8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

March 16, 2010

Unigene Laboratories, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-16005	22-2328609
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

81 Fulton Street, Boonton, New Jersey	07005
(Address of principal executive offices)	(Zip Code)

(973) 265-1100

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 – Registrant’s Business and Operations

Item 1.01. Entry into a Material Definitive Agreement.

Restructuring of Financing Agreement

On March 16, 2010 (the “Execution Date”), Unigene Laboratories, Inc. (the “Company”) entered into an Amended and Restated Financing Agreement, by and among the Company, Victory Park Management, LLC, as administrative agent and collateral agent (“Victory Park”), and the Lender party thereto (collectively, the “VPC Parties”) (together with all exhibits and schedules thereto, and as the same may have been and may hereafter be amended, restated, modified and supplemented from time to time, the “Restated Financing Agreement”). The Restated Financing Agreement amends and restates in its entirety and replaces (without constituting a novation), the Financing Agreement (such amendment and restatement herein referenced as the “Restructuring”) dated as of September 30, 2008, by and among the Company, Victory Park, as administrative agent and collateral agent, and the Lenders party thereto (the “Original Financing Agreement”), which was previously disclosed by the Company on a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October 6, 2008 (the “Original 8-K”). A closing under the Restated Financing is scheduled to occur on March 17, 2010 (the “First Closing”). In connection therewith, the Company and the VPC Parties have executed a Master Reaffirmation and Amendment to Transaction Documents (the “Master Reaffirmation”) to acknowledge and reaffirm that the transaction documents entered into, and the liens and security interests granted in connection with, the Original Financing Agreement, secure the Obligations (defined therein) of the Company under the Original Financing Agreement, as amended and restated and increased, pursuant to the Restated Financing Agreement. These original transaction documents include, without limitation, the Original Financing Agreement, a pledge and security agreement, related intellectual property security agreements, a deposit account control agreement and a mortgage.

Under the terms of the Restated Financing Agreement, at the First Closing, the Company will issue to the Lender, and the Lender will purchase, $33,000,000 aggregate principal amount of three-year, senior secured convertible notes (the “Convertible Notes”), by way of surrender of the three-year, senior secured non-convertible notes (the “Original Notes”) that the Company previously issued and sold to the Lenders pursuant to the Original Financing Agreement, in the aggregate principal amount of approximately $19,360,000, and by way of cash payment of approximately $13,640,000 for the balance. In addition, under certain circumstances, the Company may request that the Lender issue up to an additional $3 million aggregate principal amount of Convertible Notes at one subsequent closing (the “Subsequent Closing”), which shall be no later than the second anniversary of the First Closing. No Lender, however, shall be required to purchase Convertible Notes at the Subsequent Closing unless such Lender has, in its sole discretion, agreed in writing, in response to the Company’s written request for a Subsequent Closing, to such purchase. The maturity date of the Convertible Notes has been extended to March 17, 2013 from September 30, 2011 under the Original Notes. Under the terms of the Restated Financing Agreement, the Master Reaffirmation and related security agreements and

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mortgage, the Convertible Notes are secured by a first priority lien on all current and future assets of the Company. The Convertible Notes will accrue interest at a rate per annum equal to the greater of (x) the Prime Rate plus 5% and (y) 15%, which, in the absence of an Event of Default (as defined therein), shall be capitalized and added to the outstanding principal balance of the Convertible Note on each anniversary of the date of issuance other than the maturity date. The Convertible Notes are convertible into shares of common stock of the Company, par value $0.01 per share (the “Common Stock”), at the Lender’s option at the earliest of (w) the first anniversary of the date of issuance, (x) the occurrence of a Fundamental Transaction (as defined in the Convertible Notes), (y) Lender’s receipt of a Permitted Redemption Notice (as defined in the Restated Financing Agreement), and (z) an Event of Default. The initial conversion rate, which is subject to adjustment as set forth in the Convertible Notes, is calculated by dividing the sum of the principal to be converted plus all accrued and unpaid interest thereon by $0.70 per share. The Company is subject to certain cash damages, as set forth in the Convertible Notes, in the case of a failure to timely convert the notes and a failure to timely convert is also an Event of Default, subject to additional remedies described in the Restated Financing Agreement. As of the First Closing, the Company lacked sufficient shares of Common Stock to deliver all of the Conversion Shares and the Company is required to obtain stockholder approval to amend its certificate of incorporation to increase the number of authorized shares. After the first anniversary of the First Closing, under certain circumstance, the Company has the right to prepay up to $13,642,472 of the Convertible Notes at a price equal to 110% of the Convertible Notes being repaid plus accrued and unpaid interest, subject to customary conditions. The Convertible Notes also are subject to certain mandatory prepayment events set forth in the Restated Financing Agreement, such as upon receipt of certain proceeds from asset sales, equity issuances, milestone payments under the Company’s material license agreements or certain other receipts of cash outside the ordinary course of business. At the First Closing, the Company will make a payment of $660,000 to the Lender with the proceeds from the sale of the Convertible Notes in respect of an issuance fee and a payment of approximately $714,000 to RBC Capital Markets in connection with investment advisory services rendered.

At the First Closing, the Company will also enter into an Amended and Restated Registration Rights Agreement (the “Restated Registration Rights Agreement”) with the Lender which provides them with certain rights to require the Company to file with the SEC a registration statement covering the resale of all shares held by the Lenders and their affiliates, including (i) the 1,800,000 shares (the “Shares”) of Common Stock that the Company previously issued to the Lenders, and (ii) the shares of Common Stock which will be issued to the Lender upon conversion of the Convertible Notes (the “Conversion Shares”). Assuming that the Convertible Notes were convertible in full on the First Closing Date (with conversion only of the original principal amount thereof into the Conversion Shares), then, together with the Shares and other securities owned by them, Victory Park and its affiliates would beneficially own in the aggregate approximately 38.7% of the Company’s outstanding Common Stock (as diluted by outstanding options) as of the First Closing Date.

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Except for their status as contractual documents that establish and govern the legal relations among the parties thereto with respect to the transactions described in this Current Report on Form 8-K, neither the Restated Financing Agreement nor the Restated Registration Rights Agreement (together, the “Restated Agreements”) is intended to be a source of factual, business or operational information about the parties.

The representations, warranties, covenants and agreements made by the parties in the Restated Agreements are made as of specific dates. The assertions embodied in those representations and warranties were made for purposes of the Restated Agreements and are subject to qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the Restated Agreements. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders or may have been used for the purpose of allocating risk between the respective parties rather than establishing matters as facts.

The Company intends to file with the Securities and Exchange Commission (the “SEC”) a proxy statement and other relevant materials in connection with the Annual Meeting of Stockholders to approve a proposal to amend the Company’s certificate of incorporation to increase the number of authorized shares of Common Stock (the “Proposal”). The proxy statement will be sent to the stockholders of the Company in accordance with the proxy rules. Before making any voting decision with respect to the Proposal, stockholders of the Company are urged to read the proxy statement and any other relevant materials filed with the SEC, when they become available, because they will contain important information about the Proposal. The proxy statement and other relevant materials (when they become available), and any other documents filed by the Company with the SEC, may be obtained free of charge at the SEC’s web site at <www.sec.gov>. In addition, investors and stockholders of the Company may obtain free copies of the documents filed with the SEC by contacting the Company at 973-265-1100. You may also read and copy any reports, statements and other information filed by the Company at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.

Amendment and Restatement of Levy Debt

In connection with the Restated Financing Agreement, the Company also entered into a Reaffirmation of Affiliate Subordination Agreement (the “Subordination Reaffirmation”) by and among the Company, Jean Levy, Jaynjean Levy Family Limited Partnership (the “Partnership”) and Victory Park. Under the terms of the Subordination Reaffirmation, repayment of the Company’s existing indebtedness payable in favor of Mrs. Levy, to whom Jay Levy previously transferred and assigned his Company notes, and the Partnership, which is evidenced by Secured Promissory Notes (the “Existing Notes”) that were previously filed by the Company with the SEC on the Original 8-K, remain subordinated to the indebtedness payable in favor of the Lender in accordance with the terms and conditions of the original affiliate subordination agreement, which the Company, the subordinated creditors and Victory Park entered into on September 30, 2008. Simultaneously with entering into the Subordination Reaffirmation, the Company and the

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holders of the Existing Notes amended and restated the Existing Notes (as amended, the “Amended Notes”) to modify the terms therein. The Amended Notes, which are secured by a secondary lien on the Company’s equipment and certain of the Company’s United States patents and patent applications, as well as a secondary mortgage on certain of the Company’s real property, will bear interest at a rate of 9.0% per annum from May 10, 2007 to the First Closing and 12.0% per annum thereafter, each of which shall be non-compounding. The Company shall make the following payments as set forth in, and pursuant to, the Amended Notes: (w) an aggregate principal payment under the Amended Notes of $1,000,000 on May 10, 2010, (x) an aggregate principal payment under the Amended Notes of $500,000 on November 10, 2010, (y) an aggregate principal payment under the Amended Notes of $250,000 on May 10, 2011, and (z) payment of all unpaid principal and accrued and unpaid interest under the Amended Notes on June 18, 2013, subject in each case to certain conditions set forth in the Subordination Reaffirmation. The Company has the right to prepay the Amended Notes with no penalties, provided that all senior debt has been indefeasibly repaid in full first. The Amended Notes also are subject to certain mandatory prepayment events set forth therein.

The descriptions of the Restated Financing Agreement, the Master Reaffirmation, the Convertible Notes, the Restated Registration Rights Agreement, the Subordination Reaffirmation and the Amended Notes above do not purport to be complete and are qualified in their entirety by reference, as applicable, to copies respectively filed as Exhibits 10.1 through 10.4 and 10.7 hereto, which are incorporated herein by reference, or by documents that will be filed by the Company in the future in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”). A copy of the press release issued by the Company announcing the Restated Financing Agreement, the Restructuring and the transactions described above is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Amendment to Rights Agreement

On March 16, 2010, in connection with the Restructuring, an Amendment (the “Amendment”) to the Rights Agreement dated as of December 20, 2002 (the “Rights Agreement”), between the Company and Registrar and Transfer Company (the “Rights Agent”), was executed in order to render the Rights inapplicable to the Restructuring and the other transactions contemplated by or occurring concurrently with the Restructuring. The Amendment provides, among other things, that none of the VPC Parties (as such term is defined in the Amendment) shall be deemed to be an Acquiring Person (as such term is defined in the Rights Agreement), either individually or collectively, by virtue of, and no holder of Rights shall be entitled to exercise such Rights (as such term is defined in the Rights Agreement) solely by reason of: (i) the approval, execution, delivery or performance of the Restated Financing Agreement, (ii) the public announcement of the Restructuring, (iii) the consummation of the Restructuring, (iv) the acquiring of Beneficial Ownership (as such term is defined in the Rights Agreement) of Common Stock by any VPC Party (A) in connection with the Restructuring, (B) upon the Conversion Commencement Date (as defined in the Convertible Notes), (C) upon conversion of the Convertible Notes, (D) upon the Stockholder Approval or the Filing (each as defined in the Restated Financing Agreement), or (E) otherwise pursuant to the Restated Financing Agreement, or (v) the VPC Parties’ ownership of the Securities (as defined in the Restated Financing Agreement) or any other securities of the Company.

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Section 2 – Financial Information

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

(a) The information provided in Item 1.01 of this Current Report on Form 8-K under the title “Restructuring of Financing Agreement” is hereby incorporated into this Item 2.03 by reference.

Section 3 – Securities and Trading Markets

Item 3.03. Material Modification to Rights of Security Holders.

The description of the Amendment to Rights Agreement set forth above under Item 1.01 of this Current Report on Form 8-K under the title “Amendment to Rights Agreement” is incorporated herein by reference.

Section 5 – Corporate Governance and Management

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) Effective immediately following the First Closing, Jay Levy (“Mr. J. Levy”) resigned as Chairman of the Company’s Board of Directors (the “Board”) and as a director and Ronald S. Levy (“Dr. Ron Levy”) resigned as the Company’s Secretary and as a director. Dr. Ron Levy continues to serve as the Company’s Executive Vice President. Under the terms of the Restated Financing Agreement, the Company is obligated to use its reasonable best efforts to identify, interview and negotiate with candidates for, and, subject to the Board’s approval, hire a new Chief Executive Officer as successor to Warren Levy as soon as reasonably practicable.

(d) As part of the Restructuring, effective immediately following the First Closing, the Board appointed Richard N. Levy to serve as a director of the Company. As of the First Closing, Richard N. Levy, who is not related to Mr. J. Levy, Dr. Ron Levy or Dr. Warren Levy, was also elected by the Board to serve as Chairman of the Board and as a member of the Company’s Nominating and Corporate Governance Committee. Richard N. Levy is the Managing Principal and Founder of Victory Park Capital, which controls the investment decisions of the Lender who is a party to the Restated Financing Agreement described above under Item 1.01. The description of the Restructuring, the Restated Financing Agreement, the Master Reaffirmation, the Convertible Notes, the Restated Registration Rights Agreement and the Subordination Reaffirmation set forth above under Item 1.01 is incorporated herein by reference.

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(e) Employment Amendments. At the First Closing, upon the approval of the disinterested directors on the Board, the Company also entered into (i) a Second Amendment to Employment Agreement (the “WL Employment Amendment”) with Dr. Warren S. Levy (“Dr. W. Levy”), the Company’s Chief Executive Officer and President, to amend that certain Employment Agreement, dated as of January 1, 2000, by and between Dr. W. Levy and the Company (as previously amended, the “WL Agreement”), and (ii) a Second Amendment to Employment Agreement (the “RL Employment Amendment”) with Dr. R. Levy, the Company’s Executive Vice President to amend that certain Employment Agreement, dated as of January 1, 2000, by and between Dr. R. Levy and the Company (as previously amended, the “RL Agreement”). The WL Agreement and the RL Agreement (together, the “Employment Agreements”) were previously filed by the Company with the SEC with the Company’s Annual Report on Form 10-K for the years ended December 31, 1999 and 2008, and except as set forth below, the terms of the Employment Agreements remain unchanged and in full force and effect.

The WL Employment Amendment and the RL Employment Amendment (together, the “Employment Amendments”) each provide that, upon (a) termination of the employment of the executive by the Company without cause or (b) resignation of the executive for good reason (which is defined to mean a change of control of the Company or a material diminution of the executive’s responsibilities without his consent, provided that, after the Company’s hiring of a new Chief Executive Officer (the “CEO Engagement”), each agrees that he will not so resign due to material diminution for three (3) months thereafter), (i) the Company will make a severance payment to the executive equal to eighteen months of his then-current annual base salary, payable six months following termination in a lump sum representing twelve months of severance, and the balance during months twelve through eighteen following termination, plus the cash value of all accrued vacation days, (ii) all of the executive’s outstanding and unvested stock options shall vest in full immediately, (iii) any of the executive’s options which are outstanding on the date of his termination will remain exercisable for a period of three and one-half years following such termination or until the termination date of the option, whichever is earlier, (iv) the Company will provide the executive with full medical benefits for eighteen months immediately following the date of the executive’s termination, and (v) grant the executive a stock option for 100,000 shares of Common Stock, exercisable at $1.20 per share, which stock option will vest upon the three month anniversary of the CEO Engagement.

Retention Program and Restated CIC Agreements. On March 16, 2010, the Board reviewed the recommendations of the Company’s Compensation Committee and approved and adopted a retention program, subject to the approval and closing of the Restructuring, to promote the retention of certain of the Company’s vice presidents (each of whom is listed below and collectively, the “Vice Presidents”) and certain other essential employees of the Company and to motivate the Vice Presidents and align their interests with the interests of the Company’s stockholders by, among other things, granting certain stock options to the Vice Presidents. In light of this program, following the First Closing, the Company will enter into an Amended and Restated Change of Control Agreement (each, a “Restated CIC Agreement”) with each of the Vice Presidents, which will replace the Change of Control Agreements which the Company and the Vice Presidents previously executed, a form of which was previously filed by the Company with the SEC on a Current Report on Form 8-K on June 24, 2008.

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The Restated CIC Agreement provides that if (i) the Vice President is not hired by the surviving company following a Change in Control (as defined in the Restated CIC Agreement) other than for Cause (as defined in the Restated CIC Agreement), (ii) the Vice President’s employment with the Company is terminated within twelve months following a Change in Control (a) by the surviving company other than for Cause or (b) by the Vice President for Good Reason (as defined in the Restated CIC Agreement), (iii) the Vice President’s employment with the Company is terminated other than for Cause within twelve months following the First Closing under the Restated Financing Agreement (“Termination A”), or (iv) the Vice President’s employment with the Company is terminated other than for Cause within six months following the Company’s hiring of a new CEO, provided such CEO is hired within twelve months of the First Closing (“Termination B” and together with Termination A, a “Related Termination”), then the Vice President will be entitled to receive a severance payment equal to twelve months of the Vice President’s annual base salary as in effect on the date of such executive’s termination. The severance payment will be paid as salary continuation in accordance with the regular payroll cycle of the Company or the surviving company (such twelve month period, the “Severance Period”) and receipt of such payment is conditioned on the executive’s execution and delivery of a general release of all claims against the Company, the surviving company and related parties. However, any severance which a Vice President receives in connection with a Related Termination will be reduced on a dollar-for-dollar basis to reflect any amounts paid during the Severance Period to such Vice President by a subsequent employer. In addition, the executive agrees not to compete with the Company or the surviving company, or solicit any of their employees, clients or customers, during his employment with the Company or the surviving company and for one year following such executive’s termination or cessation of employment with the Company or the surviving company for any reason.

In addition, the Board determined that the terms of all currently outstanding options and restricted stock grants held by the Vice Presidents (the “Current Grants”), under the Company’s 2006 Stock-Based Incentive Compensation Plan, as amended (the “2006 Plan”), will be amended to provide that (a) upon the occurrence of a Related Termination, any unvested Current Grants scheduled to vest within twelve months following the date of such Related Termination would accelerate vesting and (b) the then-vested options contained in the Current Grants would remain exercisable for a period of three years following such Related Termination or until the termination date of the Current Grant, whichever is earlier. Lastly, the retention program provides that, pursuant to the 2006 Plan, the Vice Presidents will be granted the following non-qualified options (the “New Grants”) to purchase shares of Common Stock:

Name and Principal Position	Options to Purchase Shares of Common Stock
William Steinhauer Vice President of Finance	100,000
Paul P. Shields Vice President, Manufacturing Operations	100,000
Nozer M. Mehta Vice President, Biological R&D	100,000
James P. Gilligan Vice President of Product Development	20,000 (pro rated based on his part- time status)

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The exercise price for the New Grants will be the Fair Market Value (as defined in the 2006 Plan) on the second trading day following the public announcement of the Restructuring. The New Grants will vest in equal annual installments over four years, provided that upon the occurrence of a Related Termination, (i) any unvested New Grants scheduled to vest within twelve months following the date of such Related Termination would accelerate vesting, and (ii) that the vested options contained in the New Grants would remain exercisable for a period of three years following such Related Termination or until the termination date of the New Grant, whichever is earlier.

The descriptions of the Employment Amendments and the Restated CIC Agreement above do not purport to be complete and are qualified in their entirety, as applicable, by the documents which will be filed by the Company in the future in accordance with the Exchange Act or by the copy filed as Exhibit 10.8 hereto, which is incorporated herein by reference.

Section 8 – Other Events

Item 8.01. Other Events.

Effective as of the First Closing, the Company terminated the employment of Jay Levy as the Company’s Treasurer. Simultaneously, as set forth above under Item 5.02(b), Mr. J. Levy resigned as Chairman of the Company’s Board of Directors and as a director. Pursuant to that certain Employment Agreement, dated as of January 1, 2000, by and between the Company and Mr. J. Levy, as amended, which was previously filed by the Company with the SEC on an Annual Report on Form 10-K on (i) March 30, 2000 and (ii) March 16, 2009, the Company shall remit to Mr. J. Levy a severance payment in the amount of $71,250, which represents Mr. J. Levy’s current annual salary, plus the cash value of his accrued vacation days. Mr. Jay Levy’s options will also be exercisable for three and one-half years following termination.

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Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Document Description
4.1	Amendment to Rights Agreement, dated March 16, 2010
10.1	Amended and Restated Financing Agreement, dated as of March 16, 2010, by and among the Company, the Lenders and Victory Park Management, LLC, as agent
10.2	Master Reaffirmation and Amendment to Transaction Documents, dated as of March 17, 2010, by and among the Company and Victory Park Management, LLC, as agent *
10.3	Senior Secured Convertible Term Note, dated March 17, 2010, issued by the Company in favor of the Lenders signatory to the Restated Financing Agreement
10.4	Amended and Restated Registration Rights Agreement, dated as of March 17, 2010, by and among the Company and the Lenders
10.5	Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing, dated as of September 30, 2008, by and between the Company and Victory Park Management, LLC, as agent
10.6	First Amendment to Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing, dated as of March 17, 2010, by and between the Company and Victory Park Management, LLC, as agent
10.7	Affiliate Subordination Reaffirmation, dated as of March 17, 2010, by and among the Company, Jean Levy, Jaynjean Levy Family Limited Partnership and Victory Park Management, LLC, as agent for the Lenders
10.8	Form of Amended and Restated Change in Control Agreement, by and between the Company and the vice president named therein
99.1	Press Release, dated March 17, 2010

* Portions of the exhibit have been omitted pursuant to a request for confidential treatment.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	UNIGENE LABORATORIES, INC.
	By:	/s/    WARREN P. LEVY
		Warren P. Levy, President
Date: March 17, 2010

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EXHIBIT INDEX

Exhibit No.	Document Description
4.1	Amendment to Rights Agreement, dated March 16, 2010
10.1	Amended and Restated Financing Agreement, dated as of March 16, 2010, by and among the Company, the Lenders and Victory Park Management, LLC, as agent
10.2	Master Reaffirmation and Amendment to Transaction Documents, dated as of March 17, 2010, by and among the Company and Victory Park Management, LLC, as agent *
10.3	Senior Secured Convertible Term Note, dated March 17, 2010, issued by the Company in favor of the Lenders signatory to the Restated Financing Agreement
10.4	Amended and Restated Registration Rights Agreement, dated as of March 17, 2010, by and among the Company and the Lenders
10.5	Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing, dated as of September 30, 2008, by and between the Company and Victory Park Management, LLC, as agent
10.6	First Amendment to Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing, dated as of March 17, 2010, by and between the Company and Victory Park Management, LLC, as agent
10.7	Affiliate Subordination Reaffirmation, dated as of March 17, 2010, by and among the Company, Jean Levy, Jaynjean Levy Family Limited Partnership and Victory Park Management, LLC, as agent for the Lenders
10.8	Form of Amended and Restated Change in Control Agreement, by and between the Company and the vice president named therein
99.1	Press Release, dated March 17, 2010

* Portions of the exhibit have been omitted pursuant to a request for confidential treatment.

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EX-4.1

Exhibit 4.1

AMENDMENT TO RIGHTS AGREEMENT

AMENDMENT TO RIGHTS AGREEMENT, dated as of March 16, 2010 (this “Amendment”), between UNIGENE LABORATORIES, INC., a Delaware corporation (the “Company”), and REGISTRAR AND TRANSFER COMPANY, a New Jersey corporation (the “Rights Agent”). Capitalized terms used but otherwise not defined herein shall have the respective meanings ascribed to such terms in the Rights Agreement (as hereinafter defined).

RECITALS

WHEREAS, the Company and the Rights Agent are parties to that certain Rights Agreement, dated as of December 20, 2002 (the “Rights Agreement”);

WHEREAS, neither the Distribution Date nor the occurrence of any Triggering Event has occurred as of the date hereof;

WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company has directed the Rights Agent to enter into this Amendment;

WHEREAS, the Board of Directors has determined that it is in the best interest of the Company that it enter into that certain Amended and Restated Financing Agreement dated as of March 16, 2010, by and among the Company, Victory Park Management, LLC, as administrative agent and collateral agent, and the Lenders party thereto (together with any Related Funds (as defined therein), collectively, the “VPC Parties”) (together with the Senior Secured Convertible Notes issuable thereunder (the “Convertible Notes”) and all other exhibits and schedules thereto, and as the same may have been and may hereafter be amended, restated, modified and supplemented from time to time, the “Financing Agreement” and such amendment and restatement and the transactions contemplated by the Financing Agreement, herein referred to as the “Restructuring”), which amends and restates the Original Financing Agreement (defined below); and

WHEREAS, the Board of Directors has determined that it is in the best interests of the Company and its stockholders to amend the Rights Agreement as set forth herein immediately prior to and in connection with the execution and delivery of the Financing Agreement, pursuant to which the Company will issue to certain VPC Parties at least $33,000,000 aggregate principal amount of Convertible Notes (with potentially an additional $3,000,000 aggregate principal amount issuable thereunder), convertible in accordance with the terms thereof into shares of Common Stock of the Company, in order to render the Rights inapplicable to the Restructuring and the other transactions contemplated by or occurring concurrently with the Restructuring;

NOW, THEREFORE, in consideration of these premises and the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

1. Amendments.

(a) Amendment to Section 1(a). The following text is added at the end of the definition of “Acquiring Person” in Section 1(a) of the Rights Agreement:

“Notwithstanding the foregoing or anything in this Agreement to the contrary, none of the VPC Parties shall be deemed to be an Acquiring Person, either individually or collectively, by virtue of, and no holder of Rights shall be entitled to exercise such Rights solely by reason of, (i) the approval, execution, delivery or performance of the Financing Agreement, (ii) the public announcement of the Restructuring, (iii) the consummation of the Restructuring, (iv) the acquiring of Beneficial Ownership of Common Stock by any VPC Party (A) in connection with the Restructuring, (B) upon the Conversion Commencement Date (as defined in the Convertible Notes), (C) upon conversion of the Convertible Notes, (D) upon the Stockholder Approval or the Filing (each as defined in the Financing Agreement), or (E) otherwise pursuant to the Financing Agreement, or (v) the VPC Parties’ ownership of the Securities (as defined in the Financing Agreement) or any other securities of the Company.”

(b) The following definitions are added to Section 1 of the Rights Agreement in the appropriate alphabetical order:

“Financing Agreement” shall mean that Financing Agreement dated as of March 16, 2010, by and among the Company and the VPC Parties, together with all exhibits and schedules thereto, and as the same may hereafter be amended, restated, modified and supplemented from time to time (and which amends and restates that certain Financing Agreement, dated as September 30, 2008, by and among the Company and the VPC Parties, together with the Senior Secured Convertible Notes issuable thereunder (the “Convertible Notes”), and all other exhibits and schedules thereto, as the same may have been amended, restated, modified and supplemented from time to time (the “Original Financing Agreement”), and such amendment and restatement and the transactions contemplated by the Financing Agreement, herein referred to as the “Restructuring”).

“VPC Parties” shall mean Victory Park Management, LLC, Victory Park Special Situations Master Fund, Ltd., Victory Park Credit Opportunities Master Fund, Ltd., Related Funds (as defined in the Financing Agreement) and each of their respective Affiliates, successors and assigns.

2. The Rights Agreement, as supplemented and modified by this Amendment, together with the other writings referred to in the Rights Agreement or delivered pursuant thereto which form a part thereof, contain the entire agreement among the parties with respect to the subject matter thereof and amend, restate and supersede all prior and contemporaneous arrangements or understandings with respect thereto.

3. Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Rights Agreement to “this Agreement, “hereunder,” “hereof,” “herein” or words of like import, shall mean and be a reference to the Rights Agreement, as amended hereby. Except as specifically amended above, the Rights Agreement shall remain in full force and effect, without modification, waiver or amendment, and is hereby ratified and confirmed.

4. This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State; provided, however, that all provisions regarding the rights, duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

5. This Amendment may be executed in any number of counterparts and such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

[signature page follows]

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

UNIGENE LABORATORIES, INC.
By:	/s/ Warren P. Levy
Name:	Warren P. Levy
Title:	Chief Executive Officer
REGISTRAR AND TRANSFER COMPANY, as Rights Agent
By:	/s/ Nicola Giancaspro
Name:	Nicola Giancaspro
Title:	Vice President

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED FINANCING AGREEMENT

Dated as of March 16, 2010

by and among

UNIGENE LABORATORIES, INC.,

as Borrower,

THE LENDERS PARTY HERETO

and

VICTORY PARK MANAGEMENT, LLC,

as Agent

$33,000,000 SENIOR SECURED CONVERTIBLE NOTES

TABLE OF CONTENTS

		Page
ARTICLE 1 DEFINITIONS; CERTAIN TERMS		3
Section 1.1	Definitions	3
Section 1.2	Terms Generally	19
Section 1.3	Accounting and Other Terms	19
ARTICLE 2 BORROWERS’ AUTHORIZATION OF ISSUE		20
Section 2.1	Senior Secured Convertible Notes	20
Section 2.2	Interest	20
Section 2.3	Redemptions and Payments	21
Section 2.4	Payments	25
Section 2.5	Dispute Resolution	26
Section 2.6	Taxes	26
Section 2.7	Reissuance	27
Section 2.8	Registers	28
Section 2.9	Maintenance of Registers	28
Section 2.10	Transfer Agent Instructions	28
Section 2.11	Common Stock	29
Section 2.12	Compensation for Increased Costs and Taxes	29
Section 2.13	Capital Adequacy Adjustment	29
ARTICLE 3 PURCHASE AND SALE OF NOTES AND SHARES		30
Section 3.1	First Restated Closing	30
Section 3.2	Subsequent Closing	31
ARTICLE 4 CONDITIONS TO THE BORROWERs’ OBLIGATION TO SELL		31
Section 4.1	First Restated Closing	31
Section 4.2	Subsequent Closing	32
ARTICLE 5 CONDITIONS TO EACH LENDER’S OBLIGATION TO PURCHASE		32
Section 5.1	First Restated Closing	32
Section 5.2	Subsequent Closing	36
ARTICLE 6 LENDER’S REPRESENTATIONS AND WARRANTIES		39
Section 6.1	No Public Sale or Distribution	39
Section 6.2	Investor Status	39
Section 6.3	No Governmental Review	40
Section 6.4	Transfer or Resale	40
Section 6.5	Legends	40
Section 6.6	Residency	41
ARTICLE 7 BORROWERS’ REPRESENTATIONS AND WARRANTIES		41
Section 7.1	Organization and Qualification	42
Section 7.2	Authorization; Enforcement; Validity	42
Section 7.3	Issuance of Securities	43

i

Section 7.4	No Conflicts	43
Section 7.5	Consents	43
Section 7.6	Subsidiary Rights	44
Section 7.7	Equity Capitalization	44
Section 7.8	Indebtedness and Other Contracts	45
Section 7.9	Off Balance Sheet Arrangements	45
Section 7.10	Ranking of Notes	45
Section 7.11	Title	45
Section 7.12	Intellectual Property Rights	46
Section 7.13	Creation, Perfection, and Priority of Liens	46
Section 7.14	Absence of Certain Changes	46
Section 7.15	Absence of Litigation	47
Section 7.16	No Undisclosed Events, Liabilities, Developments or Circumstances	47
Section 7.17	No Disagreements with Accountants and Lawyers	47
Section 7.18	No General Solicitation; Placement Agent’s Fees	47
Section 7.19	No Integrated Offering	48
Section 7.20	Tax Status	48
Section 7.21	Transfer Taxes	48
Section 7.22	Conduct of Business; Regulatory Permits	48
Section 7.23	Foreign Corrupt Practices	49
Section 7.24	Sarbanes-Oxley Act	49
Section 7.25	Environmental Laws	49
Section 7.26	Margin Stock	49
Section 7.27	ERISA	50
Section 7.28	Investment Company	50
Section 7.29	U.S. Real Property Holding Corporation	50
Section 7.30	Internal Accounting and Disclosure Controls	50
Section 7.31	SEC Documents; Financial Statements	51
Section 7.32	Manipulation of Price; Securities	52
Section 7.33	Transactions With Affiliates	52
Section 7.34	Acknowledgment Regarding Lender’s Purchase of Securities	53
Section 7.35	Acknowledgment Regarding Lender’s Trading Activity	53
Section 7.36	Registration Statement	53
Section 7.37	Insurance	53
Section 7.38	Application of Takeover Protections; Rights Agreement	53
Section 7.39	Employee Relations	54
Section 7.40	Disclosure	54
Section 7.41	Patriot Act	54
Section 7.42	Compliance with Statutes, etc	55
Section 7.43	Material Contracts	55
Section 7.44	FDA and Product-Related Matters	55
Section 7.45	Absence of Securities-Related Litigation	56
ARTICLE 8 COVENANTS		56
Section 8.1	Financial Covenants	56
Section 8.2	Deliveries	56

ii

Section 8.3	Notices	57
Section 8.4	Rank	60
Section 8.5	Incurrence of Indebtedness	60
Section 8.6	Existence of Liens	60
Section 8.7	Restricted Payments	60
Section 8.8	Mergers; Acquisitions; Asset Sales	61
Section 8.9	No Further Negative Pledges	61
Section 8.10	Affiliate Transactions	61
Section 8.11	Insurance	61
Section 8.12	Corporate Existence and Maintenance of Properties	63
Section 8.13	Non-circumvention	63
Section 8.14	Conduct of Business	63
Section 8.15	U.S. Real Property Holding Corporation	63
Section 8.16	Compliance with Laws	63
Section 8.17	Form D and Blue Sky	64
Section 8.18	Reporting Status	64
Section 8.19	Listing	64
Section 8.20	Additional Collateral	64
Section 8.21	Audit Rights; Field Exams; Appraisals; Meetings	64
Section 8.22	Pledge of Securities	65
Section 8.23	Additional Issuances of Securities	65
Section 8.24	Use of Proceeds	66
Section 8.25	Fees	67
Section 8.26	Disclosure of Transactions and Other Material Information	67
Section 8.27	Modification of Organizational Documents and Certain Documents	68
Section 8.28	Joinder	68
Section 8.29	Investments	69
Section 8.30	Authorization of Additional Shares of Common Stock	69
Section 8.31	Reservation of Shares	71
Section 8.32	Internal Accounting Controls	72
Section 8.33	Regulation M	72
Section 8.34	Corporate Governance Matters	73
Section 8.35	Notice of Change of Control Transactions	76
Section 8.36	Further Assurances	76
Section 8.37	Hiring of Chief Executive Officer	76
ARTICLE 9 CROSS GUARANTY		77
Section 9.1	Cross-Guaranty	77
Section 9.2	Waivers by Borrowers	77
Section 9.3	Benefit of Guaranty	77
Section 9.4	Waiver of Subrogation, Etc	78
Section 9.5	Election of Remedies	78
Section 9.6	Limitation	78
Section 9.7	Contribution with Respect to Guaranty Obligations	78
Section 9.8	Liability Cumulative	79
Section 9.9	Stay of Acceleration	79

iii

Section 9.10	Benefit to Borrowers	80
ARTICLE 10 RIGHTS UPON EVENT OF DEFAULT		80
Section 10.1	Event of Default	80
Section 10.2	Acceleration Right	83
Section 10.3	Consultation Rights	84
Section 10.4	Other Remedies	84
ARTICLE 11 TERMINATION		85
Section 11.1	Failure to Close	85
Section 11.2	Conversion/Redemption of Notes	85
ARTICLE 12 AGENCY PROVISIONS		85
Section 12.1	Appointment	85
Section 12.2	Delegation of Duties	85
Section 12.3	Exculpatory Provisions	86
Section 12.4	Reliance by Agent	86
Section 12.5	Notices of Default	86
Section 12.6	Non-Reliance on the Agent and Other Holders	87
Section 12.7	Indemnification	87
Section 12.8	The Agent in Its Individual Capacity	87
Section 12.9	Resignation of the Agent; Successor Agent	88
Section 12.10	Reimbursement by Holders	88
ARTICLE 13 MISCELLANEOUS		88
Section 13.1	Payment of Expenses	88
Section 13.2	Governing Law; Jurisdiction; Jury Trial	89
Section 13.3	Counterparts	90
Section 13.4	Headings	90
Section 13.5	Severability	90
Section 13.6	Entire Agreement; Amendments	90
Section 13.7	Notices	91
Section 13.8	Successors and Assigns	92
Section 13.9	No Third Party Beneficiaries	92
Section 13.10	Survival	92
Section 13.11	Further Assurances	92
Section 13.12	Indemnification	93
Section 13.13	No Strict Construction	93
Section 13.14	Waiver	93
Section 13.15	Payment Set Aside	94
Section 13.16	Independent Nature of Lenders’ Obligations and Rights	94
Section 13.17	Reaffirmation	94

iv

EXHIBITS

Exhibit A	Note
Exhibit B	Registration Rights Agreement
Exhibit C	Security Agreement
Exhibit D	Fee Letter
Exhibit E	Funds Flow Letter
Exhibit F	Outside Counsel Opinion
Exhibit G	Irrevocable Transfer Agent Instructions
Exhibit H	Secretary’s Certificate
Exhibit I	Officer’s Certificate
Exhibit J	Post-Closing Obligations Letter
Exhibit K	Compliance Certificate
Exhibit L	Notice of Purchase and Sale
Exhibit M	Affiliate Subordination Agreement
Exhibit N	Intellectual Property Security Agreements
Exhibit O	Confidentiality Agreement
SCHEDULES
Schedule 7.1	Subsidiaries
Schedule 7.5	Consents
Schedule 7.6	Subsidiary Rights
Schedule 7.7	Equity Capitalization
Schedule 7.8	Indebtedness and Other Contracts
Schedule 7.11	Title
Schedule 7.12	Intellectual Property Rights
Schedule 7.14	Absence of Certain Changes
Schedule 7.15	Absence of Litigation
Schedule 7.18	No General Solicitation; Placement Agent’s Fees
Schedule 7.22	Conduct of Business; Regulatory Permits
Schedule 7.25	Environmental Laws
Schedule 7.27	ERISA
Schedule 7.31	SEC Documents; Financial Statements
Schedule 7.33	Transactions with Affiliates
Schedule 7.35	Acknowledgement Regarding Lender’s Trading Activity
Schedule 7.43	Material Contracts
Schedule 7.44	FDA and Product-Related Matters
Schedule 8.6	Existing Liens
Schedule 8.7	Restricted Payments
Schedule 8.23	Additional Issuances of Securities
Schedule 8.24	Use of Proceeds
Schedule 8.29	Existing Investments
Schedule 8.31	Reservation of Shares
Schedule 8.34	Powers and Authority of Chairman of the Board

v

AMENDED AND RESTATED FINANCING AGREEMENT

This AMENDED AND RESTATED FINANCING AGREEMENT (as same may be further amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), dated as of March 16, 2010, is being entered into by and among UNIGENE LABORATORIES, INC. (“Principal Borrower”), the lenders listed on the Schedule of Lenders attached hereto (each individually, a “Lender” and collectively, the “Lenders”) and Victory Park Management, LLC, as administrative agent and collateral agent (in such capacity, the “Agent”) for the Lenders and the Holders (as defined herein).

WHEREAS, Principal Borrower, Agent and Lenders are parties to that certain Financing Agreement dated as of September 30, 2008, as amended pursuant to that certain Omnibus Amendment Agreement, dated as of October 19, 2009, by and among the Principal Borrower, Agent and the Lenders (the “October 2009 Amendment”) (as heretofore amended, restated, supplemented or otherwise modified from time to time and in effect immediately prior to the effectiveness of this Agreement, the “Original Financing Agreement”);

WHEREAS, the parties hereto desire to enter into this Agreement to, among other things, amend and restate in its entirety the Original Financing Agreement, without constituting a novation of the obligations, liabilities and indebtedness of the Principal Borrower thereunder, on the terms and subject to the conditions contained herein;

WHEREAS, in connection with the execution of this Agreement, each Lender wishes to purchase (by way of surrender of existing Original Notes (as defined below) and/or by way of cash payment, in each case as described herein), and the Principal Borrower wishes to sell to the Lenders, upon the terms and conditions stated in this Agreement, that principal amount of Notes (as defined below), at the First Restated Closing (as defined below) as set forth opposite such Lender’s name in column three (3) on the Schedule of Lenders attached hereto and at the Subsequent Closing, if any, pursuant to the terms and conditions of Section 3.2;

WHEREAS, in connection with the sale of the Original Notes at the First Closing and the Second Closing, and as an inducement to the Lenders to purchase the Original Notes, the Principal Borrower issued to the Lenders at the First Closing and the Second Closing, upon the terms and conditions stated in the Original Financing Agreement, shares of common stock, par value $0.01 per share, of the Principal Borrower (or any capital stock issued in substitution or exchange for, or otherwise in respect of, such common stock, the “Common Stock”), as set forth opposite such Lender’s name in column four (4) on the Schedule of Lenders attached hereto (the “Shares”);

WHEREAS, in connection with the execution and delivery of the October 2009 Amendment, upon the execution of the October 2009 Amendment, the Principal Borrower issued to the Lender 300,000 shares of Common Stock (the “Exchange Shares”) in exchange for the Lender’s surrender of a Warrant to purchase 1,000,000 shares of Common Stock pursuant to the terms of a Warrant Exchange Agreement, dated as of October 19, 2009;

WHEREAS, the Principal Borrower and each Lender executed and delivered the Original Financing Agreement, and are executing and delivering this Agreement, in reliance upon the exemption from securities registration with respect to the Original Notes (as defined below), the Shares, the Exchange Shares, the Notes (as defined below) and the Conversion Shares (as defined below) (collectively, the “Securities”) afforded by the Securities Act of 1933, as amended (the “1933 Act”), and Regulation D (“Regulation D”) promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act;

WHEREAS, contemporaneously with the execution and delivery of the Original Financing Agreement, the Principal Borrower and the Lenders executed and delivered a Registration Rights Agreement (the “Original Registration Rights Agreement”), pursuant to which the Principal Borrower agreed to provide certain registration rights with respect to the Shares under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws, which Original Registration Rights Agreement shall be amended and restated to be in the form attached hereto as Exhibit B contemporaneously with the execution and delivery of this Agreement to, among other things, cover the Conversion Shares (as so amended and restated, and as may otherwise be amended, restated, supplemented or modified from time to time, the “Registration Rights Agreement”);

WHEREAS, contemporaneously with the execution and delivery of the Original Financing Agreement, the Principal Borrower and the Agent on behalf of the Holders and Lenders executed and delivered a Pledge and Security Agreement, substantially in the form attached hereto as Exhibit C (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), pursuant to which all of the assets of the Principal Borrower and any New Borrower that becomes a party hereto have and will be pledged as Collateral to secure the Obligations (as defined herein);

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Principal Borrower and the Agent are executing and delivering a Fee Letter, substantially in the form attached hereto as Exhibit D (as amended, restated, supplemented or otherwise modified from time to time, the “Fee Letter”), pursuant to which the Principal Borrower shall pay and reimburse the Agent for itself and on behalf of the Holders and Lenders for fees and expenses incurred in connection with the transactions contemplated hereunder; and

WHEREAS, contemporaneously with the execution and delivery of the Original Financing Agreement, the Principal Borrower, the holders of the Affiliate Notes (or their predecessors in interest, as applicable) and the Agent on behalf of the Holders and Lenders executed and delivered an Affiliate Subordination Agreement, substantially in the form attached hereto as Exhibit M (as amended, restated, supplemented or otherwise modified from time to time, the “Affiliate Subordination Agreement”), pursuant to which the holders of the Affiliate Notes agreed that the payment of all Affiliate Indebtedness shall be subordinated and junior in right of payment to the prior payment in full in cash of the Obligations.

2

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the Principal Borrower, any New Borrower that becomes a party hereto, Agent and each Lender hereby agree as follows:

ARTICLE 1

DEFINITIONS; CERTAIN TERMS

Section 1.1 Definitions. As used in this Agreement, the following terms have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:

“8-K Filing” has the meaning set forth in Section 8.26.

“1933 Act” has the meaning set forth in the recitals.

“1934 Act” has the meaning set forth in Section 7.34.

“Accounts” has the meaning provided in the UCC.

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business line, unit or division of a Person, (b) the acquisition of in excess of 50% of the Equity Interests of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person.

“Agent” has the meaning set forth in the introductory paragraph hereto.

“Affiliate” means, with respect to a specified Person, another Person that (i) is a director or officer of such specified Person, or (ii) directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with the Person specified.

“Affiliate Indebtedness” means Indebtedness under the Affiliate Notes.

