis of the  Technology.  No party shall use or transfer or
release any such new technology to any third party without the permission of the
JV. Party B shall have a right to use such improvements outside the Territory in
accordance with the Technology Transfer Agreement.

ARTICLE 28. The JV has right of first  refusal to other  products  independently
developed by Party B for use in the PRC. New products  developed by the JV shall
belong to the JV,  shall be  considered  JV  Products,  and Party B shall have a
right of first  refusal  to such  products  outside  the  Territory.  If the new
products  developed  by the JV entail  the use of AE,  Party B or its  successor
shall provide the JV's AE requirements  for such new products under the terms of
the  Technology  Transfer  Agreement  provided  there  is no  conflict  with any
obligation of Party B.

ARTICLE  29.  Without  the  written  permission  from the other  party after the
establishment  of  the  JV,  neither  Party  A nor  Party  B as  well  as  their
subsidiaries  and assignees shall  independently or jointly with any third party
manufacture, distribute JV Products in the Territory.

ARTICLE 30.  Party B shall be the  exclusive  source of AE for the JV and the JV
shall purchase all of its  requirements of AE from the JV. The JV shall not sell
AE.

                  CHAPTER VIII     SALES OF PRODUCTS

ARTICLE  31.  The goal of the JV is to  optimize  return on  investment  for all
parties.  The JV  Products  shall  be  sold  inside  the  PRC and may be sold in
countries  outside  the  PRC in the  best  interest  of the  JV,  to the  extent
expressly authorized by the unanimous approval of the Board of Directors. If the
Board  authorizes  the JV to sell the JV Products  outside the PRC, the JV shall
ensure that the ratio of export  sales v.  domestic  sales shall be * Adjustment
will be made to such  ratio  according  to market  conditions  by the  unanimous
approval of the Board of Directors.

ARTICLE 32. The JV shall have the right to use for free in the  marketing  of JV
Products in the Territory the trademarks of Party A (the "Party A Marks"). Party
A and the JV  shall  have  the  right to use  certain  trademarks  of Party B in
accordance with the following:

                                       10
<PAGE>

*omitted and filed  separately  with the United States  Securities  and Exchange
Commission pursuant to a request for confidential treatment.

1.   Subject to the terms and conditions hereof,  Party B hereby grants to Party
     A a  non-exclusive,  royalty-free  license (without right to sublicense) to
     use the trade name  "Unigene" as part of the name of the JV, in  connection
     with the  preparation  of the  feasibility  study  and  related  documents,
     applications for all licenses and approvals  required from PRC governmental
     authorities,  and ancillary  documents in connection with the establishment
     of  the  JV  pursuant  to  this   Contract.   Such  license   shall  expire
     automatically on the Establishment Date.

2.   Subject to the terms and  conditions  hereof,  Party B hereby grants to the
     JV,  effective  as  of  the   Establishment   Date,  (i)  a  non-exclusive,
     royalty-free  license  (without  right to sublicense) to use the trade name
     "Unigene"  as  part  of the  name  of the  JV,  and  (ii) a  non-exclusive,
     royalty-free  license  (without  right to sublicense) to use the trademarks
     "Unigene" and  "Fortical"  (collectively,  the "Party B Marks" and with the
     Party A Marks,  the  "Marks"),  solely  for the  purpose of  marketing  and
     promoting  the JV Products in the  Territory.  Such  license  shall  expire
     automatically upon the expiration or termination of the Contract.

3.   Party A agrees  not to use the trade name  "Unigene"  for any  purpose  not
     specified  in  Paragraph  1  hereof,   including  without  limitation,   in
     connection  with its own business.  Further,  Party A agrees not to use any
     trademark,  trade name,  service name, service mark or business symbol that
     is  substantially  similar to the Marks or so nearly  resembles it as to be
     likely to cause deception or confusion.