“Affiliate Notes” means each of (i) the Second Amended and Restated Secured Promissory Note dated as of March 17, 2010 issued by the Principal Borrower in favor of Jaynjean Levy Family Limited Partnership in an aggregate principal amount of $7,418,803 and (ii) the Second Amended and Restated Secured Promissory Note dated as of March 17, 2010 issued by the Principal Borrower in favor of Jean Levy in an aggregate principal amount of $8,318,714.

“Affiliate Subordination Agreement” has the meaning set forth in the recitals.

“Asset Sale” means (i) the sale, lease, license, conveyance or other disposition of any assets or rights of any Borrower or any of the Borrowers’ Subsidiaries, and (ii) the sale of Equity Interests in any of the Borrowers (other than the Capital Stock of the Principal Borrower) or any of the Borrowers’ Subsidiaries.

“Bankruptcy Law” has the meaning set forth in Section 10.1(c).

3

“Blocked Account” means each Controlled Account (as defined in the Security Agreement) that is subject to the full dominion and control of the Agent.

“Blue Sky Legend” has the meaning set forth in Section 6.5.

“Board” means the board of directors of the Principal Borrower.

“Borrower” means the Principal Borrower and any New Borrower that becomes a party hereto in accordance with Section 8.28.

“Business Day” means any day other than Saturday or Sunday or any day that banks in Chicago, Illinois are required or permitted to close.

“Capital Stock” means (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into, or exchangeable for, Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalent Investment” means, at any time, (a) any evidence of debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case rated at least A-l by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-l by Moody’s Investors Service, Inc., (c) any certificate of deposit, time deposit or banker’s acceptance, maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) any repurchase agreement entered into with any commercial banking institution of the nature referred to in clause (c) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder, (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by Agent.

“Cash Flow” means, with respect to any Person for any period, the sum of (i) the total operating revenue of such Person for such period as set forth in such Person’s statement of operations prepared in accordance with GAAP plus (ii) the increase in deferred revenue of such Person during such period as set forth in such Person’s statement of cash flows prepared in accordance with GAAP.

“cGMPs” means the regulatory requirements for current good manufacturing practices promulgated by the FDA under the Food and Drug Act, including at 21 C.F.R. § 210 et seq. and under the Public Health Service Act, Biological Products, 21 C.F.R. §§ 610-10, as the same may be amended from time to time.

4

“Change of Control” means, with respect to any Borrower or Subsidiary, that (A) such Borrower or Subsidiary shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not such Borrower or Subsidiary is the surviving corporation) another Person, (ii) sell, assign, transfer, lease, license, convey or otherwise dispose of all or substantially all of the properties or assets of such Borrower or Subsidiary to another Person, (iii) consummate a stock purchase agreement or other business combination (including a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than fifty percent (50%) of the outstanding shares of Common Stock, (iv) reorganize, recapitalize or reclassify the Common Stock, or (v) cause to occur a “change in control” under any Affiliate Indebtedness, (B) any Person shall make a purchase, tender or exchange offer that is accepted by the holders of more than fifty percent (50%) of the outstanding shares of Common Stock or other voting securities of such entity (not including any shares of Common Stock or other voting securities of such entity held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), (C) with respect to the Principal Borrower, (i) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act), other than the Lenders, is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of fifty percent (50%) or more of the aggregate ordinary voting power represented by issued and outstanding Common Stock or (ii) a Unigene Change of Control (as defined in the Tarsa Stockholders’ Agreement) shall occur or (D) during any consecutive two (2) year period, individuals who at the beginning of such period constituted the board of directors (but not a committee thereof), together with any new directors whose election to such board of directors (but not a committee thereof), or whose nomination for election by the stockholders of such entity, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the board of directors (but not a committee thereof) then in office.

“China JV” means Unigene Biotechnology Co. Ltd., a corporation established under the laws of the People’s Republic of China.

“Closing” means the First Closing, the Second Closing, the First Restated Closing or the Subsequent Closing, as applicable.

“Closing Date” means the First Closing Date, the Second Closing Date, the First Restated Closing Date or the Subsequent Closing Date, as applicable.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means the “Collateral” as defined in the Security Agreement.

“Collateral Assignment” means the collateral assignment of the Tarsa License Agreement entered into by the Principal Borrower and the Agent.

5

“Common Stock” has the meaning set forth in the recitals.

“Compliance Certificate” means a certificate signed by a responsible officer of the Principal Borrower, in substantially the form attached hereto as Exhibit K and reasonably satisfactory to the Agent.

“Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of the First Restated Closing Date, to be entered into by and among the Principal Borrower, each of the Lenders and the other parties thereto, in the form attached hereto as Exhibit O.

“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

“Control” means the possession, directly or indirectly, of the power (i) to vote 10% or more of the Capital Stock having ordinary voting power for the election of directors of a Person or (ii) to direct or cause the direction of management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Conversion Shares” means those shares of Common Stock or other securities into which the outstanding principal amount of the Notes, and any accrued and unpaid interest thereon, may be converted pursuant to the terms of the Notes.

“Current Interest Rate” means a rate per annum equal to the greater of (i) the Prime Rate plus five percent (5.00%) (i.e., 500 basis points) and (ii) fifteen percent (15.00%), as adjusted pursuant to the terms of Section 2.2 of this Agreement.

“Custodian” has the meaning set forth in Section 10.1(d).

“Default Rate” means a rate per annum equal to the Current Interest Rate plus three percent (3.00%) (i.e., 300 basis points).

“Destruction” means any and all damage to, or loss or destruction of, or loss of title to, all or any portion of the Collateral (i) in excess of $500,000 in the aggregate for any Fiscal Year or (ii) that results in a Material Adverse Effect.

“Diligence Date” has the meaning set forth in Section 7.14.

“DTC” has the meaning set forth in Section 6.5.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed to by, any Borrower or any of their respective Subsidiaries or ERISA Affiliates.

6

“Environmental Laws” means all applicable federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, the exposure of humans thereto, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all regulatory authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices of violation or similar notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

“Equity Interests” means Capital Stock and all warrants, options and other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock, whether or not such debt security includes the right of participation with Capital Stock).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means, as to any Borrower, any trade or business (whether or not incorporated) that is a member of a group which includes such Borrower and which is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30 day notice to the PBGC has been waived by regulation); (b) the failure to meet the minimum funding standards of Sections 412 and 430 of the Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Code) or the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal by any of the Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any of the Borrowers, any of their Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of liability on any of the Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the withdrawal of any of the Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by any of the Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to

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terminate or has terminated under Section 4041A or 4042 of ERISA; (h) the occurrence of an act or omission which could give rise to the imposition on any of the Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Sections 4975 or 4971 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (i) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against any of the Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (j) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; or (k) the imposition of a Lien pursuant to Section 401(a)(29) or 430(k) of the Code or pursuant to ERISA with respect to any Pension Plan.

“Event of Default” has the meaning set forth in Section 10.1.

“Event of Default Notice” has the meaning set forth in Section 10.2(a).

“Event of Default Redemption” has the meaning set forth in Section 10.2(a).

“Event of Default Redemption Notice” has the meaning set forth in Section 10.2(a).

“Event of Loss” means any Destruction to, or any Taking of, any asset or property of any of the Borrowers or any of their Subsidiaries.

“Exchange Shares” has the meaning set forth in the recitals.

“Extraordinary Receipts” means any cash received by the Borrowers or any of their Subsidiaries outside the ordinary course of business (and not consisting of (i) Milestone Payments, (ii) proceeds described in Sections 2.3(b)(i), (b)(ii), (b)(iii), (b)(iv) or (b)(v) or (iii) reimbursements under Section 4.1 of the Tarsa License Agreement), including (a) foreign, United States, state or local tax refunds, (b) pension plan reversions, (c) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, and (d) any purchase price adjustment received in connection with any Acquisition.

“FDA” means the U.S. Food and Drug Administration or any successor thereto.

“FDA Approvals” has the meaning set forth in Section 7.42.

“FDA Regulations” means any rule, regulation or administrative order promulgated or issued by the FDA.

“Fee Letter” has the meaning set forth in the recitals.

“Filing” has the meaning set forth in Section 8.30(a).

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“First Closing” means the original Closing of the Original Financing Agreement on the First Closing Date and the purchase of a portion of the Original Notes and Shares by the Lenders in connection therewith.

“First Closing Date” means September 30, 2008.

“First Restated Closing” has the meaning set forth in Section 3.1.

“First Restated Closing Date” has the meaning set forth in Section 3.1.

“First Restated Closing Purchase Price” has the meaning set forth in Section 3.1.

“First Stockholders Meeting” has the meaning set forth in Section 8.30(a).

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year of the Borrowers.

“Fiscal Year” means a fiscal year of the Borrowers.

“Food and Drug Act” means the U.S. Food, Drug and Cosmetic Act, as amended, 21 U.S.C. § 301 et seq. and any successor thereto.

“Funds Flow Letter” has the meaning set forth in Section 4.1(b).

“Future Designee” has the meaning set forth in Section 8.34(b).

“GAAP” means United States generally accepted accounting principles, consistently applied.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision of any of the foregoing, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under: (i) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (ii) other agreements or arrangements designed to manage interest rates or interest rate risk; and (iii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices.

“HHS Regulations” means any rule, regulation or administrative order promulgated or issued by the U.S. Department of Health and Human Services or any successor thereto.

“Holder” means a holder of a Note.

“Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including “capital leases” in accordance with GAAP) (other than

9

trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, notes or similar instruments whether convertible or not, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all indebtedness referred to in clauses (i) through (v) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, (vii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vi) above; (viii) banker’s acceptances; (ix) the balance deferred and unpaid of the purchase price of any property or services due more than three months after such property is acquired or such services are completed; (x) Hedging Obligations; and (xi) obligations under convertible securities. In addition, the term “Indebtedness” of Borrowers or their Subsidiaries, as applicable, includes (a) all Indebtedness of others secured by a Lien on any assets of any of the Borrowers or any of their Subsidiaries (whether or not such Indebtedness is assumed by the Borrowers or such Subsidiaries), and (b) to the extent not otherwise included, the guarantee by any of the Borrowers or any of their Subsidiaries of any Indebtedness of any other Person.

“Insolvent” means, with respect to each Borrower or Subsidiary, (i) the present fair saleable value in a non-liquidation context of such Borrower’s or Subsidiary’s assets is less than the amount required to pay such Borrower’s or Subsidiary’s total Indebtedness as applicable, (ii) such Borrower or Subsidiary is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Borrower or Subsidiary intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Borrower or Subsidiary has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

“Intellectual Property Security Agreements” means each trademark security agreement, patent security agreement and copyright security agreement, in the forms of Exhibit N attached hereto, executed from time to time by and among the Borrowers and the Agent, as any such agreement may be amended, supplemented or otherwise modified from time to time.

“Interest Date” has the meaning provided in Section 2.2(a).

“Inventory” has the meaning provided in the UCC.

“Investment” means, with respect to any Person, any investment in another Person, whether by acquisition of any debt security or Equity Interest, by making any loan or advance, by becoming contingently liable in respect of obligations of such other Person or by making an Acquisition.

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“Investors” has the meaning provided in the Registration Rights Agreement.

“Irrevocable Transfer Agent Instructions” has the meaning provided in Section 2.10.

“Jay Levy Resignation” has the meaning set forth in Section 5.1(hh).

“Late Charge” has the meaning provided in Section 2.4.

“Lender” and “Lenders” has the meaning set forth in the introductory paragraph hereto.

“Lender Designee” has the meaning set forth in Section 8.34(b).

“Lender Rights Termination Date” has the meaning set forth in Section 8.34(c).

“Lender Shares” has the meaning provided in Section 2.10.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, security interest, conditional sale or other title retention agreement, charge or other security interest or encumbrance of any kind, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement or any lease or license in the nature thereof, or any option or other agreement to sell or give a security interest in such asset.

“Master Reaffirmation Agreement” means that certain Master Reaffirmation and Amendment to Transaction Documents dated as of the First Restated Closing Date by and among Principal Borrower, Agent, Lenders and Holders.

“Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, the Collateral, results of operations, condition (financial or otherwise) or prospects of the Principal Borrower and its Subsidiaries, taken as whole, or on the transactions contemplated hereby and by the other Transaction Documents, or on the authority or ability of each of the Borrowers and each of their Subsidiaries to fully and timely perform its obligations under any Transaction Document.

“Material Contract” means (i) each of the Material License Agreements, (ii) each of the Material Tarsa Agreements, (iii) each of the Affiliate Notes and (iv) any other contract or other arrangement to which the Borrowers or any of their Subsidiaries is a party (other than the Transaction Documents) for which breach, nonperformance, cancellation, termination or failure to renew could reasonably be expected to have a Material Adverse Effect.

“Material License Agreements” means, collectively, the Novartis License Agreement, the USL License Agreement, the SmithKline License Agreement, the Tarsa License Agreement and each other material agreement pursuant to which any of the Borrowers or their Subsidiaries license intellectual property rights.

“Material Tarsa Agreements” means the Tarsa License Agreement, the Tarsa Contribution Agreement, the Tarsa Stockholders’ Agreement, the Tarsa Investor Rights Agreement, the Tarsa Charter and the Tarsa Bylaws.

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“Maturity Date” means the earlier of (a) March 17, 2013 and (b) such earlier date as the unpaid principal balance of all outstanding Notes becomes due and payable pursuant to the terms of this Agreement and the Notes.

“Maximum Permitted Redemption Amount” means, at any time, the lesser of (i) $13,642,472.50 and (ii) the then outstanding principal amount of the Notes.

“Milestone Payments” means payments, net of any costs recovered, made to the Borrowers or their Subsidiaries pursuant to the Material License Agreements that are made upon the achievement of specified events or results and are outside the ordinary course of business pursuant to the terms set forth in such Material License Agreements.

“Mortgage” means a mortgage or deed or trust securing the Obligations, in form and substance reasonably satisfactory to the Agent, as it may be amended, supplemented or otherwise modified from time to time.

“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA.

“MVM Investors” means MVM Fund III Limited Partnership, MVM Fund III (No. 2) Limited Partnership, Novo A/S, Quaker BioVentures II, L.P. and David Brand, collectively.

“National Exchange” has the meaning set forth in Section 8.19.

“New Borrower” has the meaning set forth in Section 8.28.

“Notes” has the meaning set forth in Section 2.1.

“Novartis License Agreement” means the License Agreement dated as of April 7, 2004, between the Principal Borrower and Novartis Pharma AG, as amended, modified or otherwise supplemented from time to time in accordance with Section 8.27.

“Obligations” means any and all obligations, liabilities and indebtedness, including principal, interest (including, but not limited to, interest calculated at the Default Rate and post-petition interest in any proceeding under any Bankruptcy Law), Late Charges and other fees, costs, expenses and other charges and other obligations under the Transaction Documents, of the Borrowers or any of their Subsidiaries to the Agent, the Holders and the Lenders or to any parent, affiliate or subsidiary of such Holders of any and every kind and nature, howsoever created, arising or evidenced and howsoever owned, held or acquired, whether now or hereafter existing, whether now due or to become due, whether primary, secondary, direct, indirect, absolute, contingent or otherwise (including obligations of performance), whether several, joint or joint and several, and whether arising or existing under written or oral agreement or by operation of law.

“October 2009 Amendment” has the meaning set forth in the recitals.

“Original Financing Agreement” has the meaning set forth in the recitals.

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“Other Filings” has the meaning set forth in Section 8.30(d).

“Original Notes” means the “Notes” as defined in, and issued under, the Original Financing Agreement.

“Original Registration Rights Agreement” has the meaning set forth in the recitals.

“Other Taxes” has the meaning set forth in Section 2.6(b).

“Outside Legal Counsel” means Dechert LLP.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Sections 412 and 430 of the Code or Section 302 of ERISA.

“Permitted Acquisition” means any Acquisition permitted in the discretion of the Agent, which permission shall not be unreasonably withheld, and for which an appraisal and field examination satisfactory to the Agent shall have been obtained if reasonably requested by the Agent.

“Permitted Dispositions” means (i) sales of Inventory in the ordinary course of business, (ii) disposals of obsolete, worn out or surplus property in the ordinary course of business, (iii) the granting of Permitted Liens, (iv) the licensing of patents, trademarks, copyrights and other intellectual property rights in the ordinary course of business consistent with past practice, and (v) the disposition of assets and the licensing of intellectual property rights pursuant to and in accordance with the terms of the Tarsa License Agreement.

“Permitted Indebtedness” means (i) Indebtedness outstanding as of the First Restated Closing Date as set forth on Schedule 7.8, (ii) unsecured guaranties in the ordinary course of business of the obligations of suppliers, customers and licensees of the Borrowers or their Subsidiaries, (iii) Indebtedness which may be deemed to exist pursuant to any unsecured guaranties with respect to surety and appeal bonds, performance bonds, bid bonds and similar obligations incurred in the ordinary course of business, (iv) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts in the ordinary course of business, (v) Affiliate Indebtedness to the extent subject to the terms and conditions of the Affiliate Subordination Agreement, (vi) Indebtedness in an aggregate amount not to exceed $1,000,000 (less the aggregate amount of Indebtedness described in clauses (vii) and (viii) hereof) incurred in connection with any capital lease transaction, so long as (A) no default or Event of Default shall have occurred and be continuing on the date of such incurrence or shall be caused thereby, (B) the terms and conditions of such Indebtedness shall be reasonably satisfactory to the Agent, and (C) such Indebtedness shall be secured solely with Liens permitted under clause (xiv) of the definition of “Permitted Liens,” (vii) purchase money Indebtedness in an aggregate amount not to exceed $1,000,000 (less the aggregate amount of Indebtedness described in clauses (vi) and (viii) hereof), so long as (A) no default or Event of Default shall have occurred and be continuing on the date of such incurrence or shall be caused thereby, (B) the terms and conditions of such Indebtedness shall be reasonably satisfactory to the Agent, and (C) such Indebtedness shall be secured solely with Liens permitted under clause (xiv) of the definition of “Permitted Liens,” and (viii) unsecured Indebtedness in an aggregate amount not to exceed $1,000,000 (less the aggregate amount of Indebtedness described in clauses (vi) and (vii) hereof).

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“Permitted Liens” means (i) Liens in favor of the Agent for the benefit of the Lenders and Holders granted pursuant to any Security Document, (ii) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (A) are not yet delinquent or (B) do not have priority over Agent’s Liens, so long as in each case the underlying taxes, assessments, charges or levies are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, (iii) Liens securing judgments for the payment of money not constituting an Event of Default, (iv) Liens outstanding as of the First Restated Closing Date as set forth on Schedule 8.6, provided that any such Lien only secures the Indebtedness that it secures on the First Restated Closing Date, (v) the interests of lessors under operating leases and licensors under license agreements in each case entered into in the ordinary course of business of the Borrowers and their Subsidiaries, (vi) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers or suppliers, in each case incurred in the ordinary course of business and not in connection with the borrowing of money and either (A) for amounts that are not yet delinquent or (B) for amounts that are no more than 30 days overdue that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserves or appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts, (vii) Liens incurred in the ordinary course of business in connection with workers’ compensation and other unemployment insurance, or to secure the performance of tenders, surety and appeal bonds, bids, leases, government contracts, trade contracts and other similar obligations (exclusive of obligations for the payment of borrowed money), in each case so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof, (viii) rights of setoff or bankers’ liens upon deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business, (ix) Liens to secure Affiliate Indebtedness so long as such Liens (A) encumber only those assets encumbered by such Indebtedness as of the First Restated Closing Date and (B) are subordinated to the Liens securing the Obligations pursuant to the Affiliate Subordination Agreement, (x) easements, reservations, rights of way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances affecting real property in a manner not materially or adversely affecting the value or use of such property, (xi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importation of goods, (xii) Liens on insurance proceeds in favor of insurance companies granted solely as security for financed premiums, (xiii) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default hereunder, provided that enforcement of any such Liens is stayed and claims secured by such Liens are being actively contested in good faith and by appropriate proceedings, and (xiv) Liens to secure Indebtedness described in clauses (vi) and (vii) of the definition of “Permitted Indebtedness,” so long as such Liens encumber only those assets acquired with the proceeds of such Indebtedness.

“Permitted Redemption” means any redemption of Notes permitted pursuant to Section 2.3(a).

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“Permitted Redemption Amount” has the meaning set forth in Section 2.3(a)(i).

“Permitted Redemption Conditions” has the meaning set forth in Section 2.3(a)(iv).

“Permitted Redemption Date” means any date on which the Borrowers elect to redeem a portion of the Notes in accordance with Section 2.3(a).

“Permitted Redemption Notice” has the meaning set forth in Section 2.3(a)(i).

“Permitted Redemption Notice Date” has the meaning set forth in Section 2.3(a)(iii).

“Permitted Redemption Notice Period” has the meaning set forth in Section 2.3(a)(iii).

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or any other entity or government or any department or agency thereof.

“Plan” means any Multiemployer Plan or Pension Plan.

“Post-Closing Obligations Letter” means that certain letter agreement dated the First Restated Closing Date, in the form of Exhibit J attached hereto, by and among the Principal Borrower and the Agent.

“Prime Rate” means the rate of interest per annum announced from time to time by Citibank, N.A. as its prime rate. The Prime Rate is a variable rate and each change in the Prime Rate is effective from and including the date the change is announced as being effective.

“Principal Borrower” has the meaning set forth in the introductory paragraph hereto.

“Principal Market” means the OTC Bulletin Board, or if the Common Stock becomes listed on a National Exchange, then from and after such date, such National Exchange.

“Principal Stockholders” means Principal Borrower, David Brand and James Gilligan, Ph.D, MSIB, collectively.

“Proceeding” has the meaning set forth in Section 7.15.

“Product” means a specific pharmaceutical product or pharmaceutical product family or pharmaceutical formulation in the development phase, except that for the purposes of Sections 7.42 and 7.44, Products means the products being developed, marketed, sold and/or offered for sale in the Territory under the following trademarks/tradenames: Fortical®, all other nasal spray and oral salmon calcitonins, and all successor products thereto.

“Product Recall Notice” means any written notice from the FDA stating that any product or product line of any Borrower or any of its Subsidiaries has been or will be recalled.

“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including Capital Stock.

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“Proposal” has the meaning set forth in Section 8.30(a).

“Proxy Statement” has the meaning set forth in Section 8.30(b).

“Registrable Securities” has the meaning set forth in the Registration Rights Agreement.

“Registration Rights Agreement” has the meaning set forth in the recitals.

“Registration Statement” has the meaning set forth in the Registration Rights Agreement.

“Regulation D” has the meaning set forth in the recitals.

“Reporting Period” has the meaning set forth in Section 8.18.

“Required Holders” means at any time the Holders of Notes representing at least seventy percent (70%) of the aggregate principal amount of the Notes then outstanding.

“Related Fund” means, with respect to any Lender or Holder, any Person (other than a natural Person) that is advised or managed by (i) such Lender or Holder, (ii) any Affiliate of such Lender or Holder or (iii) any Person (other than an individual) or any Affiliate of any Person (other than an individual) that administers or manages such Lender or Holder.

“Related Parties” of any Person means such Person’s Affiliates or any of their respective partners, directors, agents, employees and controlling persons.

“Remaining Permitted Redemption Amount” has the meaning set forth in Section 2.3(a)(iii).

“Required Reserve Amount” has the meaning set forth in Section 8.31.

“Resignations” has the meaning set forth in Section 5.1(hh).

“Resigning Board Members” means Jay Levy and Ronald Levy.

“Ronald Levy Resignation” has the meaning set forth in Section 5.1(gg).

“Sarbanes-Oxley” has the meaning set forth in Section 7.24.

“Schedules” has the meaning set forth in ARTICLE 7.

“SEC” has the meaning set forth in the recitals.

“SEC Documents” has the meaning set forth in Section 7.31.

“Second Closing” means the Closing under the Original Financing Agreement on the Second Closing Date and the purchase of a portion of the Original Notes and Shares by the Lenders in connection therewith.

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“Second Closing Date” means May 22, 2009.

“Securities” has the meaning set forth in the recitals.

“Security Agreement” has the meaning set forth in the recitals.

“Security Documents” means the Security Agreement, the Collateral Assignment, the Intellectual Property Security Agreements, the Mortgages, if any, the Master Reaffirmation Agreement, any deposit account control agreements or securities account control agreements and all other instruments, documents and agreements delivered by any of the Borrowers or any of their Subsidiaries in order to grant to Agent or any Holder a Lien (or to perfect any such Lien) on any real, personal or mixed Property of the Borrowers or one of their Subsidiaries as security for the Obligations.

“Shares” has the meaning set forth in the recitals.

“SmithKline License Agreement” means the License Agreement dated as of April 13, 2002, between the Principal Borrower and SmithKline Beecham Corporation, as amended, modified or otherwise supplemented from time to time in accordance with Section 8.27.

“Stockholder Approval” means the vote of the holders of a majority of the outstanding shares of Common Stock, at a duly called and held meeting of the Principal Borrower’s stockholders, in favor of the Proposal, such that the Proposal is approved pursuant to the Principal Borrower’s certificate of incorporation and applicable law.

“Stockholder Meeting” has the meaning set forth in Section 8.30(a).

“Subsequent Closing” has the meaning set forth in Section 3.2.

“Subsequent Closing Date” has the meaning set forth in Section 3.2.

“Subsequent Closing Purchase Price” has the meaning set forth in Section 3.2.

“Subsidiaries” has the meaning set forth in Section 7.1.

“Taking” means any taking of any property of any of the Borrowers or any of their Subsidiaries or any portion thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, general or special, or by reason of the temporary requisition of the use of such assets or any portion thereof, by any Governmental Authority, civil or military (i) in excess of $500,000 in the aggregate for any Fiscal Year or (ii) that results in a Material Adverse Effect.

“Taxes” has the meaning set forth in Section 2.6(a).

“Tarsa” means Tarsa Therapeutics, Inc., a Delaware corporation.

“Tarsa Bylaws” means the Bylaws of Tarsa, as amended, restated, supplemented, or otherwise modified in accordance with the terms hereof.

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“Tarsa Charter” means the Amended and Restated Certificate of Incorporation of Tarsa, as amended, restated, supplemented, or otherwise modified in accordance with the terms hereof.

“Tarsa Confidential Information” means Tarsa Confidential Information (as defined in the Tarsa License Agreement).

“Tarsa Contribution Agreement” means that certain Contribution Agreement by and between Principal Borrower and Tarsa, dated as of October 19, 2009, as amended, restated, supplemented, or otherwise modified in accordance with the terms hereof.

“Tarsa Investor Rights Agreement” means that certain Investor Rights Agreement, by and among Tarsa, Principal Borrower and the MVM Investors, dated as of October 19, 2009, as amended, restated, supplemented, or otherwise modified in accordance with the terms hereof.

“Tarsa License Agreement” means that certain License Agreement by and between Principal Borrower and Tarsa, dated as of October 19, 2009, as amended, restated, supplemented, or otherwise modified in accordance with the terms hereof.

“Tarsa Stockholders’ Agreement” means that certain Stockholders’ Agreement by and among Tarsa, the MVM Investors and the Principal Stockholders, dated as of October 19, 2009, as amended, restated, supplemented, or otherwise modified in accordance with the terms hereof.

“Territory” means the United States (including its territories and possessions).

“Trading Day” means any day on which the Common Stock is traded on the Principal Market; provided that “Trading Day” shall not include any day on which the Principal Market is open for trading for less than 4.5 hours.

“Transaction Documents” has the meaning set forth in Section 7.2.

“Triggering Event” has the meaning set forth in Section 10.1.

“Triggering Event Redemption Price” has the meaning set forth in Section 10.2(a).

“UCC” has the meaning set forth in Section 7.13.

“Unigene UK” means Unigene U.K. Limited, a corporation organized under the laws of England and Wales.

“USL License Agreement” means the License and Development Agreement dated as of November 26, 2002, between the Principal Borrower and Upsher-Smith Laboratories, Inc., as amended, modified or otherwise supplemented from time to time in accordance with Section 8.27.

“Warrant Exchange Agreement” means that certain Warrant Exchange Agreement by and between Principal Borrower and Victory Park Special Situations Master Fund, Ltd., dated as of October 19, 2009, as amended, restated, supplemented, or otherwise modified from time to time.

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“Yield Maintenance Premium” shall be equal to the greater of (i) one percent (1%) of the unredeemed Notes immediately prior to the applicable redemption or (ii) the excess, if any, of (A) the present value (“PV”) of all scheduled interest (determined with reference to the interest rate then in effect) and all scheduled redemptions in respect of the unredeemed Notes immediately prior to the applicable redemption for the period from the date of such redemption to the scheduled maturity date, including the amount of the Notes scheduled to be redeemed on the scheduled maturity date, discounted at an interest rate per annum equal to the Index (defined below), based on a 360-day year of twelve 30-day months, over (B) the amount of the Notes immediately before such redemption (i.e., (PV of all future payments) - (principal balance at time of redemption)). The foregoing amount shall be calculated by Agent and shall be conclusive and binding on the Borrowers (absent manifest error).

For purposes hereof, “Index” means the average yield for “treasury constant maturities” published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (“FRB Release”), for the second full week preceding the date of acceleration of the Maturity Date for instruments having a maturity coterminous with the remaining term of the Notes. If the FRB Release is no longer published, Agent shall select a comparable publication to determine the Index. If there is no Index for instruments having a maturity coterminous with the remaining term of the Notes, then the weighted average yield to maturity of the Indices with maturities next longer and shorter than such remaining average life to maturity shall be used, calculated by averaging (and rounding upward to the nearest whole multiple of 1/100 of 1% per annum, if the average is not such a multiple) the yields of the relevant Indices (rounded, if necessary, to the nearest 1/100 of 1% with any figure of 1/200 of 1% or above rounded upward).

Section 1.2 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. References in this Agreement to “determination” by the Agent include good faith estimates by the Agent (in the case of quantitative determinations) and good faith beliefs by the Agent (in the case of qualitative determinations).

Section 1.3 Accounting and Other Terms. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP applied on a basis consistent with those used in preparing the financial statements delivered to Agent pursuant to Section 8.2.

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ARTICLE 2

BORROWERS’ AUTHORIZATION OF ISSUE

Section 2.1 Senior Secured Convertible Notes. The Borrowers have authorized the issuance to the Lenders of senior secured convertible notes in the aggregate principal amount of $33,000,000, to be dated the date of issue thereof, to mature March 17, 2013, to bear interest as provided in Section 2.2 below and to be in the form of Exhibit A hereto (the “Notes”). The Borrowers shall repay the outstanding principal balance of the Notes in full in cash on the Maturity Date, unless accelerated in accordance with Section 10.2 or redeemed or prepaid in accordance with Section 2.3 or otherwise in accordance with the terms and provisions of the Notes. The term “Notes” as used herein shall include each such senior secured convertible note delivered pursuant to any provision of this Agreement and each such senior secured convertible note delivered in substitution or exchange for, or otherwise in respect of, any other Note pursuant to any such provision. A portion of the principal amount of the Notes was previously advanced to the Principal Borrower by the Lenders under the Original Financing Agreement and evidenced by the Original Notes. The Borrowers acknowledge and agree that, as of the First Restated Closing Date, immediately prior to giving effect to the transactions contemplated by this Agreement, the outstanding principal balance of the Original Notes is $19,357,527.50. Subject to the terms and conditions set forth in this Agreement, the entire outstanding principal balance of the Original Notes shall be deemed to be part of the outstanding principal balance of the Notes issued under this Agreement, without constituting a novation, upon surrender of the Original Notes to the Principal Borrower as partial consideration for the issuance of the Notes pursuant to this Agreement, as further described in Section 3.1.

Section 2.2 Interest. The Borrowers shall pay interest on the unpaid principal amount of the Notes at the rates, time and manner set forth below:

(a) Rate of Interest. Each Note shall bear interest on the unpaid principal amount thereof from the date issued through the date such Note is paid in full in cash (whether upon final maturity, by redemption, prepayment, acceleration or otherwise) at the Current Interest Rate. Interest on each Note shall be computed on the basis of a 360-day year and actual days elapsed and, subject to Section 2.2(b), shall be payable in arrears on each March 17 of each calendar year, commencing March 17, 2011, and on the Maturity Date (each, an “Interest Date”).

(b) Interest Payments. Interest on each Note shall be payable on each Interest Date or at any such other time the Notes become due and payable (whether by acceleration, redemption or otherwise) to the record holder of such Note on the applicable Interest Date, in cash; provided, however, that so long as no Event of Default has occurred and is continuing, on each Interest Date other than the Maturity Date, accrued and unpaid interest due and payable with respect to any Note on such Interest Date shall, instead of being required to be paid in cash on such Interest Date, be capitalized and added to the outstanding principal balance of such Note on such Interest Date (which capitalized interest shall then constitute outstanding

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principal in respect of such Note for all purposes of this Agreement and the other Transaction Documents and interest shall accrue thereon at the rates otherwise applicable with respect to such Note pursuant to the terms of this Agreement and the other Transaction Documents). If an Event of Default shall have occurred and be continuing on an applicable Interest Date, or if the applicable Interest Date is the Maturity Date, then all accrued and unpaid interest due and payable on such Interest Date shall be paid by Borrowers in cash. Each Interest Date shall be considered the last day of an accrual period for U.S. federal income tax purposes. Notwithstanding anything herein to the contrary, any payment of accrued but unpaid interest due and owing on any Note that is required to be paid in cash in accordance with the terms hereof or the terms of such Note shall only be made by wire transfer of immediately available funds.

(c) Default Rate. Upon the occurrence of any Event of Default, the Notes shall bear interest (including post-petition interest in any proceeding under any Bankruptcy Law) on the unpaid principal amount thereof at the Default Rate from the date of such Event of Default through and including the date such Event of Default is cured. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided that interest as calculated and unpaid at the Default Rate during the continuance of such Event of Default shall continue to be due to the extent relating to the days after the occurrence of such Event of Default through and including the date of cure of such Event of Default.

(d) Savings Clause. In no contingency or event shall the interest rate charged pursuant to the terms of this Agreement exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Holders have received interest hereunder in excess of the highest applicable rate, the amount of such excess interest shall be applied against the principal amount then outstanding under the Notes to the extent permitted by applicable law, and any excess interest remaining after such application shall be refunded promptly to the Borrowers.

Section 2.3 Redemptions and Payments.

(a) Permitted Redemption.

(i) At any time (but only one time) on or after the first anniversary of the First Restated Closing Date, the Borrowers shall have the right, at their option, to redeem the Maximum Permitted Redemption Amount (but not more or less than the Maximum Permitted Redemption Amount) of the principal amount of the Notes then outstanding (pro rata amongst the Holders based on the then outstanding principal amount of their Notes) by electing to pay to the Holders the applicable Permitted Redemption Amount (as defined below) on the Permitted Redemption Date (a “Permitted Redemption”); provided that the Permitted Redemption Conditions and the conditions set forth in Section 2.3(a)(i), (ii) and (iii) are satisfied (or waived in writing by the Required Holders). The Borrowers may exercise their right to effectuate a Permitted Redemption by delivering to each of the Holders written notice (the “Permitted Redemption Notice”), and making of contemporaneous public disclosure thereof, at least sixty (60) days prior to the proposed Permitted Redemption Date. If the Borrowers elect to exercise a Permitted Redemption pursuant to this Section 2.3(a), then they must

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simultaneously take the same action with respect to all of the Notes. The Permitted Redemption Notice shall state (1) the principal amount of the Notes (in the aggregate and with respect to each Note) which the Borrowers elect to redeem pursuant to the Permitted Redemption, (2) the applicable “Permitted Redemption Amount” for such Permitted Redemption (in the aggregate and with respect to each Note), which amount shall be equal to (A) one hundred ten percent (110%) of the unpaid outstanding principal amount of the Notes being redeemed in connection with such Permitted Redemption, plus (B) all accrued and unpaid interest with respect to such principal amount, plus (C) accrued and unpaid Late Charges with respect to such principal amount and such accrued and unpaid interest, and (3) the proposed Permitted Redemption Date, and shall certify that the Permitted Redemption Conditions are satisfied as of the Permitted Redemption Notice Date (to the extent they can be satisfied thereon). Other than pursuant to a Permitted Redemption, the Borrowers shall have no right to voluntarily prepay, redeem or repurchase Notes.

(ii) A Permitted Redemption Notice delivered pursuant to this subsection shall be irrevocable; provided that a Holder may elect, by written notice delivered to Principal Borrower at any time prior to the applicable Permitted Redemption Date, to convert all or any portion of the principal amount of its Note(s) (plus accrued and unpaid interest thereon), which the Borrowers elect to redeem pursuant to the Permitted Redemption into Conversion Shares in accordance with the terms of such Note(s), in which event the principal amount of such Note(s) so converted shall not be redeemed as part of the Permitted Redemption but such principal amount will still be charged against the Maximum Permitted Redemption Amount. For purposes of clarification, in the event that any Holder elects, during the period commencing on the date of delivery to the Holders of the Permitted Redemption Notice (the “Permitted Redemption Notice Date”) and ending immediately prior to the Permitted Redemption Date (such period, the “Permitted Redemption Notice Period”), to convert a principal amount of its Note(s) (plus accrued and unpaid interest thereon) equal to or exceeding the principal amount of its Note(s) which are the subject of the Permitted Redemption, then the principal amount of its Note(s) which are the subject of such Permitted Redemption shall not be redeemed.

(iii) If the Borrowers have exercised their right to effectuate a Permitted Redemption in accordance with Section 2.3(a)(i) and the other conditions of this Section 2.3(a) (including the Permitted Redemption Conditions) are satisfied (or waived in writing by the Required Holders) on the Permitted Redemption Date (and, for the avoidance of doubt, on each day during the Permitted Redemption Notice Period), then such portion of the principal amount of each Note which is the subject of such Permitted Redemption, if any, which has not been converted by the Holder thereof pursuant to Section 2.3(a)(ii) (the “Remaining Permitted Redemption Amount”) shall be redeemed on the Permitted Redemption Date by the payment to such Holder on such Permitted Redemption Date, by wire transfer of immediately available funds, of an amount equal to the Permitted Redemption Amount in respect of each Note comprising such Remaining Permitted Redemption Amount. In the event the Permitted Redemption Conditions are not satisfied (or waived in writing by the Required Holders) on the Permitted Redemption Date (and, for the avoidance of doubt, on each day during the Permitted Redemption Period), then the Permitted Redemption shall be null and void with respect to all of the Remaining Permitted Redemption Amount of each Note.

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(iv) For purposes of this Section 2.3(a), “Permitted Redemption Conditions” means the following conditions: (A) during the period beginning on and including the First Restated Closing Date and ending on and including the Permitted Redemption Date, there shall not have occurred either (x) the public announcement of a pending, proposed or intended Change of Control that has not been abandoned, terminated or consummated and publicly disclosed as such at least ten (10) Trading Days prior to the Permitted Redemption Notice Date or (y) an Event of Default that has not been cured or waived prior to the date that is ten (10) days prior to the date of delivery of the Permitted Redemption Notice; (B) on each day during the period beginning ten (10) days prior to the date of delivery of the Permitted Redemption Notice and ending on and including the applicable Permitted Redemption Date, there shall not have existed an event that with the passage of time or the giving of notice and without being cured would constitute an Event of Default, and the Borrowers and their Subsidiaries otherwise shall have been in compliance with in all material respects and shall not have breached or been in breach in any material respect of any provision or covenant of this Agreement or any of the other Transaction Documents; (C) on each day during the period beginning on and including the date that is ten (10) days prior to the Permitted Redemption Notice Date and ending on and including the Permitted Redemption Date, a Registration Statement shall be effective and available for the sale of not less one hundred fifty percent (150%) of the Registrable Securities issuable upon conversion of the Permitted Redemption Amount pursuant to the terms of the Note(s) in accordance with the Registration Rights Agreement, and there shall not be any Grace Period (as defined in the Registration Rights Agreement) applicable to such Registration Statement(s); (D) the Stockholder Approval shall have been obtained; and (E) there shall be reserved for issuance upon conversion of the Notes at least an amount equal to the number of Conversion Shares into which the Permitted Redemption Amount would be converted upon the Holders’ election to do so pursuant to Section 2.3(a)(ii); and (F) on the Permitted Redemption Notice Date, neither the Principal Borrower nor any officer, director or any Affiliate thereof shall be in possession of any material non-public information with respect to the Principal Borrower or any of its securities.

(b) Mandatory Prepayments.

(i) No later than the third Business Day following the date of receipt by the Borrowers or any of their Subsidiaries of any net cash proceeds in excess of $200,000 in the aggregate from any Asset Sales (other than any Permitted Dispositions (except pursuant to clause (ii) of such definition)), the Borrowers shall prepay the Notes as set forth in Section 2.3(d) in an aggregate amount equal to 50% of such net cash proceeds.

(ii) No later than the third Business Day following the date of receipt by the Borrowers or any of their Subsidiaries, or the Agent as loss payee, of any net cash proceeds in excess of $200,000 in the aggregate from any Destruction or Taking (without giving regard to clauses (i) or (ii) of each such definition), the Borrowers shall prepay the

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Notes as set forth in Section 2.3(d) in an aggregate amount equal to 100% of such net cash proceeds, provided, so long as no default or Event of Default shall have occurred and be continuing on the date of receipt thereof or caused thereby, Borrowers shall have the option to apply such net cash proceeds, prior to the date that is 90 days following receipt thereof, for purposes of the repair, restoration or replacement of the applicable assets thereof.

(iii) No later than the third Business Day following the date of receipt by the Borrowers or any of their Subsidiaries of any net cash proceeds from a capital contribution to, or the issuance of any Equity Interests of, the Borrowers or any of their Subsidiaries (other than to operating companies in the biotechnology or pharmaceutical industries in connection with strategic alliances, pursuant to any employee stock or stock option compensation plan or pursuant to this Agreement and the Notes), the Borrowers shall prepay the Notes as set forth in Section 2.3(d) in an aggregate amount equal to 50% of such net cash proceeds.

(iv) On the date of receipt by the Borrowers or any of their Subsidiaries of any net cash proceeds from the incurrence of any Indebtedness of the Borrowers or any of their Subsidiaries (other than with respect to Permitted Indebtedness and Indebtedness under this Agreement and the Notes), the Borrowers shall prepay the Notes as set forth in Section 2.3(d) in an aggregate amount equal to 100% of such net cash proceeds.

(v) No later than the third Business Day following the date of receipt by the Borrowers or any of their Subsidiaries of any Milestone Payments, the Borrowers shall prepay the Notes as set forth in Section 2.3(d) with 10% of the proceeds of such Milestone Payments.

(vi) No later than the third Business Day following the date of receipt by the Borrowers or any of their Subsidiaries of any Extraordinary Receipts, the Borrowers shall prepay the Notes as set forth in Section 2.3(d) in an aggregate amount equal to 50% of such Extraordinary Receipts, provided that no payment shall be required pursuant to this Section 2.3(b)(vi) unless the amount of Extraordinary Receipts received on such date exceeds $100,000.

(vii) Concurrently with any prepayment of the Notes pursuant to this Section 2.3(b), the Borrowers shall deliver to the Agent a certificate of an authorized officer thereof demonstrating the calculation of the amount of the applicable proceeds. In the event that the Borrowers shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate (including as a result of the conversion of non-cash proceeds into cash), the Borrowers shall promptly make an additional prepayment of the Notes in an amount equal to such excess, and the Borrowers shall concurrently therewith deliver to the Agent a certificate of an authorized officer thereof demonstrating the derivation of such excess.

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(c) Waiver of Mandatory Prepayments. Anything contained in Section 2.3(b) to the contrary notwithstanding, in the event the Borrowers are required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Notes, not less than five (5) Business Days prior to the date (the “Required Prepayment Date”) on which the Borrowers are required to make such Waivable Mandatory Prepayment, the Borrowers shall notify the Agent of the amount of such prepayment, and the Agent shall promptly thereafter notify each Holder holding an outstanding Note of the amount of such Holder’s pro rata share of such Waivable Mandatory Prepayment and such Holder’s option to refuse such amount. Each such Holder may exercise such option by giving written notice to the Borrowers and the Agent of its election to do so on or before the first Business Day prior to the Required Prepayment Date (it being understood that any Holder which does not notify the Borrowers and the Agent of its election to exercise such option on or before the first Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option). On the Required Prepayment Date, the Borrowers shall pay to the Agent the amount of the Waivable Mandatory Prepayment, which amount shall be applied in an amount equal to that portion of the Waivable Mandatory Prepayment payable to those Holders that have elected not to exercise such option, to prepay the Notes of such Holders.

(d) Application of Mandatory Prepayments. All mandatory prepayments made pursuant to Section 2.3(b) and not waived pursuant to Section 2.3(c) shall be made to the Holders on a pro rata basis with respect to the then-outstanding principal under the Notes.

(e) Terms of the Notes. The mandatory prepayments required to be made pursuant to Section 2.3(b) shall be in addition to any prepayment or redemption obligations of the Borrowers set forth in the Notes, and nothing herein shall limit the applicability of such prepayment or redemption obligations.

Section 2.4 Payments. Whenever any payment of cash is to be made by any of the Borrowers to any Person pursuant to the Notes, such payment shall be made in lawful money of the United States of America by a check drawn on the account or accounts of the Borrowers and sent via overnight courier service to such Person at such address as previously provided to the Borrowers in writing (which address, in the case of each of the Lenders, shall initially be as set forth on the Schedule of Lenders attached hereto); provided that (i) any Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Borrowers with prior written notice setting out such request and such Holder’s wire transfer instructions and (ii) Borrowers may elect to make a payment of cash via wire transfer of immediately available funds in accordance with wire transfer instructions provided by each Holder upon request therefor. Whenever any amount expressed to be due by the terms of any Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which this Note is paid in full in cash, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. Any amount due under the Transaction Documents (other than principal and interest, if the same are already accruing interest at the Default Rate), which is not paid when due shall result in a late charge being incurred and payable by the Borrowers in an amount equal to the Default Rate from the date such amount was due until the same is paid in full in cash (“Late Charge”). Such Late Charge shall continue to accrue post-petition in any proceeding under any Bankruptcy Law.

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Section 2.5 Dispute Resolution. Except as otherwise provided herein, in the case of a dispute as to the determination of any amounts due and owing pursuant to a redemption under Section 2.3 or otherwise or any other similar or related amount, the Borrowers shall submit the disputed determinations or arithmetic calculations via facsimile within three (3) Business Days of receipt, or deemed receipt, of the applicable notice of dispute to the Agent. If the Agent and the Holders and the Borrowers are unable to agree upon such determination or calculation within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Agent, then the Borrowers shall, within three (3) Business Days submit via facsimile the disputed determinations or arithmetic calculations to an independent outside national registered public accounting firm specified by Agent. The Borrowers, at the Borrowers’ expense, shall cause the accounting firm to perform the determinations or calculations and notify the Borrowers and the Agent of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such accounting firm’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

Section 2.6 Taxes.

(a) Any and all payments by or on behalf of the Borrowers hereunder and under any Transaction Document shall be made, free and clear of and without deduction for any and all current or future taxes, levies, imposts, deductions, charges or withholdings that are or would be applicable to the Holders, and all liabilities with respect thereto, excluding (x) income taxes imposed on the net income of a Holder and (y) franchise taxes imposed on the net income of a Holder, in each case by the jurisdiction under the laws of which such Holder is organized or qualified to do business or a jurisdiction or any political subdivision thereof in which a Holder engages in business activity other than activity arising solely from the Holder having executed this Agreement and having enjoyed its rights and performed its obligations under this Agreement or any Transaction Document (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, being called “Taxes”). If any Borrower must deduct any Taxes from or in respect of any sum payable hereunder or under any other Transaction Document to a Holder, (x) the sum payable shall be increased by the amount (an “additional amount”) necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 2.6), such Holder shall receive an amount equal to the sum it would have received had no such deductions been made, (y) such Borrower shall make such deductions and (z) such Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) The Borrowers will pay to the relevant Governmental Authority in accordance with applicable law any current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under any Transaction Document, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any Transaction Document that are or would be applicable to the Holders (“Other Taxes”).

(c) The Borrowers jointly and severally agree to indemnify each Holder for the full amount of Taxes and Other Taxes paid by such Holder and any liability (including penalties, interest and expenses (including reasonable attorney’s fees and expenses)) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or

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legally asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared by such Holder absent manifest error, shall be final conclusive and binding for all purposes. Such indemnification shall be made within thirty (30) days after the date such Holder makes written demand therefor. The Borrowers shall have the right to receive that portion of any refund of any Taxes and Other Taxes received by a Holder for which any Borrower has previously paid any additional amount or indemnified such Holder and which leaves the Holder, after such Borrower’s receipt thereof, in no better or worse financial position than if no such Taxes or Other Taxes had been imposed or additional amounts or indemnification paid to the Holder.

Section 2.7 Reissuance.

(a) Transfer. If any Note is to be transferred, the Holder shall surrender such Note to the Borrowers, whereupon the Borrowers will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with this Section 2.7), registered as the Holder may request, representing the outstanding principal being transferred by the Holder and, if less than the entire outstanding principal is being transferred, a new Note (in accordance with this Section 2.7) to the Holder representing the outstanding principal not being transferred.

(b) Lost, Stolen or Mutilated Note. Upon receipt by the Borrowers of evidence reasonably satisfactory to the Borrowers of the loss, theft, destruction or mutilation of any Note and (i) in the case of loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the Borrowers (provided, however, that if the Holder is an institutional investor, the affidavit of an authorized partner, manager (or managing member) or officer of such Holder setting forth the circumstances with respect to such loss, theft or destruction shall be accepted as satisfactory evidence thereof and no indemnity agreement or other security shall be required), and (ii) in the case of mutilation, upon surrender and cancellation of the mutilated Note, the Borrowers shall execute and deliver to the Holder a new Note (in accordance with this Section 2.7) representing the outstanding principal.

(c) Note Exchangeable for Different Denominations. The Notes are exchangeable, upon the surrender thereof by the Holder at the principal office of the Borrowers, for a new Note or Notes (in accordance this Section 2.7) in principal amounts of at least $250,000) representing in the aggregate the outstanding principal of the surrendered Note, and each such new Note will represent such portion of such outstanding principal as is designated by the Holder at the time of such surrender.

(d) Issuance of New Notes. Whenever the Borrowers are required to issue a new Note pursuant to the terms of this Agreement or the Notes, such new Note (i) shall be of like tenor with the Note being replaced, (ii) shall represent, as indicated on the face of such new Note, the principal remaining outstanding (or, in the case of a new Note being issued pursuant to paragraph (a) or (b) of this Section 2.7, the principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the principal remaining outstanding under the Note being replaced immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the issuance date of the Note being replaced, (iv) shall have the same rights and conditions as the Note being replaced, and (v) shall represent accrued interest on the principal and Late Charges of the Note being replaced, from the issuance date of such Note.

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Section 2.8 Registers. The Principal Borrower shall maintain at its principal executive office (or such other office or agency of the Principal Borrower as it may designate by notice to each holder of Securities), a register for the Notes in which the Principal Borrower shall record the name and address of the Person in whose name the Notes have been issued (including the name and address of each transferee) and the principal amount of Notes held by such Person. The Principal Borrower shall keep the register open and available at all times during business hours for inspection of any Holder or its legal representatives. The Principal Borrower shall cause its transfer agent to maintain a register for the Lender Shares which shall record the name and address of the Person in whose name the Lender Shares have been issued (including the name and address of each transferee) and the number of Lender Shares held by such Person. The Principal Borrower shall cause the transfer agent to keep the register open and available for inspection by any Lender or its legal representatives on the same terms that it makes such information available to any other holder of shares of Common Stock.

Section 2.9 Maintenance of Registers. Notwithstanding anything to the contrary contained herein, the Notes are registered obligations and the right, title, and interest of each Lender and its assignees in and to such Notes shall be transferable only upon notation of such transfer in the register. The Notes shall only evidence a Lender’s or its assignee’s right, title and interest in and to the related Notes, and in no event is any such Note to be considered a bearer instrument or obligation. This Section 2.9 shall be construed so that the Notes are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related Treasury regulations promulgated thereunder.

Section 2.10 Transfer Agent Instructions. The Principal Borrower shall issue irrevocable instructions in the form attached hereto as Exhibit G (the “Irrevocable Transfer Agent Instructions”) to its transfer agent and any subsequent transfer agent, to issue certificates or credit shares to the applicable balance accounts at DTC, registered in the name of each Lender or its respective nominee(s), for the Conversion Shares in such amounts as specified from time to time by each Lender to the Principal Borrower upon conversion of any Note pursuant to the terms thereof. The Principal Borrower warrants that no instruction other than the Irrevocable Transfer Agent Instructions and stop transfer instructions to give effect to the provisions of Section 6.4 and Section 6.5 hereof will be given by the Principal Borrower to its transfer agent with respect to the Shares, the Exchange Shares and, to the extent issued, the Conversion Shares (collectively, the “Lender Shares”), and that the Lender Shares shall otherwise be freely transferable on the books and records of the Principal Borrower, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Lender effects a sale, assignment or transfer of Lender Shares in accordance with Section 6.4 and Section 6.5, the Principal Borrower shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the balance account at DTC, as applicable, in such name and in such denominations as specified by such Lender to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Lender Shares sold, assigned or transferred pursuant to an effective registration statement or pursuant to Rule 144 under the 1933 Act, the transfer agent shall issue such Lender Shares to such Lender, assignee or transferee, as the case may be, without any restrictive legend. The Principal Borrower

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acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Lender. Accordingly, the Principal Borrower acknowledges that the remedy at law for a breach of its obligations under this Section 2.10 will be inadequate and agrees, in the event of a breach or threatened breach by the Principal Borrower of the provisions of this Section 2.10, that a Lender shall be entitled, in addition to all other available remedies, to seek an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

Section 2.11 Common Stock. Pursuant to the Original Financing Agreement, the Principal Borrower authorized the issuance to the Lenders of (a) 1,125,000 Shares as of the First Closing Date, and (b) 375,000 Shares, in the aggregate, as of the Second Closing Date, as further set forth on the Schedule of Lenders.

Section 2.12 Compensation for Increased Costs and Taxes. In the event that any Holder shall reasonably determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Holder with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Holder (or its applicable lending office) to any additional Taxes with respect to this Agreement or any of the other Transaction Documents or any of its obligations hereunder or thereunder or any payments to such Holder (or its applicable lending office) of principal, interest, Late Charges, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Holder; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Holder or its obligations hereunder; and the result of any of the foregoing is to increase the cost to such Holder of holding Notes hereunder or to reduce any amount received or receivable by such Holder with respect thereto; then, in any such case, the Borrowers shall promptly pay to such Holder, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Holder in its reasonable discretion shall determine) as may be necessary to compensate such Holder for any such increased cost or reduction in amounts received or receivable hereunder. Such Holder shall deliver to the Borrowers (with a copy to the Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Holder under this Section 2.12, which statement shall be conclusive and binding upon all parties hereto absent manifest error.

Section 2.13 Capital Adequacy Adjustment. In the event that any Holder shall have determined that the adoption, effectiveness, phase-in or applicability after the First Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, reserve requirements, or similar requirements, or any change therein or in the interpretation or

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administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Holder with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Holder or any corporation controlling such Holder as a consequence of, or with reference to, such Holder’s Notes or other obligations hereunder with respect to the Notes to a level below that which such Holder or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Holder or such controlling corporation with regard to capital adequacy), then from time to time, within five (5) Business Days after receipt by the Borrowers from such Holder of the statement referred to in the next sentence, the Borrowers shall pay to such Holder such additional amount or amounts as will compensate such Holder or such controlling corporation on an after-tax basis for such reduction. Such Holder shall deliver to the Borrowers (with a copy to the Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Holder under this Section 2.13, which statement shall be conclusive and binding upon all parties hereto absent manifest error.

ARTICLE 3

PURCHASE AND SALE OF NOTES AND SHARES

Section 3.1 First Restated Closing. In consideration for each Lender’s payment of its pro rata share of the First Restated Closing Purchase Price, which is set forth opposite such Lender’s name in column five (5) of the Schedule of Lenders attached hereto (which payment shall be made by way of surrender of the existing Original Notes issued to such Lender by Principal Borrower and/or by way of cash payment, in each case as set forth on the Schedule of Lenders), the Principal Borrower shall issue and sell to each Lender, and each Lender severally, but not jointly, agrees to purchase from the Principal Borrower on the First Restated Closing Date, a principal amount of Notes as is set forth opposite such Lender’s name in column three (3) on the Schedule of Lenders attached hereto. The closing (the “First Restated Closing”) of the purchase of such Securities by the Lenders shall occur at the offices of Katten Muchin Rosenman LLP, 525 West Monroe Street, Chicago, Illinois 60661. The date and time of the First Restated Closing (the “First Restated Closing Date”) shall be 10:00 a.m., Chicago time, on March 17, 2010, subject to notification of satisfaction (or waiver) of the conditions to the First Restated Closing set forth in Section 4.1 and Section 5.1 below (or such later date as is mutually agreed to by the Principal Borrower and each Lender). The aggregate purchase price (the “First Restated Closing Purchase Price”) of the Notes to be purchased by the Lenders at the First Restated Closing shall be equal to $33,000,000. On the First Restated Closing Date, (i) each Lender shall pay its pro rata share of the First Restated Closing Purchase Price (less the amounts withheld by it pursuant to Section 8.25) to the Principal Borrower for the Notes to be issued and sold to such Lender at the First Restated Closing, by wire transfer of immediately available funds in accordance with the Funds Flow Letter and/or surrender of its existing Original Notes, as more fully set forth on the Schedule of Lenders, and (ii) the Principal Borrower shall deliver to each Lender the Notes (in the denominations as such Lender shall have requested prior to the First Restated Closing) which such Lender is then purchasing, duly executed on behalf of the Principal Borrower and registered in the name of such Lender or its designee.

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Section 3.2 Subsequent Closing. Subject to the satisfaction (or waiver) of the conditions to the Subsequent Closing set forth in Sections 4.2 and 5.2 (or such later date as is mutually agreed to by the Borrowers and each Lender), and further subject to Section 10.2(a), in consideration for each Lender’s payment of its pro rata share of the Subsequent Closing Purchase Price (based on the amount, if any, each Lender has, in its sole and absolute discretion, agreed in writing to pay in respect thereof), the Borrowers shall issue and sell to each such Lender, and each such Lender severally, but not jointly, agrees to purchase from the Borrowers on the Subsequent Closing Date, a principal amount of Notes in the amount each Lender has agreed in writing to pay in respect thereof, pursuant to a notice of purchase and sale (“Notice of Purchase and Sale”) in the form attached hereto as Exhibit L delivered by the Borrowers to each such Lender at least 30 days prior to the proposed Subsequent Closing Date (as defined below). The closing (the “Subsequent Closing”) of the purchase of such Notes by the Lenders shall occur at the offices of Katten Muchin Rosenman LLP, 525 West Monroe Street, Chicago, Illinois 60661. The date and time of the Subsequent Closing (the “Subsequent Closing Date”) shall be 10:00 a.m., Chicago time, on the day that is three (3) Business Days following the date on which the conditions set forth in Sections 4.2 and 5.2 shall be satisfied or waived in accordance with this Agreement, provided that the Subsequent Closing Date may occur no later than the two (2) year anniversary of the First Restated Closing Date. The aggregate purchase price (the “Subsequent Closing Purchase Price”) of the Notes to be purchased by the Lenders at the Subsequent Closing shall not exceed $3,000,000 in the aggregate. On the Subsequent Closing Date, (i) each Lender shall pay its pro rata share of the Subsequent Closing Purchase Price (less the amounts withheld by it pursuant to Section 8.25) to the Borrowers for the Notes to be issued and sold to such Lender at the Subsequent Closing, by wire transfer of immediately available funds in accordance with the Borrowers’ written wire instructions, and (ii) the Borrowers shall deliver to each Lender the Notes (in the denominations as such Lender shall have requested prior to the Subsequent Closing) which such Lender is then purchasing, duly executed on behalf of the Borrowers and registered in the name of such Lender or its designee. Notwithstanding anything to the contrary contained herein, Borrowers shall only be permitted to avail themselves of one Subsequent Closing and no Lender or Holder shall be required to purchase Notes at such Subsequent Closing unless such Lender or Holder has agreed in writing, in its sole and absolute discretion, to so purchase Notes in response to a Notice of Purchase and Sale.

ARTICLE 4

CONDITIONS TO THE BORROWERS’ OBLIGATION TO SELL

Section 4.1 First Restated Closing. The obligations of the Principal Borrower hereunder to issue and sell the Notes to each Lender at the First Restated Closing are subject to the satisfaction, at or before the First Restated Closing Date, of each of the following conditions:

(a) Such Lender shall have executed each of the Transaction Documents contemplated to be entered into in connection with the First Restated Closing to which it is a party and delivered the same to the Principal Borrower.

(b) Such Lender and each other Lender shall have delivered to the Principal Borrower its pro rata portion of the First Restated Closing Purchase Price (less the amounts withheld by it pursuant to Section 8.25) for the Notes being purchased by such Lender at the

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First Restated Closing by surrender of its existing Original Notes and/or by wire transfer of immediately available funds pursuant to the wire instructions provided by the Principal Borrower in the funds flow letter (the “Funds Flow Letter”) set forth on Exhibit E attached hereto, in each case as set forth on the Schedule of Lenders.

(c) The representations and warranties of such Lender shall be true and correct in all material respects as of the date when made and as of the First Restated Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such specific date).

Section 4.2 Subsequent Closing. The obligations of the Borrowers hereunder to issue and sell the Notes to each Lender at the Subsequent Closing is subject to the satisfaction, at or before the Subsequent Closing Date, of each of the following conditions:

(a) Such Lender and each other Lender shall have delivered to the Borrowers its pro rata portion of the Subsequent Closing Purchase Price (less the amounts withheld by it pursuant to Section 8.25) for the Notes being purchased by such Lender at the Subsequent Closing by wire transfer of immediately available funds pursuant to the written wire instructions provided by the Borrowers.

(b) The representations and warranties of such Lender shall be true and correct in all material respects as of the date when made and as of the Subsequent Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such specific date).

ARTICLE 5

CONDITIONS TO EACH LENDER’S OBLIGATION TO PURCHASE

Section 5.1 First Restated Closing. The obligation of each Lender hereunder to purchase the Notes at the First Restated Closing is subject to the satisfaction, at or before the First Restated Closing Date, of each of the following conditions:

(a) The Principal Borrower shall have executed and delivered to each Lender (i) the Notes (in such denominations as such Lender shall have requested prior to the First Restated Closing) being purchased by such Lender at the First Restated Closing pursuant to this Agreement, and (ii) each of the other Transaction Documents contemplated to be entered into in connection with the First Restated Closing to which it is a party (other than the Transaction Documents contemplated to be executed and delivered to the Agent pursuant to the other subsections of this Section 5.1).

(b) The Principal Borrower shall have delivered to such Lender a letter (or other evidence acceptable to Agent) from the Principal Borrower’s transfer agent certifying the number of shares of Common Stock outstanding as of a date within five (5) days of the First Restated Closing Date.

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(c) The Principal Borrower shall have executed and delivered to the Lenders the Registration Rights Agreement.

(d) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent the Fee Letter and evidence satisfactory to the Agent that the Principal Borrower shall pay to the Agent on the First Restated Closing Date (i) all fees and other amounts due and owing thereon under the Fee Letter, this Agreement and the other Transaction Documents and (ii) for the benefit of the Holders, all unpaid interest on account of the Original Notes accrued through the day immediately preceding the First Restated Closing Date.

(e) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent deposit account control agreements and securities account control agreements, in form and substance satisfactory to the Agent, executed by the applicable banks, in each case as the Agent may request.

(f) [Reserved].

(g) The Agent shall have received the opinions of Outside Legal Counsel, dated the First Restated Closing Date, in substantially the form of Exhibit F attached hereto.

(h) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent the Funds Flow Letter.

(i) The Principal Borrower shall have delivered to the Agent a copy of the Irrevocable Transfer Agent Instructions, which instructions shall have been delivered to and acknowledged in writing by the Principal Borrower’s transfer agent.

(j) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certificate evidencing its incorporation and good standing in its jurisdiction of incorporation issued by the Secretary of State of such jurisdiction, as of a date reasonably proximate to the First Restated Closing Date.

(k) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certificate evidencing its qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Principal Borrower is qualified to conduct business and failure to so qualify would cause a Material Adverse Effect, as of a date reasonably proximate to the First Restated Closing Date.

(l) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certificate as to the fact that no action has been taken with respect to any merger, consolidation, liquidation or dissolution of the Principal Borrower, or with respect to the sale of substantially all of its assets, nor is any such action pending or contemplated.

(m) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certified copy of the Principal Borrower’s certificate or articles of incorporation, as certified by the Secretary of State of its jurisdiction of incorporation, as of a date reasonably proximate to the First Restated Closing Date.

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(n) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certificate, executed by the secretary of the Principal Borrower and dated the First Restated Closing Date, as to (i) the resolutions consistent with Section 7.2 as adopted by the Board in a form reasonably acceptable to the Agent, (ii) the Principal Borrower’s articles or certificate of incorporation, each as in effect at the First Restated Closing, (iii) the Principal Borrower’s bylaws, each as in effect at the First Restated Closing, and (iv) no action having been taken by the Principal Borrower or its stockholders, directors or officers in contemplation of any amendments to items (i), (ii), or (iii) listed in this Section 5.1(n), as certified in the form attached hereto as Exhibit H.

(o) The Common Stock (i) shall be designated for quotation or listed on the Principal Market and (ii) shall not have been suspended, as of the First Restated Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the First Restated Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

(p) The Principal Borrower shall have obtained all governmental, regulatory and third party consents and approvals, if any, necessary for the sale of the Notes at the First Restated Closing.

(q) The Principal Borrower shall have reserved all authorized, unissued and unreserved shares of Common Stock solely for the purpose of effecting the conversion of the Notes in accordance with Section 8.31.

(r) From the date hereof until the First Restated Closing Date, there shall not have been any subdivision (by any stock split, stock dividend, recapitalization, reclassification or other similar transaction) of the shares of Common Stock.

(s) The Principal Borrower shall have obtained and delivered to the Agent searches of UCC filings in the jurisdictions of formation or incorporation of the Principal Borrower, the jurisdiction of the chief executive offices of the Principal Borrower and each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Agent’s and Holders’ security interest in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens.

(t) The employment agreements between Principal Borrower and each of Warren Levy and Ronald Levy shall have been amended on terms acceptable to Agent.

(u) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent, with respect to the existing Mortgage covering the Principal Borrower’s fee interest in real property located in Essex County, New Jersey, the following:

(i) a fully executed and notarized First Amendment to Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing in form and substance satisfactory to Agent;

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(ii) a fully executed and notarized First Amendment to Assignment of Rents and Leases in form and substance satisfactory to Agent; and

(iii)(A) a bring-down endorsement to the title insurance policy previously delivered to Agent in respect of such Mortgage, in form and substance satisfactory to Agent and (B) evidence satisfactory to the Agent that the Principal Borrower has paid to the title company all expenses and premiums of the title company and all other sums required in connection with the issuance of such bring-down endorsement and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the items described in the preceding clauses (i) and (ii) in the appropriate real estate records.

(v) The Principal Borrower shall have delivered, or caused to be delivered, to the Agent such information in form, scope and substance reasonably satisfactory to the Agent, to the extent requested by Agent, regarding environmental matters relating to all real property owned, leased, operated or used by the Principal Borrower as of the First Restated Closing Date.

(w) [Reserved].

(x) If not previously delivered to Agent, the Principal Borrower shall have delivered, or caused to be delivered, to the Agent certificates evidencing any Pledged Equity (as defined in the Security Agreement) pledged to the Agent pursuant to the Security Agreement, together with duly executed in blank, undated stock or unit powers attached thereto.

(y) The Agent shall have received a certificate from the chief financial officer of the Principal Borrower in form and substance satisfactory to the Agent, supporting the conclusions that, after giving effect to the transactions contemplated by the Transaction Documents, the Principal Borrower and each of its Subsidiaries are not Insolvent.

(z) Since September 30, 2009, there shall have been no change which has had or could reasonably be expected to have a Material Adverse Effect.

(aa) The Agent shall have received certificates from the Principal Borrower’s insurance broker or other evidence satisfactory to it that all insurance required to be maintained pursuant to this Agreement is in full force and effect, together with endorsements naming the Agent, for the benefit of the Holders, as additional insured and lender’s loss payee thereunder.

(bb) The Principal Borrower shall have executed and delivered, or caused to be delivered, to the Agent the Post-Closing Obligations Letter.

(cc) The Principal Borrower shall have caused to be delivered to the Agent evidence satisfactory to the Agent that the holders of the Affiliate Notes have (i) amended the payment terms of the Affiliated Notes in a manner satisfactory to Agent, (ii) reaffirmed the subordination of the Indebtedness evidenced by the Affiliate Notes and Liens securing same to the Obligations and Liens securing same pursuant to the terms of the Affiliate Subordination Agreement, (iii) agreed to the amendment of the Affiliate Subordination Agreement in form and substance satisfactory to Agent (and each Lender hereby authorizes Agent to enter into the applicable agreements, documents and instruments evidencing or consenting to the transactions

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described in the preceding clauses (i) through (iii)), and (iv) consented in all respects to the execution, delivery and performance of this Agreement and the other Transaction Documents, including the incurrence of Indebtedness and Liens hereunder and thereunder.

(dd) The representations and warranties of the Principal Borrower shall be true and correct as of the First Restated Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and the Principal Borrower shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Principal Borrower at or prior to the First Restated Closing Date. The Agent shall have received certificates, executed by the chief executive officer of the Principal Borrower, dated the First Restated Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Agent, in the form attached hereto as Exhibit I.

(ee) The Principal Borrower shall have executed and/or delivered to the Agent such other documents relating to the transactions contemplated by this Agreement as the Agent or its counsel may reasonably request.

(ff) No Event of Default (or event or circumstance that, with the passage of time, the giving of notice, or both, would become an Event of Default) shall have occurred and be continuing or would result from the issuance of the Notes at the First Restated Closing.

(gg) Ronald Levy shall have delivered to the Principal Borrower his irrevocable resignation as a member of the Board (and all committees thereof), subject to, and effective immediately following, the First Restated Closing (the “Ronald Levy Resignation”).

(hh) Jay Levy shall have delivered to the Principal Borrower and the Agent his irrevocable resignation as a member of the Board (and all committees thereof) and as Chairman of the Board, subject to, and effective immediately following, the First Restated Closing (the “Jay Levy Resignation,” and together with the Ronald Levy Resignation, the “Resignations”).

Section 5.2 Subsequent Closing. The obligation of any Lender to purchase the Notes at the Subsequent Closing is subject to the satisfaction, at or before the Subsequent Closing Date, of each of the following conditions:

(a) Each Borrower, as applicable, shall have executed and delivered to such Lender (i) the Notes (in such denominations as such Lender shall have requested prior to the Subsequent Closing) being purchased by such Lender at the Subsequent Closing pursuant to this Agreement and (ii) each of the other Transaction Documents to which it is a party (other than the Transaction Documents contemplated to be executed and delivered to the Agent pursuant to the other subsections of this Section 5.2).

(b) The Borrowers shall have delivered, or caused to be delivered, to the Agent evidence satisfactory to the Agent that the Borrowers shall pay to the Agent on the Subsequent Closing Date all fees and other amounts due and owing thereon under the Fee Letter, this Agreement and the other Transaction Documents.

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(c) If the Subsequent Closing Date occurs more than six (6) months following the First Restated Closing Date, the Agent shall have received the opinions of the Borrowers’ Outside Legal Counsel, dated the Subsequent Closing Date, in form and substance satisfactory to such Agent.

(d) If the Subsequent Closing Date occurs more than six (6) months following the First Restated Closing Date, each Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certificate evidencing the formation or incorporation and good standing of such Borrower in such entity’s jurisdiction of formation or incorporation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date reasonably proximate to the Subsequent Closing Date.

(e) If the Subsequent Closing Date occurs more than six (6) months following the First Restated Closing Date, each Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certificate evidencing such Borrower’s qualification as a foreign corporation or other entity and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which such Borrower conducts business, as of a date reasonably proximate to the Subsequent Closing Date.

(f) Each Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certificate as to the fact that no action has been taken with respect to any merger, consolidation, liquidation or dissolution of such Borrower, or with respect to the sale of substantially all of its assets, nor is any such action pending or contemplated.

(g) If the Subsequent Closing Date occurs more than six (6) months following the First Restated Closing Date, each Borrower shall have executed and delivered, or caused to be delivered, to the Agent a certified copy of such Borrower’s certificate or articles of incorporation (or other applicable governing document), as certified by the Secretary of State (or comparable office) of such entity’s jurisdiction of formation or incorporation, as of a date reasonably proximate to the Subsequent Closing Date.

(h) Each Borrower shall have executed and delivered, or caused to be delivered, to Agent a certificate, executed by the Secretary of such Borrower and dated the Subsequent Closing Date, as to (i) the resolutions consistent with Section 7.2 as adopted by such Borrower’s board of directors (or other governing body) in a form reasonably acceptable to the Agent, (ii) such Borrower’s articles or certificate of incorporation (or other applicable governing document), each as in effect at the Subsequent Closing, (iii) such Borrower’s bylaws (or other applicable governing document), each as in effect at the Subsequent Closing, and (iv) no action having been taken by such Borrower or its stockholders, directors or officers in contemplation of any amendments to items (i), (ii), or (iii) listed in this Section 5.2(h), as certified, in the form attached hereto as Exhibit H.

(i) The Common Stock (i) shall be designated for quotation or listed on the Principal Market and (ii) shall not have been suspended, as of the Subsequent Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Subsequent Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

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(j) The Principal Borrower shall have delivered to the Agent a copy of the irrevocable transfer agent instructions in substantially the form of the Irrevocable Transfer Agent Instructions (but with respect to the Notes to be issued at the Subsequent Closing), which instructions shall have been delivered to and acknowledged in writing by the Principal Borrower’s transfer agent.

(k) The Principal Borrower shall have reserved such number of authorized and unissued Common Stock as required pursuant to Section 8.31 solely for the purpose of effecting the conversion of the Notes.

(l) Each of the Borrowers shall have obtained all governmental, regulatory and third party consents and approvals, if any, necessary for the sale of the Notes at the Subsequent Closing.

(m) If the Subsequent Closing Date occurs more than six (6) months following the First Restated Closing Date, each of the Borrowers shall have obtained and delivered to the Agent searches of UCC filings in the jurisdictions of formation or incorporation of each of the Borrowers, the jurisdiction of the chief executive offices of each of the Borrowers and each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Agent’s and Holders’ security interest in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens.

(n) Each of the Borrowers shall have authorized the filing of UCC financing statements for each appropriate jurisdiction as is necessary, in the Agent’s sole discretion, to perfect the Agent’s and Holders’ security interest in the Collateral.

(o) The Agent shall have received a certificate from the chief financial officer of the Principal Borrower in form and substance satisfactory to the Agent, supporting the conclusions that, after giving effect to the transactions contemplated by the Transaction Documents, the Borrowers and each of their Subsidiaries are not Insolvent.

(p) The representations and warranties of each Borrower shall be true and correct as of the date when made and as of the Subsequent Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and each Borrower shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by each Borrower at or prior to the Subsequent Closing Date. The Agent shall have received certificates, executed by the chief executive officer of each Borrower, dated the Subsequent Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Agent, in the form attached hereto as Exhibit I.

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(q) No Event of Default (or event or circumstance that, with the passage of time, the giving of notice, or both, would become an Event of Default) shall have occurred and be continuing or would result from the issuance of the Notes at the Subsequent Closing; and there shall have been no event or occurrence or series of events or occurrences that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect. The Agent shall have received certificates, executed by the chief executive officer of each Borrower, dated the Subsequent Closing Date, to the foregoing effect.

(r) The Borrowers shall be in pro forma compliance with Section 8.1(a) and Section 8.1(b), after giving effect to the issuance of the Notes. The Agent shall have received a certificate, executed by the chief executive officer of each Borrower, dated the Subsequent Closing Date, to the foregoing effect.

(s) Since the First Restated Closing, there shall have been no change which has had or could reasonably be expected to have a Material Adverse Effect, as determined in the Agent’s sole discretion, or any disruption or adverse change in the financial, banking and/or capital markets that, in the sole judgment of the Agent, could impair the syndication and/or the market value for the Notes.

(t) Each of the Borrowers shall have executed and/or delivered to the Agent such other documents relating to the transactions contemplated by this Agreement as the Agent or its counsel may reasonably request.

(u) The applicable Lenders so purchasing such Notes shall have agreed in writing, in their sole and absolute discretion, to so purchase such Notes, it being agreed to and understood that neither the Agent nor any Lender shall be obligated to so purchase any additional Notes unless such Person has so agreed in writing and that the provisions of Section 3.2 shall not be deemed a commitment of the Agent or any Lender to lend funds to any of the Borrowers.

ARTICLE 6

LENDER’S REPRESENTATIONS AND WARRANTIES

Each Lender represents and warrants (severally and not jointly) with respect to only itself that:

Section 6.1 No Public Sale or Distribution. Such Lender is acquiring the Notes and any Conversion Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in a manner that would violate the 1933 Act, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, such Lender does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of any of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Lender does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute the Notes or any Conversion Shares.

Section 6.2 Investor Status. Such Lender is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

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Section 6.3 No Governmental Review. Such Lender understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

Section 6.4 Transfer or Resale. Such Lender understands that, except as provided in the Registration Rights Agreement, the Notes and any Conversion Shares issued pursuant thereto have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred except pursuant to an effective registration statement or an exemption from registration; provided, however, that the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed by the Principal Borrower to be a transfer, sale or assignment of the Securities hereunder, and no Lender effecting such a pledge of Securities shall be required to provide the Borrowers with any notice thereof or otherwise make any delivery to the Borrowers pursuant to this Agreement or any other Transaction Document, including this Section 6.4.

Section 6.5 Legends. Such Lender understands that the certificates or other instruments representing the Notes and the certificates representing Conversion Shares, except as set forth below, shall bear any legend as required by the “blue sky” laws of any state (each, a “Blue Sky Legend”) and a restrictive legend in substantially the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES, SUBJECT TO COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS.

The legend set forth above and every Blue Sky Legend shall be removed and the Borrowers or the Principal Borrower, as applicable, shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, and the Conversion Shares issued upon any conversion of any Note shall be issued without any restrictive legend, if (i) such Securities are

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registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Borrowers or the Principal Borrower, as applicable, with an opinion of counsel, in a generally acceptable form, to the Principal Borrower’s transfer agent, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act, (iii) the Securities have been or are being sold, assigned or transferred pursuant to Rule 144 under the 1933 Act, or such holder provides the Borrowers or the Principal Borrower, as applicable, with reasonable assurance that the Securities can be sold, assigned or transferred without restriction or condition pursuant to Rule 144 under the 1933 Act; (iv) such holder certifies, on or after the date that is one (1) year after the issuance date of the applicable Note, that such holder is not an “affiliate” (as defined in Rule 144) of the Borrower or Principal Borrower, as applicable. The Borrowers shall be responsible for the fees of its transfer agent and all of The Depository Trust Company (“DTC”) fees associated with the issuance of the Securities to the holders and any legend removal in accordance herewith. At such time as a legend is no longer required for certain Conversion Shares, the Borrower or Principal Borrower, as applicable, will no later than three (3) Trading Days following the delivery by a holder to the Borrower or Principal Borrower, as applicable, or its transfer agent (with notice to the Borrower or Principal Borrower, as applicable) of a legended certificate representing such Conversion Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer), deliver or cause to be delivered to the holder, a certificate representing such Conversion Shares that is free from all restrictive and other legends. Certificates for Conversion Shares subject to legend removal hereunder may be transmitted by the Borrower’s or Principal Borrower’s, as applicable, transfer agent to the holder by crediting the account of the holder’s prime broker with DTC. Each Borrower acknowledges that a material breach by it of its obligations hereunder will cause irreparable harm to the holders of the Securities. Accordingly, each Borrower acknowledges that the remedy at law for such material breach of its obligations under this Section 6.5 will be inadequate and agrees that, in the event of a breach or threatened breach of this Section 6.5, such holder shall be entitled, in addition to all other available remedies, to an injunctive order and/or injunction restraining any such material breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

Section 6.6 Residency. Each Lender is a resident of that jurisdiction specified below its address on the Schedule of Lenders attached hereto.

ARTICLE 7

BORROWERS’ REPRESENTATIONS AND WARRANTIES

As an inducement to the Agent and the Lenders to enter into this Agreement and to consummate the transactions contemplated hereby, each of the Borrowers jointly and severally represents and warrants to each of the Agent and the Lenders that each and all of the following representations and warranties (as supplemented by the disclosure schedules delivered to the Agent and the Lenders contemporaneously with the execution and delivery of this Agreement (the “Schedules”)) are true and correct as of the applicable Closing Date. The Schedules shall be arranged by the Borrowers in paragraphs corresponding to the sections and subsections contained in this ARTICLE 7.

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Section 7.1 Organization and Qualification. The Principal Borrower and its subsidiaries (which, for purposes of this Agreement, means any entity in which the Principal Borrower, directly or indirectly, owns at least 50% of the Capital Stock or other Equity Interests) (“Subsidiaries”) are entities duly incorporated or organized and validly existing in good standing under the laws of the jurisdiction in which they are formed or incorporated, and have the requisite power and authorization to own their properties, carry on their business as now being conducted, enter into the Transaction Documents to which they are party and carry out the transactions contemplated thereby. Each of the Principal Borrower and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. Except as set forth on Schedule 7.1, (i) the Principal Borrower has no Subsidiaries and (ii) all Capital Stock or other equity or similar interests of the Subsidiaries is directly or indirectly owned by the Principal Borrower. Unigene UK conducts no business, has no material assets and has no material liabilities.

Section 7.2 Authorization; Enforcement; Validity. Each of the Borrowers and each of their Subsidiaries has (and had at the time of execution and delivery thereof with respect to Transaction Documents executed and delivered prior to the First Restated Closing Date) the requisite power and authority to enter into and perform its obligations under this Agreement, the Notes, the Registration Rights Agreement, the Security Agreement, the Collateral Assignment, the other Security Documents, the Irrevocable Transfer Agent Instructions, the Fee Letter, the Mortgages, the Intellectual Property Security Agreements, the Affiliate Subordination Agreement, the Confidentiality Agreement and each of the other agreements, documents and certificates entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Borrowers and each of their Subsidiaries party thereto have been duly authorized by each such Person’s respective board of directors (or other governing body) and the consummation by the Borrowers and each of their Subsidiaries of the transactions contemplated hereby and thereby, including the issuance of the Notes by the Borrowers, the issuance of the Conversion Shares by the Principal Borrower upon conversion of the Notes (subject, solely for purposes of the issuance of in excess of 35,268,905 Conversion Shares, to obtaining the Stockholder Approval and making the Filing) and the election of Richard Levy to the Board and his appointment as Chairman of the Board, have been duly authorized by such Person’s board of directors (or other governing body) and the Board, respectively, and (other than the filing with the SEC of a Form D and one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement and other than filings with “Blue Sky” authorities as required thereby) no further filing, consent, approval or authorization is required by any Borrower or any Subsidiary of a Borrower, its board of directors (or other governing body) or its stockholders (except, solely for purposes of the issuance of in excess of 35,268,905 Conversion Shares, for the obtaining of Stockholder Approval and the Filing). This Agreement and the other Transaction Documents have been duly executed and delivered by each of the Borrowers and each Subsidiary of a Borrower party thereto, and constitute the legal, valid and binding obligations of each of the Borrowers and each Subsidiary of a Borrower party thereto, enforceable against each of such Borrowers and such Subsidiaries in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

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Section 7.3 Issuance of Securities. The Notes are duly authorized and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all taxes, liens and charges with respect to the issue thereof. As of the First Closing and the Second Closing, as applicable, the Shares were duly authorized, validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject, in the case of the issuance of in excess of 35,268,905 Conversion Shares, to the Stockholder Approval and the Filing, upon the issuance of the Conversion Shares pursuant to the terms of the Notes, the Conversion Shares will be duly authorized, validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Assuming the truth and accuracy of the representations and warranties of each Lender set forth in ARTICLE 6 of this Agreement, the issuance by the Principal Borrower to the Lenders of the Notes is, and any issuance of the Conversion Shares upon conversion of the Notes will be, exempt from registration under the 1933 Act.

Section 7.4 No Conflicts. Subject, in the case of the issuance of in excess of 35,268,905 Conversion Shares, to the Stockholder Approval and the Filing, the execution, delivery and performance of the Transaction Documents by the Borrowers and their Subsidiaries party thereto and the consummation by the Borrowers and their Subsidiaries of the transactions contemplated hereby and thereby (including the issuance of the Notes and the Lender Shares) will not (i) result in a violation of any Borrower’s or Subsidiary’s certificate or articles of incorporation or bylaws or other governing documents, or the terms of any capital stock or other equity interests of the Principal Borrower or any of its Subsidiaries; (ii) conflict with, or constitute a breach or default (or an event which, with notice or lapse of time or both, would become a breach or default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Principal Borrower, any of the other Borrowers or any of their Subsidiaries is a party; (iii) result in any “price reset” or other material change in or other modification to the terms of any Indebtedness, Equity Interests or other securities of the Principal Borrower or any of its Subsidiaries; or (iv) result in a violation of any law, rule, regulation, order, judgment or decree (including (A) any Environmental Laws, (B) federal and state securities laws or (C) the rules and regulations of the Principal Market applicable to the Principal Borrower or its Subsidiaries or by which any property or asset of the Principal Borrower or its Subsidiaries is bound or affected).

Section 7.5 Consents. No Borrower and no Subsidiary of a Borrower is required to obtain any consent, authorization, approval, order, license, franchise, permit, certificate or accreditation of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or authority or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof (other than (v) with respect to the issuance of in excess of 35,268,905 Conversion Shares, the Stockholder Approval and the Filing, (w) the filing with the SEC of (i) a Form D and one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement and (ii) any filings on

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Form 8-K required pursuant to the 1934 Act, (x) filings with “Blue Sky” authorities as required thereby, (y) filings required by the Security Documents and (z) as set forth on Schedule 7.5). All consents, authorizations, approvals, orders, licenses, franchises, permits, certificates or accreditations of, filings and registrations which the Borrowers and their Subsidiaries are required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the First Restated Closing Date, and each Borrower is unaware of any facts or circumstances which might prevent any of the Borrowers or their Subsidiaries from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence. Except as set forth in Schedule 7.5, the Principal Borrower is not in violation of any requirements for trading on the Principal Market and has no knowledge of the occurrence of any facts which would reasonably lead to the suspension of the Common Stock by the Principal Market in the foreseeable future.

Section 7.6 Subsidiary Rights. Except as set forth on Schedule 7.6, each Borrower has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital and other equity securities of its Subsidiaries as owned by the Principal Borrower or such Subsidiary.

Section 7.7 Equity Capitalization. As of the First Restated Closing Date, the authorized capital stock of the Principal Borrower consists of 135,000,000 shares of Common Stock, of which, as of the First Restated Closing Date, 92,141,951 shares (including the Shares and the Exchange Shares) are issued and outstanding. All of such outstanding shares of Capital Stock or other Equity Interests of the Principal Borrower and its Subsidiaries have been duly authorized, validly issued and are fully paid and nonassessable. Except as set forth on Schedule 7.7: (i) none of any Borrower’s or Subsidiary’s Capital Stock or other Equity Interest in such Borrower or Subsidiary is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by such Borrower or Subsidiary; (ii) other than the Notes, there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any Capital Stock or other Equity Interest in any of the Borrowers or any of their Subsidiaries, or contracts, commitments, understandings or arrangements by which any of the Borrowers or any of their Subsidiaries is or may become bound to issue additional Capital Stock or other Equity Interest in such Borrower or Subsidiary or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any Capital Stock or other Equity Interest in any of the Borrowers or any of their Subsidiaries; (iii) other than the Notes, there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of any of the Borrowers or any of their Subsidiaries or by which any of the Borrowers or any of their Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with any of the Borrowers or any of their Subsidiaries, other than financing statements perfecting Liens granted under the Security Documents in favor of Agent for the benefit of itself and the Holders and Lenders; (v) there are no agreements or arrangements under which any of the Borrowers or any of their Subsidiaries is obligated to register the sale of any of its securities under the 1933 Act (except the Registration Rights Agreement); (vi) other than the Notes, there are no outstanding securities or instruments of any of the Borrowers or any of their Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or

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arrangements by which any of the Borrowers or any of their Subsidiaries is or may become bound to redeem a security of any of the Borrowers or any of their Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) none of the Borrowers or any of their Subsidiaries has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix) none of the Borrowers or any of their Subsidiaries has any liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Borrowers’ and their Subsidiaries’ respective businesses. Prior to the applicable Closing, the Borrowers have provided to the Lenders true, correct and complete copies of (i) each Borrower’s and Subsidiary’s certificate or articles of incorporation (or other applicable governing document), as amended and as in effect on the applicable Closing Date, and (ii) each Borrower’s and Subsidiary’s bylaws, as amended and as in effect on the applicable Closing Date (or other applicable governing document). Schedule 7.7 identifies all outstanding securities (other than the Notes) convertible into, or exercisable or exchangeable for, shares of Capital Stock or other Equity Interests in any of the Borrowers or any of their Subsidiaries and the material rights of the holders thereof in respect thereto.