By its  ratification of this Contract,  the JV agrees (a) not to make use of the
Marks in contravention  hereof; and (b) to comply, in its use of the Marks, with
such rules and conditions pertaining to the use thereof as the relevant JV Party
may  establish  from time to time at its sole  discretion.  The JV shall  report
forthwith to the relevant JV Party any infringement or suspected infringement of
such party's Marks in the Territory  which may come to the notice of the JV and,
at the request of such party and to the extent such  infringement  is related to
the  JV's  use of the  Marks,  institute  legal  action  with  respect  to  such
infringement.  Upon  such JV  Party's  reasonable  request  and at the  cost and
expense  of the JV,  the JV shall use its best  efforts to prevent or enjoin any
such  infringement  (to the extent  related to the JV's use of the Marks) and to
prosecute any  proceedings  that may be necessary for such  purposes,  including
granting  permission to such JV Party to institute any such  proceedings  in the
name of the JV or in the  names  of  such JV  Party  and  the  JV.  Any  damages
recovered  in any such  proceedings  shall be for the  account of the JV. The JV
shall use its best  efforts to preserve  the value and  validity of the Marks in
the Territory.

                      CHAPTER IX   BOARD OF DIRECTORS

ARTICLE 33. The  Establishment  Date is the  establishment  date of the Board of
Directors.

ARTICLE 34. The Board of Directors is composed of five (5) directors.  The Board
shall have one (1) director who shall serve as Chairman and one (1) director who
shall serve as Vice-Chairman.  The Chairman shall be selected by Party A and the
Vice-Chairman shall be selected

                                       11
<PAGE>

*omitted and filed  separately  with the United States  Securities  and Exchange
Commission pursuant to a request for confidential treatment.

by Party B. Three (3) directors  will be selected by Party A and two (2) will be
selected by Party B. Each  director  shall be  appointed  for a term of four (4)
years,  subject to  renewal,  but may be replaced at any time during his term by
the party that appointed him, upon prior written notice to the other party.

ARTICLE 35. The Board of Directors  shall be the highest body of authority  over
the JV. It shall decide all major issues  concerning the JV, in accordance  with
the Articles of  Association.  The vote of four of the five members of the Board
of Directors (or their duly appointed proxies) shall be sufficient to constitute
action of the Board on all matters  except the matters  set forth  below,  as to
which the Board  may take  action  only by  unanimous  decision  of the five (5)
members (or their duly appointed proxies):

     1.   Approving on an annual basis the operating plan for the JV;

     2.   Investigating and approving any expenditures by the JV in excess of *;

     3.   Investigating  and  approving  the  obtainment  by the JV of all third
          party financing;

     4.   Selecting and approving any foreign country market regions for sale of
          the JV Products and  determining the ratio of export sales to domestic
          sales;

     5.   Examining and approving the fiscal  budget,  financial  statements and
          balance sheets of the JV;

     6.   Determining and approving the profit  allocation and  distribution and
          the loss offset plan for the JV;

     7.   Approving any change in the registered capital for the JV;

     8.   Approving the transfer of the registered  capital of the JV to a third
          party;

     9.   Approving   any   merger,   separation,   acquisition,    dissolution,
          liquidation or alteration of the JV;

     10.  Amending the Articles of Association;

     11.  Approving the marketing and/or development of products by the JV other
          than the JV Products;

     12.  Approving  the  transfer,  sale or  licensing  to a third party of any
          improvements in technology that belong to the JV or contractually  may
          be transferred, sold or licensed by the JV; and

     13.  Other issues of importance so deemed by the Board of Directors.

                                       12
<PAGE>

ARTICLE 36. The Chairman of the Board of  Directors is the legal  representative
of the JV.When  the  Chairman  is unable to perform  his  responsibilities,  the
Vice-Chairman shall be authorized to represent the JV.

ARTICLE 37.  A Board of  Directors'  meeting is to be convened at least once per
year.  The  Chairman of the Board shall  convene  interim  board  meetings  upon
proposal by two or more directors.

ARTICLE 38. Board meetings  shall be conducted both in Chinese and English.  All
topics  for  Board  Meetings  and all  minutes  and  resolutions  from the Board
Meetings shall be written in both Chinese and English language  versions,  which
shall have equal force. All records of meetings,  including  without  limitation
minutes and resolutions, shall be filed by the JV.