Section 7.8 Indebtedness and Other Contracts. Except as disclosed on Schedule 7.8, neither the Principal Borrower nor any of its Subsidiaries (i) has any outstanding Indebtedness other than under this Agreement and the Notes, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, or (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness or any contract, agreement or instrument entered into in connection therewith that could reasonably be expected to result in a Material Adverse Effect.

Section 7.9 Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between any of the Borrowers or any of their Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Principal Borrower in its 1934 Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.

Section 7.10 Ranking of Notes. No Indebtedness of any of the Borrowers or any of their Subsidiaries will rank senior to or pari passu with the Notes in right of payment or collectability, whether with respect to payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise (other than Permitted Indebtedness that is not Affiliate Indebtedness, which Permitted Indebtedness may be pari passu with the Notes in right of payment).

Section 7.11 Title. Except as described on Schedule 7.11, each of the Borrowers and Subsidiaries has (i) good and marketable title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), (iii) valid licensed rights in (in the case of licensed interests in Intellectual Property Rights), and (iv) good and marketable title to (in the case of all other personal property) all of its real property and other properties and assets owned by it which are material to the business of such Borrower or Subsidiary, in each case free and clear of all liens, encumbrances and defects, other than Permitted Liens. Any real property and facilities held under lease by any of the Borrowers or any of their Subsidiaries are held by it under valid, subsisting and enforceable leases.

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Section 7.12 Intellectual Property Rights. Each of the Borrowers and Subsidiaries owns or possesses adequate and valid rights to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (“Intellectual Property Rights”) that are necessary to conduct its respective businesses as now conducted, and such Intellectual Property Rights are free and clear of all liens, encumbrances and defects other than Permitted Liens. No Borrower’s or Subsidiary’s Intellectual Property Rights have expired or terminated, or are expected to expire or terminate within five (5) years from the First Restated Closing Date. Except as described on Schedule 7.12, (i) none of the Borrowers or any of their Subsidiaries has any knowledge of any infringement, misappropriation, dilution or other violation by any of the Borrowers or any of their Subsidiaries of Intellectual Property Rights of other Persons; (ii) none of the Borrowers or any of their Subsidiaries has any knowledge of any infringement, misappropriation, dilution or other violation by any other Persons of the Intellectual Property Rights of the Borrowers or any of their Subsidiaries; (iii) there is no claim, action or proceeding pending or, to the knowledge of each of the Borrowers, threatened in writing, against any of the Borrowers or any of their Subsidiaries regarding its Intellectual Property Rights or the Intellectual Property Rights of other Persons; and (iv) none of the Borrowers or the Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. Each of the Borrowers and the Subsidiaries has taken and is taking commercially reasonable security measures, consistent with industry standards, to maintain and protect the secrecy, confidentiality and value of its Intellectual Property Rights.

Section 7.13 Creation, Perfection, and Priority of Liens. The Security Documents are effective to create in favor of the Agent, for the benefit of the Holders and Lenders, a legal, valid, binding, and (upon the filing of the appropriate UCC financing statements and the recording of the Mortgages) enforceable perfected first priority security interest and Lien in the Collateral described therein as security for the obligations under the Notes to the extent that a legal, valid, binding, and enforceable security interest and Lien in such Collateral may be created under applicable law including the uniform commercial code as in effect in any applicable jurisdiction (“UCC”) and any other applicable governmental agencies.

Section 7.14 Absence of Certain Changes. Except as disclosed in Schedule 7.14, since September 30, 2009 (the “Diligence Date”), there has been no material adverse change in the business, assets, properties, operations, condition (financial or otherwise), results of operations or prospects of the Principal Borrower or any of its Subsidiaries. Except as disclosed in Schedule 7.14, since the Diligence Date, the Principal Borrower and each of its Subsidiaries has not (i) declared or paid any dividends, (ii) sold any assets (other than the sale of Inventory in the ordinary course of business) or (iii) had capital expenditures, individually or in the aggregate, in excess of $500,000. None of the Borrowers or any of their Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor do the Borrowers or any of their Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. None of the Borrowers or any of their Subsidiaries intends to incur debts

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beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). None of the Borrowers or any of their Subsidiaries has any knowledge of any facts or circumstances which leads it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within three (3) years from the First Restated Closing Date. No Borrower or Subsidiary is, as of the applicable Closing Date, and after giving effect to the transactions contemplated hereby to occur at the applicable Closing, will be Insolvent.

Section 7.15 Absence of Litigation. Except as set forth in Schedule 7.15, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency (including the SEC, self-regulatory organization or other governmental body) (in each case, a “Proceeding”) pending or, to the knowledge of any Borrower, threatened in writing against or affecting any Borrower, the Common Stock or any of the Principal Borrower’s Subsidiaries or any of Principal Borrower’s or its Subsidiaries’ officers or directors which (i) could reasonably be expected to result in a Material Adverse Effect, (ii) if adversely determined, could reasonably be expected to result in a Material Adverse Effect, or (iii) questions the validity of this Agreement or any of the other Transaction Documents or any of the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto.

Section 7.16 No Undisclosed Events, Liabilities, Developments or Circumstances. Except for the transactions contemplated by the Transaction Documents, no event, liability, development or circumstance has occurred or exists, or is contemplated to occur or may occur with respect to any of the Borrowers or any of their Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Principal Borrower under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Principal Borrower of its Common Stock and which has not been publicly announced.

Section 7.17 No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by any of the Borrowers or any of their Subsidiaries to arise, between any of the Borrowers or any of their Subsidiaries and the accountants and lawyers formerly or presently employed by the Borrowers and their Subsidiaries which could affect the ability of the Borrowers to perform any of their obligations under any of the Transaction Documents.

Section 7.18 No General Solicitation; Placement Agent’s Fees. None of the Borrowers, nor any of their Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Lender Shares. The Principal Borrower shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by the Lenders or their investment advisors) relating to or arising out of the transactions contemplated hereby. The Principal Borrower shall pay, and hold each Lender harmless against, any liability, loss or expense (including attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. Except as described on Schedule 7.18, no Borrower has engaged any placement agent or other agent in connection with the sale of the Lender Shares.

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Section 7.19 No Integrated Offering. None of the Borrowers, any of their Affiliates, or any Person acting on 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 any of the Securities under the 1933 Act. None of the Borrowers, their Affiliates or any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act (except as set forth in the Registration Rights Agreement) or cause the offering of the Securities to be integrated with other offerings. None of the Borrowers has a registration statement pending before the SEC or currently under the SEC’s review.

Section 7.20 Tax Status. Each of the Borrowers and its Subsidiaries (i) has made or filed all foreign, federal and state income and all other material tax returns, reports and declarations required by any jurisdiction to which it is subject, except prior to the First Closing Date where any failure to do so did not result in any material penalties to the Borrowers or its Subsidiaries, (ii) has paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith, and (iii) has set aside on its books adequate reserves in accordance with GAAP for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be delinquent by the taxing authority of any jurisdiction (other than those being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and subject to adequate reserves taken by the Borrowers and their Subsidiaries as shall be required in conformity with GAAP), and the officers of each of the Borrowers and its Subsidiaries know of no basis for any such claim.

Section 7.21 Transfer Taxes. On each applicable Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to each Lender hereunder will be, or will have been, fully paid or provided for by the Borrowers, and all laws imposing such taxes will be or will have been complied with.

Section 7.22 Conduct of Business; Regulatory Permits. None of the Borrowers or any of their Subsidiaries is in violation of any term of or in default under its certificate or articles of incorporation or bylaws or other governing documents. None of the Borrowers or any of their Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to such Borrowers or Subsidiaries. Without limiting the generality of the foregoing, except as set forth on Schedule 7.22, the Principal Borrower is not in material violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of the occurrence of any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. Except as set forth on Schedule 7.22, during the one (1) year period prior to the First Restated Closing Date, (i) the Common Stock has been designated for quotation or listed on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Principal Borrower has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. Except as set forth on Schedule 7.22, each of the Borrowers and their Subsidiaries possesses all material consents, authorizations, approvals, orders, licenses,

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franchises, permits, certificates, accreditations and permits issued by the FDA and all other appropriate regulatory authorities necessary to conduct their respective businesses, and none of the Borrowers or any of their Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such consents, authorizations, approvals, orders, licenses, franchises, permits, certificates, accreditations or permits.

Section 7.23 Foreign Corrupt Practices. None of the Borrowers or any of their Subsidiaries, nor any director, officer, agent, employee or other Person acting on behalf of any of the Borrowers or any of their Subsidiaries has, in the course of its actions for, or on behalf of, any of the Borrowers or any of their Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

Section 7.24 Sarbanes-Oxley Act. The Principal Borrower is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”), that are applicable to the Principal Borrower as of the date hereof and as of the applicable Closing Date, and any and all applicable rules and regulations promulgated by the SEC thereunder that are applicable to the Principal Borrower as of the date hereof and as of the applicable Closing Date, except where the failure to be in compliance would not have a Material Adverse Effect. Since December 31, 2006, no attorney representing the Principal Borrower, whether or not employed by the Principal Borrower, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Principal Borrower or any of the Borrowers or any of their respective officers, directors, employees or agents to their respective boards of directors or any committee thereof pursuant to Section 307 of Sarbanes-Oxley.

Section 7.25 Environmental Laws. Except as set forth on Schedule 7.25, each of the Borrowers and its Subsidiaries (a) (i) is in compliance with any and all Environmental Laws, (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its respective businesses, (iii) is in compliance with all terms and conditions of any such permit, license or approval, and (iv) has no outstanding Liability under any Environmental Laws and is not aware of any facts that could reasonably result in Liability under any Environmental Laws, in each of the foregoing clauses of this clause (a), except to the extent a Material Adverse Effect could not reasonably be expected to occur, and (b) has provided Agent and Lenders with copies of all environmental reports, assessments and other documents in any way related to any actual or potential Liability under any Environmental Laws.

Section 7.26 Margin Stock. No Borrower nor any of its respective Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds from the issuance of any Note will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock, or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

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Section 7.27 ERISA. Except as set forth on Schedule 7.27, none of the Borrowers nor any ERISA Affiliate (a) maintains or has maintained any Pension Plan, (b) contributes or has contributed to any Multiemployer Plan or (c) provides or has provided post-retirement medical or insurance benefits with respect to employees or former employees (other than benefits required under Section 601 of ERISA, Section 4980B of the Code or applicable state law). Except as set forth on Schedule 7.27, none of the Borrowers nor any ERISA Affiliate has received any notice or has any knowledge to the effect that it is not in full compliance with any of the requirements of ERISA, the Code or applicable state law with respect to any Employee Benefit Plan. No ERISA Event exists. Each Employee Benefit Plan which is intended to qualify under the Code has received a favorable determination letter (or opinion letter in the case of a prototype Employee Benefit Plan) to the effect that such Employee Benefit Plan is so qualified and to Borrowers’ knowledge, there exists no reasonable basis for the revocation of such determination or opinion letter. None of the Borrowers nor any ERISA Affiliate has (i) any unpaid minimum required contributions under any Plan, whether or not waived, (ii) any liability under Section 4201 or 4243 of ERISA for any withdrawal, or partial withdrawal, from any Multiemployer Plan, (iii) a Pension Plan that is “at risk” within the meaning of Section 430 of the Code, (iv) received notice from any Multiemployer Plan that it is either in endangered or critical status within the meaning of Section 432 of the Code or (v) any liability or knowledge of any facts or circumstances which could result in any liability to the PBGC, the Internal Revenue Service, the Department of Labor or any participant in connection with any Employee Benefit Plan (other than routine claims for benefits under the Employee Benefit Plan).

Section 7.28 Investment Company. None of the Borrowers or any of their Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

Section 7.29 U.S. Real Property Holding Corporation. None of the Borrowers or any of their Subsidiaries is, nor has it ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Code, as amended, and the Borrowers will so certify upon the request of any Lender.

Section 7.30 Internal Accounting and Disclosure Controls. The Principal Borrower maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Principal Borrower maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Principal Borrower in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in

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the rules and forms of the SEC, including controls and procedures designed to ensure that information required to be disclosed by the Principal Borrower in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Principal Borrower’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. During the twelve months prior to the First Restated Closing Date, none of the Borrowers or any of their Subsidiaries has received any notice or correspondence from any accountant relating to any potential material weakness in any part of the system of internal accounting controls of any of the Borrowers or any of their Subsidiaries. The Borrowers and their Subsidiaries maintain internal control over financial reporting (as such term is defined in Rule 13a-15 under the 1934 Act), and such internal control is effective, does not have any material weaknesses and does not have any significant deficiencies that are reasonably likely to adversely affect the Principal Borrower’s ability to accurately and completely record, process, summarize and report financial information. Since December 31, 2006, no Borrower, any Subsidiary thereof nor any of their respective directors or officers has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of any Borrower or any Subsidiary thereof or its internal accounting controls, including any complaint, allegation, assertion or claim that any Borrower or any Subsidiary thereof has engaged in any improper accounting or auditing practices.

Section 7.31 SEC Documents; Financial Statements. The Principal Borrower’s Common Stock is registered under Section 12(g) of the 1934 Act. Except for the 10-Q report in respect of the Fiscal Quarter ended June 30, 2005, the Principal Borrower has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the applicable Closing Date and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except as described on Schedule 7.31, as of their respective dates, the financial statements of the Principal Borrower included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Principal Borrower as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Since the filing of each of the SEC Documents, no event has occurred that would require an amendment or supplement to any such SEC Document and as to which such an amendment or supplement has not been filed and made publicly available on the SEC’s EDGAR system no less

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than five Business Days prior to the date this representation is made. The Principal Borrower has not received any written comments from the SEC staff that have not been resolved to the satisfaction of the SEC staff. Except as required pursuant to Section 8.26, the Principal Borrower is not required to file any agreement, note, lease, mortgage, deed or other instrument entered into prior to the date this representation is made and in effect on the date this representation is made and to which any Borrower is a party or by which the Principal Borrower is bound that has not been previously filed as an exhibit (including by way of incorporation by reference) to its reports filed or made with the SEC under the 1934 Act. There is no material transaction, arrangement or other relationship between the Principal Borrower and an unconsolidated or other off-balance-sheet entity that is required to be disclosed by the Principal Borrower in its reports pursuant to the 1934 Act that has not been so disclosed in the SEC Documents at least five Business Days prior to the date of this Agreement. Since December 31, 2006, there have been no internal or SEC inquiries or investigations (formal or informal) regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of any executive officer of the Principal Borrower or the Board or any committee thereof.

Section 7.32 Manipulation of Price; Securities.

(a) Neither any of the Borrowers or any of their Subsidiaries, nor any officer, director or Affiliate of any of the Borrowers or any of their Subsidiaries, and to each such Person’s knowledge, no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Principal Borrower or any other Borrower or Subsidiary to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (except for customary placement fees payable in connection with this transaction), or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Principal Borrower or such Borrower or Subsidiary (except for customary placement fees payable in connection with this transaction).

(b) Since the Diligence Date, neither any officer, director or Affiliate of any of the Borrowers or any of their Subsidiaries, nor any Affiliate of any of the foregoing, or anyone acting on their behalf has sold, bid, purchased or traded in the Common Stock of the Principal Borrower.

Section 7.33 Transactions With Affiliates. Except (i) as set forth on Schedule 7.33 and (ii) for transactions that have been entered into on terms no less favorable to the Borrowers and their Subsidiaries than those that might be obtained at the time from a Person who is not an officer, director or employee, none of the officers, directors or employees of any of the Borrowers or any of their Subsidiaries is presently a party to any transaction with any of the Borrowers or any of their Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Borrowers, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.

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Section 7.34 Acknowledgment Regarding Lender’s Purchase of Securities. Each of the Borrowers acknowledges and agrees that each Lender is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Lender is, to the knowledge of the Borrowers, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)). Each of the Borrowers further acknowledges that no Lender is acting as a financial advisor or fiduciary of any Borrower or any Subsidiary (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Lender or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Lender’s purchase of the Securities. Each of the Borrowers further represents to each Lender that each Borrower’s decisions to enter into the Transaction Documents to which it is a party have been based solely on the independent evaluation by such Borrowers and their respective representatives.

Section 7.35 Acknowledgment Regarding Lender’s Trading Activity. Except as described on Schedule 7.35 or in the Registration Rights Agreement, it is understood and acknowledged by the Principal Borrower that none of the Lenders has been asked by the Principal Borrower to agree, nor has any Lender agreed, to desist from purchasing or selling, long and/or short, securities of the Principal Borrower, or “derivative” securities based on securities issued by the Principal Borrower or to hold the Lender Shares for any specified term. The Principal Borrower acknowledges that such aforementioned activities do not constitute a breach of any of the Transaction Documents.

Section 7.36 Registration Statement. To the knowledge of the Borrowers, no facts or circumstances exist that would inhibit or delay the preparation and filing of the Registration Statement with respect to the Registrable Securities (including the Shares, the Exchange Shares and the Conversion Shares) in accordance with the Registration Rights Agreement.

Section 7.37 Insurance. Each of the Borrowers and Subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Borrowers and Subsidiaries are engaged. None of the Borrowers or any of their Subsidiaries has been refused any insurance coverage sought or applied for and none of the Borrowers or any of their Subsidiaries believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

Section 7.38 Application of Takeover Protections; Rights Agreement. Each of the Borrowers and its respective board of directors (or other governing body) has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under each Borrower’s certificate or articles of incorporation (or other governing documents) or the laws of the jurisdiction of its incorporation or formation which is or could become applicable to any Lender as a result of the transactions contemplated by this Agreement, including each Borrower’s issuance of the Notes, the Principal Borrower’s issuance of the Conversion Shares and any Lender’s ownership of the Securities. The Principal Borrower

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has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Principal Borrower, except for the Principal Borrower’s rights agreement, dated as of December 20, 2002, with Registrar and Transfer Company.

Section 7.39 Employee Relations. None of the Borrowers or any of their Subsidiaries is a party to any collective bargaining agreement or employs any member of a union in such person’s capacity as a union member or to perform union labor work. Each of the Borrowers believes that its relations with its employees are good. As of the First Restated Closing Date, no executive officer of any of the Borrowers or any of their Subsidiaries has notified such Borrower or Subsidiary that such officer intends to leave such Borrower or Subsidiary or otherwise terminate such officer’s employment with such Borrower or Subsidiary. As of the First Restated Closing Date, no executive officer of any of the Borrowers or any of their Subsidiaries, to the knowledge of the Borrowers, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant. Each of the Borrowers and Subsidiaries is in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

Section 7.40 Disclosure. Notwithstanding any other provision of this Agreement, all disclosure provided to the Lenders regarding each of the Borrowers and their Subsidiaries, its business and properties, and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of each Borrower shall be information available to the public, is true and correct in all material respects and does 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, taken as a whole and in the light of the circumstances under which they were made, not materially misleading. Each press release issued by the Principal Borrower during the twelve (12) months preceding each Closing did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. During the twelve (12) months immediately preceding each Closing, no event or circumstance has occurred or information exists with respect to the Borrowers or any of their Subsidiaries or any of their business, properties, prospects, operations or condition (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure or announcement by the Principal Borrower but which has not been so publicly announced or disclosed.

Section 7.41 Patriot Act. To the extent applicable, each of the Borrowers and their Subsidiaries is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department and any other enabling legislation or executive order relating thereto, and (ii) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

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Section 7.42 Compliance with Statutes, etc. Each of the Borrowers and their Subsidiaries is in compliance in all material respects with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, the FDA and all other Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including compliance with (i) all FDA approvals necessary for manufacturing or marketing the Products (“FDA Approvals”), (ii) all FDA Regulations and HHS Regulations, and (iii) all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws).

Section 7.43 Material Contracts. Schedule 7.43 contains a true, correct and complete list of all the Material Contracts of the Borrowers and their Subsidiaries, and all such Material Contracts are in full force and effect and no defaults currently exist thereunder.

Section 7.44 FDA and Product-Related Matters.

(a) The FDA has not commenced or threatened in writing to commence any action to withdraw its approval of any Product or commenced or threatened in writing to commence any action to withdraw its approval of any facility of the Borrowers or their Subsidiaries.

(b) The human clinical trials conducted by or on behalf of the Borrowers or their Subsidiaries, or in which the Borrowers or their Subsidiaries have participated, or the results thereof, were and, if still pending, are being conducted in accordance with applicable regulatory requirements. To the Borrowers’ knowledge, no other studies or tests have results that discredit the results of such human clinical trials. Neither any Borrower nor any of their respective Subsidiaries have received any notice or correspondence from the FDA or any other Governmental Authority requiring the termination or suspension of any human clinical trials conducted by, or on behalf of, the Borrowers or their Subsidiaries or in which the Borrowers or their Subsidiaries have participated, or any modification of any clinical trials conducted by, or on behalf of, the Borrowers or their Subsidiaries or in which the Borrowers or their Subsidiaries have participated.

(c) To the Borrowers’ knowledge, there exist no pending abbreviated new drug applications or other applications filed by third parties with respect to any of the Products for which there is no generic equivalent product on the market, whereby any such third party could reasonably be expected to obtain approval to make, have made, use, sell, offer for sale, import, distribute, commercialize or otherwise dispose of any of the Products in the Territory on or prior to the First Restated Closing Date.

(d) To the Borrowers’ knowledge, all inventory of any Product in possession or control of the Borrowers or any of their Subsidiaries (i) is not adulterated or misbranded (within the meaning of the Food and Drug Act or the rules and regulations of the FDA promulgated thereunder); and (ii) is manufactured, labeled and packaged in accordance with cGMPs and with all other applicable laws. The Borrowers have taken reasonable precautions to ensure that all inventory of any Product in possession or control of the Borrowers or any of their Subsidiaries (A) is not adulterated or misbranded (within the meaning of the Food and Drug Act or the rules and regulations of the FDA promulgated thereunder) and (B) is manufactured, labeled and packaged in accordance with cGMPs and with all other applicable laws.

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(e) A complete and correct list of all FDA Approvals and all patents and patent applications owned or licensed by the Borrowers or any of their Subsidiaries that cover the manufacture, marketing, use, sale, offer for sale, importation, distribution, commercialization and other disposition of the Products anywhere in the Territory is described in Schedule 7.44.

Section 7.45 Absence of Securities-Related Litigation. To the knowledge of the Principal Borrower, no director or officer of the Principal Borrower or any of the other Borrowers has been involved in securities-related litigation since January 1, 2004.

ARTICLE 8

COVENANTS

Section 8.1 Financial Covenants. So long as the aggregate principal amount of all Obligations then outstanding is no less than $5,000,000, the Borrowers shall, and shall cause their Subsidiaries to, comply with the following financial covenants:

(a) Cash Balance. Commencing with the month ending March 31, 2010, the Borrowers shall at all times maintain cash in their Blocked Accounts in an aggregate amount not less than $2,500,000.

(b) Cash Flow. Commencing with the Fiscal Quarter ending March 31, 2010, the Borrowers shall not permit Cash Flow of the Principal Borrower and its Subsidiaries on a consolidated basis (i) for any Fiscal Quarter ending on the last day of such Fiscal Quarter to be less than $2,000,000 or (ii) for any period consisting of three consecutive Fiscal Quarters ending on the last day of such Fiscal Quarters to be less than $7,000,000 in the aggregate.

Section 8.2 Deliveries. The Borrower agrees to deliver the following to the Agent and each Holder:

(a) Monthly Financial Statements. At any time following the occurrence of an Event of Default, as soon as available upon the request of the Agent, and in any event within ten (10) days after the end of each month (including December), the consolidated balance sheets of the Borrowers and their Subsidiaries as at the end of such month and the related consolidated statements of operations, stockholders’ equity and cash flows of the Borrowers and their Subsidiaries for such month and for the period from the beginning of the then current Fiscal Year to the end of such month, all in reasonable detail, and certified by the chief financial officer of the Principal Borrower;

(b) Quarterly Financial Statements. As soon as available, and in any event within forty-five (45) days after the end of each Fiscal Quarter (including the fourth Fiscal Quarter), the consolidated balance sheets of the Borrowers and their Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of operations, stockholders’ equity and cash flows of the Borrowers and their Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, all in

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reasonable detail, and certified by the chief financial officer of the Principal Borrower (it being understood and agreed that delivery of the Principal Borrower’s Form 10-Q for such Fiscal Quarter as filed with the SEC, if certified as required above, shall satisfy such requirements);

(c) Annual Financial Statements. As soon as available, and in any event within ninety (90) days after the end of each Fiscal Year, the consolidated balance sheets of the Borrowers and their Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of operations, stockholders’ equity and cash flows of the Borrowers and their Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, in reasonable detail and certified by the chief financial officer of the Principal Borrower (it being understood and agreed that delivery of the Principal Borrower’s Form 10-K for such Fiscal Year as filed with the SEC, if certified as required above, shall satisfy such requirements);

(d) Compliance Certificate. The Principal Borrower shall send to the Agent and each Holder on the dates that the financial statements under clause (b) above are delivered, a duly completed Compliance Certificate, with appropriate insertions, dated the date of the applicable quarterly financial statements, and signed on behalf of the Principal Borrower by the chief financial officer of the Principal Borrower, containing a computation of each of the restrictions set forth in Section 8.1 hereof and to the effect that such officer has not become aware of any Event of Default or default that has occurred and is continuing or, if there is any such Event of Default or default, describing it and the steps, if any, being taken to cure it.

(e) Quarterly Compliance Checklist. The Principal Borrower shall send to the Agent and each Holder on the dates that the financial statements under clause (b) above are delivered, a duly completed compliance checklist, in form and substance satisfactory to the Agent, dated the date of the applicable quarterly financial statements, and signed on behalf of the Principal Borrower by the chief financial officer of the Principal Borrower, indicating whether or not the Borrowers are in compliance with each covenant set forth in ARTICLE 8 of the Agreement and whether each representation and warranty contained in ARTICLE 7 of the Agreement is true and correct as though made on such date (except for representations and warranties that speak as of a specific date).

Section 8.3 Notices. The Borrowers agree to deliver the following to the Agent and each Holder:

(a) Collateral Information. Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 8.2, a certificate of one of its duly authorized officers (i) either confirming that there has been no change in the information set forth in the perfection certificate executed and delivered to the Agent on the First Restated Closing Date since such date or the date of the most recent certificate delivered pursuant to this Section and/or identifying such changes, and (ii) certifying that all UCC financing statements (including fixtures filings, as applicable) and other appropriate filings, recordings and registrations have been filed of record in each governmental, municipal and other appropriate office in each jurisdiction identified pursuant to clause (i) above (or in such certificate) to the extent necessary to effect, protect and perfect the security interests under the Security Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period);

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(b) Auditor Reports. Promptly upon receipt thereof, copies of any reports submitted by the Principal Borrower’s independent public accountants in connection with each annual, interim or special audit or review of any type of the financial statements or internal control systems of the Principal Borrower or any of its Subsidiaries made by such accountants, including any comment letters submitted by such accountants to management of the Principal Borrower or any Subsidiary in connection with their services;

(c) Notice of Default. Promptly upon any officer of any Borrower obtaining knowledge (i) of any condition or event that constitutes a default or an Event of Default or that notice has been given to any Borrower with respect thereto; (ii) that any Person has given any notice to any Borrower or taken any other action with respect to any event or condition set forth in ARTICLE 10; or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its chief executive officer or chief financial officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, default, event or condition, and the action(s) the Borrowers have taken, are taking and propose to take with respect thereto;

(d) Notice of Litigation. Promptly upon any officer of any Borrower obtaining knowledge of (i) the institution of, or non-frivolous threat of, any adverse Proceeding not previously disclosed in writing by the Borrower to the Agent and the Holders, or (ii) any material development in any adverse Proceeding that, in the case of either clause (i) or (ii) if adversely determined, could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information as may be reasonably available to the Borrowers to enable the Agent and the Holders and their counsel to evaluate such matters;

(e) ERISA. (i) Promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, the action(s) the applicable Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by such Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices received by the Principal Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as any Holder shall reasonably request;

(f) Insurance Report. As soon as practicable following receipt thereof and in any event by the last day of each Fiscal Year, a report by the Principal Borrower’s insurance broker(s) in form and substance satisfactory to the Agent outlining all material insurance coverage maintained as of the date of such report by the Borrowers and their Subsidiaries and all material insurance coverage planned to be maintained by the Borrowers and their Subsidiaries in the immediately succeeding Fiscal Year;

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(g) Environmental Reports and Audits. As soon as practicable following receipt thereof, copies of all environmental audits and reports with respect to environmental matters at any facility or property used by the Borrowers and their Subsidiaries or which relate to any environmental liabilities of any Borrower or its Subsidiaries which, in any such case, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(h) Corporate Information. Thirty (30) days’ prior written notice of any change (i) in any Borrower’s or Subsidiary’s corporate name, (ii) in any Borrower’s or Subsidiary’s identity or corporate structure, (iii) in any Borrower’s or Subsidiary’s jurisdiction of organization, or (iv) in any Borrower’s or Subsidiary’s Federal Taxpayer Identification Number or state organizational identification number. The Borrowers agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral as contemplated in the Security Agreement and other Transaction Documents;

(i) Tax Returns. Within ten (10) days following request by the Agent or any Holder, copies of each federal income tax return filed by or on behalf of any Borrower and requested by such Holder;

(j) Event of Loss. Promptly (and in any event within three (3) Business Days) notice of (i) any claim with respect to any liability against any of the Borrowers or any of their Subsidiaries that (A) is in excess of $500,000 and (B) could reasonably be expected to result in a Material Adverse Effect or (ii) any event which, with or without the passage of time, could reasonably be expected to constitute an Event of Loss;

(k) FDA Notices. Promptly (and in any event within three (3) Business Days) after any Borrower has knowledge of any violation, claim, complaint or charge, or receipt of any violation, claim, complaint or charge, of or under the Food and Drug Act or any applicable statutes, rules, regulations, guidelines, policies, orders or directives administered or issued by the FDA, including receipt by any Borrower or any of its Subsidiaries of any Product Recall Notice, other FDA notice or amendment to such a previous Product Recall Notice or FDA notice that is required to be disclosed under this Section 8.3(k), that is material to the interests of Agent, the Lenders or the Holders, a statement of an authorized officer of the Borrowers setting forth the material details of such occurrence and the actions, if any, which the Borrowers propose to take with respect thereto and, in the case of a written document evidencing such event, together with a true, correct and complete copy of such Product Recall Notice, FDA Notice or amendment or other notice, as the case may be (other than to the extent that provision of such documents or information to the Agent and the Holders would invalidate any privileged status granted by such Governmental Authority with respect to such documents or information, in which case, the Borrowers shall furnish a summary of the documents or information so provided that does not invalidate such privilege); and

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(l) Other Information. Promptly upon their becoming available, deliver copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by the Principal Borrower to its security holders acting in such capacity or by any of its Subsidiaries to its security holders other than the Principal Borrower or another Subsidiary, (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by the Principal Borrower or any of its Subsidiaries with any securities exchange or with the SEC or any governmental or private regulatory authority, (iii) all press releases and other statements made available generally by the Principal Borrower or any of its Subsidiaries to the public concerning material developments in the business of the Principal Borrower or any of its Subsidiaries, (iv) each demand, notice or other communication of a material nature (except those received in the ordinary course of business) delivered to or sent by it in any way relating to any Material Tarsa Agreement, and otherwise keep Agent informed of all material circumstances known to it bearing upon any of the Borrowers’ or the Agent’s rights under any Material Tarsa Agreement, and (v) such other information and data with respect to the Principal Borrower or any of its Subsidiaries as from time to time may be reasonably requested by any Holder.

Section 8.4 Rank. All Indebtedness due under the Notes shall be senior in right of payment, whether with respect to payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise, to all other current and future Indebtedness of the Borrower (other than Permitted Indebtedness that is not Affiliate Indebtedness, which Permitted Indebtedness may be pari passu with the Notes in right of payment).

Section 8.5 Incurrence of Indebtedness. So long as the Notes are outstanding, no Borrower shall, and no Borrower shall permit any of its Subsidiaries to, directly or indirectly, create, incur or guarantee, assume, or suffer to exist any Indebtedness or engage in any sale and leaseback, synthetic lease or similar transaction, other than (i) the Obligations and (ii) Permitted Indebtedness.

Section 8.6 Existence of Liens. So long as any Notes are outstanding, no Borrower shall, and no Borrower shall permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any Liens, other than Permitted Liens.

Section 8.7 Restricted Payments. Except as set forth on Schedule 8.7, no Borrower shall, and no Borrower shall permit any of its Subsidiaries to, directly or indirectly,

(a) declare or pay any dividend or make any other payment or distribution on account of any Borrower’s Equity Interests (including any payment in connection with any merger or consolidation involving any Borrower) or to the direct or indirect holders of any Borrower’s Equity Interests in their capacity as such;

(b) purchase, redeem or otherwise acquire or retire for value (including in connection with any merger or consolidation involving any Borrower) any Equity Interests of any Borrower or any Subsidiary or any direct or indirect parent of any Borrower or any Subsidiary, other than (i) repurchases of Equity Interests by Principal Borrower pursuant to the terms of employee stock purchase plans, employee restricted stock agreements or similar arrangements in an aggregate amount not to exceed $100,000 each Fiscal Year or (ii) any Permitted Redemptions pursuant to the terms of this Agreement and the Notes;

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(c) make any payment (including by setoff) on or with respect to, accelerate the maturity of, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of any Borrower or any Subsidiary (or set aside or escrow any funds for any such purpose), except for (i) payments of principal, interest and other amounts under (A) the Notes and (B) Permitted Indebtedness (other than Affiliate Indebtedness), and (ii) so long as no Senior Default (as defined in the Affiliate Subordination Agreement) shall have occurred and be continuing or shall be caused thereby and Borrowers are not Insolvent at the time such payment is made or would be rendered Insolvent after giving effect to such payment, at any time on and after May 10, 2010, Permitted Subordinated Debt Payments (as defined in the Affiliate Subordination Agreement);

(d) incur any costs or payments outside of the ordinary course of business that (i) individually exceeds $25,000, or (ii) exceeds in the aggregate $100,000 per year; provided that this subsection does not prohibit the use of proceeds as permitted by Section 8.24.

Section 8.8 Mergers; Acquisitions; Asset Sales. No Borrower shall, and no Borrower shall permit any of its Subsidiaries to, directly or indirectly, (a) be a party to any merger or consolidation, or Acquisition, other than Permitted Acquisitions, or (b) consummate any Asset Sale other than Permitted Dispositions.

Section 8.9 No Further Negative Pledges. The Borrowers agree not to enter into, assume or become subject to, and no Borrower shall permit any of its Subsidiaries to enter into, assume or become subject to, any agreement prohibiting or otherwise restricting the existence of any Lien upon any of their properties or assets in favor of the Holders of Notes (directly or through Agent) as set forth under the Transaction Documents, whether now owned or hereafter acquired, or requiring the grant of any security for any obligation if such property or asset is given as security under the Transaction Documents, except in connection with any Permitted Liens or any document or instrument governing any Permitted Liens, provided that any such restriction contained therein relates only to the property or asset subject to such Permitted Liens (or proceeds thereof).

Section 8.10 Affiliate Transactions. No Borrower shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of any Borrower or Subsidiary, unless such transaction is on terms that are no less favorable to such Borrower or Subsidiary, as the case may be, than those that might be obtained at the time from a Person who is not an Affiliate.

Section 8.11 Insurance.

(a) The Borrowers shall, and shall cause their Subsidiaries to, keep the Collateral properly housed and insured against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of the Borrowers and their Subsidiaries, with such companies, in such amounts, with such deductibles and under policies in such form as shall be reasonably satisfactory to the Agent. Certificates of insurance or, if requested by the Agent, original (or certified) copies of such policies of insurance have been or

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shall be, no later than the First Restated Closing Date, delivered to the Agent, and shall contain an endorsement, in form and substance reasonably acceptable to Agent, showing loss under such insurance policies payable to the Agent, for the benefit of the Holders. Such endorsement, or an independent instrument furnished to the Agent, shall provide that the insurance company shall give the Agent at least thirty (30) days’ written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of any Borrower or any other Person shall affect the right of the Agent to recover under such policy of insurance in case of loss or damage. In addition, each Borrower shall cause to be executed and delivered to the Agent no later than the First Restated Closing Date an assignment of proceeds of its business interruption insurance policies. Each Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to the Agent. Each Borrower irrevocably makes, constitutes and appoints the Agent (and all officers, employees or agents designated by the Agent) as each Borrower’s true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of such Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided however, that if no Event of Default shall have occurred and be continuing, such Borrower may make, settle and adjust claims involving less than $250,000 in the aggregate without the Agent’s consent.

(b) The Borrowers shall, and shall cause their Subsidiaries to, maintain, at their expense, such public liability and third-party property damage insurance as is customary for Persons engaged in businesses similar to that of the Borrowers and their Subsidiaries with such companies and in such amounts with such deductibles and under policies in such form as shall be reasonably satisfactory to the Agent and certificates of insurance or, if requested by the Agent, original (or certified) copies of such policies have been or shall be, no later than the First Restated Closing Date, delivered to the Agent; each such policy shall contain an endorsement showing the Agent as additional insured thereunder and providing that the insurance company shall give the Agent at least thirty (30) days’ written notice before any such policy shall be altered or canceled.

(c) If any Borrower or Subsidiary of a Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then the Agent, without waiving or releasing any obligation or default by the Borrowers hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as the Agent reasonably deems advisable. Such insurance, if obtained by the Agent, may, but need not, protect each Borrower’s and Subsidiary’s interests or pay any claim made by or against any Borrower or any Subsidiary with respect to the Collateral. Such insurance may be more expensive than the cost of insurance the Borrowers may be able to obtain on their own and may be cancelled only upon the Borrowers providing evidence that they have obtained the insurance as required above. All sums disbursed by the Agent in connection with any such actions, including court costs, expenses, other charges relating thereto and reasonable attorneys’ fees, shall constitute part of the obligations due and owing hereunder, shall be payable on demand by the Borrowers to the Agent and, until paid, shall bear interest at the highest rate applicable to Notes hereunder.

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Section 8.12 Corporate Existence and Maintenance of Properties. Each Borrower shall, and shall cause each of its Subsidiaries to, maintain and preserve (a) its existence and good standing in the jurisdiction of its organization and (b) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary (other than such jurisdictions in which the failure to be so qualified or in good standing could not reasonably be expected to have a Material Adverse Effect). Each Borrower will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of the Principal Borrower and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof. The Borrowers and their Subsidiaries shall use commercially reasonable efforts to ensure that all inventory of any Product in possession or control of the Borrowers or any of their Subsidiaries (i) is not adulterated or misbranded (within the meaning of the Food and Drug Act or the rules and regulations of the FDA promulgated thereunder) and (B) is manufactured, labeled and packaged in accordance with cGMPs and with all other applicable laws. The Principal Borrower shall not permit Unigene UK to conduct any business, own any assets (other than such assets owned as of the First Restated Closing Date) or incur any liabilities (other than such liabilities existing as of the First Restated Closing Date).

Section 8.13 Non-circumvention. Each Borrower hereby covenants and agrees that no Borrower or any of its Subsidiaries will, by amendment of its articles or certificate of incorporation, bylaws, or other governing documents, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement or the other Transaction Documents, and will at all times in good faith carry out all of the provisions of this Agreement and the other Transaction Documents and take all action as may be required to protect the rights of the Holders of the Notes.

Section 8.14 Conduct of Business. The Borrowers shall not, and shall not permit their Subsidiaries to, conduct their businesses in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect. The Borrowers and their Subsidiaries shall not engage in any line of business other than the businesses engaged in on the First Restated Closing Date and businesses incidental thereto.

Section 8.15 U.S. Real Property Holding Corporation. None of the Borrowers shall become a U.S. real property holding corporation or permit or cause its shares to be U.S. real property interests, within the meaning of Section 897 of the Code.

Section 8.16 Compliance with Laws. The Borrowers shall, and shall cause their Subsidiaries to, (i) comply in all material respects with federal, state and other applicable securities laws, and (ii) comply in all material respects with the requirements of all other applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws, FDA Regulations and HHS Regulations).

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Section 8.17 Form D and Blue Sky. The Borrowers agree to file a Form D with respect to the Notes as required under Regulation D and to provide a copy thereof to each Lender promptly after such filing. Each of the Borrowers shall, on or before the applicable Closing Date, take such action as is necessary in order to obtain an exemption for or to qualify the Notes for sale to the Lenders at the applicable Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Lenders on or prior to the applicable Closing Date. Each of the Borrowers shall make all filings and reports relating to the offer and sale of the Notes required under applicable securities or “Blue Sky” laws of the states of the United States following the First Restated Closing Date.

Section 8.18 Reporting Status. Until the date on which the Investors shall have sold all the Lender Shares and none of the Notes are outstanding (the “Reporting Period”), the Principal Borrower shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Principal Borrower shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination.

Section 8.19 Listing. The Principal Borrower shall take all actions necessary to remain eligible for quotation of its securities of the OTC Bulletin Board and to cause all of the Registrable Securities covered by a Registration Statement to be quoted thereon, unless listed on The New York Stock Exchange, the NASDAQ Global Market, the NASDAQ Global Select Market or the NASDAQ Capital Market (each, a “National Exchange”). The Principal Borrower shall use its commercially reasonable efforts to (a) secure the listing of all of the Registrable Securities on a National Exchange as promptly as practicable following such time as the Principal Borrower meets all of the financial and other quantitative listing requirements for a National Exchange, and (b) following such listing, maintain such listing of all Registrable Securities from time to time issuable under the terms of the Transaction Documents. Following such listing, neither the Principal Borrower nor any other Borrower shall take any action that would reasonably be expected to result in the delisting or suspension of the Common Stock from the National Exchange. The Principal Borrower shall pay all fees and expenses in connection with satisfying its obligations under this Section 8.19.

Section 8.20 Additional Collateral. With respect to any Property acquired after the First Closing Date by any Borrower as to which the Agent, for the benefit of the Holders, does not have a perfected Lien, such Borrower shall promptly (i) execute and deliver to the Agent, for the benefit of the Holders, or its agent such amendments to the Security Documents or such other documents as the Agent, for the benefit of the Holders, deems necessary or advisable to grant to the Agent, for the benefit of the Holders, a security interest in such Property and (ii) take all other actions necessary or advisable to grant to the Agent, for the benefit of the Holders, a perfected first priority security interest in such Property, including the filing of Mortgages and UCC financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be requested by the Agent.

Section 8.21 Audit Rights; Field Exams; Appraisals; Meetings.

(a) The Borrowers shall, upon reasonable notice, subject to reasonable safety and security procedures, and at the Borrowers’ sole cost and expense, permit the Agent and each Holder (or any of their respective designated representatives) to visit and inspect any of the

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properties of the Borrowers and their Subsidiaries, to examine the books of account of the Borrowers and their Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Borrowers and their Subsidiaries, and to be advised as to the same by their respective officers, and to conduct examinations and verifications (whether by internal commercial finance examiners or independent auditors), all at such reasonable times and intervals as the Agent and the Holders may reasonably request; provided that such audit rights shall not be exercised more than two (2) times in any calendar year, unless an Event of Default shall have occurred and be continuing, in which case there shall be no such limit on audit rights.

(b) The Borrowers shall, upon reasonable notice, subject to reasonable safety and security procedures, and at the Borrowers’ sole cost and expense, permit the Agent and each Holder (or any of their respective designated representatives) to conduct field exams of the Collateral, all at such reasonable times and intervals as the Agent and the Holders may reasonably request; provided that such field examination rights shall not be exercised more than four (4) times in any calendar year, unless an Event of Default shall have occurred and be continuing, in which case there shall be no such limit on the ability to conduct field exams.

(c) The Borrowers shall, upon reasonable notice, and at the Borrowers’ sole cost and expense, obtain an appraisal of the Collateral from an independent appraisal firm satisfactory to Agent; provided that in the absence of an Event of Default the Borrowers shall not be required to obtain more than one (1) appraisal per year.