                      CHAPTER X   MANAGEMENT ORGANIZATION

ARTICLE 39. The Board of Directors of the JV shall establish  management  organs
for the JV, to be responsible for daily  operational and managerial work. The JV
shall  have one (1)  general  manager,  selected  by Party B, and one (1) deputy
general  manager,  selected  by Party A.  The  term of  service  for each of the
general  manager and the deputy general  manager shall be four (4) years,  which
term may be  renewed  through  re-appointment  by the  Board of  Directors.  The
general  manager and the deputy general  manager may be removed for cause by the
vote of the Board of  Directors  and  otherwise  by the  selecting  party.  Upon
removal of the general  manager or the deputy  general  manager or expiration of
their  respective  terms  without  renewal,  the party that selected the general
manager or deputy general  manager,  as the case may be, shall have the right to
select the replacement  general manager or deputy general  manager,  as the case
may be.

ARTICLE 40. The general manager shall carry out various resolutions of the Board
of Directors and organize and lead the daily operation and management of the JV.
The deputy general manager shall assist the general manager in his work.

ARTICLE 41. In the case of engagement in malpractice for private gain or serious
dereliction of duty on the part of the general manager,  deputy general managers
or other corporate executives, or for any other reason, they may be dismissed at
any time by resolution of the Board of Directors.

                     CHAPTER XI  PURCHASE OF EQUIPMENT

ARTICLE 42. In the purchases of such items as required machinery, equipment, raw
materials, fuel, parts, means of transport and articles for office use, priority
shall be given to sources  located in the PRC,  provided  that such  sources are
capable of providing such supply on terms and conditions, which conditions shall
include without limitation quality considerations, substantially as favorable as
those offered by sources not located in the PRC.

ARTICLE 43. The participation of Party A should not be prevented when Party B is
entrusted by the JV for the purchase of equipment from overseas markets.

                     CHAPTER XII   MANAGEMENT OF LABOR

ARTICLE  44.  Matters  relating  to the  staff  and  workers  of the JV  such as
recruitment, employment, dismissal, resignation, wages, labor insurance, welfare
benefits, incentive and penalty systems, are to be settled through collective or
individual contracts by the JV and Trade Union following the programs mapped out
by the Board of  Directors,  in  accordance  with "The

                                       13
<PAGE>

PRC Labor Law" and other relevant  regulations.  Labor  Contracts shall be filed
with the local Labor Department.

ARTICLE  45.  Matters  relating  to  the  recruitment,  wage  treatment,  social
insurance,  welfare  benefits  and  standard  of travel  expenses  of high level
managerial personnel are subject to the approval of the Board of Directors.

                     CHAPTER XIII   TRANSFER OF JV RIGHTS

ARTICLE 46. For a period of three (3) years  following the Effective Date, no JV
Party  shall sell,  assign,  transfer,  convey,  pledge,  encumber or  liquidate
("Transfer") or otherwise cease to be the beneficial  owner of any or all of its
rights under this Contract or in its capital contribution in the JV.

ARTICLE 47. Right of First Refusal.

     (a) No JV Party shall  effect a Transfer of any or all of its rights  under
this  Contract  or in its  capital  contribution  in the JV  (collectively,  its
"Rights"),  after the third anniversary  following the Effective Date, except in
accordance  with this Article 46. Any JV Party (the  "Offeror") that proposes to
Transfer its Rights shall first offer to Transfer  such Rights (the  "Offer") to
the other JV Party (the  "Offeree"),  and the  Offeree  shall have the option to
purchase such Rights,  on such terms and  conditions as it and the Offeror shall
mutually  agree.  In the  absence  of an  agreement,  the offer  price  shall be
determined  by a  valuation  expert  chosen  by lot from a list of the three (3)
largest  valuation  firms  licensed to do business in the PRC within a period of
thirty (30) days  beginning  with the receipt of the Offeror's  written offer to
Transfer  its  Rights;  provided,  however,  that  the  Offeree  shall  have  no
obligation  to purchase  the Rights at such  price.  The costs  associated  with
retaining the valuation expert shall be borne by the Offeror.

     (b) If the Offeree does not agree to purchase the Rights within thirty (30)
days from the date of receipt of the Offer,  the Offeror may offer its Rights to
a third party on the terms and conditions offered to the Offeree. If the Offeror
receives a bona fide  offer  from a third  party (a "Third  Party  Offer"),  the
Offeror  shall  obtain the from the third  party and  deliver  to the  Offeree a
notice in  writing,  signed by the  Offeror  and the third  party,  of the terms
thereof.  The Offeree  shall then have ten (10) days from the date of receipt of
such  notice to accept the Third  Party Offer by  delivering  written  notice of
acceptance to the Offeror. Further, the Offeree shall have the right to purchase
such Rights on the terms and conditions set forth in the notice delivered to the
Offeree,  except  that any Offeree  accepting  the Offer shall have the right to
substitute equivalent cash for any non-cash  consideration included in the Third
Party  Offer.  A  valuation  expert  chosen  by lot from a list of the three (3)
largest  valuation  firms licensed to do business in the PRC shall determine the
cash value of any non-cash  consideration.  The costs  associated with retaining
the  valuation  expert  shall be borne by the  Offeror.  If the Offeree does not
accept the Third Party Offer within such ten-day  period,  the Offeror  shall be
free,  for a succeeding  sixty-day  period,  to accept the Third Party Offer and
Transfer the relevant Rights accordingly

                                       14
<PAGE>

*omitted and filed  separately  with the United States  Securities  and Exchange
Commission pursuant to a request for confidential treatment.

               CHAPTER XIII   TAXATION, ACCOUNTING AND AUDITING

ARTICLE 48. The JV shall pay various taxes in accordance  with  stipulations  of
the relevant laws and regulations of the PRC.

ARTICLE  49.  Staff and  workers of the JV shall pay  individual  income tax and
income  adjustment  tax  according  to the  "Individual  Income  Tax  Law of the
People's Republic of China."

ARTICLE 50. The Board of Directors of the JV shall  determine  the amounts to be
allocated to the reserve fund, the enterprise  expansion fund, and the staff and
workers welfare and incentive fund (collectively,  the "Three Funds") before any
distribution  of  profits  is made to  Party A and  Party B. The JV may not make
allocations to such funds (or similar funds) if such allocations  exceed, in the
aggregate,  * of the after-tax  profits of the JV,  without the unanimous  prior
consent of the Board of Directors.

ARTICLE 51. The profits distributed by the JV to Party B may be repatriated from
the PRC according to Chinese law.

ARTICLE 52. The fiscal  year of the JV shall be 1st January  through 31 December
each year (the Gregorian calendar year).

ARTICLE 53. The  financial and  accounting  system of the JV shall be formulated
according to, and consistent with, the relevant laws and regulations of the PRC.
All  vouchers,  accounts,  books,  statements  shall be written in Chinese.  All
monthly and annual  statements  and quarterly  reports shall be prepared both in
Chinese and English,  with both versions  having equal force and effect.  The JV
shall  render  assistance  to each  party for review of such  documents  by such
party.

ARTICLE  54. The JV shall keep full and  accurate  books of account  showing all
revenues and  disbursements  and all assets and  liabilities  of the JV. Without
limiting the  generality of the  foregoing,  such books of account shall include
the following items:

1.   All cash receipts and expenses of the JV;

2.   All records of sales, losses and purchases by the JV;

3.   The registered capital and liability of the JV; and

4.   The timing of registered capital contributions,  distributions, changes and
     assignment.

ARTICLE 55. The JV shall provide  accounting reports in both English and Chinese
to the  Board  of  Directors,  each of  Party  A and  Party  B,  the  local  tax
authorities  and other  relevant  government  agencies on a quarterly and annual
basis,  and shall include such information in the reports to each of Party A and
Party B. The JV's  management  shall  provide the annual report of the JV to the
Board of Directors for approval within two (2) months  following the end of each
fiscal year.