(d) The Borrowers will, upon the request of the Agent or Required Holders, participate in a meeting of the Agent and the Holders twice during each Fiscal Year to be held at the Principal Borrower’s corporate offices (or at such other location as may be agreed to by the Borrowers and the Agent) at such time as may be agreed to by the Borrowers and the Agent.

Section 8.22 Pledge of Securities. Each of the Borrowers acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona fide margin account or other loan or financing arrangement that is secured by the Securities; provided such pledge is made in compliance with applicable federal and state securities laws. Such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting such pledge of Securities shall be required to provide any Borrower with any notice thereof or otherwise make any delivery to any Borrower pursuant to this Agreement or any other Transaction Document, including Section 6.4 hereof, unless required in connection with the registration of the Securities or by applicable law. Each of the Borrowers hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.

Section 8.23 Additional Issuances of Securities. Except as set forth on Schedule 8.23, so long as any Notes are outstanding, none of the Borrowers or any other Subsidiary shall, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its debt securities or Equity Interests, including any debt, preferred stock or other instrument or security that may be, at any time during its life, and under any circumstance, convertible into or exchangeable or exercisable for shares of Common Stock, options, convertible securities or debt

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securities (any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”) without the prior written consent of the Agent and the Required Holders; provided, that notwithstanding the foregoing, the Borrowers may (i) issue Common Stock and non-redeemable securities linked to Common Stock, in each case so long as the proceeds thereof will be applied in accordance with Section 2.3, (ii) issue Common Stock or warrants therefor to operating companies in the biotechnology or pharmaceutical industries in connection with strategic alliances and pursuant to employee stock or stock option compensation plans and (iii) issue Conversion Shares pursuant to the terms of this Agreement and the Notes; provided, that in no event shall the Principal Borrower (a) issue any shares of Common Stock, Options or Convertible Securities (each as defined in the Notes) prior to the Filing (other than pursuant to an Approved Stock Plan (as defined in the Notes), pursuant to an equity award of up to 1,000,000 shares of Common Stock (subject to proportionate adjustments for stock splits, stock dividends, stock combinations and similar events after the First Restated Closing Date) issued to the first new Chief Executive Officer of the Principal Borrower hired after the date hereof (provided that such equity award is approved by the Board), upon conversion of the Notes, or upon conversion, exchange or exercise of any Option or Convertible Security outstanding prior to the date hereof and set forth on Schedule 7.7, provided that the terms of such Option or Convertible Security are not amended or otherwise modified on or after the date of the Financing Agreement, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of Shares issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Financing Agreement) or (b) issue any shares of Common Stock, Options or Convertible Securities such that such issuance would result in any violation of any other provision of this Financing Agreement (including Section 8.31) or any other Transaction Document. Notwithstanding the foregoing or anything else to the contrary contained herein or any other Transaction Document, from the date of this Agreement until the first date following the First Restated Closing Date on which no original Lender or any Affiliate or Related Fund of an original Lender holds any Notes or Lender Shares, the Principal Borrower shall not in any manner issue or sell any Options or Convertible Securities that are convertible into or exchangeable or exercisable for shares of Common Stock at a price that varies or may vary with the market price of the Common Stock, including by way of one or more resets to a fixed price or increases in the number of shares of Common Stock issued or issuable, or at a price that upon the passage of time or the occurrence of certain events automatically is reduced or is adjusted or at the option of any Person may be reduced or adjusted, whether or not based on a formulation of the then-current market price of the Common Stock.

Section 8.24 Use of Proceeds. The Borrowers will use the cash proceeds from the sale of the Notes on the First Restated Closing Date as set forth on Schedule 8.24 (which shall include the payment of fees and expenses pursuant to the Fee Letter and the payment of all accrued and unpaid interest under the Original Notes through the day immediately preceding the First Restated Closing Date); provided that, except as set forth on Schedule 8.24, no proceeds from the sale of the Notes shall be used to pay or repay any Indebtedness, any accrued and unpaid executive officer salary and/or bonus, or any accrued and unpaid placement agent’s fees, financial advisory fees or broker’s commissions.

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Section 8.25 Fees. The Principal Borrower, on behalf of itself and the other Borrowers, shall pay the Lenders the fees and expenses set forth in the Fee Letter, and shall reimburse the Lenders or their designee(s) for reasonable and documented costs and expenses incurred in connection with the transactions contemplated by the Transaction Documents (including reasonable legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amounts, less any amounts paid in advance by any Borrower, shall be withheld by each Lender from the purchase price paid by such Lender on the First Restated Closing Date and the Subsequent Closing Date, in accordance with the Fee Letter. In addition, the Principal Borrower shall, within five (5) Business Days of receiving a request from any Lender or the Agent therefor, reimburse such Lender or Agent for any additional reasonable legal fees incurred post-closing in connection with perfecting the Agent’s and/or Lenders’ security interests and any additional filing or recording fees in connection therewith. The Principal Borrower shall be responsible for the payment of, and shall pay, any placement agent’s fees, financial advisory fees, or broker’s commissions relating to or arising out of the transactions contemplated hereby, and shall hold each Lender harmless against, any liability, loss or expense (including reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment.

Section 8.26 Disclosure of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the fourth Business Day following each Closing Date, the Principal Borrower shall file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching this Agreement, the form of Note and the Registration Rights Agreement (including all attachments, the “8-K Filing”). The Principal Borrower shall provide the Agent, the Lenders and the Holders a reasonable opportunity to review each 8-K Filing prior to the filing thereof. Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents, each of the Borrowers shall not, and shall cause each of their respective officers, directors, employees and agents not to, provide any Lender with any Tarsa Confidential Information from and after the time the 8-K Filing is made with the SEC unless prior to delivery thereof, (A) the Borrowers shall have disclosed to the Lenders (x) that they are required to deliver information that is Tarsa Confidential Information, (y) a general description of the nature of such information and a redacted version of any document otherwise required to be delivered that contains such information and (z) the provision of this Agreement or the other Transaction Documents that otherwise requires disclosure of such information, (B) the Lenders shall have specifically requested delivery of such information after being informed that such information is Tarsa Confidential Information, and (C) the Lenders and the Borrowers shall have negotiated in good faith to enter into, and shall have entered into, a confidentiality arrangement applicable to such information on terms substantially the same as those set forth in Section 5.1 of the Tarsa License Agreement, as in effect on October 19, 2009, with Tarsa as a third party beneficiary of such confidentiality arrangement; provided that if the Borrowers do not deliver such information because either the Lenders decline to receive such information hereunder or the Lenders and Borrowers do not or are unable to enter into such a confidentiality arrangement after such good faith negotiations, then the Borrowers shall not be in breach of either this covenant or the provision of this Agreement or the other Transaction Documents that otherwise requires disclosure of such information. Subject to the foregoing provisions of this Section 8.26, neither any of the Borrowers nor any Lender shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Principal Borrower shall be entitled, without the prior approval of any Lender, to make any press release

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or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided, that in the case of clause (i) each Lender shall be consulted by the Principal Borrower in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of any applicable Lender, none of the Borrowers shall disclose the name of any Lender or its affiliates in any filing, announcement, release or otherwise unless required by law. Notwithstanding anything to the contrary contained herein, the Principal Borrower acknowledges and agrees that the Lenders and/or their Affiliates may file a Schedule 13D relating to transactions contemplated hereby and any amendments thereto, and include in such Schedule 13D (and amendments thereto) such information regarding the transactions contemplated hereby and other matters relating to the Principal Borrower as the Lenders determine after consultation with their legal counsel should be included therein, and agrees that no such filing (nor the inclusion of any such information therein) will constitute a violation of the provisions of this Agreement or any Transaction Document; provided, however, that the Lenders shall use their reasonable efforts to limit any such disclosure to the requirements of the Schedule 13D as determined by the Lenders in consultation with their legal counsel.

Section 8.27 Modification of Organizational Documents and Certain Documents. The Borrowers shall not, without the prior written consent of the Agent or the Required Holders, (i) except as required in connection with the Stockholder Approval and the Filing, permit the charter, by-laws or other organizational documents of any Borrower, or any Material Contract (other than any Material License Agreement or any Material Tarsa Agreement) to be amended or modified, (ii) consent to an amendment, supplement or other modification of any Material Tarsa Agreement (other than the Tarsa License Agreement) or (iii) amend, supplement or otherwise modify, or waive any rights under, the Affiliate Subordination Agreement, in each case in any manner adverse to the interests of the Holders or the Lenders.

Section 8.28 Joinder. The Borrowers shall notify the Holders prior to the formation or acquisition of any Subsidiaries. For any Subsidiaries of the Borrowers formed or acquired after the First Restated Closing Date, the Borrowers shall at their own expense, upon formation or acquisition of such Subsidiary, cause each such Subsidiary to execute an instrument of joinder (a “Joinder Agreement”) in form and substance reasonably satisfactory to the Agent obligating such Subsidiary to any or all of the Transaction Documents deemed necessary or appropriate by the Holders and cause the applicable Borrower that owns the Equity Interests of such Subsidiary to pledge to the Holders 100% (or 66% in the case of a Controlled Foreign Corporation (as defined in the Security Agreement)) of the Equity Interests owned by it of each such Subsidiary formed or acquired after the First Restated Closing Date and execute and deliver all documents or instruments required thereunder or appropriate to perfect the security interest created thereby. In the event a party becomes a Borrower (the “New Borrower”) pursuant to the Joinder Agreement, upon such execution the New Borrower shall be bound by all the terms and conditions hereof and the other Transaction Documents to the same extent as though such New Borrower had originally executed the Notes and the other Transaction Documents. The addition of the New Borrower shall not in any manner affect the obligations of the other Borrowers hereunder or thereunder. Each Borrower and Lender and the Agent hereto acknowledges that the schedules and exhibits hereto or thereto may be amended or modified in connection with the addition of any New Borrower to reflect information relating to such New Borrower. Compliance with this Section 8.28 shall not excuse any violation of Section 8.8.

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Section 8.29 Investments. No Borrower shall, and no Borrower shall permit any Subsidiary to, make or permit to exist any Investment in any other Person, except the following:

(a) Cash Equivalent Investments;

(b) bank deposits in the ordinary course of business;

(c) Investments in securities of account debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such account debtors;

(d) advances made in connection with purchases of goods or services in the ordinary course of business;

(e) Investments owned by the Principal Borrower on the First Restated Closing Date as set forth on Schedule 8.29;

(f) deposits of cash in the ordinary course of business to secure performance of operating leases;

(g) guaranties that constitute Permitted Indebtedness;

(h) so long as no Event of Default shall have occurred and be continuing or shall be caused thereby, at any time following September 1, 2010, Investments in the China JV in an aggregate amount not to exceed $2,200,000;

(i) so long as no Event of Default shall have occurred and be continuing or shall be caused thereby, Investments in an aggregate amount not to exceed $2,000,000 in operating companies in the biotechnology or pharmaceutical industries in connection with strategic alliances or joint ventures (including licensing arrangements and technology transfers);

(j) Permitted Acquisitions; and

(k) Investments in Tarsa pursuant to and in accordance with the terms of the Material Tarsa Agreements.

Section 8.30 Authorization of Additional Shares of Common Stock.

(a) The Principal Borrower will use its commercially reasonable efforts, in accordance with the General Corporation Law of the State of Delaware and its Certificate of Incorporation and Bylaws, to increase the number of authorized shares of Common Stock to at least 224,231,095 shares (subject to adjustment upon any subdivision (by any stock split, stock dividend, recapitalization, reclassification or other similar transaction) or combination (by any reverse stock split or otherwise)) as soon as practicable after the First Restated Closing, including: (i) duly calling, giving notice of, convening and holding a meeting of the stockholders of the Principal Borrower (the “First Stockholders Meeting”) to be held as promptly as practicable, and in any event by June 15, 2010, for the purpose of approving an increase in the number of authorized shares of Common Stock to a total of at least 224,231,095 shares (subject to

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adjustment upon any subdivision (by any stock split, stock dividend, recapitalization, reclassification or other similar transaction) or combination (by any reverse stock split or otherwise)) (the “Proposal”); (ii) using its commercially reasonable efforts to solicit from its stockholders proxies in favor of the approval of the Proposal and taking all other action reasonably necessary or advisable to secure the Stockholder Approval or otherwise required by the rules of the SEC or under applicable laws to obtain the Stockholder Approval; (iii) if the Principal Borrower does not obtain the Stockholder Approval at the First Stockholders Meeting, calling a stockholders meeting every four (4) months thereafter to seek the Stockholder Approval until the date on which the Stockholder Approval is obtained (each, including the First Stockholders Meeting, a “Stockholders Meeting”); and (iv) promptly (and in any event within one (1) Business Day after the Stockholder Approval is obtained, filing an amendment to the Principal Borrower’s Certificate of Incorporation to effect such increase in the number of authorized shares of Common Stock (the “Filing”). If at any time thereafter while any of the Notes remain outstanding the Principal Borrower does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (as defined below), then the Principal Borrower shall immediately take all action necessary to increase the Principal Borrower’s authorized shares of Common Stock (including such actions described in subsections (a), (b), (c) and (d) hereof) to an amount sufficient to allow the Principal Borrower to reserve the Required Reserve Amount for the Notes then outstanding.

(b) In connection with each Stockholders Meeting, the Principal Borrower will (i) as promptly as reasonably practicable before the date of such Stockholders Meeting (and in the case of the First Stockholders Meeting, as promptly as reasonably practicable after the date hereof), prepare and file with the SEC a proxy statement (as it may be amended or supplemented from time to time, a “Proxy Statement”) related to the consideration of the Proposal at the Stockholders Meeting, (ii) respond as promptly as reasonably practicable to any comments received from the SEC with respect to such filings and provide copies of such comments to the Agent promptly upon receipt and provide copies of proposed responses to the Agent a reasonable time prior to filing to allow the Agent the opportunity to provide meaningful comment, (iii) as promptly as reasonably practicable, prepare and file any amendments or supplements necessary to be filed in response to any SEC comments or as otherwise required by applicable laws, (iv) as promptly as reasonably practicable, distribute or otherwise make available to its stockholders, in accordance with applicable law and the rules of the SEC, the Proxy Statement and all other customary proxy or other materials for meetings such as the Stockholders Meeting, (v) to the extent required by applicable laws, as promptly as reasonably practicable prepare, file and distribute (or otherwise make available) to its stockholders, in accordance with applicable law and the rules of the SEC, any supplement or amendment to the Proxy Statement if any event shall occur which requires such action at any time prior to the Stockholders Meeting, and (vi) otherwise comply with all requirements of law and rules of the SEC applicable to any Stockholders Meeting. The Lenders shall cooperate with the Principal Borrower in connection with the preparation of the Proxy Statement and any amendments or supplements thereto, including promptly furnishing the Principal Borrower, upon request, with any and all information as may be required to be set forth in the Proxy Statement under applicable laws. The Principal Borrower will provide the Agent a reasonable opportunity to review and comment upon the Proxy Statement, or any amendments or supplements thereto, and shall give reasonable

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consideration to any such comments proposed, prior to distributing (or otherwise making available) the Proxy Statement to its stockholders. The Proxy Statement shall include the recommendation of the Principal Borrower’s Board to approve the Proposal.

(c) If, at any time prior to a Stockholders Meeting, any information relating to the Principal Borrower or any of the Lenders or any of their respective Affiliates should be discovered by the Principal Borrower or any of the Lenders which should be set forth in an amendment or supplement to a Proxy Statement so that the Proxy Statement shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other parties and, to the extent required by applicable law, the Principal Borrower shall disseminate in an appropriate manner in accordance with applicable law and the rules of the SEC an appropriate amendment thereof or supplement thereto describing such information to its stockholders.

(d) The Principal Borrower represents, warrants, covenants and agrees that (i) none of the information included or incorporated by reference in a Proxy Statement or any other document filed with the SEC in connection with the transactions contemplated hereby (all such other documents, the “Other Filings”) shall, in the case of a Proxy Statement, at the date it is first distributed or otherwise made available to stockholders or at the time of the applicable Stockholders Meeting or at the time of any amendment or supplement thereof, or, in the case of any Other Filing, at the date it is first distributed or otherwise made available to stockholders or at the date it is first filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no such representation, warranty or covenant is made by the Principal Borrower with respect to statements made or incorporated by reference therein in reliance on, and in conformity with, information supplied in writing by or on behalf of the Lenders in connection with the preparation of the Proxy Statement or the Other Filings expressly for inclusion therein, and (ii) the Proxy Statement and the Other Filings that are filed by the Principal Borrower shall comply as to form in all material respects with the requirements of the 1934 Act.

(e) Each of the Lenders severally and not jointly, represents, warrants, covenants and agrees that none of the information supplied in writing by or on behalf of such Lender expressly for inclusion in a Proxy Statement or the Other Filings will, in the case of the Proxy Statement, at the date it is first distributed or otherwise made available to stockholders or at the time of the applicable Stockholders Meeting or at the time of any amendment or supplement thereof, or, in the case of any Other Filing, at the date it is first distributed or otherwise made available to stockholders or at the date it is first filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

Section 8.31 Reservation of Shares. The Principal Borrower shall take all action necessary to reserve and keep available for conversions under the Notes (a) as of and at all times after the First Restated Closing Date but prior to the Filing, all shares of Common Stock

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authorized, unissued and unreserved as of the date hereof (as set forth on Schedule 8.31) (provided, that the Principal Borrower may issue, or reserve for issuance, up to 1,000,000 of such shares (subject to proportionate adjustment for stock splits, stock dividends and stock combinations after the date hereof) pursuant to an equity award to the first new Chief Executive Officer of the Principal Borrower hired after the First Restated Closing Date, provided that such equity award is approved by the Board), and (b) as of and at all times after the Filing, a number of authorized and unissued shares of Common Stock equal to at least one hundred fifty percent (150%) of the number of Conversion Shares issuable upon the conversion of all of the principal amount then outstanding under the Notes (together with accrued and unpaid interest thereon) (such aggregate amount, the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for conversions of the Notes and any increase in the number of shares of Common Stock so reserved shall be deemed to be allocated pro rata among the holders of the Notes based on the principal amount of the Notes held by each holder at the time of issuance of the Notes or increase in the number of reserved shares, as the case may be. In the event any holder of Notes shall sell or otherwise transfer any portion of its Notes, each transferee shall be allocated a pro rata portion of the number of shares of Common Stock reserved for such transferor. Any shares of Common Stock reserved and deemed to be allocated to any Person that ceases to hold any Notes shall be allocated to the remaining holders of the Notes, pro rata based on the principal amount of the Notes then held by such holders.

Section 8.32 Internal Accounting Controls. During the Reporting Period, the Principal Borrower shall, and shall cause each of the Borrowers to:

(a) at all times keep books, records and accounts with respect to all of such Person’s business activities, in accordance with sound accounting practices and GAAP;

(b) maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liability is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences; and

(c) timely file and make publicly available on the SEC’s EDGAR system, all certifications and statements required by (A) Rule 13a-14 or Rule 15d-14 under the 1934 Act and (B) Section 906 of Sarbanes Oxley with respect to any periodic reports filed pursuant to the 1934 Act.

Section 8.33 Regulation M. Neither the Principal Borrower nor any of the Borrowers or any of their respective Affiliates will take any action prohibited by Regulation M under the 1934 Act in connection with the offer, sale and delivery of the Notes and Conversion Shares contemplated hereby.

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Section 8.34 Corporate Governance Matters.

(a) Acceptance of Resignations. The Principal Borrower shall accept, effective immediately following the First Restated Closing and without the necessity of any further action by the Principal Borrower or either of Ronald Levy or Jay Levy, as applicable, each of the Resignations. Neither the Principal Borrower nor the Board shall take any action, or permit any action to be taken, to rescind or release any of the Resignations, or otherwise release, or permit or consent to the release of, any Resigning Board Member from such Resigning Board Member’s irrevocable obligation under his respective Resignation.

(b) Appointments.

(i) Prior to the First Restated Closing, the Principal Borrower, the Nominating and Corporate Governance Committee of the Board and the Board shall take all actions (including making any necessary amendments to the bylaws of the Principal Borrower, making any filings and disclosures and taking any other actions necessary to comply with applicable laws) so that, immediately following the First Restated Closing, without any further action by the Principal Borrower or the Board (or any committee thereof), (A) Richard Levy shall become a member of the Board, filling the vacancy created by the Jay Levy Resignation, (B) Richard Levy shall be appointed as Chairman of the Board, (C) Richard Levy shall become a member of the Nominating and Corporate Governance Committee of the Board and (D) the powers and authorities of the Chairman of the Board shall include those powers and authorities set forth on Schedule 8.34.

(ii) At any time after the First Restated Closing, upon the Agent’s request to the Principal Borrower therefor, the Principal Borrower, the Nominating and Corporate Governance Committee of the Board and the Board shall take all actions (including making any filings and disclosures, and taking any other actions necessary, to comply with applicable laws), so that as promptly as practicable thereafter (but in any event within two (2) Business Days after delivery of such Agent’s request), without any further action by the Principal Borrower or the Board (or any committee thereof), (A) an individual designated by the Agent in its sole discretion (the “Future Designee”) shall become a member of the Board, filling the vacancy created by the Ronald Levy Resignation; provided, however, that in the event that the Board determines in good faith, after consultation with outside legal counsel, that its appointment of a particular Future Designee would constitute a breach of its fiduciary duties to the Principal Borrower’s stockholders, then the Principal Borrower shall appoint another individual designated for election to the Board by the Agent (subject in each case to this proviso); and (B) such Future Designee shall become a member of the Compensation Committee of the Board and the Audit Committee of the Board.

For purposes of this Agreement, each of Richard Levy and the Future Designee, and any successor thereto, substitute therefor or replacement thereof designated by the Agent shall be referred to herein as a “Lender Designee,” and collectively as the “Lender Designees.”

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(c) Nominations.

(i) In connection with any annual meeting of the stockholders of the Principal Borrower or any special meeting of the stockholders of the Principal Borrower at which directors are to be elected following the First Restated Closing, until such time as both (A) the aggregate principal amount outstanding under the Notes is less than $5,000,000 and (B) the Lenders and/or their Affiliates and/or Related Funds beneficially own (within the meaning of Rule 13d-3 under the 1934 Act) less than twenty percent (20%) of the issued and outstanding shares of Common Stock of the Principal Borrower (such date, the “Lender Rights Termination Date”), the Nominating and Corporate Governance Committee of the Board shall recommend the nomination of, and the Board shall nominate for reelection (or election), recommend that the Principal Borrower’s stockholders vote in favor of election to the Board of, and solicit proxies in favor of the election of, and the Principal Borrower and the Board shall otherwise take all actions as are reasonably necessary or desirable to elect, those Lender Designees whose terms of office expire at such stockholder meeting (or, in the discretion of the Agent, such replacements thereof or successors thereto designated by the Agent) to the Board; provided, however, that with respect to any such meeting of the stockholders of the Principal Borrower after the First Stockholders Meeting, in the event that the Board determines in good faith, after consultation with outside legal counsel, that its nomination of a particular Lender Designee would constitute a breach of its fiduciary duties to the Principal Borrower’s stockholders, then the Principal Borrower shall nominate another individual designated for election to the Board by the Agent (subject in each case to this proviso) and the Board and the Principal Borrower shall take all of the actions required by this Section 8.34(c) with respect to the election at such stockholder meeting of such substitute Lender Designee; and provided, further, that the Board shall only be obligated pursuant to this Section 8.34(c) to nominate for election at such stockholder meeting (and take the other required actions with respect to) two (2) Lender Designees.

(ii) The Principal Borrower, the Nominating and Corporate Governance Committee of the Board and the Board shall take all actions (including making any filings and disclosures, and taking any other actions necessary, to comply with applicable laws), so that, upon the Principal Borrower’s hiring and appointment of a new Chief Executive Officer of the Principal Borrower as successor to Warren Levy, such new Chief Executive Officer shall become a member of the Board (or, if such hiring and appointment occurs prior to the date of the First Stockholders Meeting, no later than such date). The Board shall not nominate for reelection (or election) at the First Stockholders Meeting at least one of the individuals serving as a member of the Board as of the date hereof or any other replacement therefor (other than the new Chief Executive Officer). As a result of the foregoing, immediately following the date of the First Stockholders Meeting, either (A) the new Chief Executive Officer of the Principal Borrower shall be a member of the Board or (B) there shall be a vacancy on the Board to be filled by the new Chief Executive Officer upon his hiring and appointment.

(iii) The provisions of this Section 8.34(c) are in addition to, and shall not limit, any rights that any of the Lenders or any of their respective Affiliates or Related Funds may have as a record holder or beneficial owner of shares of Common Stock as a matter of applicable law with respect to the election of directors or otherwise.

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(d) Vacancies and Number of Directors. In the event that, at any time prior to the Lender Rights Termination Date, there is a vacancy on the Board resulting from retirement, resignation or other termination of service for any reason of a Lender Designee, the Principal Borrower shall promptly fill such vacancy (for the remainder of the then current term) with an individual designated by the Agent; provided, however, that, in the event that the Board determines in good faith, after consultation with outside legal counsel, that its appointment of a particular Lender Designee to fill such vacancy would constitute a breach of its fiduciary duties to the Principal Borrower’s stockholders, then the Principal Borrower shall fill such vacancy with another individual designated by the Agent (subject again in each case to this proviso). Prior to the Lender Rights Termination Date, the Principal Borrower and the Board shall not, without the prior written consent of the Agent, take any action to increase the number of members on the Board to be more than nine (9).

(e) Chairman of the Board. Prior to the first (1^st) anniversary of the First Restated Closing Date, the Board shall not remove or replace Richard Levy as Chairman of the Board; provided, however, that, in the event that the Board determines in good faith, after consultation with outside legal counsel, that its failure to remove or replace Richard Levy as Chairman of the Board would constitute a breach of its fiduciary duties to the Principal Borrower’s stockholders, then the Principal Borrower may remove Richard Levy solely in his capacity as Chairman of the Board (but, for the avoidance of doubt, the Principal Borrower may not remove Richard Levy in his capacity as a member of the Board) and replace him with another Lender Designee selected by the Agent (subject again in each case to this proviso). In the event that, at any time prior to the first (1^st) anniversary of the First Restated Closing Date, Richard Levy resigns, retires or otherwise terminates his service as Chairman of the Board, the Principal Borrower shall promptly appoint as Chairman of the Board a Lender Designee selected by the Agent; provided, however, that, in the event that the Board determines in good faith, after consultation with outside legal counsel, that its appointment of a particular Lender Designee as Chairman of the Board would constitute a breach of its fiduciary duties to the Principal Borrower’s stockholders, then the Principal Borrower shall appoint as Chairman of the Board another Lender Designee selected by the Agent (subject again in each case to this proviso). For so long as Richard Levy or another Lender Designee serves as Chairman of the Board, the Principal Borrower and the Board shall not take any action to rescind the Board’s delegation to the Chairman of the Board of any of the powers and authorities set forth on Schedule 8.34.

(f) Committees. The Board shall take such actions so that, at all times prior to the Lender Rights Termination Date, there shall be (A) at least one (1) Lender Designee on each of the Nominating and Corporate Governance Committee of the Board, the Compensation Committee of the Board and each other standing committee of the Board (other than the Audit Committee), as selected by the Agent, provided that there need not be any Lender Designee on the Compensation Committee of the Board prior to the date that the Future Designee becomes a member of the Board, unless the Agent otherwise so requests, and (B) after the Future Designee has become a member of the Board, so long as the Common Stock is not listed on a National Exchange and after any such listing, if permitted by the rules of the applicable National Exchange, at least one (1) Lender Designee on the Audit Committee of the Board; provided, however, that there shall not be a violation of this Section 8.34(f) if, as a result of the termination

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of service of a Lender Designee, the number of Lender Designees on a committee of the Board is less than one (1), so long as the Board takes action to cause the number of Lender Designees on such committee to be at least such minimum number as promptly as reasonable practicable after such termination (or, in the event that no Lender Designee serving on the Board is then eligible to serve on such committee pursuant to applicable law, SEC rules or regulations or the rules of the Principal Market, as soon as an eligible Lender Designee is appointed or elected to the Board).

(g) Rights of Lender Designees. Each Lender Designee shall be entitled to the same compensation, the same indemnification and the same director and officer insurance in connection with such Lender Designee’s role as a director as all other members of the Board, and each Lender Designee shall be entitled to reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the Board and any committees thereof, to the same extent as all other members of the Board. The Principal Borrower agrees that any such indemnification arrangements described in the foregoing sentence will be the primary source of indemnification and advancement of expenses in connection with the matters covered thereby and payment thereon will be made before, offset and reduce any other insurance, indemnity or expense advancement to which a Lender Designee may be entitled or which is actually paid in connection with such matters, including as a member, manager, partner or employee of the Agent, a Lender or any Affiliates or Related Funds of the foregoing. Without limiting the foregoing, the Principal Borrower shall maintain, at its own expense, directors and officers liability insurance in at least an amount equal to $12,500,000 on behalf of and covering all members of the Board (including the Lender Designees) against expenses, liabilities or losses asserted against or incurred by any such individual in such capacity or arising out of such individual’s status as a member of the Board, subject to customary exclusions.

Section 8.35 Notice of Change of Control Transactions. The Principal Borrower shall give written notice to the Lenders at least twenty (20) Business Days prior to the date on which any Change of Control will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Lenders.

Section 8.36 Further Assurances. At any time or from time to time upon the request of the Agent, each Borrower will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Agent may reasonably request in order to effect fully the purposes of the Transaction Documents. In furtherance and not in limitation of the foregoing, each Borrower shall take such actions as the Agent may reasonably request from time to time to ensure that the Obligations are secured by substantially all of the assets of the Borrowers and their Subsidiaries.

Section 8.37 Hiring of Chief Executive Officer. The Principal Borrower, the Board and all applicable committees thereof shall use their reasonable best efforts to identify, interview and negotiate with candidates for Chief Executive Officer of the Principal Borrower and, subject to the Board’s approval, hire and appoint a new Chief Executive Officer as successor to Warren Levy as soon as reasonably practicable.

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ARTICLE 9

CROSS GUARANTY

Section 9.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to the Holders and their respective successors and assigns the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all obligations owed or hereafter owing to the Holders by each other Borrower. Each Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under this ARTICLE 9 shall not be discharged until payment and performance, in full, of the obligations under the Transaction Documents has occurred and all commitments (if any) to lend hereunder have been terminated, and that its obligations under this ARTICLE 9 shall be absolute and unconditional, irrespective of, and unaffected by:

(a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Transaction Document or any other agreement, document or instrument to which any Borrower is or may become a party;

(b) the absence of any action to enforce this Agreement (including this ARTICLE 9) or any other Transaction Document or the waiver or consent by the Holders with respect to any of the provisions thereof;

(c) the Insolvency of any Borrower or Subsidiary; or

(d) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

Each Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the obligations guaranteed hereunder.

Section 9.2 Waivers by Borrowers. Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel the Holders to marshal assets or to proceed in respect of the obligations guaranteed hereunder against any other Borrower or Subsidiary, any other party or against any security for the payment and performance of the obligations under the Transaction Documents before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Transaction Documents and that, but for the provisions of this ARTICLE 9 and such waivers, the Holders would decline to enter into this Agreement.

Section 9.3 Benefit of Guaranty. Each Borrower agrees that the provisions of this ARTICLE 9 are for the benefit of the Holders and their respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower and the Holders, the obligations of such other Borrower under the Transaction Documents.

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Section 9.4 Waiver of Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or in any other Transaction Document, and except as set forth in Section 9.7, each Borrower hereby expressly and irrevocably waives any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges and agrees that this waiver is intended to benefit the Holders and shall not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this ARTICLE 9, and that the Holders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 9.4.

Section 9.5 Election of Remedies. If the Holders may, under applicable law, proceed to realize their benefits under any of the Transaction Documents, the Agent or any of the Holders may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this ARTICLE 9. If, in the exercise of any of its rights and remedies, any of the Holders shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by such Holders and waives any claim based upon such action, even if such action by such Holders shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by such Holders. Any election of remedies that results in the denial or impairment of the right of the Holders to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the obligations under the Transaction Documents.

Section 9.6 Limitation. Notwithstanding any provision herein contained to the contrary, each Borrower’s liability under this ARTICLE 9 (which liability is in any event in addition to amounts for which such Borrower is primarily liable under the Transaction Documents) shall be limited to an amount not to exceed as of any date of determination the greater of:

(a) the net amount of all amounts advanced to any other Borrower under this Agreement or otherwise transferred to, or for the benefit of, such Borrower (including any interest and fees and other charges); and

(b) the amount that could be claimed by the Holders from such Borrower under this ARTICLE 9 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Borrower’s right of contribution and indemnification from each other Borrower under Section 9.7.

Section 9.7 Contribution with Respect to Guaranty Obligations.

(a) To the extent that any Borrower shall make a payment under this ARTICLE 9 of all or any of the obligations under the Transaction Documents (other than financial accommodations made to that Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments then previously or

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concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate obligations under the Transaction Documents satisfied by such Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the obligations under the Transaction Documents and termination of the Transaction Documents (including all commitments (if any) to lend hereunder), such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

(b) As of any date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this ARTICLE 9 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

(c) This Section 9.7 is intended only to define the relative rights of Borrowers and nothing set forth in this Section 9.7 is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 9.1. Nothing contained in this Section 9.7 shall limit the liability of any Borrower to pay the financial accommodations made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

(d) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Borrower to which such contribution and indemnification is owing.

(e) The rights of the indemnifying Borrowers against other Borrowers under this Section 9.7 shall be exercisable upon the full and indefeasible payment of the obligations under the Transaction Documents and the termination of the Transaction Documents.

Section 9.8 Liability Cumulative. The liability of Borrowers under this ARTICLE 9 is in addition to and shall be cumulative with all liabilities of each Borrower to the Holders under this Agreement and the other Transaction Documents to which such Borrower is a party or in respect of any obligations under the Transaction Documents or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

Section 9.9 Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Borrowers under this Agreement is stayed upon the insolvency, bankruptcy or reorganization of any of the Borrowers, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable jointly and severally by the Borrowers hereunder forthwith on demand by the Required Holders.

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Section 9.10 Benefit to Borrowers. All of the Borrowers and their Subsidiaries are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of each such Person has a direct impact on the success of each other Person. Each Borrower and each Subsidiary will derive substantial direct and indirect benefit from the purchase and sale of the Notes hereunder.

ARTICLE 10

RIGHTS UPON EVENT OF DEFAULT

Section 10.1 Event of Default. Each of the following events shall constitute an “Event of Default”:

(a) any Borrower’s failure to pay to the Agent and/or Holders and/or Lenders any amount of principal, interest (including interest calculated at the Default Rate), Late Charges, redemptions or other amounts when and as due under this Agreement and the Notes (including any Borrower’s failure to pay any redemption payments or amounts hereunder or under the Notes) or any other Transaction Document, or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby;

(b) any default occurs and is continuing under, or any redemption of or acceleration prior to maturity of, any Indebtedness of the Borrowers or any of their Subsidiaries in excess of $500,000; provided, that, in the event that any such default or acceleration of indebtedness is cured or rescinded by the holders thereof prior to acceleration of the Notes, no Event of Default shall exist as a result of such cured default or rescinded acceleration;

(c)(i) any of the Borrowers or any of their Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign or state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, or to the conversion of an involuntary case to a voluntary case, (C) consents to the appointment of or taking of possession by a receiver, trustee, assignee, liquidator or similar official (a “Custodian”) for all or a substantial part of its property, (D) makes a general assignment for the benefit of its creditors, or (E) admits in writing that it is Insolvent or is otherwise generally unable to pay its debts as they become due; or (ii) the board of directors (or similar governing body) of any of the Borrowers or any of their Subsidiaries (or any committee thereof) adopts any resolution or otherwise authorizes any action to approve any of the actions referred to in this Section 10.1(c) or Section 10.1(d);

(d) a court of competent jurisdiction (i) enters an order or decree under any Bankruptcy Law, which order or decree (A) (1) is not stayed or (2) is not rescinded, vacated, overturned, or otherwise withdrawn within thirty (30) days after the entry thereof, and (B) is for relief against any of the Borrowers or any of their Subsidiaries in an involuntary case, (ii) appoints a Custodian over all or a substantial part of the property of any of the Borrowers or any of their Subsidiaries and such appointment continues for thirty (30) days, (iii) orders the liquidation of any of the Borrowers or any of their Subsidiaries, or (iv) issues a warrant of attachment, execution or similar process against any substantial part of the property of any of the Borrowers or any of their Subsidiaries;

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(e) a final judgment or judgments for the payment of money in excess of $500,000 or that otherwise could reasonably be expected to have a Material Adverse Effect are rendered against any of the Borrowers or any of their Subsidiaries and which judgments are not, within fifteen (15) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within fifteen (15) days after the expiration of such stay, unless (in the case of a monetary judgment) such judgment is covered by third-party insurance, so long as the applicable Borrower or Subsidiary provides the Holders a written statement from such insurer (which written statement shall be reasonably satisfactory to the Agent and the Required Holders) to the effect that such judgment is covered by insurance and such Borrower or Subsidiary will receive the proceeds of such insurance within fifteen (15) days following the issuance of such judgment;

(f) any of the Borrowers breaches any covenant, or other term or condition of any Transaction Document or any other agreement with the Agent or any Holder, except (i) in the case of a breach of a covenant or other term or condition of any Transaction Document (other than Sections 8.1, 8.4 through 8.10, 8.13, 8.23, 8.27, 8.28 and 8.29 of this Agreement) which is curable, only if such breach continues for a period of five (5) Business Days, and (ii) a breach addressed by the other provisions of this Section 10.1;

(g) a Change of Control occurs;

(h) any representation or warranty made by any Borrower herein or any other Transaction Document is breached or is false or misleading, each in any material respect;

(i) any default or “Event of Default” or similarly defined term occurs and is continuing with respect to any of the other Transaction Documents;

(j) the repudiation by any of the Borrowers of any of its obligations under any Security Document, or any Security Document or any term thereof shall cease to be, or is asserted by any Borrower not to be, a legal, valid and binding obligation of any Borrower enforceable in accordance with its terms;

(k) any Lien against the Collateral intended to be created by any Security Document shall at any time be invalidated, subordinated or otherwise cease to be in full force and effect, for whatever reason, or any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by any Borrower not to be, a valid, first priority perfected Lien (to the extent that any Transaction Document obligates the parties to provide such a perfected first priority Lien, and except to the extent Permitted Liens are permitted by the terms of the Transaction Documents to have priority) in the Collateral (except as expressly otherwise provided under and in accordance with the terms of such Transaction Document);

(l) any material provision of any Transaction Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Borrower, or a proceeding shall be commenced by any Borrower, or by any Governmental Authority having jurisdiction over such Borrower, seeking to establish the invalidity or unenforceability thereof, or any Borrower shall deny that it has any liability or obligation purported to be created under any Transaction Document;

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(m) the failure of the Principal Borrower’s Common Stock to be quoted or listed on the Principal Market;

(n) the material breach by any of the Borrowers or any of their Subsidiaries of an agreement or agreements (in each case, other than a Transaction Document) to which it is a party that involves the payment to or by such Borrower or Subsidiary, individually or in the aggregate, of more than $500,000 (whether by set-off or otherwise) in any six (6) month period;

(o) the occurrence of any event which could reasonably be expected to have a Material Adverse Effect;

(p) any Borrower or Subsidiary liquidates, dissolves, terminates or suspends its business operations or otherwise fails to operate its business in the ordinary course;

(q) [Reserved];

(r) (i) any material decline or depreciation in the value or market price of the Collateral (whether actual or reasonably anticipated), which causes the Collateral, in the sole opinion of Agent acting in good faith, to become unsatisfactory as to value or character, or which causes the Agent to reasonably believe that the Obligations are inadequately secured and that the likelihood for repayment of the Obligations is or will soon be impaired, time being of the essence, or (ii) any other event or circumstance which causes the Agent to reasonably believe that the Obligations are inadequately secured and that the likelihood for repayment of the Obligations is or will soon be impaired, time being of the essence;

(s)(i) there occurs one or more ERISA Events which individually or in the aggregate result(s) in or could reasonably be expected to result in liability of the Borrowers or any of their Subsidiaries in excess of $500,000 during the term hereof; or (ii) there exists any fact or circumstance that could reasonably be expected to result in the imposition of a Lien pursuant to Section 430(k) of the Code or ERISA or a violation of Section 436 of the Code;

(t) any default or event of default (monetary or otherwise) shall occur with respect to any Material Contract;

(u) the failure of any Registration Statement (as defined in the Registration Rights Agreement) required to be filed pursuant to the Registration Rights Agreement to be declared effective by the SEC on or prior to the date that is sixty (60) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);

(v) while a Registration Statement filed pursuant to the Registration Rights Agreement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of such Registration Statement lapses for any reason (including the issuance of a stop order) or is unavailable to the Holder for sale of Registrable Securities in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive Trading Days or for more than an aggregate of twenty-five (25) Trading Days in any 365-day period (other than days during an Allowable Grace Period (as defined in the Registration Rights Agreement));

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(w) the Principal Borrower or its transfer agent provides notice to any holder of the Notes, including by way of public announcement, at any time of its intention not to comply with a Conversion Notice (as defined in the Notes) delivered in accordance with the terms of the respective Note (excluding, however, a notice that relates solely to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of the Notes); or

(x) a Conversion Failure (as defined in the Notes), whether or not as a result of a failure to obtain the Stockholder Approval in accordance with Section 8.30;

(y) the shares of Common Stock cease to be registered under Section 12 of the 1934 Act; or

(z) the Principal Borrower fails to timely make any filing with the SEC required under the 1934 Act or any rules or regulations promulgated thereunder (other than a Current Report on Form 8-K that is required solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06, 4.02(a) or 5.02(e) of Form 8-K), provided that any filing made within the time period permitted by Rule 12b-25 under the 1934 Act and pursuant to a timely filed Form 12b-25 shall, for purposes of this clause (z), be deemed to be timely filed.

For purposes of this Agreement, “Triggering Event” shall mean the occurrence of any event set forth in subsections (m), (u), (v), (w), (x), (y) or (z) above on or after the Conversion Commencement Date (as defined in the Notes).

Section 10.2 Acceleration Right.

(a) Promptly after the occurrence of an Event of Default, the Borrowers shall deliver written notice thereof via email, facsimile and overnight courier (an “Event of Default Notice”) to the Agent and the Holders. At any time after the earlier of the Agent’s and the Holders’ receipt of an Event of Default Notice and the Agent and the Holders becoming aware of an Event of Default which has not been cured or waived, the Required Holders may require the Borrowers to redeem all or any portion of the Notes (an “Event of Default Redemption”) by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Borrowers, which Event of Default Redemption Notice shall indicate the portion of the Notes that the Required Holders are requiring the Borrowers to redeem; provided, that upon the occurrence of any Event of Default described in Section 10.1(c) or Section 10.1(d), the Notes, in whole, shall automatically, and without any action on behalf of the Agent or any Holder, be redeemed by the Borrowers. All Notes subject to redemption by the Borrowers pursuant to this Section 10.2 shall be redeemed by the Borrowers at a price equal to the outstanding principal amount of the Notes, plus the Yield Maintenance Premium, plus accrued and unpaid interest and accrued and unpaid Late Charges (the “Event of Default Redemption Price”); provided, however, if the applicable Event of Default is a Triggering Event, the price for redemption of the Notes shall be equal to the greater of (i) an amount equal to the sum of one hundred fifteen percent (115%) of the outstanding principal amount of the Notes, plus accrued and unpaid interest, plus accrued and

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unpaid Late Charges and (ii) an amount equal to the product of (A) the number of Conversion Shares into which the principal amount and all accrued and unpaid interest outstanding under the Notes may, without giving effect to any limitations set forth in Section 4 of the Notes, be converted as of the date of the Triggering Event pursuant to the terms of the Notes, multiplied by (B) the Weighted Average Price (as defined in the Notes) for one (1) share of Common Stock as of the date of the Triggering Event (the “Triggering Event Redemption Price”). Upon the delivery of an Event of Default Redemption Notice and upon the occurrence of any Event of Default described in Section 10.1(c) or Section 10.1(d), any agreement of the Lenders or Holders, as applicable, to purchase additional Notes under this Agreement shall irrevocably terminate.

(b) In the case of an Event of Default Redemption, the Borrowers shall deliver the Event of Default Redemption Price or Triggering Event Redemption Price, as applicable, to the Agent within three (3) Business Days after the Borrowers’ receipt of the Event of Default Redemption Notice. In the case of an Event of Default Redemption of less than all of the principal of the Notes, the Borrowers shall promptly cause to be issued and delivered to the Holders new Notes (in accordance with Section 2.7) representing the outstanding principal which has not been redeemed.