                                       15
<PAGE>

ARTICLE  56. An annual  audit of the JV's  accounts  shall be carried  out by an
internationally  known and recognized  accounting  firm  (registered in the PRC)
appointed by the Board of  Directors.  The auditor  shall submit  reports to the
Board of Directors and to the general manager.  All costs and expenses  incurred
in connection with such annual audit shall be borne by the JV. Party A and Party
B shall  each have the right to  procure a special  audit of the JV's  books and
records, provided that the external auditor is from an internationally known and
recognized  accounting  firm,  whose reports shall  likewise be submitted to the
Board of Directors and the general manager.  The costs and expenses  incurred in
connection  with such additional  audit shall be borne by the requesting  party,
unless  such  audit  shall  disclose  one or more  errors in the  regular  audit
totaling at least one percent (1%) of the aggregate  expenses of the JV for such
year, in which case the JV shall bear such costs and expenses. Party A and Party
B may designate duly  authorized  personnel to inspect,  at reasonable  business
hours, the books and records of the JV at the expense of such party.

                       CHAPTER XV   PROFITS AND LOSSES

ARTICLE  57.  The equity of the JV shall be held by,  and the  distributions  of
profits of the JV shall be made to, the JV Parties in the following proportions:
fifty-five percent (55%) to Party B and forty-five percent (45%) to Party A (the
"Distribution Ratios").

ARTICLE 58.  Profit of the JV  (calculated  after (a)  repayment of any loans to
third parties (other than the JV Parties);  (b) payment of any and all taxes due
and owing by the JV; (c)  satisfaction of losses for any previous years; and (d)
allocations to the Three Funds in accordance  with Article 49) (the "JV Profit")
shall be  distributed  to Party B and Party A annually  in  accordance  with the
Distribution  Ratios then in effect,  unless the Board of Directors  unanimously
determines that no such  distribution  should be made.  Such  distribution of JV
Profit  shall be made within  three (3) months of the end of each fiscal year of
the JV.  Distributions to Party A shall be made in Renminbi and distributions to
Party B shall be made in US Dollars.

ARTICLE 59. As set forth in Article  17, the  Distribution  Ratios  shall not be
altered,  notwithstanding any capital contributions by any third party or either
JV Party.

ARTICLE 60. Neither JV Party shall be jointly or severally  liable for the debts
or  obligations  of the JV, or for any claim for losses or damages caused by the
JV,  except to the  extent of its  contributions  to the JV as  provided  for in
Article 15 and except to the extent of any  third-party  financing it guarantees
pursuant to Article 16.

ARTICLE 61. Any payments made by the JV in US Dollars  pursuant to this Contract
shall be calculated on the basis of the official  exchange rate published by the
PRC  Administration  of Foreign  Exchange Control for the purchase of US Dollars
with Renminbi on the day the payment is due.

            CHAPTER XVI   REPRESENTATIONS, WARRANTIES AND COVENANTS

ARTICLE 62. General Representations and Warranties.

                                       16
<PAGE>

62.1 Party A represents  and  warrants to Party B that it has the  authorization
required  under the laws of the PRC to execute and deliver this  Contract and to
carry out and perform its obligations under the terms of this Contract.  Party A
further represents and warrants to Party B that it is a legal person established
and in good standing under the laws of the PRC and  registered in  Shijiazhuang,
Hebei Province, PRC.

62.2 Party B represents  and  warrants to Party A that it has all the  requisite
legal and corporate  power to execute and deliver this Contract and to carry out
and perform its  obligations  under the terms of this Contract.  Party B further
represents and warrants to Party A that it is a corporation  established  and in
good standing under the laws of the State of Delaware, USA.

ARTICLE 63. Covenants.

63.1 Neither the JV nor Party A shall,  directly or  indirectly,  (a)  purchase,
manufacture,  distribute  or sell bulk  (unformulated)  calcitonin  or  products
containing  calcitonin other than the JV Products; or (b) use AE for any purpose
other than the manufacture of the JV Products,  including,  without  limitation,
for resale.

63.2 The parties agree that any transaction  between the JV and either of the JV
Parties, including any entity directly or indirectly related to either of the JV
Parties,  other than transactions expressly contemplated by this Contract or the
Technology  Transfer  Agreement,  shall be at  prices,  and on other  terms  and
conditions,  that  are no less  favorable  to the JV than  those  that  could be
reasonably   obtained   by  the  JV  from   unrelated   third   parties   on  an
arms-length-basis in similar transactions.