Section 10.3 Consultation Rights. Without in any way limiting any remedy that the Holders may have, at law or in equity, under any Transaction Document (including under the foregoing provisions of this ARTICLE 10) or otherwise, upon the occurrence and during the continuance of any Event of Default, upon the request of the Agent or the Required Holders, the Borrowers shall hire or otherwise retain a consultant, advisor or similar Person acceptable to the Agent to advise the Borrowers with respect to their business and operations.

Section 10.4 Other Remedies. The remedies provided herein and in the Notes shall be cumulative and in addition to all other remedies available under any of the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Agent’s or any Holder’s right to pursue actual and consequential damages for any failure by the Borrowers to comply with the terms of this Agreement, the Notes and the other Transaction Documents. Amounts set forth or provided for herein and in the Notes with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Holders and shall not, except as expressly provided herein, be subject to any other obligation of the Borrowers (or the performance thereof). Each of the Borrowers acknowledges that a breach by it of its obligations hereunder and under the Notes and the other Transaction Documents will cause irreparable harm to the Holders and that the remedy at law for any such breach may be inadequate. The Borrowers therefore agree that, in the event of any such breach or threatened breach, the Holders shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

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ARTICLE 11

TERMINATION

Section 11.1 Failure to Close. In the event that the First Restated Closing shall not have occurred with respect to a Lender on March 17, 2010 (or such later date as is agreed to by such Lender) due to the Principal Borrower’s or such Lender’s failure to satisfy the conditions set forth in Sections 4.1 and 5.1 (and the non-breaching party’s failure to waive such unsatisfied condition(s)), the non-breaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party; provided, however, if this Agreement is terminated pursuant to this Section 11.1, the Borrowers shall remain obligated to reimburse the Lenders for the expenses described in Section 8.25 above. Any such termination of this Agreement shall not affect the effectiveness of the Original Financing Agreement or the Transaction Documents (as defined in the Original Financing Agreement), each of which shall continue in full force and effect in accordance with its terms.

Section 11.2 Conversion/Redemption of Notes. Except for those obligations and agreements herein that by their terms survive termination of this Agreement, this Agreement shall immediately terminate and be of no further force or effect upon conversion and/or redemption in full of the Notes and payment in full in cash of all Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).

ARTICLE 12

AGENCY PROVISIONS

Section 12.1 Appointment. Each of the Holders hereby irrevocably designates and appoints Agent as the administrative agent and collateral agent of such Holder (or the Holders represented by it) under this Agreement and the other Transaction Documents for the term hereof (and Agent hereby accepts such appointment), and each such Holder irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the other Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and the other Transaction Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or the other Transaction Documents, the Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the other Transaction Documents or otherwise exist against the Agent. Any reference to the Agent in this Agreement or the other Transaction Documents shall be deemed to refer to the Agent solely in its capacity as Agent and not in its capacity, if any, as a Holder.

Section 12.2 Delegation of Duties. The Agent may execute any of its respective duties under this Agreement or the other Transaction Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by the Agent with reasonable care.

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Section 12.3 Exculpatory Provisions. Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement (except for actions occasioned by its or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Holders for any recitals, statements, representations or warranties made by the Borrowers or any of their Subsidiaries or any officer thereof contained in this Agreement, the other Transaction Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or the other Transaction Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Transaction Document or for any failure of the Borrowers or any of their Subsidiaries to perform its obligations hereunder or thereunder. The Agent shall not be under any obligation to any Holder to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or of any other Transaction Document, or to inspect the properties, books or records of the Borrowers or any of their Subsidiaries.

Section 12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrowers), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless the Agent shall have actual notice of any transferee. The Agent shall be fully justified in failing or refusing to take any action under this Agreement and the other Transaction Documents unless it shall first receive such advice or concurrence of the Required Holders (or, when expressly required hereby, all the Holders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Holders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action except for its own gross negligence or willful misconduct. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Transaction Documents in accordance with a request of the Required Holders (or, when expressly required hereby, all the Holders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Holders and all future Holders.

Section 12.5 Notices of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default hereunder or under any other Transaction Document unless it has received notice of such Event of Default in accordance with the terms hereof or thereof or notice from a Holder or the Borrowers referring to this Agreement or the other Transaction Documents describing such Event of Default and stating that such notice is a “notice of default.” In the event that the Agent receives such a notice, it shall promptly give notice thereof to the Holders. The Agent shall take such action with respect to such Event of Default as shall be reasonably directed by the Required Holders; provided that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take

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such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable in the best interests of the Holders, except to the extent that other provisions of this Agreement or the other Transaction Documents expressly require that any such action be taken or not be taken only with the consent and authorization or upon the request of the Holders or Required Holders, as applicable.

Section 12.6 Non-Reliance on the Agent and Other Holders. Each of the Holders expressly acknowledges that neither the Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates has made any representations or warranties to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Borrowers or any of their Subsidiaries, shall be deemed to constitute any representation or warranty by the Agent to any Holder. Each of the Holders represents that it has made and will continue to make, independently and without reliance upon the Agent or any other Holder, and based on such documents and information as it shall deem appropriate at the time, its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Transaction Documents, and such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrowers and their Subsidiaries. Except for notices, reports and other documents expressly required to be furnished to the Holders by the Agent hereunder or under the other Transaction Documents, the Agent shall not have any duty or responsibility to provide any Holder with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrowers or any of their Subsidiaries which may come into the possession of the Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.

Section 12.7 Indemnification. Each of the Holders hereby agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably according to the respective amounts of their Notes, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including at any time following the payment of the Notes) be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement, the other Transaction Documents, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Holder shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent they result from the Agent’s gross negligence or willful misconduct. The agreements in this Section 12.7 shall survive the payment or conversion of the Notes and all other amounts payable hereunder and the termination of this Agreement and the other Transaction Documents.

Section 12.8 The Agent in Its Individual Capacity. The Agent and its Subsidiaries and Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though the Agent were not an Agent hereunder. With respect to any Note issued to it, the Agent shall have the same rights and powers under this Agreement and the other Transaction Documents as any Holder and may exercise the same as though it were not an Agent, and the term “Holders” shall include the Agent in its individual capacity.

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Section 12.9 Resignation of the Agent; Successor Agent. The Agent may resign as Agent at any time by giving thirty (30) days advance notice thereof to the Holders and the Borrowers and, thereafter, the retiring Agent shall be discharged from its duties and obligations hereunder. Upon any such resignation, the Required Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Holders, then the Agent may, on behalf of the Holders, appoint a successor Agent reasonably acceptable to the Borrowers (so long as no Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Agent. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 12.9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. If no successor has accepted appointment as Agent by the date which is thirty (30) days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Required Holders shall perform all of the duties of the Agent hereunder until such time, if any, as the Required Holders appoint a successor agent as provided for above.

Section 12.10 Reimbursement by Holders. To the extent that the Borrowers for any reason fail to indefeasibly pay any amount required under Section 13.1 or Section 13.12 to be paid by it to the Agent (or any sub-agent thereof), or any Related Party of any of the foregoing, each Holder severally agrees to pay to the Agent (or any such sub-agent) or such Related Party, as the case may be, such Holder’s applicable percentage thereof (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Agent (or any such sub-agent) in connection with such capacity. For the purposes of this Section 12.10, the “applicable percentage” of a Holder shall be the percentage of the total aggregate principal amount of the Notes represented by the Notes held by such Holder at such time.

ARTICLE 13

MISCELLANEOUS

Section 13.1 Payment of Expenses. The Borrowers shall reimburse Agent and the Holders on demand for all reasonable costs and expenses, including legal expenses and reasonable attorneys’ fees (whether for internal or outside counsel), incurred by Agent and the Holders in connection with the (i) documentation and consummation of the transactions contemplated hereunder and any other transactions between the Borrower and Agent and the Holders, including UCC and other public record searches and filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review (including due diligence review) costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Obligations; (iv) administration and enforcement of Agent’s and any Holder’s rights under this Agreement or any other Transaction Document (including any costs and expenses of any third party provider engaged by Agent or the Holders for such purposes); (v) costs associated with any refinancing or restructuring of the

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Notes whether in the nature of a “work-out,” in any insolvency or bankruptcy proceeding or otherwise, and whether or not consummated; (vi) all reasonable out-of-pocket costs and expenses of the Agent and the Holders and their assignees (including attorneys’ fees) in connection with the assignment, transfers or syndication of the Notes; and (vii) from and against all liability for any intangibles, documentary, stamp or other similar taxes, fees and excises, if any, including any interest and penalties, and any finder’s or brokerage fees, commissions and expenses (other than any fees, commissions or expenses of finders or brokers engaged by the Holders), that may be payable in connection with the Notes contemplated by this Agreement and the other Transaction Documents. The Borrowers shall also (i) pay all normal service charges with respect to all accounts maintained by the Borrowers with the Holders and any additional services requested by any Borrower from the Holders and (ii) reimburse Agent, Lenders, Holders and their Related Parties on demand for all reasonable out-of-pocket costs and expenses (including legal expenses and reasonable attorneys’ fees (whether for internal or outside counsel)) incurred in connection with the ownership of the Notes and Lenders Shares, the exercise of any rights or remedies in respect thereof or appurtenant thereto (including, without limitation, rights under or related to Section 8.34, whether as a Lender Designee or otherwise) or the administration thereof, including, without limitation, the preparation and filing of all applicable governmental disclosures and other filings and attendance at board of director meetings (and subcommittees thereof). All such costs, expenses and charges shall constitute Obligations hereunder, shall be payable by the Borrowers to the Holders on demand, and, until paid, shall bear interest at the highest rate then applicable to Notes hereunder. Without limiting the foregoing, if (a) any Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or any Holder otherwise takes action to collect amounts due under such Note or to enforce the provisions of such Note or (b) there occurs any bankruptcy, reorganization, receivership of any of the Borrowers or other proceedings affecting creditors’ rights and involving a claim under such Note, then the Borrowers shall pay the costs incurred by such Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, reasonable attorneys’ fees and disbursements (including such fees and disbursements related to seeking relief from any stay, automatic or otherwise, in effect under any Bankruptcy Law).

Section 13.2 Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Chicago, Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY

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IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY.

Section 13.3 Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. A facsimile, telecopy, PDF or other reproduction of this Agreement may be delivered by any party hereto, and an executed copy of this Agreement may be delivered by any party hereto by facsimile, e-mail or other similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. Each party hereto hereby agrees that it shall not raise the execution of facsimile, PDF or other reproduction of this Agreement, or the fact that any signature was transmitted by facsimile, e-mail or other similar electronic transmission device, as a defense to such party’s entry into this Agreement.

Section 13.4 Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

Section 13.5 Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

Section 13.6 Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Lenders, the Borrowers, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein and therein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, none of the Borrowers or any Lender makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement, the Notes or any of the other Transaction Documents may be amended or waived other than by an instrument in writing signed by the Borrowers, the Agent and the Required Holders (or by the Agent with the consent of the Required Holders) (provided, that no amendment or waiver hereof shall increase any Lender’s obligations hereunder or materially adversely affect the rights of such Lender hereunder, in either case, without such Lender’s written consent; and provided, further, no amendment or waiver shall extend the due date of any payment hereunder or under the Notes, decrease the amount of interest or other compensation payable hereunder or under the Notes, or modify Section 8.1 without the consent of the Holders of all Notes), and any amendment or waiver to this Agreement made in conformity with the provisions of this Section 13.6 shall be binding on all Lenders and holders of Securities, as applicable. No such amendment or waiver shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding. No consideration shall be offered or paid to any Person to amend or

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consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents or Holders of Notes, as the case may be. None of the Borrowers has, directly or indirectly, made any agreements with any Lenders relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, each of the Borrowers confirms that, except as set forth in this Agreement, no Lender has made any commitment or promise or has any other obligation to provide any financing to the Borrowers or otherwise.

Section 13.7 Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided, confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Borrower:
	Unigene Laboratories, Inc. 81 Fulton Street Boonton, New Jersey 07005
	Telephone:	(973) 265-1100
	Facsimile:	(973) 335-0972
	Attention:	Warren Levy
With a copy (for informational purposes only) to:
	Dechert LLP 902 Carnegie Center, Suite 500 Princeton, New Jersey 08540
	Telephone:	(609) 955-3200
	Facsimile:	(609) 955-3259
	Attention:	James J. Marino
If to the Agent:
	Victory Park Management, LLC 227 W. Monroe Street, Suite 3900 Chicago, Illinois 60606
	Telephone:	(312) 701-0788
	Facsimile:	(312) 701-0794
	Attention:	Matthew Ray

If to a Lender, to its address and facsimile number set forth on the Schedule of Lenders, with copies to such Lender’s representatives as set forth on the Schedule of Lenders,

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with a copy (for informational purposes only) to:
	Katten Muchin Rosenman LLP 525 West Monroe Street, Suite 1900 Chicago, Illinois 60661
	Telephone:	(312) 902-5297
	Facsimile:	(312) 577-4408
	Attention:	Mark Grossmann, Esq.

or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clauses (i), (ii) or (iii) above, respectively.

Section 13.8 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns, including any purchasers of the Notes or the Lender Shares (with respect to a purchaser of the Lender Shares, to the extent such purchaser is a Lender or Holder, an Affiliate or Related Fund of a Lender or Holder, or a purchaser of all or any portion of the Notes). None of the Borrowers shall assign this Agreement or any rights or obligations hereunder without the prior written consent of each of the Holders of the Notes and the Lender Shares, including by way of a Change of Control. A Lender may assign some or all of its rights and obligations hereunder in connection with transfer of any of its Securities without the consent of the Borrowers, in which event such assignee shall be deemed to be the Lender hereunder with respect to such assigned rights and obligations, and the Borrowers shall use their best efforts to ensure that such transferee is registered as a Holder and that any Liens on the Collateral shall be for the benefit of such Holder (as well as the other Holders of Notes).

Section 13.9 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

Section 13.10 Survival. The representations, warranties, agreements and covenants of the Borrowers and the Lenders contained in the Transaction Documents shall survive each applicable Closing, except for the representations, warranties, agreements and covenants under this Agreement if same is terminated under ARTICLE 11. Each Lender shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

Section 13.11 Further Assurances. Each Borrower shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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Section 13.12 Indemnification. In consideration of each Lender’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Borrowers’ other obligations under the Transaction Documents, the Borrowers shall jointly and severally defend, protect, indemnify and hold harmless Agent, each Lender and each other Holder of any Notes and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Borrowers in this Agreement or any other Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Borrowers contained in this Agreement or any other Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (c) the present or former status of the Principal Borrower as a U.S. real property holding corporation for federal income tax purposes within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, if applicable, or (d) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Borrowers) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement or any other Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of such Lender or Holder of the Securities as an investor in the Borrowers pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertakings by the Borrower may be unenforceable for any reason, the Borrowers shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnification provided in this Section 13.12 shall not apply to any Indemnified Liabilities which are the subject of the indemnification provided for in the Registration Rights Agreement, as well as shall not apply to those matters covered by the express exceptions to indemnification provided by the Registration Rights Agreement. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 13.12 shall be the same as those set forth in the Registration Rights Agreement. The agreements in this Section 13.12 shall survive the payment or conversion of the Notes and all other amounts payable hereunder and the termination of this Agreement and the other Transaction Documents.

Section 13.13 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

Section 13.14 Waiver. No failure or delay on the part of any Holder in the exercise of any power, right or privilege hereunder or any of the other Transaction Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

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Section 13.15 Payment Set Aside. To the extent that any of the Borrowers makes a payment or payments to the Lenders hereunder or pursuant to any of the other Transaction Documents or the Lenders enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to any of the Borrowers, a trustee, receiver or any other Person under any law (including any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

Section 13.16 Independent Nature of Lenders’ Obligations and Rights. The obligations of each Lender under any Transaction Document are several and not joint with the obligations of any other Lender, and no Lender shall be responsible in any way for the performance of the obligations of any other Lender under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Lender pursuant hereto or thereto, shall be deemed to constitute the Lenders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Lenders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents and each of the Borrowers acknowledges that the Lenders are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Lender confirms that it has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors. Each Lender shall be entitled to independently protect and enforce its rights, including the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

Section 13.17 Reaffirmation. Anything contained herein to the contrary notwithstanding, this Agreement is not intended to and shall not serve to effect a novation of the “Obligations” (as defined in the Original Financing Agreement). Instead, it is the express intention of the parties hereto to reaffirm the indebtedness, obligations and liabilities created under the Original Financing Agreement and the Original Notes, which is evidenced by the Original Notes and secured by the Collateral. Each Borrower acknowledges and confirms that the Liens and security interests granted pursuant to the Security Documents secure the indebtedness, liabilities and obligations of the Borrowers to the Agent and the Lenders and Holders under the Original Notes and the Original Financing Agreement, as amended and restated pursuant to the Notes and this Agreement, respectively (except that the grants of security interests, mortgages and Liens under and pursuant to the Security Documents shall continue unaltered, and each other Transaction Document shall continue in full force and effect in accordance with its terms unless otherwise amended by the parties thereto, and the parties hereto hereby ratify and confirm the terms thereof as being in full force and effect and unaltered by this Agreement), and that the term “Obligations” as used in the Transaction Documents (or any other

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term used therein to describe or refer to the indebtedness, liabilities and obligations of the Borrowers to the Agent and the Lenders and Holders) includes the indebtedness, liabilities and obligations of the Borrowers under this Agreement and the Notes delivered hereunder, and under the Original Notes and the Original Financing Agreement, as amended and restated pursuant to the Notes and this Agreement, respectively, as the same further may be amended, modified, supplemented and/or restated from time to time. The Transaction Documents and all agreements, instruments and documents executed or delivered in connection with any of the foregoing shall each be deemed to be amended to the extent necessary to give effect to the provisions of this Section 13.17. Each reference to the “Financing Agreement” or the “Notes” in any Transaction Document shall mean and be a reference to this Agreement and the Notes issued hereunder, respectively (as each may be further amended, restated, supplemented or otherwise modified from time to time). Cross-references in the Transaction Documents to particular section numbers in the Original Financing Agreement shall be deemed to be cross-references to the corresponding sections, as applicable, of this Agreement.

[Signature Pages Follow]

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IN WITNESS WHEREOF, each party has caused its signature page to this Financing Agreement to be duly executed as of the date first written above.

BORROWERS:
UNIGENE LABORATORIES, INC.
By:	/s/ Warren P. Levy
Name:	Warren P. Levy
Title:	Chief Executive Officer
AGENT:
VICTORY PARK MANAGEMENT, LLC
By:	/s/ Matthew Ray
Name:	Matthew Ray
Title:	Manager

Signature Page to Amended and Restated Financing Agreement

LENDERS:
VICTORY PARK CREDIT OPPORTUNITIES MASTER FUND, LTD.
By:	Victory Park Capital Advisors, LLC, its investment manager
By:	/s/ Scott Zemnick
Name:	Scott Zemnick
Title:	General Counsel

Signature Page to Amended and Restated Financing Agreement

SCHEDULE OF LENDERS

(1)	(2)	(3)		(4)	(5)	(6)
Lender	Address and Facsimile Number	Aggregate Principal Amount of Notes at First Restated Closing		Aggregate Number of Shares of Common Stock Issued at First Closing and Second Closing	First Restated Closing Purchase Price in aggregate	Legal Representative’s Address and Facsimile Number
Victory Park Credit Opportunities Master Fund, Ltd.	227 W. Monroe Street Suite 3900 Chicago, IL 60606 Telephone: 312.701.0788 Facsimile: 312.701.0794 Attention: Matthew Ray Residence: Delaware	$	33,000,000	1,500,000	$19,357,527.50 in principal amount of surrendered Original Notes $13,642,472.50 in cash	Katten Muchin Rosenman LLP 525 W. Monroe Street Chicago, IL 60661 Telephone: (312) 902-5297 Facsimile: (312) 577-4408 Attention: Mark Grossmann, Esq.
			Total principal amount of Notes to be issued at First Restated Closing: $33,000,000

Schedule – 1

SCHEDULE 7.1

Subsidiaries

(i) Unigene U.K. Limited

SCHEDULE 7.5

Consents

The Joint Venture Contract by and between Shijiazhuang Pharmaceutical Group Company, Ltd. and Unigene Laboratories, Inc., dated as of June 15, 2000, provides that, for a period of three (3) years following the date the Contract is approved by the National Administration of High and New Technology Industrial Development Zone, Shijiazhuang, Hebei Province (the “Effective Date”), neither JV Party shall sell, assign, transfer, convey, pledge, encumber or liquidate or otherwise cease to be the beneficial owner of any or all of its rights under the contract or in its capital contribution in the JV.

SCHEDULE 7.6

Subsidiary Rights

None.

SCHEDULE 7.7

Equity Capitalization

(ii) STOCK OPTIONS:

As of 01/01/09	Stock Options
Outstanding	4,864,315
Vested	3,475,285
Nonvested	1,389,030
Period Activity
Issued	731,000
Exercised	629,900
Forfeited	116,500
Expired	66,000
As of 12/31/09
Outstanding	4,782,915
Vested	3,281,915
Nonvested	1,501,000

Each of Warren Levy and Ronald Levy will receive, upon execution of a Second Amendment to Employment Agreement, as applicable, stock options to purchase 100,000 shares of Common Stock. These options, which will have an exercise price of $1.20 per share, will vest in full on the three month anniversary of a new Chief Executive Officer joining the Company.

MISCELLANEOUS WARRANTS as of December 31, 2009:

	Number of Shares	Exercise Price		Grant Date	Expiration Date
Yale	20,000	$	2.00	7/25/2005	5/31/2015
Kieran Murphy	40,000	$	2.20	12/4/2006	12/5/2012
	60,000

RETENTION PROGRAM:

Pursuant to a retention program (the “Retention Program”) adopted by the Principal Borrower, certain of the Principal Borrower’s vice presidents and other key employees will be granted a new one-time award under the Principal Borrower’s 2006 Stock-Based Incentive Compensation Plan, as amended (the “2006 Plan”) of non-qualified options to purchase, in the aggregate, approximately 820,000 shares of Common Stock. The options will be subject to a four-year

vesting schedule, with 25% of such shares vesting on each anniversary of the date of grant, subject to twelve months accelerated vesting under certain termination circumstances (the “Acceleration”), and subject to Extension (as defined below).

As part of the Retention Program, all currently outstanding options and restricted stock grants held by Company employees (the “Current Grants”) under the 2006 Plan will be amended to provide for (a) the Acceleration and (b) the then-vested options contained in the Current Grants will remain exercisable for a period of three years following such termination of employment or until the termination date of such options, whichever is earlier (the “Extension”).

RIGHTS AGREEMENT:

In December 2002, pursuant to a rights agreement, the Principal Borrower distributed common stock purchase rights to stockholders of record as a dividend at the rate of one right for each share of common stock. Each right entitles the holder to purchase from the Principal Borrower one ten-thousandth of a share of common stock at an exercise price of $4.00. Initially the rights are attached to the common stock and are not exercisable. There is one right outstanding for every share of common stock outstanding.

The rights generally become exercisable and will separate from the common stock ten calendar days after a person or group acquires beneficial ownership of fifteen percent or more of the Principal Borrower’s common stock, or ten business days (or a later date following such announcement as determined by the Principal Borrower’s Board of Directors) after the announcement of a tender offer or an exchange offer to acquire fifteen percent or more of our outstanding common stock.

The rights are redeemable for $.00001 per right at the option of the Board of Directors at any time prior to the close of business on the tenth calendar day after a person or group acquires beneficial ownership of fifteen percent or more of our common stock. If not redeemed, the rights will expire on December 30, 2012. Prior to the date upon which the rights would become exercisable under the rights agreement, the Principal Borrower’s outstanding stock certificates will represent both the shares of common stock and the rights, and the rights will trade only with the shares of common stock.

In connection with the execution of the Agreement, the rights agreement has been amended to render the rights inapplicable to the restructuring under the Agreement and the other transactions contemplated by or occurring concurrently with such restructuring.

(iii) NOTES:

Jean Levy	$	8,318,714	5/10/2007	*
Jaynjean Levy Family Limited Partnership	$	7,418,803	5/10/2007	*
Victory Park Credit Opportunities Master Fund, Ltd.	$	9,454,032.02	9/30/2008
Victory Park Credit Opportunities Master Fund, Ltd.	$	4,949,479.15	9/30/2008
Victory Park Credit Opportunities Master Fund, Ltd.	$	3,251,667.49	5/22/2009
Victory Park Credit Opportunities Master Fund, Ltd.	$	1,702,348.84	5/22/2009

* Amended and restated as of September 30, 2008, and as further amended and restated on the First Restated Closing Date.

(iv) Schedule 8.6 is hereby incorporated by reference.

(v) Registration Rights Agreement by and between Fusion Capital Fund II, LLC and Unigene Laboratories, Inc., dated as of April 7, 2005.

Registration Rights Agreement by and between Unigene Laboratories, Inc. and the Buyers listed therein, dated as of March 16, 2006.

(vi) The Rights Agreement described in Schedule 7.7(ii) is hereby incorporated by reference.

SCHEDULE 7.8

Indebtedness and Other Contracts

(i)	Jean Levy	$	8,318,714	5/10/2007	*
	Jaynjean Levy Family Limited Partnership	$	7,418,803	5/10/2007	*
	Unigene Biotechnology Co., Ltd.	$	2,175,000	4/23/2008
	Victory Park Credit Opportunities Master Fund, Ltd.	$	9,454,032.02	9/30/2008
	Victory Park Credit Opportunities Master Fund, Ltd.	$	4,949,479.15	9/30/2008
	Victory Park Credit Opportunities Master Fund, Ltd.	$	3,251,667.49	5/22/2009
	Victory Park Credit Opportunities Master Fund, Ltd.	$	1,702,348.84	5/22/2009

* Amended and restated as of September 30, 2008, and as further amended and restated on the First Restated Closing Date.

SCHEDULE 7.11

Title

(iv)	Jean Levy	Assets per 5/10/2007 security agreement
	Jaynjean Levy Family Limited Partnership	Assets per 5/10/2007 security agreement
	Tarsa Therapeutics, Inc.	Assigned Contracts per, and as defined, in, that certain Assignment and Assumption Agreement, dated as of October 19, 2009, by and between the Principal Borrower and Tarsa Therapeutics, Inc.

SCHEDULE 7.12

Intellectual Property Rights

(ii) See December 31, 2009 Form 10-K Note 20 – Legal Matters regarding the Apotex litigation

SCHEDULE 7.14

Absence of Certain Changes

None.

SCHEDULE 7.15

Absence of Litigation

(ii) See December 31, 2009 Form 10-K Note 20 – Legal Matters regarding the Apotex litigation

SCHEDULE 7.18

No General Solicitation; Placement Agent’s Fees

Pursuant to an engagement letter between the Principal Borrower and RBC Capital Markets Corporation, dated June 5, 2009, the Principal Borrower will pay RBC Capital Markets Corporation, on the First Restated Closing Date in connection with the First Restated Closing, approximately $409,300 for providing certain placement agent services, $250,000 for the delivery of a fairness opinion to the Board and related fees and expenses.

SCHEDULE 7.22

Conduct of Business; Regulatory Permits

None.

SCHEDULE 7.25

Environmental Laws

None.

SCHEDULE 7.27

ERISA

None.

SCHEDULE 7.31

SEC Documents; Financial Statements

None.

SCHEDULE 7.33

Transactions with Affiliates

(i) NOTES:

Jean Levy	$	8,318,714
Jaynjean Levy Family Limited Partnership	$	7,418,803

SCHEDULE 7.35

Acknowledgement Regarding Lender’s Trading Activity

None, other than pursuant to the Lock-Up Agreement dated September 30, 2008, which has expired by its terms.

SCHEDULE 7.43

Material Contracts

LICENSE AND OTHER AGREEMENTS:

The Material Tarsa Agreements.

The Smithkline License Agreement.

The Novartis License Agreement.

The USL License Agreement.

Collateral Assignment of Agreement, by and between Unigene Laboratories, Inc. and Victory Park Management, LLC, as administrative agent and collateral agent, dated as October 19, 2009.

CHINA JV AGREEMENTS (SPG/CPG):

Joint Venture Contract by and between Shijiazhuang Pharmaceutical Group Company, Ltd. and Unigene Laboratories, Inc., dated as of June 15, 2000.

Articles of Association of Shijiazhuang – Unigene Pharmaceutical Corporation Limited, dated as of June 15, 2000.

Agreement by and between Shijiazhuang Pharmaceutical Group Company, Ltd. and Unigene Laboratories, Inc., dated as of April 23, 2008.

Technology Transfer Agreement by and between Shijiazhuang Pharmaceutical Group Corporation and Unigene Laboratories, Inc., dated as of April 23, 2008.

NOTES:

Jean Levy

Jaynjean Levy Family Limited Partnership

SCHEDULE 7.44

FDA and Product-Related Matters

(e) The Principal Borrower constructed a facility that complies with current good manufacturing practice guidelines, or cGMP, for the production of calcitonin at leased premises located in Boonton, New Jersey.

The Principal Borrower filed a new drug application, or NDA, for Fortical in March 2003 and Fortical was approved by the FDA in August 2005.

Issued US Patents

Patent Number	Name	Date
6,319,685	Alpha-Amidating Enzyme Compositions & Processes for their Production and Use	11/20/01
5,789,234	Expression Systems for Amidating Enzyme	8/4/98
5,912,014	Oral Salmon Calcitonin	6/15/99
6,103,495	Direct Expressions	8/15/00
6,086,918	Oral Prep-I	7/11/00
6,210,925	Direct Expression – I	4/3/01
6,440,392	Nasal Calcitonin	8/27/02
6,627,438	Direct Expression – I	9/30/03
6,737,250	Direct Expression – I	5/18/04
6,673,574	Oral Pep-Trans	1/6/04
7,316,819	Oral Pep Pharmaceutical Dosage Form and Method of Production (Pfizer)	1/8/08
7,445,911	Enzymatic Reactions in the Presence of Keto Acids	11/4/08
7,531,518	Method For Fostering Bone Formation and Preservation	5/12/09
7,541,174	Bacterial Host Cell For the Direct Expression of Peptides	6/2/09
7,553,655	Improved Bacterial Host Cell for the Direct Expression of Peptides	6/30/09
RE 40812	Nasal Calcitonin Formulation	6/30/09
7,648,965	Method for Fostering Bone Formation and Preservation	1/19/10
7,648,700	Method for Fostering Bone Formation and Preservation	1/19/10

US Patent Applications

Application Number	Name	Date
11/455,628	Amidated Parathyroid Hormone Fragments and Uses Thereof (Joint with GSK) (Abandoned as of 3/16/09 per GSK) split 50/50	6/19/06
12/063,618	Bone Augment Apparatus	2/21/08
11/430,752	Bone Implant Device and Methods of Using Same (Yale)	5/9/06
PCT/US2006/018609	Bone Implant Device and Methods of Using Same (Yale)	5/11/06
11/474,159	Cell Lines for the Expressing Enzyme Useful in the Preparation of Amidated Products	6/23/06
10/818,966	Direct Expression of Peptides Into Culture Media	4/5/04
12/284,552	Enzymatic Reactions In the Presence of Keto Acids	9/22/08
11/567,454	Fast Acting Oral Peptide Pharmaceutical Products	12/6/06
11/654,211	Glyoxylate Assays and their Use For Identifying Natural Amidated Compounds	1/17/07
11/076,260	Improved Bacterial Host Cell for the Direct Expression of Peptides	3/9/05
11/928,936	Improved Bacterial Host Cell for the Direct Expression of Peptides (Div of Application #60/552,824)	10/30/07
11/928,994	Improved Bacterial Host Cell for the Direct Expression of Peptides(Div of Application #60/552,824)	10/30/07
10/761,481	Improved Oral Delivery of Peptides	1/10/04
11/839,993	Method for Fostering Bone Formation and Preservation	8/16/07
12/059,662	Method for Fostering Bone Formation and Preservation	3/31/08
12/059,605	Method for Fostering Bone Formation and Preservation	3/31/08
11/254,640	Method for Bone Augmentation	10/21/05
11/796,439	Method and Composition for Fostering & Preserving Bone Growth	4/27/07
11/144,580	Oral Delivery of Peptide Pharmaceutical Composition	6/2/05
12/128,210	Peptide Pharmaceutical for Oral Delivery	5/28/08
12/284,552	Enzymatic Reactions in the Presence of Keto Acids (Divisional of U.S. Patent No. 7,445,911)	9/22/08
11/661,838	Cement Delivery	12/13/07
61/166,160	Nasal Pharmaceuticals for Nasal Delivery	4/2/09
61/205,750 (Provisional)	Treatment for Obesity

License Agreements

Intellectual Property	Licensee	License Number	Effective Date	Expiration Date
All Calcitonin Manufacturing and Oral Formulation IP and other IP as described in the Tarsa License Agreement	Tarsa Therapeutics, Inc.	—	October 19, 2009	Expiration of last valid claim
All Peptide Manufacturing & Oral Formulation IP	Smithkline Beecham Corporation	—	April 13, 2002	Expiration of last valid claim
All Manufacturing IP for Peptides and Amidating Enzyme	Novartis Pharma AG	—	April 7, 2004	Expiration of last valid claim
All US Patents and Patent Applications that claim Unigene’s salmon calcitonin formulation for nasal administration, including Patent No. 6,440,392	Upsher-Smith Laboratories, Inc.	—	November 26, 2002	Expiration of last valid claim

SCHEDULE 8.6

Existing Liens

UCC-1 Financing Statement filed in Delaware on 5/25/07 in favor of Jaynjean Levy Family Limited Partnership regarding: certain patents (File number 71974707).

UCC-1 Financing Statement filed in Delaware on 5/25/07 in favor of Jay Levy regarding: all property and assets at the Fairfield and Boonton locations (File number 71974772) (as assigned by the UCC-3 filed in Delaware on 3/2/2010 in favor of Jean Levy (File number 2010 0697650)).

UCC-1 Financing Statement filed in Essex County, New Jersey on 5/31/07 in favor of Jay Levy regarding: fixture lien on property and assets located at the Fairfield location (File number 7070826, bk 12059, pg 4373) (as assigned by the UCC-3 submitted for filing in Essex County, New Jersey on or about 3/5/2010 in favor of Jean Levy).

UCC-1 Financing Statement filed in Morris County, New Jersey on 5/31/07 in favor of Jay Levy regarding: fixture lien on property and assets located at the Boonton location (File number 2007049957, bk 20831, pg 1055) (as assigned by the UCC-3 filed in Morris County, New Jersey on 3/8/2010 in favor of Jean Levy (File number 2010014950, bk 021503, pg 0259)).

Mortgage lien filed in Essex County, New Jersey in favor of Jay Levy regarding: real property located at the Fairfield location, pursuant to the Mortgage and Security Agreement, dated July 13, 1999, by and between Unigene Laboratories, Inc. and Jay Levy (as modified by the First Modification, the Second Modification and the Third Modification (as such terms are defined in the Third Modification of Mortgage and Security Agreement, dated September 30, 2008)) (as assigned by the Assignment of Mortgage submitted for filing in Essex County, New Jersey on or about 3/5/10 in favor Jean Levy.

UCC-1 Financing Statement filed in New Jersey on 9/26/08 in favor of Victory Park Management, LLC (as Collateral Agent) regarding: all assets (File number 83282140).

UCC-1 Financing Statement filed in Essex County, New Jersey on 11/21/08 in favor of Victory Park Management, LLC regarding: fixture lien on property and assets located at the Fairfield location (File number 8104546, bk 12167, pg 8612).

Mortgage lien filed in Essex County, New Jersey on 10/27/08 in favor of Victory Park Management, LLC (as Collateral Agent) regarding: real property located at the Fairfield location (File number 8097873), pursuant to the Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing, dated September 30, 2008, between Unigene Laboratories, Inc. and Victory Park Management, LLC, as Collateral Agent for the Lenders and the Holders under the Agreement.

UCC-1 Financing Statement filed in Delaware on 8/31/01 in favor of GE Capital Colonial Pacific Leasing regarding: (1) HELOS/BF Particle Size Analyzer; (1) HP Vectra P3/933, 128 Mbyte RAM, 20 GB HD, 48x CD-ROM, NIC, WIN 2000 Operating System; (1) WINDOX Soft on CD-ROM, CRYPTOBOX, Plus Manuals; (1) IQ/OQ Validation of HELOS; (1) QT Trend Analysis Software Equipment/Lease No (File number 11077820) (as continued on 8/29/06 (File number 63011707)).

SCHEDULE 8.7

Restricted Payments

None.

SCHEDULE 8.23

Additional Issuances of Securities

None.

SCHEDULE 8.24

Use of Proceeds

USES	Amount			Description
Unigene Laboratories, Inc.	$	(11,865,764.49	)	Proceeds from Amended and Restated Financing Agreement
Agent	$	(660,000.00	)	Closing Payment
Victory Park Credit Opportunities Master Fund, Ltd.	$	(120,446.84	)	Accrued and Unpaid Interest
Victory Park Management, LLC	$	(5,000.00	)	Out-of-pocket fees and expenses
RBC Capital Markets Corporation	$	(714,274.17	)	Investment Banker Fee and Fairness Opinion
Title Company	$	(1,987.00	)	Fees for Date Down Endorsement to Title Policy
Katten Muchin Rosenman LLP	$	(275,000.00	)	Legal fees and expenses for representation of VPM, as Agent
TOTAL USES	$	(13,642,472.50	)

SCHEDULE 8.29

Existing Investments

EQUITY INTERESTS:

	Percentage of Class of Shares or Interests
Unigene Biotechnology Co., Ltd. (China JV)	45	%
Unigene U.K. Limited	100	%
Tarsa Therapeutics, Inc.	25.95	%

SCHEDULE 8.31

Reservation of Shares

The Principal Borrower has authorized 135,000,000 shares of Common Stock, of which 92,141,951 shares are issued and outstanding, 4,844,915 shares are reserved for issuance upon exercise of outstanding stock options and warrants, and 2,744,229 shares are reserved for yet-to-be granted options and restricted stock grants pursuant to the 2006 Plan, leaving an aggregate of 35,268,905 shares of Common Stock authorized, unissued and unreserved as of the date hereof.

SCHEDULE 8.34

Chairman of the Board

The powers and authorities of the Chairman of the Board shall include the following:

• To preside as Chairman at all meetings of the Board.

• To preside as Chairman at all meetings of the stockholders of the Principal Borrower.

• To develop in consultation with the Chief Executive Officer and the lead independent director (if any), and approve the agenda for each Board meeting.

• To review in advance all information sent to the Board as a whole.

• To call meetings of the Board.

• To attend meetings of each committee of the Board of which he is not a member.

• To serve as the Board’s liaison with the Chief Executive Officer.

• To serve as a designated contact for stockholder communication to non-management directors, including for consultation and direct communication with major stockholders.

• To lead and coordinate the annual evaluation of the Chief Executive Officer with the applicable committees of the Board.

• To lead and review the Board’s self-assessment and evaluation process.

EX-10.2

Exhibit 10.2

Execution Copy

Portions of this Exhibit were omitted and filed separately with the Secretary of the Commission pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. Such omissions are designated as ***.

MASTER REAFFIRMATION AND AMENDMENT TO TRANSACTION DOCUMENTS

THIS MASTER REAFFIRMATION AND AMENDMENT TO TRANSACTION DOCUMENTS (this “Master Amendment”) is made as of March 17, 2010, by and among UNIGENE LABORATORIES, a Delaware corporation (“Borrower”), VICTORY PARK MANAGEMENT, LLC, a Delaware limited liability company, as collateral agent and administrative agent (“Agent”) for the benefit of all Secured Parties (as defined in the Pledge and Security Agreement referenced on Exhibit A hereto), and the Secured Parties. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Amended and Restated Financing Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Agent, Borrower and the persons from time to time party thereto as lenders are party to that certain Financing Agreement dated as of September 30, 2008 (as amended, restated, supplemented or otherwise modified from time to time prior to the effectiveness of the Amended and Restated Financing Agreement, the “Original Financing Agreement”), pursuant to which, among other things, such Lenders made certain loans and other financial accommodations to Borrower, subject to the terms and conditions set forth therein;

WHEREAS, Borrower consented to and executed and/or delivered various agreements, documents and instruments in connection with the Original Financing Agreement, including but not limited to, the Transaction Documents (as defined in the Original Financing Agreement) and, in any case, including those agreements, documents and instruments described on Exhibit A hereto (as amended, restated, supplemented, or otherwise modified from time to time, collectively, the “Existing Transaction Documents”);

WHEREAS, Borrower, Agent and the Lenders have agreed to amend and restate the Original Financing Agreement pursuant to that certain Amended and Restated Financing Agreement dated as of March 16, 2010 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Amended and Restated Financing Agreement”), without constituting a novation;

WHEREAS, it is a condition precedent to the effectiveness of the Amended and Restated Financing Agreement that Borrower enter into this Master Amendment to acknowledge and agree that the Existing Transaction Documents, and the liens, security interests and guarantees granted and issued thereunder, secure the “Obligations” of Borrower under the Original Financing Agreement, as amended and restated pursuant to the Amended and Restated Financing Agreement;

NOW, THEREFORE, in consideration of the premises set forth herein and to induce Agent and the Lenders to make additional loans pursuant to the Amended and Restated Financing Agreement, to enter into and perform their obligations under the Amended and Restated Financing Agreement, and to continue to make available to Borrower the loans and other financial accommodations under the Original Financing Agreement and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, each of the undersigned hereby agrees as follows:

1. Amendments to the Existing Transaction Documents. All references in the Existing Transaction Documents to the “Lenders,” “Holders” or “Secured Parties” (or words of similar import) shall be deemed to refer to and include the Lenders, Holders and Secured Parties, respectively, under the Amended and Restated Financing Agreement and other Transaction Documents. All references in the Existing Transaction Documents to the “Notes” shall be deemed to refer to and include the “Notes” under the Amended and Restated Financing Agreement. All references in the Existing Transaction Documents to the “Obligations” or any other obligations, liabilities or indebtedness of any Borrower owing from time to time to “Agent”, the “Lenders”, the “Holders” or the “Secured Parties” (or words of similar import) shall refer to, and for all purposes shall be deemed and construed to refer to, without limitation, the Obligations under, and all Obligations as defined in, the Amended and Restated Financing Agreement. Without limiting the generality of the foregoing, it is expressly understood and agreed that the Obligations shall include, and the Liens on the Collateral shall secure, payment of the Notes issued under the Amended and Restated Financing Agreement, including, but not limited to, all accrued and unpaid interest thereon and all other amounts due and payable in respect thereof. All references in the Existing Transaction Documents to the “Financing Agreement” (or words of similar import) shall refer to, and for all purposes shall be deemed and construed to refer to, the Amended and Restated Financing Agreement. All references in the Existing Transaction Documents to the “Transaction Documents” shall refer to, and for all purposes shall be deemed and construed to refer to, the Transaction Documents, including, but not limited to, any Transaction Documents delivered in connection with the Amended and Restated Financing Agreement.

2. Amendments to Schedules. Schedules A through G of that certain Pledge and Security Agreement dated as of September 30, 2008 are hereby amended by deleting such schedules in their entirety and substituting therefor the replacement schedules attached hereto as Exhibit B (such amended and substituted schedules, the “Amended Borrower Schedules”).

3. Reaffirmation. Borrower hereby ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each such Existing Transaction Document to which it is a party and, to the extent Borrower granted liens on or security interests in any of its properties pursuant to any such Existing Transaction Documents as security for Borrower’s obligations under or with respect to the Original Financing Agreement, hereby ratifies and reaffirms such grant of liens and security interests and confirms and agrees that such

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liens and security interests hereafter secure all of the Obligations, including, without limitation, all additional Obligations resulting from the Amended and Restated Financing Agreement, in each case as if each reference in such Existing Transaction Documents to the obligations secured thereby are construed to hereafter mean and refer to such Obligations under, and all Obligations as defined in, the Amended and Restated Financing Agreement. Borrower acknowledges that each of the Existing Transaction Documents remains in full force and effect and is hereby ratified and confirmed. The execution of this Master Amendment shall not operate as a novation, waiver of any right, power or remedy of Agent or any of the Lenders, nor constitute a waiver of any provision of any of the Existing Transaction Documents.

4. Successors and Assigns. This Master Amendment shall be binding upon Borrower and its successors and assigns and shall inure to the benefit of Agent, the Lenders, the Holders and the other Secured Parties and each of their respective successors and assigns. The successors and assigns of such entities shall include, without limitation, their respective receivers, trustees, or debtors-in-possession.

5. Miscellaneous.

(a) No course of dealing between Borrower, on the one hand, and Agent and the other Secured Parties, on the other hand, nor any failure to exercise, nor any delay in exercising, on the part of Agent or any other Secured Party, any right, power or privilege hereunder, under the Original Financing Agreement or Amended and Restated Financing Agreement, the Original Notes or the Notes, or the other Transaction Documents (as defined in the Original Financing Agreement and Amended and Restated Financing Agreement) shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

(b) All of the rights and remedies of Agent and each other Secured Party with respect to the Collateral, whether established hereby, under the Amended and Restated Financing Agreement, the Notes or the other Transaction Documents or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

(c) This Master Amendment, along with the other Transaction Documents, constitutes the entire agreement of the parties with respect to the subject matter hereof and is intended to supersede all prior negotiations, understandings and agreements with respect thereto. No provision of this Master Amendment may be modified or amended except by a written agreement specifically referring to this Master Amendment and signed by the parties hereto.

(d) In the event any provision of this Master Amendment is held to be invalid, prohibited or unenforceable in any jurisdiction for any reason, unless such provision is narrowed by judicial construction, this Master Amendment shall, as to such jurisdiction, be construed as if such invalid, prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid, prohibited or unenforceable. If, notwithstanding the foregoing, any provision of this Master Amendment is held to be invalid, prohibited or unenforceable in any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such invalidity, prohibition

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or unenforceability without invalidating the remaining portion of such provision or the other provisions of this Master Amendment and without affecting the validity or enforceability of such provision or the other provisions of this Master Amendment in any other jurisdiction.

(e) No waiver of any breach or default or any right under this Master Amendment shall be considered valid unless in writing and signed by the party giving such waiver, and no such waiver shall be deemed a waiver of any subsequent breach or default or right, whether of the same or similar nature or otherwise.

(f) Each party shall take such further action and execute and deliver such further documents as may be reasonably necessary or appropriate in order to carry out the provisions and purposes of this Master Amendment.

(g) All questions concerning the construction, validity, enforcement and interpretation of this Master Amendment shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Chicago, Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Master Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

(h) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS MASTER AMENDMENT.

(i) This Master Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission or by electronic mail in “portable document format” (or “.pdf”), such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such signature were the original thereof.

- Remainder of this page intentionally left blank -

[Signature Page Follows]

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IN WITNESS WHEREOF, this Master Amendment has been duly executed by each of the undersigned as of the day and year first set forth above.

UNIGENE LABORATORIES, INC., a Delaware corporation
By:	/s/ Warren P. Levy
Name:	Warren P. Levy
Title:	Chief Executive Officer

Master Reaffirmation and Amendment of Security Documents

ACKNOWLEDGED AND ACCEPTED as of the date first written above
VICTORY PARK MANAGEMENT, LLC, as Agent
By:	/s/ Matthew Ray
Name:	Matthew Ray
Title:	Manager

Master Reaffirmation and Amendment of Transaction Documents

ACKNOWLEDGED AND ACCEPTED as of the date first written above
Secured Parties:
VICTORY PARK CREDIT OPPORTUNITIES MASTER FUND, LTD.
By:	Victory Park Capital Advisors, LLC, its investment manager
By:	/s/ Scott Zemnick
Name:	Scott Zemnick
Title:	General Counsel

Master Reaffirmation and Amendment of Security Documents

EXHIBIT A

EXISTING TRANSACTION DOCUMENTS

All capitalized terms used but not elsewhere defined in this Exhibit A shall have the respective meanings ascribed to such terms in the Amended and Restated Financing Agreement. Each of the following agreements, documents and instruments shall be deemed to include any and all amendments, modifications, supplements and restatements thereof. All documents are dated as of September 30, 2008 unless otherwise indicated.

1. Pledge and Security Agreement among Borrower, Agent and the other Secured Parties

2. Affiliate Subordination Agreement by and among Jay Levy, Jaynjean Levy Family Limited Partnership, Agent and Borrower

3. Patent Security Agreement by Borrower for the benefit of Collateral Agent

4. Patent Security Agreement dated May 22, 2009 by Borrower for the benefit of Collateral Agent

5. Trademark Security Agreement by Borrower for the benefit of Collateral Agent

6. Trademark Security Agreement dated May 22, 2009 by Borrower for the benefit of Collateral Agent

7. Environmental Indemnity Agreement by Borrower for the benefit of Agent and Lenders

8. Mortgage, Assignment of Rents, Security Agreement and Fixture Filing executed by Borrower in favor of Collateral Agent covering the real property located at 110 Little Falls Road, Fairfield, NJ 07004

9. Deposit Account Control Agreement dated October 29, 2008 by and among Wachovia Bank, National Association, Borrower and Collateral Agent

EXHIBIT B

UPDATED SCHEDULES TO PLEDGE AND SECURITY AGREEMENT

(see attached)

SCHEDULE A

PRINCIPAL PLACES OF BUSINESS AND OTHER

COLLATERAL LOCATIONS OF OBLIGORS

Unigene Laboratories, Inc.

1. Chief Executive Office

81 Fulton Street

Boonton, NJ 07005

2. Other Collateral Locations

110 Little Falls Road

Fairfield, NJ 07004

83 Fulton Street

Boonton, NJ 07005

SCHEDULE B

Recording Jurisdiction

Unigene Laboratories, Inc. - Secretary of State of Delaware

SCHEDULE C

Commercial Tort Claims

None.

SCHEDULE D

Pledged Companies

Tarsa Therapeutics, Inc.

SCHEDULE E

Pledged Equity

Obligor	Pledged Company	Percent of Pledged Interests	Pledged Interests as % of Total Issued and Outstanding of Pledged Company	Certificate No. of Pledged Interests
Unigene Laboratories, Inc.	Tarsa Therapeutics, Inc.	100%	25.95%	C0004

SCHEDULE F

Controlled Accounts

Name and Address of Bank	Name of Entity on the Account	Account Number	Type of Account
Wachovia, 190 River Road, Summit, NJ 07901-1444	Unigene Laboratories, Inc.	***	***
Wachovia, 190 River Road, Summit, NJ 07901-1444	Unigene Laboratories, Inc.	***	***
Wachovia, 190 River Road, Summit, NJ 07901-1444	Unigene Laboratories, Inc.	***	***1
Wachovia, 190 River Road, Summit, NJ 07901-1444	Unigene Laboratories, Inc.	***	***
Wachovia, 190 River Road, Summit, NJ 07901-1444	Unigene Laboratories, Inc.	***	***
Merrill Lynch, 717 5th Avenue 7 th Floor, New York, NY 10022	Unigene Laboratories, Inc.	***	***1

¹ For information purposes only; these accounts are accounts used for payroll and thereby excluded as a Controlled Account, as contemplated in the definition of Controlled Account.

SCHEDULE G

Motor Vehicles

None.

EX-10.3

Exhibit 10.3

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THIS NOTE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES, SUBJECT TO COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS.

SENIOR SECURED CONVERTIBLE NOTE

March 17, 2010 Principal: U.S. $33,000,000.00

FOR VALUE RECEIVED, UNIGENE LABORATORIES, INC., a Delaware corporation (the “Company”), hereby promises to pay to Victory Park Credit Opportunities Master Fund, Ltd. or its registered assigns (the “Holder”) the principal amount of Thirty-Three Million and No/100 Dollars $33,000,000.00 (the “Principal”) pursuant to, and in accordance with, the terms of that certain Amended and Restated Financing Agreement, dated as of March 16, 2010, by and among the Company, Victory Park Management, LLC, as administrative agent and collateral agent (in such capacity, the “Agent”), and the Lenders party thereto (together with all exhibits and schedules thereto and as may be amended, restated, modified and supplemented from time to time, the “Financing Agreement”). The Company hereby promises to pay accrued and unpaid Interest (as defined below) and premium, if any, on the Principal on the dates, at the rates and in the manner provided for in the Financing Agreement. This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, and as any of the foregoing may be amended, restated, supplemented or otherwise modified from time, this “Note”) is one of the Senior Secured Convertible Notes issued pursuant to the Financing Agreement (collectively, including all Senior Secured Convertible Notes issued in exchange, transfer or replacement thereof, and as any of the foregoing may be amended, restated, supplemented or otherwise modified from time to time, the “Notes”). All capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Financing Agreement.

This Note is subject to mandatory prepayment and permitted redemption on the terms specified in the Financing Agreement. Except as expressly provided in the Financing Agreement, the Company has no right, but under certain circumstances may have an obligation, make payments of Principal prior to the Maturity Date. At any time an Event of Default exists, the Principal of this Note, together with all accrued and unpaid Interest and any applicable premium due, if any, may be declared, or shall otherwise become, due and payable in the manner, at the price and with the effect provided in the Financing Agreement.

(1) Definitions.

(a) Certain Defined Terms. For purposes of this Note, the following terms shall have the following meanings:

(i) “Common Stock” means the common stock, par value $0.01 per share, of the Company.

(ii) “Conversion Amount” means the sum of (A) the Principal to be converted, redeemed or otherwise with respect to which this determination is being made and (B) the amount of all accrued and unpaid Interest on the Principal to be converted, redeemed or otherwise with respect to which this determination is being made, as further described in the Financing Agreement (the “Interest Amount”).

(iii) “Conversion Price” means, as of any Conversion Date or other date of determination, $0.70 per Share, subject to adjustment as provided herein.

(iv) “Conversion Commencement Date” means the earliest to occur of (a) the first (1^st) anniversary of the Issuance Date, (b) the earliest date on which the Company is required to provide to the Holder prior written notice of its intention to consummate, or the occurrence of, a Fundamental Transaction either hereunder or pursuant to the Financing Agreement, or if no such notice is required to be given, the date such Fundamental Transaction is consummated or occurs, (c) the Company’s delivery of a Permitted Redemption Notice, and (d) an Event of Default.

(v) “Dollars” or “$” means United States Dollars.

(vi) “Fundamental Transaction” means any of the following events:

(A) any transaction, other than a transaction with the Agent and/or the Lenders, which results in a Change of Control of the Principal Borrower (a “Change of Control Transaction”);

(B) the sale or transfer of significant assets of the Company (which, for purposes of clarification, shall mean a sale or transfer of assets in one transaction or a series of related transactions for a purchase price of more than $20,000,000) or a sale or transfer of assets of the Company comprising at least fifty percent (50%) of the fair market value of the Company’s total assets;

(C) a purchase, tender or exchange offer made to the holders of outstanding Shares, such that following such purchase, tender or exchange offer a Change of Control Transaction shall have occurred;

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(D) the liquidation, bankruptcy, insolvency, dissolution or winding-up (or the occurrence of any analogous proceeding) of the Company; or

(E) the Common Stock ceases to be registered under Section 12 of the Exchange Act.

(vii) “Interest” means any interest (including any default interest) accrued on the Principal pursuant to the terms of this Note and the Financing Agreement.

(viii) “Issuance Date” means the original date of issuance of this Note pursuant to the Financing Agreement, regardless of any exchange or replacement hereof.

(ix) “Principal” means the outstanding principal amount of this Note as of any date of determination.

(x) “Registration Rights Agreement” means that certain Amended and Restated Registration Rights Agreement, dated as of March 17, 2010, by and among the Company and the Lenders.

(xi) “Shares” means shares of Common Stock.

(xii) “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on its principal market during the period beginning at 9:30 a.m. New York City time (or such other time as its principal market publicly announces is the official open of trading) and ending at 4:00 p.m. New York City time (or such other time as its principal market publicly announces is the official close of trading) as reported by Bloomberg Financial Markets (or any successor thereto) (“Bloomberg”) through its “Volume at Price” functions, or if the foregoing does not apply, the dollar volume-weighted average price of such security on the OTC Bulletin Board (or successor thereto) during the period beginning at 9:30 a.m. New York City time (or such other time as the OTC Bulletin Board publicly announces is the official open of trading), and ending at 4:00 p.m. New York City time (or such other time as the OTC Bulletin Board publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported on the OTCQX (or successor thereto) or Pink Sheets (or successor thereto) by Pink Sheets OTC Markets Inc. (or successor thereto). If the Weighted Average Price cannot be calculated for such security on such date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Agent. If the Company and the Agent are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 2(c)(iii) below, with the term “Weighted Average Price” being substituted for the term “Conversion Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during any period during which the Weighted Average Price is being determined.

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(2) Conversion Rights. This Note may be converted into Shares on the terms and conditions set forth in this Section 2.

(a) Conversion at Option of the Holder. At any time on or after the Conversion Commencement Date, the Holder shall be entitled to convert all or any part of the Principal (and the Interest Amount thereon) or any Interest accrued hereunder into fully paid and nonassessable Shares (the “Conversion Shares”) in accordance with this Section 2 at the Conversion Rate (as defined in Section 2(b)). The Company shall not issue any fraction of a Share upon any conversion. If the issuance would result in the issuance of a fraction of a Share, then the Company shall round such fraction of a Share up or down to the nearest whole share (with 0.5 rounded up).

(b) Conversion Rate. The number of Conversion Shares issuable upon a conversion of any portion of this Note pursuant to Section 2 shall be determined according to the following formula (the “Conversion Rate”):

            Conversion Amount            

Conversion Price

(c) Mechanics of Conversion. The conversion of this Note shall be conducted in the following manner:

(i) Holder’s Delivery Requirements. To convert a Conversion Amount into Conversion Shares on any date (the “Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 5:00 p.m. New York City time on such date, a copy of an executed conversion notice in the form attached hereto as Exhibit A (the “Conversion Notice”) to the Company (Attention: Chief Executive Officer), which Conversion Notice may specify that such conversion is conditioned upon consummation of any transaction (a “Conversion Trigger Transaction”) and (B) if required by Section 2(c)(vii), surrender to a common carrier for delivery to the Company, no later than three (3) Business Days after the Conversion Date, the original Note being converted (or an indemnification undertaking in customary form with respect to this Note in the case of its loss, theft or destruction) (or, if the conversion is conditioned upon the consummation of a Conversion Trigger Transaction, on the later of such third (3^rd) Business Day and the date of consummation of such Conversion Trigger Transaction.

(ii) Company’s Response. Upon receipt or deemed receipt by the Company of a copy of a Conversion Notice, the Company (I) shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to the Holder and the Company’s designated transfer agent (the “Transfer Agent”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein and (II) on or before the second (2^nd) Business Day following the date of receipt or deemed receipt by the Company of such Conversion Notice (or, if the conversion is conditioned upon the consummation of a Conversion Trigger Transaction, upon the consummation of such Conversion Trigger Transaction) (the “Share Delivery Date”) (A) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program and provided that the Holder is eligible to receive Shares through DTC, credit

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such aggregate number of Conversion Shares to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (B) if the foregoing shall not apply, issue and deliver to the address as specified in the Conversion Notice, a stock certificate, registered in the name of the Holder or its designee, for the number of Conversion Shares to which the Holder shall be entitled. If this Note is submitted for conversion, as may be required by Section 2(c)(vii), and the Principal represented by this Note is greater than the Principal being converted, then the Company shall, as soon as practicable and in no event later than three (3) Business Days after receipt of this Note (the “Note Delivery Date”) and at its own expense, issue and deliver to the Holder a new Note representing the Principal not converted and cancel this Note.

(iii) Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price or the arithmetic calculation of the Conversion Rate, the Company shall instruct the Transfer Agent to issue to the Holder the number of Conversion Shares that is not disputed and shall transmit an explanation of the disputed determinations or arithmetic calculations to the Holder via facsimile within two (2) Business Days of receipt or deemed receipt of the Holder’s Conversion Notice or other date of determination. If the Holder and the Company are unable to agree upon the determination of the Conversion Price or arithmetic calculation of the Conversion Rate within one (1) Business Day of such disputed determination or arithmetic calculation being transmitted to the Holder, then the Company shall promptly (and in any event within two (2) Business Days) submit via facsimile (A) the disputed determination of the Conversion Price to an independent, reputable investment banking firm agreed to by the Company and the Agent, or (B) the disputed arithmetic calculation of the Conversion Rate to the Company’s independent registered public accounting firm, as the case may be. The Company shall direct the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than two (2) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accounting firm’s determination or calculation, as the case may be, shall be binding upon all parties absent manifest error.

(iv) Record Holder. The person or persons entitled to receive the Conversion Shares issuable upon a conversion of this Note shall be treated for all purposes as the legal and record holder or holders of such Shares on the Conversion Date (which, if the conversion is conditioned upon the consummation of a Conversion Trigger Transaction, shall be deemed the date of the consummation of such Conversion Trigger Transaction), or in the case of Conversion Shares the issuance of which is subject to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 2(c)(iii), the first Business Day after the resolution of such bona fide dispute.

(v) Company’s Failure to Timely Convert.

(A) Cash Damages. If within three (3) Business Days after the Company’s receipt of the facsimile copy of a Conversion Notice or deemed receipt of a Conversion Notice (or, if the conversion is conditioned upon the consummation of a Conversion Trigger Transaction, upon the consummation of such Conversion Trigger Transaction) the Company shall fail, other than due solely to the Company’s failure to have obtained Stockholder

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Approval, to issue and deliver a certificate to the Holder for, or credit the Holder’s or its designee’s balance account with DTC with, the number of Conversion Shares to which the Holder is entitled upon the Holder’s conversion of any Conversion Amount, or if the Company fails to issue and deliver a new Note representing the Principal to which such Holder is entitled on or before the Note Delivery Date pursuant to Section 2(c)(ii), then in addition to all other available remedies that the Holder may pursue hereunder and under the Financing Agreement, the Company shall pay additional damages to the Holder for each day after the Share Delivery Date such conversion is not timely effected and/or each day after the Note Delivery Date such Note is not delivered in an amount equal to one percent (1%) of the sum of the following: (a) in the event the Company has failed to deliver the Conversion Shares to the Holder or its designee on or prior to the Share Delivery Date, the product of (I) the number of Conversion Shares not issued to the Holder or its designee on or prior to the Share Delivery Date and to which the Holder is entitled and (II) the Weighted Average Price of the Common Stock on the Share Delivery Date (such product is referred to herein as the “Share Product Amount”), and (b) in the event the Company has failed to deliver a Note to the Holder on or prior to the Note Delivery Date, the product of (y) the number of Conversion Shares issuable upon conversion of the Principal represented by the Note to have been delivered as of the Note Delivery Date and (z) the Weighted Average Price of the Common Stock on the Note Delivery Date; provided, that in no event shall cash damages accrue pursuant to this Section 2(c)(v)(A) with respect to the Share Product Amount during the period, if any, in which the Conversion Price or the arithmetic calculation of the Conversion Rate is subject to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 2(c)(iii) and the Company is otherwise in compliance with Section 2(c)(iii), so long as all of the Conversion Shares are delivered to the Holder within one (1) Business Day of the resolution of such bona fide dispute. Alternatively, subject to Section 2(c)(iii), at the election of the Holder made in the Holder’s sole discretion, the Company shall pay to the Holder, in lieu of the additional damages referred to in the preceding sentence (but in addition to all other available remedies that the Holder may pursue hereunder and under the Financing Agreement), 115% of the amount by which (A) the Holder’s total purchase price (including brokerage commissions, if any) for the Shares purchased to make delivery in satisfaction of a sale by the Holder of the Conversion Shares to which the Holder is entitled but has not received upon a conversion exceeds (B) the net proceeds received by the Holder from the sale of the Shares to which the Holder is entitled but has not received upon such conversion. If the Company fails to pay the additional damages set forth in this Section 2(c)(v)(A) within five (5) Business Days of the date incurred, then the Holder entitled to such payments shall have the right at any time, so long as the Company continues to fail to make such payments, to require the Company, upon written notice, to immediately issue, in lieu of such cash damages, the number of Shares equal to the quotient of (X) the aggregate amount of the damages payments described herein divided by (Y) the Conversion Price in effect on such Conversion Date as specified by the Holder in the Conversion Notice.

(B) Void Conversion Notice. If for any reason the Holder has not received all of the Conversion Shares prior to the tenth (10th) Business Day after the Share Delivery Date with respect to a conversion of this Note, other than due to the pendency of a dispute being resolved in accordance with Section 2(c)(iii) (a “Conversion Failure”), then the Holder, upon written notice to the Company (a “Void Conversion Notice”), may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any portion

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of this Note that has not been converted pursuant to the Holder’s Conversion Notice; provided, that the voiding of the Holder’s Conversion Notice shall not affect the Company’s obligations to make any payments that have accrued prior to the date of such notice pursuant to Section 2(c)(v)(A) or otherwise.

(C) Redemption. In the event of a Conversion Failure, the Holder, upon written notice to the Company, may require that the Company redeem, in accordance with Section 10.2 of the Financing Agreement, all of the Principal, including the Principal previously submitted for conversion and with respect to which the Company has not delivered Conversion Shares.

(vi) Pro Rata Conversion. In the event the Company receives a Conversion Notice from more than one holder of the Notes for the same Conversion Date and the Company can convert some, but not all, of such Notes, then the Company shall convert from each holder of the Notes electing to have Notes converted at such time a pro rata amount of such holder’s Note submitted for conversion based on the principal amount of the Note submitted for conversion on such date by such holder relative to the aggregate principal amount of all of the Notes submitted for conversion on such date; provided, however, that nothing in this Section 2(c)(vi) shall affect any other rights or remedies provided to the Company provided hereunder, under the Financing Agreement or any of the other Transaction Documents, or otherwise.

(vii) Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion or redemption of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless all of the Principal is being converted or redeemed. The Holder and the Company shall maintain records showing the Principal converted or redeemed and the dates of such conversions or redemptions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon any such partial conversion or redemption. Notwithstanding the foregoing, if this Note is converted or redeemed as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder may request, representing in the aggregate the remaining Principal represented by this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion or redemption of any portion of this Note, the Principal of this Note may be less than the principal amount stated on the face hereof.

(d) Taxes. The Company shall pay any and all taxes (excluding income taxes, franchise taxes or other taxes levied on gross earnings, profits or the like of the Holder) that may be payable with respect to the issuance and delivery of Conversion Shares upon the conversion of this Note.

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(e) Adjustments to Conversion Price. The Conversion Price will be subject to adjustment from time to time as follows:

(i) Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Issuance Date, the Company issues or sells, or in accordance with this Section 2(e)(i) is deemed to have issued or sold, any Shares (including the issuance or sale of Shares owned or held by or for the account of the Company, but excluding Exempted Issuances (as defined below)) for a consideration per Share less than a price (the “Applicable Price”) equal to the Conversion Price in effect immediately prior to such time, then immediately after such issue or sale (or deemed issue or sale), the Conversion Price then in effect shall be reduced to an amount equal to such consideration per Share. For all purposes of this Section 2(e)(i), including for purposes of determining the adjusted Conversion Price under this Section 2(e)(i) and for purposes of determining whether the Company has issued or sold, or shall be deemed to have issued or have sold, any Shares for a consideration per Share less than a price equal to the Applicable Price), the following shall be applicable:

(A) Issuance of Options. If the Company in any manner grants or sells any Options (as defined below) and the lowest price per share for which one Share is issuable upon the exercise of any such Option or upon conversion, exchange or exercise of any Convertible Security (as defined below) issuable upon exercise of any such Option is less than the Applicable Price, then such Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(e)(i)(A), the “lowest price per share for which one Share is issuable upon the exercise of any such Option or upon conversion, exchange or exercise of any Convertible Security issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Share upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Share or of such Convertible Securities upon the exercise of such Option or upon the actual issuance of such Share upon conversion, exchange or exercise of such Convertible Security.

(B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one Share is issuable upon the conversion, exchange or exercise thereof is less than the Applicable Price, then such Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 2(e)(i)(B), the “lowest price per share for which one Share is issuable upon such conversion, exchange or exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Share upon the issuance or sale of the Convertible Security and upon the conversion, exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Share upon conversion, exchange or exercise of such Convertible Security, and if any such issuance or sale of such Convertible Security is made upon exercise of any Option for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section 2(e)(i), then no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.

(C) Change in Option Price or Rate of Conversion. If the purchase, exchange or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Options or Convertible Securities are convertible

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into or exchangeable or exercisable for Shares changes at any time, then the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price that would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase, exchange or exercise price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(e)(i)(C), if the terms of any Option or Convertible Security that was outstanding as of the Issuance Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(D) Calculation of Consideration Received. In case any Options are issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction or series of related transactions, (A) the Options will be deemed to have been issued for a consideration equal to the greatest of (I) $0.01, (II) the specific aggregate consideration, if any, allocated to such Options, and (III) the Black-Scholes Value (as defined below) of such Options (the greatest of (I), (II) and (III), the “Option Consideration”) and, for purposes of applying the provisions of this Section 2(e), the Option Consideration shall be allocated pro rata among all the Shares issuable upon exercise of such Options to determine the consideration per each such Share, and (B) the other securities will be deemed to have been issued for an aggregate consideration equal to the aggregate consideration received by the Company for the Options and other securities (determined as provided below), less the Option Consideration. If any Shares, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any Shares, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of marketable securities, in which case the amount of consideration received by the Company will be the Weighted Average Price of such securities on the date of receipt of such securities. If any Shares, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Shares, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or marketable securities will be determined jointly by the Company and the Agent. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected jointly by the Company and the Agent. The determination of such appraiser shall be final and binding upon all parties absent manifest error, and the fees and expenses of such appraiser shall be borne by the Company.

(E) Record Date. If the Company takes a record of the holders of Shares for the purpose of entitling them (1) to receive a dividend or other distribution payable in Shares, Options or in Convertible Securities or (2) to subscribe for or purchase Shares, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Shares deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

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(F) Certain Definitions. For purposes of this Section 2(e), the following terms have the respective meanings set forth below:

(I) “Approved Stock Plan” means any employee benefit plan that has been approved by the Board of Directors of the Company (the “Board”) and the stockholders of the Company prior to the date of the Financing Agreement and listed on Schedule 7.27 thereto, pursuant to which the Company’s securities may be issued to any consultant, employee, officer or director for services provided to the Company.

(II) “Black-Scholes Value” of any Options shall mean the sum of the amounts resulting from applying the Black-Scholes pricing model to each such Option, which calculation is made with the following inputs: (i) the “option striking price” being equal to the lowest exercise price possible under the terms of such Option on the date of the issuance of such Option (the “Valuation Date”), (ii) the “interest rate” being equal to the Federal Reserve US H.15 T Note Treasury Constant Maturity 1 Year rate on the Valuation Date (as reported by Bloomberg through its “ALLX H15T” function (accessed by typing “ALLX H15T” [GO] on a Bloomberg terminal, and inserting the date of the Valuation Date and then looking at the row entitled “Treas Const Mat 1 Year” under the column entitled “Previous Value”)), or if such rate is not available then such other similar rate as mutually agreed to by the Company and the Agent, (iii) the “time until option expiration” being the time from the Valuation Date until the expiration date of such Option, (iv) the “current stock price” being equal to the Weighted Average Price of the Common Stock on the Valuation Date, (v) the “volatility” being the 100-day historical volatility of the Common Stock as of the Valuation Date (as reported by the Bloomberg “HVT” screen), and (vi) the “dividend rate” being equal to zero. Within three (3) Business Days after the Valuation Date, each of the Company and the Holder shall deliver to the other a written calculation of its determination of the Black-Scholes Value of the Options. If the Holder and the Company are unable to agree upon the calculation of the Black-Scholes Value of the Options within eight (8) days of the Valuation Date, then the Company shall submit via facsimile the disputed calculation to an investment banking firm (selected jointly by the Company and the Agent) within ten (10) days of the Valuation Date. The Company shall cause such investment banking firm to perform the calculations and notify the company and the Holder of the results no later than five (5) Business Days after the delivery of the disputed calculation to such firm. Such investment banking firm’s calculation of the Black-Scholes Value of the Options shall be deemed conclusive absent manifest error. The Company shall bear the fees and expenses of such investment banking firm for providing such calculation.

(III) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable or exercisable for Shares.

(IV) “Exempted Issuances” shall mean: (A) Shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan; (B) up to 1,000,000 Shares (subject to proportionate adjustment for stock splits,

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stock dividends, stock combinations and similar events after the Issuance Date) issued or deemed to be issued pursuant to an equity award outside of an Approved Stock Plan to the first new chief executive officer hired by the Company after the Issuance Date, provided that such equity award is approved by the Board; (C) Shares issued or deemed to have been issued upon the conversion, exchange or exercise of any Option or Convertible Security outstanding on the date prior to the Issuance Date and set forth in Schedule 7.7 to the Financing Agreement, provided that the terms of such Option or Convertible Security are not amended or otherwise modified on or after the date of the Financing Agreement, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of Shares issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Financing Agreement; (D) Shares issued or deemed to have been issued by the Company upon conversion of the Notes; (E) Shares, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on Shares for which adjustment of the Conversion Price is fully made by Section 2(e)(i), 2(e)(ii) or 2(e)(iii); (F) Shares issued or deemed to be issued to an equipment lessor or other financial institution, or to a real property lessor, pursuant to an equipment leasing or real property leasing transaction approved by the Board, provided that the primary purpose or material result of such transaction is not to raise or obtain equity capital or cash; (G) Shares issued or deemed to be issued to a supplier or third party service provider as consideration for such supplier’s or provider’s provision of goods or services to the Company, pursuant to a transaction approved by the Board, provided that the primary purpose or material result of such transaction is not to raise or obtain equity capital or cash; and (H) Shares issued or deemed to be issued in connection with a sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreement or strategic partnership, pursuant to a transaction approved by the Board, provided that the primary purpose or material result of such transaction is not to raise or obtain equity capital or cash, and provided, in the case of any Shares issued or deemed to be issued pursuant to transactions described in clauses (F), (G) and (H) of this Section 2(e)(i)(G)(IV), that the aggregate number of Shares so issued and deemed to be issued does not exceed 5,000,000 Shares (subject to proportionate adjustment for stock splits, stock dividends, stock combinations and similar events after the Issuance Date).

(V) “Options” means any rights, warrants or options to subscribe for or purchase Shares or Convertible Securities.

(ii) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) outstanding Shares into a greater number of Shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) its outstanding Shares into a lesser number of Shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

(iii) Adjustment of Conversion Price upon a Distribution of Assets. If the Company at any time on or after the Issuance Date shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including any distribution of cash, stock or other

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securities, property or options by way of a dividend, spin-off, reclassification, corporate rearrangement or other similar transaction (a “Distribution”), then, in each such case, the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such date, to a price determined by multiplying such Conversion Price by a fraction of which (A) the numerator shall be the Weighted Average Price of the Common Stock on the Trading Day immediately preceding such date minus the value of the Distribution (as determined in good faith by the Board) applicable to one Share, and (B) the denominator shall be the Weighted Average Price of the Common Stock on the Trading Day immediately preceding such date.

(iv) Adjustment for Tax Purposes. The Company shall be entitled to make such reductions in the Conversion Price, in addition to those otherwise required by this Section 2(e), as the Board in its discretion shall determine to be advisable in order that any stock dividends, subdivisions of shares, distribution of rights to purchase stock or securities, or any distribution of securities convertible into or exchangeable for stock, made after the Issuance Date by the Company to its stockholders shall not be taxable.

(v) Other Events. If any event occurs of the type contemplated by the provisions of this Section 2(e) but not expressly provided for by such provisions (including the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 2(e).

(vi) Notices. Promptly upon any adjustment of the Conversion Price, the Company will give written notice thereof to the Holder, setting forth in reasonable detail, and certifying, the calculation of such adjustment. The Company will give written notice to the Holder at least ten (10) Business Days prior to the date on which the Company closes its books or takes a record (I) with respect to any dividend or distribution upon the Common Stock, (II) with respect to any pro rata subscription offer to holders of Common Stock or (III) for determining rights to vote with respect to any Organic Change (as defined in Section 3(a)), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder. The Company will also give written notice to the Holder at least ten (10) Business Days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

(3) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or other transaction that is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an “Organic Change.” In addition to any other rights provided to the Holder hereunder, under the Financing Agreement or otherwise, prior to the consummation of any (i) sale of all or substantially all of the Company’s assets to an acquiring Person (including,

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for the avoidance of doubt, the sale of all or substantially all of the assets of the Company’s Subsidiaries in the aggregate) or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) a written agreement, in form and substance reasonably satisfactory to the Agent and approved by the Agent (which approval shall not be unreasonably withheld), to deliver to the Holder in exchange for this Note, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Note and reasonably satisfactory to the Agent and approved by the Agent (which approval shall not be unreasonably withheld), which instrument shall have a principal amount and interest rate equal to the Principal and the interest rate of the Note, have similar ranking and have similar conversion rights, provided that such new instrument shall ensure (in a manner reasonably satisfactory to the Agent) that the Holder will thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the Shares immediately theretofore acquirable and receivable upon the conversion of this Note (without regard to any limitations or restrictions on conversion), such shares of stock, securities or assets of the Acquiring Entity that would have been issued or payable in such Organic Change with respect to or in exchange for the number of Shares that would have been acquirable and receivable upon the conversion of this Note as of the date of such Organic Change (without taking into account any limitations or restrictions on the conversion of this Note). Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the Agent and approved by the Agent (which approval shall not be unreasonably withheld)) to ensure that the Holder will thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the Shares immediately theretofore acquirable and receivable upon the conversion of this Note (without regard to any limitations or restrictions on conversion), such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of Shares that would have been acquirable and receivable upon the conversion of this Note as of the date of such Organic Change (without taking into account any limitations or restrictions on the conversion of this Note).

(4) Voting Rights. Except as required by law and as expressly provided in this Note and the Financing Agreement, the Holder shall have no voting rights with respect to any of the Conversion Shares until the Conversion Date relating to the conversion of this Note upon which such Conversion Shares are issuable (or in the case of Conversion Shares the issuance of which is subject to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 2(c)(iii), the first Business Day after the resolution of such bona fide dispute).

(5) Vote to Change the Terms of the Notes. The terms and provisions of this Note shall not be amended or waived except in accordance with Section 13.6 of the Financing Agreement.

(6) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, the Financing Agreement, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall

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be deemed a waiver of compliance with the provisions giving rise to such remedy, and nothing herein shall limit the Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

(7) Specific Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general provision contained herein. This Note shall be deemed to be jointly drafted by the Company and all purchasers of Notes pursuant to the Financing Agreement and shall not be construed against any Person as the drafter hereof.

(8) Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

(9) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 13.7 of the Financing Agreement.

(10) Transfer of this Note. This Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Sections 6.4 and 6.5 of the Financing Agreement.

(11) Payment of Collection, Enforcement and Other Costs. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding; or (b) an attorney is retained to represent the Holder in any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action, including reasonable attorneys’ fees and disbursements.

(12) Cancellation. After all Principal, Interest and other amounts at any time owed under, or on account of, this Note have been paid in full or converted into Shares in accordance with the terms hereof, this Note shall automatically be deemed cancelled, shall be surrendered to the Company for cancellation and shall not be reissued.

(13) Registered Note. This Note is a registered Note, and the right, title and interest of the Holder and its assignees in and to this Note shall be transferable only upon

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notation of such transfer in the register in accordance with Sections 2.8 and 2.9 of the Financing Agreement. As provided in the Financing Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered Holder hereof or such Holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note shall only evidence the Holder’s or its assignee’s right, title and interest in and to the Note, and in no event is this Note to be considered a bearer instrument or obligation. This Section 13 shall be construed so that this Note is at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related Treasury regulations promulgated thereunder.

(14) Waiver of Notice. To the extent permitted by law, the Company hereby waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, the Financing Agreement and the other Transaction Documents.

(15) Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note and all disputes arising hereunder shall be governed by, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. The Company (a) agrees that any legal action or proceeding with respect to this Note or any other agreement, document, or other instrument executed in connection herewith, shall be brought exclusively in any state or federal court located within Chicago, Illinois, (b) irrevocably waives any objections which the Company may now or hereafter have to the venue of any suit, action or proceeding arising out of or relating to this Note, or any other agreement, document, or other instrument executed in connection herewith, brought in the aforementioned courts, and (c) further irrevocably waives any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND THE HOLDER (BY ACCEPTANCE HEREOF) IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE ANY PROVISION OF THIS NOTE OR ANY OTHER TRANSACTION DOCUMENT.

(16) Interpretative Matters. Unless the context otherwise requires, (a) all references to Sections or Exhibits are to Sections or Exhibits contained in or attached to this Note, (b) each accounting term not otherwise defined in this Note has the meaning assigned to it in accordance with GAAP, (c) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter and (d) the use of the word “including” in this Note shall be by way of example rather than limitation. If a stock split, stock dividend, stock combination or other similar event occurs during any period over which an average price is being determined, then an appropriate adjustment will be made to such average to reflect such event.

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(17) Execution. A facsimile, telecopy, PDF or other reproduction of this Note may be delivered by the Company, and an executed copy of this Note may be delivered by the Company by facsimile, e-mail or other similar electronic transmission device pursuant to which the signature of or on behalf of the Company can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. The Company hereby agrees that it shall not raise the execution of facsimile, PDF or other reproduction of this Note, or the fact that any signature was transmitted by facsimile, e-mail or other similar electronic transmission device, as a defense to the Company’s execution of this Note. Notwithstanding the foregoing, the Company shall be required to deliver an originally executed Note to the Holder.

[Signature page follows]

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the date first set forth above.

COMPANY:
UNIGENE LABORATORIES, INC.
By:	/s/ Warren P. Levy
Name:	Warren P. Levy
Title:	Chief Executive Officer

Exhibit A

CONVERSION NOTICE

Reference is made to the Senior Secured Convertible Note (the “Note”) of UNIGENE LABORATORIES, INC., a Delaware corporation (the “Company”), in the original principal amount of $33,000,000.00. In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into Shares of Common Stock, par value $0.01 per share (the “Common Stock”), of the Company, as of the date specified below.

Date of Conversion:                    

OR

The conversion requested hereby is conditioned upon the consummation of the following Conversion Trigger Transaction:
	*

Aggregate Conversion Amount to be converted at the Conversion Price (as defined in the Note):

Principal, applicable thereto, to be converted:

Interest, applicable thereto, to be converted:

Please confirm the following information:

Conversion Price:

Number of shares of Common Stock to be issued:

Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

Issue to:

Facsimile Number:

Authorization:

By:

Title:

Dated:                    

DTC Participant Number and Name (if electronic book entry transfer):

Account Number (if electronic book entry transfer):

* No such condition applies if left blank.

ACKNOWLEDGMENT

The Company hereby acknowledges this Conversion Notice and hereby directs Registrar and Transfer Company to issue the above indicated number of shares of Common Stock in accordance with the Irrevocable Transfer Agent Instructions dated March 17, 2010 from the Company and acknowledged and agreed to by Registrar and Transfer Company.

UNIGENE LABORATORIES, INC.

By:

Name:

Title:

EX-10.4

Exhibit 10.4

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (as same may be further amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of March 17, 2010, is entered into by and among Unigene Laboratories, Inc., a Delaware corporation (the “Company”), and the lender(s) listed on the Schedule of Buyers attached hereto (each, a “Buyer” and, collectively, the “Buyers”).

WHEREAS:

A. In connection with that the execution of that certain Financing Agreement, dated as of September 30, 2008, by and among the Company, Victory Park Management, LLC, as administrative agent and collateral agent (the “Agent”), and the Buyers (the “Original Financing Agreement”), the Company and the Buyers entered into that certain Registration Rights Agreement, dated as of September 30, 2008, by and between the Company and the Buyers (the “Original Registration Rights Agreement”), pursuant to which the Company agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.

B. In connection with the amendment and restatement of the Original Financing Agreement pursuant to that certain Amended and Restated Financing Agreement, dated as of March 16, 2010, by and among the Company, the Agent and the Buyers (as same may be further amended, restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), the parties have agreed, and now desire, to amend and restate in its entirety the Original Registration Rights Agreement.

C. This Agreement constitutes a Transaction Document (as defined in the Financing Agreement).

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:

1. DEFINITIONS.

As used in this Agreement, the following terms shall have the following meanings:

(a) “Additional Mandatory Registration Effectiveness Deadline” means the date that is the earlier of (i) the date that is ninety (90) days after the applicable Additional Mandatory Registration Filing Deadline and (ii) the fifth (5th) Business Day after the Company is notified by the SEC that the applicable Registration Statement will not be reviewed or is no longer subject to review and comment (i.e., all outstanding comments thereon have been resolved to the satisfaction of the SEC staff).

(b) “Additional Mandatory Registration Filing Deadline” means each of (a) the tenth (10th) Business Day after the date of Stockholder Approval, and (b) in the event any Registration Statement filed pursuant to Section 2 does not include any Registrable Securities because such Registrable Securities do not constitute Permitted Registrable Securities (any Registrable Securities so excluded being referred to as “Cutback Securities”), the tenth (10^th) Business Day after the earliest date that the Company is permitted by the SEC to file a Registration Statement including any of such Cutback Securities.

(c) “Conversion Commencement Date” has the meaning set forth in the Notes.

(d) “Effective Date” means the date that a Registration Statement is first declared effective by the SEC.

(e) “Effectiveness Deadline” means the Initial Effectiveness Deadline, an Additional Mandatory Registration Effectiveness Deadline or a Maintenance Mandatory Effectiveness Deadline, as applicable.

(f) “Filing Deadline” means the Initial Filing Deadline, an Additional Mandatory Registration Filing Deadline or a Maintenance Mandatory Filing Deadline, as applicable.

(g) “Initial Effectiveness Deadline” means the earlier of (i) the date that is one hundred twenty (120) days after the First Restated Closing Date and (ii) the fifth (5^th) Business Day after the Company is notified by the SEC that the Initial Registration Statement will not be reviewed or is no longer subject to further review and comment (i.e., all outstanding comments thereon have been resolved to the satisfaction of the SEC staff).

(h) “Initial Filing Deadline” means the date that is sixty (60) days after the First Restated Closing Date.

(i) “Initial Registrable Securities” means all of the Registrable Securities held by Investors as of the date of this Agreement after giving effect to the consummation of the transactions contemplated by the Financing Agreement, including the issuance of the Notes (which includes the Shares, the Exchange Shares and the Conversion Shares).

(j) “Initial Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act pursuant to Section 2(a) hereof covering the Initial Registrable Securities.

(k) “Investor” means a Buyer, any permitted transferee of the shares of Common Stock to whom a Buyer assigns its rights under this Agreement in accordance with the provisions of this Agreement (including Section 12) and who agrees to become bound by the provisions of this Agreement in accordance with Section 12 and any permitted transferee thereof to whom a transferee of the shares of Common Stock assigns its rights under this Agreement in accordance with the provisions of this Agreement (including Section 12) and who agrees to become bound by the provisions of this Agreement in accordance with Section 12.

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(l) “Permitted Registrable Shares” means a number of Registrable Securities equal to the lesser of (i) (A) in the case of the Initial Registration Statement, the number of Initial Registrable Securities, (B) in the case of any other Registration Statement to be filed pursuant to Section 2, the number of Registrable Securities not then covered by an effective Registration Statement for resales pursuant to Rule 415, and (C) in the case of a Proposed Registration, the number of Registrable Securities requested to be included in the Registration Statement for the Proposed Registration, and (ii) the maximum number of Registrable Securities the Company is permitted to include in such Registration Statement by the SEC, provided that the Company shall have used diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities required or requested to be included in the Registration Statement, in accordance with applicable SEC guidance.

(m) “Principal Market” has the meaning set forth in the Financing Agreement.

(n) “register,” “registered” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415, and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

(o) “Registrable Securities” means (i) any shares of Common Stock held by an Investor, whether on the date of this Agreement or thereafter, or issuable upon exercise, exchange or conversion of any other securities held by an Investor, whether on the date of this Agreement or thereafter (including the Shares, the Exchange Shares and the Conversion Shares), and (ii) any shares of Capital Stock (as defined in the Financing Agreement) issued or issuable in exchange for or with respect to the foregoing shares of Common Stock as a result of any stock split, stock dividend, recapitalization, exchange, adjustment or similar event or otherwise; provided, however, that (I) prior to Stockholder Approval and the Filing, only 35,268,905 Conversion Shares shall constitute Registrable Securities, and (II) any Registrable Securities shall cease to be Registrable Securities when (A) a Registration Statement with respect to the sale of such securities becomes effective under the 1933 Act and such securities are disposed of in accordance with such Registration Statement, (B) such securities are sold in accordance with Rule 144 or (C) all of such securities are eligible to be sold by the holder thereof pursuant to Rule 144 without restriction or condition thereunder.

(p) “Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering the Registrable Securities.