                CHAPTER XVII   TERM OF JOINT VENTURE CONTRACT

ARTICLE  64.  The term of this  Contract  shall be thirty  (30)  years  from the
Establishment  Date and for such period  thereafter as is agreed by the parties,
unless earlier terminated pursuant to Chapter XX.

ARTICLE 65. Upon the proposal  from one party and  unanimous  approval  from the
Board  of  Directors,  the JV may  extend  the  term  of  the  JV by  filing  an
application  for  extension  of the JV term with the  original  examination  and
approval organ six (6) months before the date of expiration of the JV Term.

           CHAPTER XVIII  EFFECT OF CONTRACT EXPIRATION OR TERMINATION

ARTICLE 66. Upon the expiration of or  termination of this Contract,  (a) the JV
shall  immediately  cease using the  Technology  and shall return to Party B the
Technology and all other Confidential Information provided by Party B to the JV;
(b) the  Technology  Transfer  Agreement  shall  terminate;  (c)  any  remaining
inventory of JV Products shall be sold in the Territory;  (d) the JV shall cease
using the Marks,  and (e) the JV shall be  liquidated  according to the Law. The
property of the JV remaining  after  liquidation  shall be distributed to the JV
Parties  in  accordance

                                       17
<PAGE>

with the  Distribution  Ratios.  Notwithstanding  the foregoing,  Party B or its
successor  shall continue to supply the JV or its successor  with AE,  provided,
however, that Party B and the JV can agree to commercially reasonable terms with
respect  thereto and there is no conflict  with any other  obligation of Party B
and provided further that Party B shall in no event be obligated to supply AE to
the JV if the  Contract  was  terminated  as a result of the JV's  breach of the
Technology Transfer Agreement or Party A's breach of this Contract.

                         CHAPTER XIX   INSURANCE

ARTICLE 67. All insurance  coverage for the JV shall be arranged with  insurance
carrier(s) that operate in the PRC, provided that such insurance  carrier(s) are
capable of providing coverage on terms and conditions substantially as favorable
as those  offered by sources not located in the PRC. The  selection of insurance
company is subject to Board of Directors approval.

            CHAPTER XX   CONTRACT AMENDMENT, ALTERATION AND TERMINATION

ARTICLE 68. No amendments to the Contract and its appendixes  shall be effective
without the prior written agreement of Party A and Party B and the approval from
the original PRC Government examination and approval organization.

ARTICLE 69. In the event that either JV Party is unable to perform the  Contract
due to force majeure or inability to continue operation due to continuous severe
losses,  the Contract may be  terminated  by unanimous  approval of the Board of
Directors of the JV and approval from the original  examination and approval PRC
Government organization.

ARTICLE  70.  In the  event  that any JV Party  or the JV fails to  perform  its
obligations  stipulated in this  Contract,  the Articles of  Association  or the
Technology  Transfer  Agreement or  repudiates  this  Contract,  the Articles of
Association or the Technology  Transfer  Agreement,  such JV Party or the JV, as
applicable,  shall be regarded as  unilaterally  in breach of this Contract.  In
addition to the right to claims for damages,  the  non-breaching  JV Party shall
have  the  right to  terminate  this  Contract  and to file  with  the  original
examination  and approval  organization  for such  termination  if the breaching
entity  does not cure its  breach  within  thirty  (30) days of  written  notice
thereof.

ARTICLE 71. Party B may terminate  this  Contract,  by written notice to Party A
(a) at any time after the first  anniversary of the Effective Date, in the event
that no sales of any JV Product have been made,  (b) if the  Establishment  Date
has not occurred  within sixty (60) days of the  Effective  Date,  or (c) in the
event that any profits  distributed  by the JV to Party B may not be repatriated
from the PRC according to Chinese law.

ARTICLE 72. The parties agree that if there is any  subsequent  enactment of law
or  regulation  or any  subsequent  act of  governmental  authority  in the PRC,
including,  without limitation,  any condition to the approval of this Contract,
that,  in the  reasonable  opinion  of Party B, (a)  makes  performance  of this
Contract or a material  provision of this Contract  impossible  for Party B, (b)
materially  adversely  alters Party B's rights and obligations from those agreed
and contemplated by this Contract,  including,  without  limitation,  materially
adversely alters Party B's

                                       18
<PAGE>

responsibilities  or required  actions with respect to the JV, or (c) materially
adversely  interferes  with the benefits  contemplated  herein to be received by
Party  B,  including,  without  limitation,   materially  adversely  alters  the
compensation  that Party B is due  hereunder  or under the  Technology  Transfer
Agreement,  Party B's ownership interest in the JV or Party B's participation in
decision-making that affects the JV, the parties shall use their best efforts to
amend this Contract to restore the equitable arrangement intended by the parties
as reflected in this Contract or, if Party B deems in its sole  discretion  that
there is no mutually  acceptable  means of accomplishing  the parties'  original
intent, Party B shall have the right to unilaterally terminate this Contract.

ARTICLE 73. Either JV Party may terminate this Contract by written notice to the
other JV Party in the event that (a) the equipment  necessary for fulfillment of
the JV's obligations is not fully  operational in accordance with the Applicable
Regulations,  including without limitation,  not capable of producing Calcitonin
in  conformity  with the  specifications  provided  by Party B or not capable of
producing the JV Product within a reasonable time period,  or (b) the JV has not
received all necessary government approvals to distribute the JV Products in the
PRC within one (1) year of the  certification  by the relevant  PRC  authorities
that the facility is operating under Good Manufacturing Practice.

ARTICLE 74. Party A and the JV shall take all measures  necessary,  which in any
event  shall  not  be  less  than  all  reasonable  measures,  to  maintain  the
confidentiality  of the  Technology  and  other  trade  secrets  or  proprietary
information (whether or not reduced to writing) (the "Confidential Information")
provided by Party B to the JV, which  obligation  shall continue for a period of
five (5) years after the expiration or termination of this Contract. Party A and
the JV shall not disclose  such  Confidential  Information  to any third person,
except to their respective  designated  officers and employees on a need to know
basis,  and who prior to such disclosure have been notified of the  confidential
nature of the disclosure and have executed a  confidentiality  agreement  having
obligations  of  confidentiality  at least as  strict as those set forth in this
Article 73 and a copy of which is promptly  provided to Party B. In the event of
any unauthorized disclosure of the Confidential Information by Party A or the JV
or their respective officers,  employees,  staff or workers,  Party B shall have
the right to terminate this Contract by written notice to Party A.

ARTICLE  75.  The  following  provisions  of this  Contract  shall  survive  the
termination  or  expiration  thereof:  Articles 22, 24, 81, 84 and 85,  Chapters
XIII, XIV, XV, XXI, XXIII, XXIV and this Chapter XX.

              CHAPTER XXI   RESPONSIBILITIES OF CONTRACT BREACH

ARTICLE  76.  Any  party  who  fails  to  make  timely  and   adequate   capital
contributions  pursuant  to  Chapter  V,  shall pay the other JV Party an amount
equal to five percent (5%) of such shortfall amount of delay of payment thereof.
The  non-breaching  party shall also have the right to  terminate  the  Contract
according  to Article 69 and shall have a claim for damages  from the  breaching
party.

                                       19
<PAGE>

ARTICLE  77.  Partial  or  complete  non-performance  of the  contract  and  its
appendixes  caused  by any  single  party  shall be the  responsibility  of this
defaulting party. In case of shared fault, each party shall be liable to its own
share of responsibility.

                        CHAPTER XXII  FORCE MAJEURE

ARTICLE  78. In the event of such  incidents  of force  majeure  as  earthquake,
hurricane,  flood,  war and other  unpredictable  incidents  whose inception and
consequence  are  unpreventable,  which result in the difficulty or inability to
perform the Contract under the agreed  conditions,  the party who is affected by
the force majeure  incidents shall promptly fax notice to the other party of the
situation and provide valid documents with regard to the details of the incident
and  causes  for the  nonperformance  or  partial  nonperformance  or  prolonged
performance  of thc Contract.  In  consideration  of the extent of impact on the
Contract  performance,  both  parties  will  discuss  and  decide on  whether to
dissolve  the   Contract  or  partially   alleviate   the   responsibility   for
nonperformance, or prolong the Contract performance.

                        CHAPTER XXIII  APPLICABLE LAWS

ARTICLE 79. The establishment, validity, interpretation, performance and dispute
resolution of the Contract is subject to the jurisdiction of the laws of the PRC
and the  international  rules and treaties that are recognized by China shall be
duly followed.

                       CHAPTER XXIV  RESOLUTION OF DISPUTES

ARTICLE 80. All disputes that arise over the  performance or in connection  with
the Contract,  shall be referred to resolution  through friendly  discussions by
both  parties.  If  friendly  discussions  are  ineffective,  disputes  shall be
submitted to arbitration  before the Stockholm  Chamber of Commerce applying the
rules and  procedures  of  International  Chamber of Commerce.  The  arbitration
awards  shall  be final  and  binding  on both  parties.  The fees and  expenses
involved in the arbitration shall be borne by the losing party.

ARTICLE  81. In the  course of  arbitration,  with the  exception  of matters in
dispute, both parties shall continue to perform the Contract.

                           CHAPTER XXV  LANGUAGES

ARTICLE 82. The Contract is written  with 8 copies both in Chinese  language and
English language. Both versions shall have equal validity.

                         CHAPTER XXVI  MISCELLANEOUS

ARTICLE 83. The  contract,  addenda and  appendices  including  the  Articles of
Association, import list, sales agreement and the Technology Transfer Agreement,
all constitute an inseparable part of this Contract.

                                       20
<PAGE>

ARTICLE 84. This Contract and its addenda and appendixes  shall enter into force
upon  the  approval  by  National  Administration  of High  and  New  Technology
Industrial Development Zone, Shijiazhuang, Hebei Province.

ARTICLE 85. All notices or other  communications  that are required or permitted
hereunder shall be in writing and delivered personally,  sent by telecopier (and
promptly  confirmed  by  personal  delivery,  registered  or  certified  mail or
overnight  courier),  sent  by  internationally-recognized  courier  or  sent by
registered  or  certified  mail,  postage  prepaid,  return  receipt  requested,
addressed as follows:

         If to Party A, to:

                           Shijiazhuang Pharmaceutical Group Company, Ltd.
                           276 Zhongshan West Road
                           Shijiazhuang, Hebei Province, PRC
                           Attention: Mr. Cai Dong Chen
                           Telecopier: 0086-311-703-9608

                  with a copy to:

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

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

                           Attention:
                                      ------------------------
                           Telecopier:
                                       -----------------------

         If to Party B, to:

                           Unigene Laboratories, Inc.
                           110 Little Falls Road
                           Fairfield, New Jersey  07004, USA
                           Attention: Dr. Warren Levy, President
                           Facsimile: 001-973-227-6088

                  with a copy to:

                           Covington & Burling
                           601 California Street, Suite 1900
                           San Francisco, CA  94108, USA
                           Attention: James C. Snipes, Esq.
                           Facsimile: 001-415-591-6091

or to such  other  address  as the party to whom  notice is to be given may have
furnished  to the  other  party in  writing  in  accordance  herewith.  Any such
communication  shall  be  deemed  to have  been  given  (a) when  delivered,  if
personally  delivered on a business day, (b) on the business day

                                       21
<PAGE>

after dispatch, if sent by facsimile (with confirming copy sent by international
express  courier),  (c) on the third  business  day after  dispatch,  if sent by
internationally recognized courier, and (d) upon receipt, if dispatched by mail.
It is  understood  and agreed that this Article 84 is not intended to govern the
day-to-day business  communications  necessary between the parties in performing
their duties, in due course, under the terms of this Contract.

ARTICLE 86. Neither the JV nor Party B shall be responsible for compensating any
brokers or intermediaries involved in helping to establish the JV.

ARTICLE 87. This Contract is signed by representatives of Party A and Party B on
June 15, 2000.

Party A:
/s/Cai Dong Chen
--------------------------------------------------------
Cai Dong Chen
Legal Representative
SHIJIAZHUANG PHARMACEUTICAL GROUP COMPANY, LTD

Party B:
/s/Dr. Warren P. Levy
--------------------------------------------------------
Dr. Warren P. Levy
Legal Representative
UNIGENE LABORATORIES, INC.

                                       22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}]]