(q) “Required Holders” means the holders of at least seventy percent (70%) of the Registrable Securities.

(r) “Rule 144” means Rule 144 under the 1933 Act or any successor rule.

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(s) “Rule 415” means Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis.

(t) “SEC” means the United States Securities and Exchange Commission.

(u) “Shares” has the meaning set forth in the Financing Agreement.

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Financing Agreement.

2. MANDATORY REGISTRATION.

(a) Initial Mandatory Registration. The Company shall prepare and, not later than the Initial Filing Deadline, file with the SEC a Registration Statement on Form S-3 (subject to Section 2(c)), covering the resale of all of the Permitted Registrable Shares. The Company shall use its reasonable best efforts to have the Initial Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Initial Effectiveness Deadline.

(b) Additional Mandatory Registrations. The Company shall prepare, and, not later than each Additional Filing Deadline, file with the SEC a new Registration Statement on Form S-3 (subject to Section 2(c)) covering the resale of all of the Permitted Registrable Securities as of the Trading Day immediately preceding the date such Registration Statement is initially filed with the SEC. To the extent the staff of the SEC does not permit any Registrable Securities not then registered for resales pursuant to Rule 415 on an effective Registration Statement hereunder to be registered on any such Registration Statement, the Company shall file additional Registration Statements successively trying to register on each such additional Registration Statement the maximum number of remaining Registrable Securities until all of the Registrable Securities have been registered with the SEC. The Company shall use its best efforts to have each Registration Statement filed pursuant to this Section 2(b) declared effective by the SEC as soon as practicable, but in no event later than the Additional Mandatory Registration Effectiveness Deadline.

(c) Allocation of Registrable Securities. The initial number of Initial Registrable Securities included in the Initial Registration Statement (or any other Registration Statement filed pursuant to this Section 2) and each increase in the number of Initial Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of such Initial Registrable Securities held by each Investor at the time such Registration Statement or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s Initial Registrable Securities, each transferee shall be allocated a pro rata portion of the then remaining number of Initial Registrable Securities included in such Registration Statement for such transferor. Any shares of Common Stock included in the Initial Registration Statement (or any other Registration Statement filed pursuant to this Section 2) and which remain allocated to any Person that ceases to hold any Initial Registrable Securities covered by such Registration Statement shall be allocated to the remaining

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Investors, pro rata based on the number of Registrable Securities then held by such Investors that are covered by such Registration Statement. For purposes hereof, the number of Initial Registrable Securities held by an Investor includes all Conversion Shares then issuable upon the conversion of any amounts outstanding under Notes held by such Investor pursuant to the terms thereof, without regard to any limitations on conversion contained therein. In no event shall the Company include any securities other than Registrable Securities in any Registration Statement filed pursuant to this Section 2 without the prior written consent of the Required Holders.

(d) Ineligibility for Form S-3. In the event that Form S-3 is not available to the Company for the registration of the resale of the Initial Registrable Securities hereunder, the Company shall (i) register the resale of the Initial Registrable Securities on Form S-1 or another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the Initial Registrable Securities on Form S-3 (by post-effective amendment to the existing Registration Statement or otherwise) as soon as such form is available; provided, that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Initial Registrable Securities has been declared effective by the SEC.

(e) Maintenance Mandatory Registration. In the event the number of shares available under any Registration Statement previously filed pursuant to this Section 2 is at any time insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement (as a result of a reduction of the conversion price of the Notes or for any other reason) or an Investor’s allocated portion of such Registrable Securities pursuant to Section 2(c), the Company shall, as soon as practicable, but in any event not later than the later of (i) thirty (30) days after any reduction in the conversion price of the Notes or the Company otherwise becomes aware of the necessity therefor and (ii) the earliest date that the Company is permitted by the SEC to file the new Registration Statement as required hereby (a “Maintenance Mandatory Registration Filing Deadline”), file a new Registration Statement (on the short form available therefor, if applicable), so as to register for resale all of the Permitted Registrable Securities as of the Trading Day immediately preceding the date such Registration Statement is initially filed with the SEC. The Company shall use its reasonable best efforts to cause such new Registration Statement to become effective as soon as practicable following the filing thereof, but in any event not later than seventy-five (75) days following the filing thereof (a “Maintenance Mandatory Registration Effectiveness Deadline”). For purposes of the foregoing provision, the number of shares available under any Registration Statements previously filed pursuant to this Section 2(d)) shall be deemed “insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement” if, as of any date of determination, the number of Registrable Securities is greater than the aggregate number of Registrable Securities available for resale under such Registration Statements.

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3. [RESERVED]

4. PIGGYBACK REGISTRATIONS.

(a) Each time that the Company proposes for any reason to register any of its Common Stock under the 1933 Act (a “Proposed Registration”), other than pursuant to a registration statement on Form S-4 or Form S-8 (or similar or successor forms), the Company shall promptly give written notice (the “Piggyback Notice”) of such Proposed Registration to each of the Investors (which notice shall be given not less than thirty (30) days prior to the expected effective date of the Company’s registration statement, and in any event within five (5) Business Days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) and shall offer the Investors the right to include any of their Registrable Securities in the Proposed Registration; provided, however, that if the Proposed Registration is for an offering pursuant to Rule 415, the Company shall only be required to include the Permitted Registrable Shares. No registration pursuant to this Section 4 shall relieve the Company of its obligations to register Registrable Securities pursuant to Section 2 unless all Registrable Securities have been so registered and the related Registration Statement has not been withdrawn and remains effective pursuant to Rule 415 until the expiration of the Registration Period.

(b) Each Investor shall have twenty (20) days from the date of receipt of the Piggyback Notice to deliver to the Company a written request specifying the number of Registrable Securities such Investor intends to sell and such Investor’s intended method of disposition. Any Investor shall have the right to withdraw such Investor’s request for inclusion of such Investor’s Registrable Securities in any registration statement pursuant to this Section 4 by giving written notice to the Company of such withdrawal. Subject to Sections 4(c) and 4(d) below, the Company shall include in such registration statement all such Registrable Securities so requested to be included therein.

(c) If the Proposed Registration is for an offering pursuant to Rule 415 and the number of Registrable Securities requested by the Investors to be included therein exceeds the number of Permitted Registrable Shares, the initial number of Registrable Securities included in any Registration Statement in respect of such Proposed Registration and each increase in the number of Registrable Securities included therein shall be allocated pro rata among the Investors holding Registrable Securities on the basis of the number of Registrable Securities owned by such Investors, with further successive pro rata allocations among the Investors if any such Investor has requested the registration of less than all of the Registrable Securities such Investor is entitled to register. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable Securities, each transferee shall be allocated a pro rata portion of the then remaining number of Registrable Securities included in such Registration Statement for such transferor. Any shares of Common Stock included in such Registration Statement that remain allocated to any Person that ceases to hold any Registrable Securities covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors that are covered by such Registration Statement.

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(d) If the Proposed Registration is an underwritten public offering and the managing underwriter or underwriters of the Proposed Registration advises the Company that the total number of Registrable Securities that the Investors and any other Persons intend to include in the offering exceeds the number that can be sold in such offering without being likely to have a material adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Common Stock to be included in such underwritten offering shall include the number of Registrable Securities that such managing underwriter or underwriters advises the Company in writing can be sold without having such material adverse effect, with. such number to be allocated (i) first, to the Company, (ii) second, pro rata among the Investors that have requested participation in such underwritten offering and (iii) third, pro rata among any other holders of Common Stock that have requested participation in such underwritten offering. The pro rata allocations for each Investor that has requested participation in such underwritten offering shall be the product of (A) the aggregate number of Registrable Securities proposed to be sold by all Investors in such underwritten offering multiplied by (B) the fraction derived by dividing (x) the number of Registrable Securities owned on the Closing Date by such Investor by (y) the aggregate number of Registrable Securities owned on the Closing Date by all Investors participating in such underwritten offering. All participating Investors shall have the opportunity to share pro rata that portion of such priority allocable to any Investor(s) not so participating.

(e) If any Proposed Registration is in the form of an underwritten public offering, the Company shall select and obtain a recognized investment bank or investment bankers and manager or managers that will administer the offering; provided that such investment banker(s) and manager(s) must be approved (which approval shall not be unreasonably withheld) by the Investors holding at least a majority of the Registrable Securities requested to be registered.

5. EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT.

If (a) a Registration Statement covering all the Registrable Securities required to be covered thereby and required to be filed by the Company pursuant to this Agreement is (i) not filed with the SEC on or before the Filing Deadline (a “Filing Failure”) or (ii) filed with the SEC but not declared effective by the SEC on or before the Effectiveness Deadline (an “Effectiveness Failure”) or (b) on any day after the Effective Date, sales of all of the Registrable Securities required to be included on such Registration Statement cannot be made (other than during an Allowable Grace Period (as defined in Section 6(r)) pursuant to such Registration Statement (including because of a failure to keep such Registration Statement effective, a failure to disclose such information as is necessary for sales to be made pursuant to such Registration Statement, a suspension or delisting of the Common Stock on the Principal Market or a failure to register a sufficient number of shares of Common Stock) (a “Maintenance Failure”), then, as partial relief for the damages to any holder of Registrable Securities by reason of any such delay in or reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall become liable for payment to each holder of Registrable Securities relating to

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such Registration Statement of an amount in cash equal to two percent (2%) of the aggregate value of such holder’s Registrable Securities required to be included in such Registration Statement (excluding, for days prior to the Conversion Commencement Date only, the value of any Conversion Shares included in such Registrable Securities) (such value being determined by multiplying the number of such securities by the greater of (A) the then-current market price of such securities and (B) $0.70) on each of the following dates: (x) the initial day of a Filing Failure and on every thirtieth (30^th) day (pro rated for periods totaling less than thirty (30) days) thereafter until such Filing Failure is cured or until the date two (2) years after the First Restated Closing Date; (y) the initial day of an Effectiveness Failure and on every thirtieth (30^th) day (pro rated for periods totaling less than thirty (30) days) thereafter until such Effectiveness Failure is cured or until the date two (2) years after the First Restated Closing Date; and (z) the initial day of a Maintenance Failure and on every thirtieth (30^th) day (pro rated for periods totaling less than thirty (30) days) thereafter until such Maintenance Failure is cured. The payments to which a holder shall be entitled pursuant to this Section 5 are referred to herein as “Registration Delay Payments.” Registration Delay Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Registration Delay Payments are incurred and (II) the third (3^rd) Business Day after the event or failure giving rise to the Registration Delay Payments is cured. In the event the Company fails to make Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear interest at the rate of one and one-half percent (1.5%) per month (prorated for partial months) until paid in full.

6. RELATED OBLIGATIONS.

Whenever the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2 or Section 4, the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, or the Company is otherwise obligated to file a Registration Statement pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

(a) The Company shall use its reasonable best efforts to respond to written comments received from the SEC upon a review of the Registration Statement within ten (10) Business Days. The Company shall submit to the SEC, within four (4) Business Days after the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on a particular Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than two (2) Business Days after the submission of such request. Each Registration Statement shall contain the “Selling Stockholders” and “Plan of Distribution” sections in substantially the form attached hereto as Annex I (except if otherwise required pursuant to written comments received from the SEC upon review of the Registration Statement. By 9:30 a.m. (New York time) on the second Business Day following the Effective Date with respect to each Registration Statement, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Registration Statement. The Company shall keep each Registration Statement effective (pursuant to Rule 415, except in the case of an

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underwritten public offering pursuant to Section 4) at all times until the earlier of (i) the date as of which all of the Investors may sell all of the Registrable Securities covered by such Registration Statement pursuant to Rule 144 without restriction or condition thereunder, or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”). Each Investor shall provide notice to the Company of the occurrence of either of the events described in clauses (i) and (ii) of the immediately preceding sentence with respect to such Investor’s Registrable Securities promptly after the occurrence of such event. The Company shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus supplements shall be filed pursuant to Rule 424 (or successor thereto) promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period (except pursuant to Sections 6(g) and 6(r), and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of any amendment or supplement to a Registration Statement or prospectus that is required to be filed pursuant to this Agreement (including pursuant to this Section 6(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under 1934 Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendment or supplement with the SEC as expeditiously as practicable on or following the date on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.

(c) Subject to Section 8 hereof, the holders of at least a majority of the Registrable Securities to be registered under a Registration Statement pursuant to this Agreement shall have the right to select one legal counsel to review and oversee any registration pursuant to Sections 2 and Section 4 (“Legal Counsel”), which shall be Katten Muchin Rosenman LLP or such other counsel as thereafter designated by the holders of at least a majority of the Registrable Securities to be registered under such Registration Statement. The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company’s and the Investors’ respective obligations under this Agreement.

(d) The Company shall (A) permit Legal Counsel to review and comment upon (1) a Registration Statement at least three (3) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except

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for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects; provided, that the failure of any Investor or Legal Counsel to respond to such proposed documents within three (3) Business Days after receipt thereof shall be deemed confirmation of no objection to same. The Company shall promptly furnish to Legal Counsel, without charge, copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, shall permit Legal Counsel to review and comment upon the Company’s responses to any such correspondence and shall not submit any such responses in a form to which Legal Counsel reasonably objects; provided that the failure of Legal Counsel to respond to such responses within two (2) Business Days after receipt thereof shall be deemed confirmation of no objection to same. The Company shall reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this Section 6.

(e) The Company shall furnish to Legal Counsel and each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, if requested by an Investor and not otherwise available on the EDGAR (or any successor) system, at least one copy of such Registration Statement and any amendments or supplement thereto, including financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any prospectus (preliminary, final, summary or free writing), as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.

(f) The Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 6(f), (y) subject itself to general taxation in any jurisdiction or (z) file a general consent to service of process in any jurisdiction in which it is not currently so qualified or subject to general taxation or has not currently so consented. The Company shall promptly notify Legal Counsel and each Investor that holds Registrable Securities of the receipt by the Company of any

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notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

(g) The Company shall notify Legal Counsel, any underwriter of such registered offering and each Investor in writing (each such notice to Legal Counsel and the Investors, a “Suspension Notice”) of the happening of any of the following events, as promptly as practicable after becoming aware of such event: (i) any request by the SEC or any other federal or state governmental authority, during the period of effectiveness of the Registration Statement for amendments or supplements to such Registration Statement or related prospectus or for additional information; (ii) the issuance by the SEC or. any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (iv) any event or circumstance which necessitates the making of any changes to the Registration Statement or related prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that, in the case of the Registration Statement, it will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading and, in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, and, subject to Section 6(r), promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to Legal Counsel, any underwriter of such registered offering and each Investor (or such other number of copies as Legal Counsel, such underwriter or such Investor may reasonably request). The Company shall also promptly notify Legal Counsel, any underwriter of such registered offering and each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and each Investor by facsimile on the same day of such effectiveness and by overnight mail) and (ii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

(h) The Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension as soon as reasonably practicable consistent with the provisions of Section 6(g) and to notify Legal Counsel and each Investor who holds Registrable Securities being sold of the issuance of such order or suspension and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

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(i) At the reasonable request of any Investor in the context of the securities laws, or in the case of an underwritten offering upon the request of any underwriter, the Company shall furnish to such Investor or underwriter, as the case may be, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as such Investor may reasonably request (i) a “comfort letter,” dated such date, from the Company’s independent registered certified public accountants, in form and substance as is customarily given by independent registered certified public accountants to underwriters in an underwritten public offering, addressed to the Investors and any underwriters (or if such accountants are prohibited by generally accepted auditing standards from issuing a “comfort letter” to an Investor, the Company shall furnish to such Investor an “agreed upon procedures” letter covering the same matters to the greatest extent possible, and otherwise in customary form and substance), and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given to underwriters in an underwritten public offering, addressed to such Investor or underwriter, as the case may be.

(j) Upon the written request of any Investor, or in the case of an underwritten offering upon the request of any underwriter, in connection with such Investor’s due diligence requirements, if any, the Company shall make available for inspection by (i) any Investor, (ii) Legal Counsel, (iii) any underwriter participating in any disposition pursuant to the Registration Statement, (iv) legal counsel representing any such underwriter with respect to any disposition pursuant to the Registration Statement and (v) one firm of accountants or other agents retained by the Investors (collectively, the “Inspectors”) all pertinent financial, corporate and other records (collectively, the “Records”) as shall be reasonably deemed necessary by each Inspector to fulfill a due diligence obligation by such Investor, and cause the Company’s chief executive officer, chief financial officer, executive vice presidents and secretary to be reasonably available to the Inspectors for questions regarding the Records and to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree in writing to hold in strict confidence and shall not make any disclosure (except to an Investor that is subject to its own confidentiality agreement) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction or (b) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other Transaction Document. Nothing herein (or in any other confidentiality agreement between the Company and any Investor) shall be deemed to limit the Investors’ ability to sell Registrable Securities in a manner that is otherwise consistent with this Agreement and the other Transaction Documents, applicable laws and regulations.

(k) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any

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Registration Statement, (iii) the release of such information is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or government body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

(l) The Company shall use its reasonable best efforts to (i) cause all the Registrable Securities covered by the Registration Statement to be listed or quoted on each securities exchange or trading market on which securities of the same class or series issued by the Company are listed or quoted, and (ii) without limiting the generality of the foregoing, arrange for at least three market makers to register with the Financial Industry Regulatory Authority, Inc. (“FINRA”) as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 6(l).

(m) The Company shall cooperate with the Investors that hold Registrable Securities being offered and the underwriters, if any, and, to the extent applicable pursuant to the Transaction Documents, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and registered in such names as the Investors may request.

(n) If requested by an Investor, and if the Company’s counsel deems such inclusion not inconsistent with the 1933 Act or the 1934 Act or other applicable law, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to such Investor, the number of Registrable Securities being offered or sold by such Investor, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable supplement or make amendments to any Registration Statement if reasonably requested by an Investor holding any Registrable Securities.

(o) The Company shall make generally available to its security holders as soon as practicable, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve (12) month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of a Registration Statement.

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(p) The Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

(q) Within two (2) Business Days after the Registration Statement which covers Registrable Securities is ordered effective by the SEC, the Company shall deliver, or shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A, provided, that if the Company changes its transfer agent, it shall timely deliver any previously delivered notices under this Section 6(q) and any subsequent notices to such new transfer agent.

(r) Notwithstanding anything to the contrary herein, at any time after the Effective Date, upon the occurrence of any event or circumstance which necessitates the making of any changes in the Registration Statement or related prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that (i) in the case of the Registration Statement, it will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading or, (ii) in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, a suspension pursuant to a Suspension Notice delivered by the Company pursuant to Section 6(g) will not trigger any payment or liability for payment by the Company of any Registration Delay Payments otherwise payable or owing by the Company pursuant to Section 5 of this Agreement (a “Grace Period”); provided, that the Company shall (i) promptly notify the Investors in writing of the existence of a Grace Period in conformity with the provisions of this Section 6(r) and the date on which the Grace Period will begin, and (ii) as soon as such date may be determined, promptly notify the Investors in writing of the date on which the Grace Period ends; and, provided, further, that no Grace Period shall exceed twenty-five (25) consecutive days and during any three hundred sixty five (365) day period, such Grace Periods shall not exceed an aggregate of seventy-five (75) days, and the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date referred to in such notice. For the avoidance of doubt, no Maintenance Failure shall occur during an Allowable Grace Period. The provisions of Section 6(h) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 6(g) with respect to the information giving rise thereto unless such material non-public information is no longer applicable. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Financing Agreement in connection with any

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sale of Registrable Securities with respect to which an Investor has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement, in each case prior to the Investor’s receipt of the Suspension Notice related to the Grace Period and for which the Investor has not yet settled.

(s) The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the Effective Date of the applicable Registration Statement.

(t) The Company shall use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary to consummate the disposition of such Registrable Securities.

(u) To the extent not made by the underwriters in the case of an underwritten offering, the Company shall make such filings with FINRA, pursuant to FINRA Rule 5510 or otherwise (including providing all required information and paying required fees thereto), as and when requested by any Investor, or in the case of an underwritten offering, by any underwriter, and make all other filings and take all other actions reasonably necessary to expedite and facilitate the disposition by the Investors of Registrable Securities pursuant to a Registration Statement, including promptly responding to any comments received from FINRA.

(v) The Company shall not register any of its securities for sale for its own account (other than for issuance to employees, directors and consultants, of the Company under an employee benefit plan or for issuance in a business combination transaction), except pursuant to a firm commitment underwritten public offering. Except pursuant to this Agreement, the Company shall not file any Registration Statement (other than on Form S-8) with the SEC prior to the date that the Initial Registration Statement is declared effective by the SEC. Promptly following the First Restated Closing Date, the Company shall terminate and withdraw any Registration Statements (other than on Form S-8) that are effective as of the First Restated Closing Date.

(w) The Company shall enter into such customary agreements (including, in the case of underwritten offering, an underwriting agreement) and take such other actions as the any of the Investors or underwriters, if any, may reasonably request in order to expedite and facilitate the disposition of the Registrable Securities covered by a Registration Statement.

7. OBLIGATIONS AND COVENANTS OF THE INVESTORS.

(a) Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has not elected to include any of such Investor’s Registrable Securities in such Registration Statement pursuant to Section 4 hereof. It shall be a condition precedent to the obligations of the Company to complete any registration

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pursuant to this Agreement with respect to Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities.

(b) Each Investor agrees that, upon receipt of any Suspension Notice from the Company, such Investor will discontinue disposition of Registrable Securities pursuant to any Registration Statement covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 6(g) or receipt of notice from the Company in writing that no supplement or amendment is required. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Financing Agreement in connection with any sale of Registrable Securities under any of the circumstances described in the last sentence of Section 6(r).

(c) Upon a request by the Company, each Investor will, as soon as practicable, but in no event later than two (2) Business Days after such request, notify the Company whether such Investor continues to hold Registrable Securities.

8. EXPENSES OF REGISTRATION.

All reasonable expenses, other than underwriting discounts and commissions or other charges of any broker-dealer acting on behalf of the Investors, incurred in connection with registrations, filings or qualifications pursuant to Sections 2, 3, 4, 5 and 6, including all registration, listing and qualifications fees, printers and accounting fees and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall also reimburse the Investors for the fees and disbursements of Legal Counsel in connection with registrations, filings or qualifications pursuant to Sections 2, 3, 4 and 6 of this Agreement, up to an aggregate of $35,000 per registration hereunder.

9. INDEMNIFICATION.

In the event any Registrable Securities are included in a Registration Statement (provided, that for the purpose of this Section 9, the term “Registration Statement” shall include any preliminary prospectus, final prospectus, free writing prospectus, summary prospectus, exhibit, supplement or amendment included in or relating to, and. any document incorporated or deemed to be incorporated by reference in, the Registration Statement as such term is defined in Section 1(p) under this Agreement:

(a) The Company agrees to indemnify, hold harmless and defend each Investor, the directors, officers, partners, managers, members, employees, agents and representatives of, and each Person, if any, who controls, any Investor within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement (if such settlement is effected with the written

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consent of the party from which indemnification is sought, which consent shall not be unreasonably withheld, conditioned or delayed) or expenses, joint or several (collectively, “Claims”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened (“Indemnified Damages”), to which any of them may become subject insofar as such Claim (or actions or proceedings, whether commenced or threatened, in respect thereof) or Indemnified Damages arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements made therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any prospectus, including any preliminary prospectus, summary prospectus, free writing prospectus or final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC, and including all information incorporated by reference therein), or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 9(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 9(a): (i) shall not apply to a Claim or Indemnified Damages sought by an Indemnified Person to the extent arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 12.

(b) In connection with any Registration Statement in which an Investor’s Registrable Securities are included, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act (each, an “Indemnified Party”), to the same extent and in the same manner as is set forth in Section 9(a) with respect to the

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Indemnified Persons, against any Claim or Indemnified Damages to which any of them may become subject insofar as such Claim or Indemnified Damages arise out of or are based upon: (i) any Violation, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; or (ii) the use by such Investor of an outdated or defective prospectus after the Company has notified such Investor in writing that the prospectus is outdated or defective; and, subject to Section 6(c), such Investor will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 9(b) and the agreement with respect to contribution contained in Section 10 shall not apply to amounts paid in settlement of any Claim or Indemnified Damages if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld, conditioned or delayed; provided, further, however, that an Investor shall be liable under this Section 9(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to the Registration Statement giving rise to such indemnification obligation. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 12.

(c) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of the written threat of or notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim or Indemnified Damages, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 9, promptly deliver to the indemnifying party a written notice of the written threat of or notice of the commencement of such action or proceeding. In case any such action or proceeding is brought against any Indemnified Party or Indemnified Person and such Indemnified Party or Indemnified Person seeks or intends to seek indemnity from an indemnifying party, the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Party or Indemnified Person shall have the right to retain its own counsel with the fees and expenses of such counsel for such Indemnified Party or Indemnified Person (as applicable) to be paid by the indemnifying party if the defendants in any such action or proceeding include both the Indemnified Party or Indemnified Person, on the one hand, and the indemnifying party, on the other hand, and the Indemnified Party or Indemnified Person (as applicable) shall have reasonably concluded, based on an opinion of counsel reasonably satisfactory to the indemnifying party, that the representation by such counsel of the Indemnified Person or Indemnified Party (as applicable) and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding and/or that there may be legal defenses available to it and/or any other

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Indemnified Party or Indemnified Person which are different from or additional to those available to the indemnifying party; provided, further, however, that the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for all such Indemnified Persons or Indemnified Parties. In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority of the Registrable Securities included in the Registration Statement to which the Claim or Indemnified Damages relate. The Indemnified Party or Indemnified Person shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or proceeding or Claim or Indemnified Damages by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or proceeding or Claim or Indemnified Damages. The indemnifying party shall keep the Indemnified Party or Indemnified Person reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, as the case may be, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person (as applicable) of a full release from all liability with respect to such Claim or Indemnified Damages. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action or proceeding shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 9, except to the extent that the indemnifying party is materially prejudiced in its ability to defend such action or proceeding as a result of such failure.

(d) No Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to indemnification from any Person who is not guilty of such fraudulent misrepresentation.

(e) The indemnification required by this Section 9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

(f) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. Notwithstanding the foregoing, in the event that any of the provisions of Section 13.12 of the Financing Agreement and this Section 9 may be deemed to both be applicable to any of the same losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or

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before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, the provisions of this Section 9 shall control and such provisions of Section 13.12 of the Financing Agreement shall be inoperative.

10. CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to, in lieu of indemnifying such Indemnified Person or Indemnified Party, as applicable, make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 9 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 9 of this Agreement; (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

11. REPORTS UNDER THE 1934 ACT.

With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration (“Rule 144”), at all times during which there are shares of Registrable Securities outstanding that have not been previously (i) sold to or through a broker or dealer or underwriter in a public distribution or (ii) sold in a transaction exempt from the registration and prospectus delivery requirements of the 1933 Act under Section 4(1) thereof, in the case of either clause (i) or clause (ii) in such a manner that, upon the consummation of such sale, all transfer restrictions and restrictive legends with respect to such shares are removed upon the consummation of such sale, the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144;

(b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act, so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

(c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144 and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.

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12. ASSIGNMENT OF REGISTRATION RIGHTS.

The rights under this Agreement shall be automatically assignable by the Investors to any transferee or assignee of all or any portion of such Investor’s Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the applicable provisions contained herein; and (v) such transfer or assignment shall have been made in accordance with the applicable requirements of the Financing Agreement, including those in Section 6.4 thereof.

13. AMENDMENT OF REGISTRATION RIGHTS.

Provisions of this Agreement may be amended and the observance thereof 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 Required Holders. Any amendment or waiver effected in accordance with this Section 13 shall be binding upon each Investor and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the Investors.

14. MISCELLANEOUS.

(a) A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities (or the Notes or other securities upon exercise, conversion or exchange of which such Registrable Securities are issuable). If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the such record owner of such Registrable Securities (or the Notes or other securities upon exercise, conversion or exchange of which such Registrable Securities are issuable).

(b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Unigene Laboratories, Inc.

110 Little Falls Road

Fairfield, New Jersey 07004

Telephone: (973) 265-1100

Facsimile: (973) 335-0972

Attention: Warren Levy

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with a copy (for informational purposes only) to:
Dechert LLP 902 Carnegie Center, Suite 500 Princeton, New Jersey 08540
Telephone:	(609) 955-3200
Facsimile:	(609) 955-3259
Attention:	James J. Marino, Esq.
If to Legal Counsel:
Katten Muchin Rosenman LLP 525 West Monroe Street, Suite 1900 Chicago, Illinois 60661
Telephone:	(312) 902-5297
Facsimile:	(312) 902-1061
Attention:	Mark R. Grossmann, Esq. and Mark D. Wood, Esq.

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers attached hereto, with copies to such Buyer’s representatives as set forth on such Schedule of Buyers, or in any case to such other address and/or facsimile number and/or to the attention of such other individual as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile deposit with a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. Notwithstanding the foregoing, the company or its counsel may transmit versions of any Registration Statement (or any amendments or supplements thereto) to Legal Counsel in satisfaction of its obligations under Sections 6(c) and (d) to permit Legal Counsel to review such Registration Statement prior to filing (and solely for such purpose) by email to mark.wood@kattenlaw.com (or such other e-mail address as has been provided for such purpose by Legal Counsel) and provided that delivery and receipt of such transmission shall be confirmed by electronic, telephonic or other means.

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(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

(d) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of Chicago for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(e) This Agreement, the other Transaction Documents (as defined in the Financing Agreement) and the instruments referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the other Transaction Documents and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

(f) Subject to the requirements of Section 12, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

(g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

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(h) This Agreement and any amendments hereto may be executed and delivered in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when counterparts have been signed by each party hereto and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract and each party hereto forever waives any such defense.

(i) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

(j) All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders.

(k) The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

(l) Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies that such Buyers and holders have been granted at any time under any other agreement or contract and all of the rights that such Buyers and holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security or proving actual damages), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or in equity.

(m) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and, to the extent provided in Sections 9(a) and (b), each Indemnified Person and Indemnified Party, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

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(n) The Company shall not grant any Person any registration rights with respect to shares of Common Stock or any other securities of the Company other than registration rights that will not adversely affect the rights of the Investors hereunder (including by limiting in any way the number of Registrable Securities that could be included in any Registration Statement pursuant to Rule 415), and shall not otherwise enter into any agreement that is inconsistent with the rights granted to the Investors hereunder.

(o) The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor. Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.

(p) Unless the context otherwise requires, (a) all references to Sections, Exhibits or Annexes are to Sections, Exhibits or Annexes contained in or attached to this Agreement, (b) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter and (c) the use of the word “including” in this Agreement shall be by way of example rather than limitation.

*  *  *  *  *

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IN WITNESS WHEREOF, each Buyer and the Company has caused its signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

COMPANY:
UNIGENE LABORATORIES, INC.
By:	/s/ Warren P. Levy
Name:	Warren Levy
Title:	Chief Executive Officer

BUYER:
VICTORY PARK CREDIT OPPORTUNITIES MASTER FUND, LTD.
By: Victory Park Capital Advisors, LLC, its investment manager
By:	/s/ Scott Zemnick
Name:	Scott Zemnick
Title:	General Counsel

SCHEDULE OF BUYERS

Buyer	Buyer’s Address and Facsimile Number	Buyer’s Representative’s Address and Facsimile Number
Victory Park Credit Opportunities Master Fund, Ltd.	227 W. Monroe Street, Suite 3900 Chicago, IL 60606 Attention: Matthew Ray Facsimile: 312.701.0794 Telephone: 312.701.0788	Katten Muchin Rosenman LLP 525 West Monroe Street, Suite 1900 Chicago, Illinois 60661 Telephone: 312.902.5297 Facsimile: 312.577.4408 Attention: Mark R. Grossmann, Esq.

EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

Registrar and Transfer Company

10 Commerce Drive

Cranford, NJ 07016

Attention: Evette Arango

Re: Unigene Laboratories, Inc.

Ladies and Gentlemen:

[We are][I am] counsel to Unigene Laboratories, Inc., a Delaware corporation (the “Company”), and have represented the Company in connection with that certain Amended and Restated Financing Agreement, dated as of March 16, 2010 (the “Financing Agreement”), entered into by and among the Company, Victory Park Management, LLC, as administrative agent and collateral agent, and the lender(s) named therein (collectively, the “Holders”), pursuant to which the Company issued to the Holders senior secured notes (the “Initial Notes”), which Initial Notes are convertible into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), and pursuant to which the Company may have an option to issue to the Holders additional senior secured notes (such additional notes together with the Initial Notes, the “Notes”), which Notes are also convertible into shares of the Common Stock, as set forth in, and subject to the terms and conditions of, the Financing Agreement. Pursuant to the Financing Agreement, the Company also has entered into an Amended and Restated Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to which the Company has agreed, among other things, to register the resale of the Registrable Securities (as defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration Rights Agreement, on [ENTER DATE OF FILING], the Company filed a Registration Statement on Form [S-    ] (File No. 333-                ) (the “Registration Statement”) with the United States Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each of the Holders as a selling stockholder thereunder.

In connection with the foregoing, [we][I] advise you that a member of the SEC’s staff has advised [us][me] by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.

This letter shall serve as our standing advice to you that the shares of Common Stock registered pursuant to the Registration Statement are currently freely transferable by the Holders pursuant to the Registration Statement, and you need not require further letters from us to effect any future legend-free issuance or reissuance of shares of Common Stock to the Holders or the transferees of the Holders, as the case may be, as contemplated by the Company’s Irrevocable Transfer Agent Instructions, dated March 17, 2010.

            Very truly yours,

            [ISSUER’S COUNSEL]

cc: Victory Park Management, LLC

ANNEX I

PLAN OF DISTRIBUTION

We are registering the shares of common stock to permit the resale of these shares of common stock by the selling stockholders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

The selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected from time to time pursuant to one or more of the following methods, which may involve crosses or block transactions:

• on any national securities exchange or U.S. inter-dealer quotation system of a registered national securities association on which the securities may be listed or quoted at the time of sale;

• in the over-the-counter market;

• in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

• through the writing of options, whether such options are listed on an options exchange or otherwise;

• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

• block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• public or privately negotiated transactions;

• short sales;

• sales pursuant to Rule 144;

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• broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

• a combination of any such methods of sale; or

• any other method permitted pursuant to applicable law.

If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions, and to return borrowed shares in connection with such short sales, provided that the short sales are made after the registration statement is declared effective. The selling stockholders may also loan or pledge shares of common stock to broker-dealers in connection with bona fide margin accounts secured by the shares of common stock, which shares broker-dealers could in turn sell if the selling stockholders default in the performance of their respective secured obligations.

The selling stockholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if any of them defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

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Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.

The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, and the rules and regulations thereunder, including, without limitation, Regulation M of the Securities Exchange Act of 1934, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.

We will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, including, without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that the selling stockholders will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including liabilities under the Securities Act of 1933, in accordance with the registration rights agreement, or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act of 1933, that may arise from any written information furnished to us by the selling stockholders specifically for use in this prospectus, in accordance with the related registration rights agreement, or we may be entitled to contribution.

Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.

Any shares covered by this prospectus that qualify for sale pursuant to Rule 144 of the Securities Act of 1933 may be sold under Rule 144, rather than pursuant to this prospectus.

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EX-10.5

Exhibit 10.5

THIS DOCUMENT WAS PREPARED BY, AND AFTER RECORDING, RETURN TO:
David A. Baroni Latham & Watkins LLP Sears Tower, Suite 5800 233 South Wacker Drive Chicago, Illinois 60606
PROPERTY ADDRESS:	This space reserved for Recorder’s use only.
110 Little Falls Road Fairfield, Essex County, New Jersey 07004

THIS INSTRUMENT SHALL BE INDEXED AS A MORTGAGE AND AS A FIXTURE FILING. SEE SECTION 12.

MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING

This MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING executed as of September 30, 2008 and effective and dated as of September 30, 2008 (the “Mortgage”), is made by UNIGENE LABORATORIES, INC., a Delaware corporation (the “Mortgagor”), to VICTORY PARK MANAGEMENT, LLC, a Delaware limited liability company, its successors and assigns (the “Mortgagee”), in its capacity as administrative agent and collateral agent for the Lenders and the Holders (as defined herein) under the Financing Agreement (as defined herein), for the benefit of the Lenders and the Holders.

R E C I T A L S:

A. On the date hereof, Mortgagor (as the “Principal Borrower”) entered into that certain Financing Agreement by and among the Lenders (as defined therein) party thereto from time to time and Mortgagee, as administrative agent and collateral agent for the Lenders and the Holders as defined therein (as the same may be amended, restated, modified or otherwise supplemented and in effect from time to time, hereinafter the “Financing Agreement”), under which the Lenders agreed to purchase from the Borrowers (as defined in the Financing Agreement, which definition includes Mortgagor) certain notes in the form of Notes (as defined in the Financing Agreement) in an aggregate principal amount up to TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00). All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Financing Agreement.

B. Mortgagor wishes to provide further assurance and security to the Mortgagee, the Lenders and the Holders, and as a condition to the Mortgagee, the Lenders and the Holders executing the Financing Agreement, the Mortgagee, the Lenders and the Holders are requiring that Mortgagor execute this Mortgage and grant to the Mortgagee, on behalf of the Lenders and the Holders, a security interest in and a first mortgage lien upon the Premises (as hereinafter defined), subject to the Permitted Liens, to secure the Obligations (as defined in the Financing Agreement), including all the Borrowers’ obligations under the Financing Agreement, the Notes, this Mortgage and the Transaction Documents (as defined in the Financing Agreement). Mortgagor’s obligations under the Financing Agreement mature on September 30, 2011 (the “Maturity Date”); provided, however, that such date shall be extended to any later date to which the scheduled “Maturity Date” in the Financing Agreement is extended.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor agrees as follows:

A G R E E M E N T S:

The Mortgagor hereby mortgages, grants, assigns, remises, releases, warrants and conveys to the Mortgagee and its successors and assigns (for the benefit of the Lenders and the Holders), and grants a security interest in, the following described property, rights and interests (referred to collectively herein as the “Premises”), all of which property, rights and interests are hereby pledged primarily and on a parity with the Real Estate (as defined below) and not secondarily:

(a) The real estate located in the County of Essex, State of New Jersey, and legally described on Exhibit “A” attached hereto and made a part hereof (the “Real Estate”);

(b) All improvements of every nature whatsoever now or hereafter situated on the Real Estate, and all fixtures and personal property now or hereafter owned by the Mortgagor that is located on and used in connection with the operation of the Real Estate or the improvements thereon, or in connection with any construction thereon, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing and all of the right, title and interest of the Mortgagor in and to any such personal property or fixtures together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by the Mortgagor or on its behalf (the “Improvements”);

(c) All easements, rights of way, gores of real estate, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Real Estate, and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of the Mortgagor of, in and to the same;

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(d) All rents, revenues, issues, profits, proceeds, income, royalties, Letter of Credit Rights (as defined in the Uniform Commercial Code of the State of New Jersey (the “Code”) in effect from time to time), escrows, security deposits, impounds, reserves, tax refunds and other rights to monies from the Premises (but not from any businesses or operations conducted by the Mortgagor thereon other than the business of owning and operating the Premises), to be applied against the Secured Obligations (as hereinafter defined); provided, however, that the Mortgagor, so long as no Event of Default (as hereinafter defined) has occurred hereunder, may collect rent as it becomes due, but not more than one (1) month in advance thereof;

(e) All interest of the Mortgagor in all leases now or hereafter on the Premises, whether written or oral (each, a “Lease”, and collectively, the “Leases”), together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to the Mortgagor to collect the rentals under any such Lease;

(f) All fixtures and articles of personal property now or hereafter owned by the Mortgagor and forming a part of or used in connection with the operation and ownership of the Real Estate or the Improvements (but excluding any personal property owned by the Mortgagor (i) stored on the Premises and not intended to be used in connection with the operation and ownership of the Real Estate or Improvements, and/or (ii) used in a trade or business operated by the Mortgagor other than the business of owning and operating the Premises), including, but without limitation, any and all air conditioners, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, computer hardware and software used in the operation of the Premises, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, exercise equipment, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Real Estate or the Improvements in any manner; it being mutually agreed that all of the aforesaid property owned by the Mortgagor and placed on and used in connection with the operation and ownership of the Real Estate or the Improvements, so far as permitted by law, shall be deemed to be fixtures, a part of the realty, and security for the Secured Obligations; notwithstanding the agreement hereinabove expressed that certain articles of property form a part of the realty covered by this Mortgage and be appropriated to its use and deemed to be realty, to the extent that such agreement and declaration may not be effective and that any of said articles may constitute Goods (as defined in the Code), this instrument shall constitute a security agreement, creating a security interest in such goods, as collateral, in the Mortgagee, as a Secured Party, and the Mortgagor, as Debtor, all in accordance with the Code;

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(g) All of the Mortgagor’s interests in General Intangibles, including Payment Intangibles (each as defined in the Code) now owned or hereafter acquired and related to the ownership and operation of the Premises, including, without limitation, all of the Mortgagor’s right, title and interest in and to: (i) all agreements, licenses, permits and contracts to which the Mortgagor is or may become a party and which relate to the ownership and operation of the Premises; (ii) all obligations and indebtedness owed to the Mortgagor thereunder; and (iii) all choses in action and causes of action relating to the ownership and operation of the Premises, but excluding all such foregoing items related to any businesses or operations conducted by the Mortgagor on the Premises other than the business of owning and operating the Premises;

(h) All of the Mortgagor’s accounts now owned or hereafter created or acquired as relate to the ownership and operation of the Premises, including without limitation, all warranties, guarantees, permits and licenses in favor of the Mortgagor with respect to the ownership and operation of the Premises, but excluding all such foregoing items related to any businesses or operations conducted by the Mortgagor on the Premises other than the business of owning and operating the Premises; and

(i) All proceeds of the foregoing, including, without limitation, all judgments, awards of damages and settlements hereafter made resulting from condemnation proceeds or the taking of the Premises or any portion thereof under the power of eminent domain, any proceeds of any policies of insurance, maintained with respect to the Premises or proceeds of any sale, option or contract to sell the Premises or any portion thereof.

TO HAVE AND TO HOLD the Premises, unto the Mortgagee, its successors and assigns, forever, for the purposes and upon the uses herein set forth together with all right to possession of the Premises after the occurrence of any Event of Default; the Mortgagor hereby RELEASING AND WAIVING all rights under and by virtue of the homestead exemption laws of the State of New Jersey.

FOR THE PURPOSE OF SECURING: (i) the payment of the Obligations (as defined in the Financing Agreement) and all interest, late charges and other indebtedness evidenced by or owing under the Financing Agreement, the Notes or any other of the Transaction Documents, together with any extensions, modifications, renewals or refinancings of any of the foregoing; (ii) the performance and observance of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Mortgagor and any other Borrower or any other obligor to the Mortgagee or benefiting the Lenders and the Holders which are evidenced or secured by or otherwise provided in the Financing Agreement, the Notes, this Mortgage or any of the other Transaction Documents; and (iii) the reimbursement to the Mortgagee or a Lender or Holder, as applicable, of any and all sums incurred, expended or advanced by the Mortgagee or any Lender or Holder pursuant to any term or provision of or constituting additional indebtedness under or secured by this Mortgage, the Financing Agreement, the Notes or any of the other Transaction Documents, with interest thereon as provided herein or therein (collectively, the “Secured Obligations”).

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IT IS FURTHER UNDERSTOOD AND AGREED THAT:

1. Title. The Mortgagor represents, warrants and covenants that (a) the Mortgagor is the holder of the fee simple title to the Premises, free and clear of all liens and encumbrances, except those liens and encumbrances in favor of the Mortgagee and the Permitted Liens (as defined in the Financing Agreement); and (b) the Mortgagor has legal power and authority to mortgage and convey the Premises.

2. Payment of Secured Obligations. The Mortgagor covenants that, so long as any portion of the Secured Obligations remains unpaid, the Mortgagor will pay when due the Secured Obligations in accordance with the terms of the Financing Agreement and the other Transaction Documents and duly perform and observe all of the terms, covenants and conditions to be observed and performed by the Mortgagor under the Financing Agreement, this Mortgage and the other Transaction Documents.

3. OFAC. The Mortgagor covenants that, so long as any portion of the Secured Obligations remains unpaid, the Mortgagor will, without limiting the generality of Section 4(k) herein, (i) ensure that Mortgagor is not and shall not be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (ii) not use or permit the use of any funds disbursed by the Mortgagee under the Financing Agreement to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (iii) comply with all applicable Bank Secrecy Act laws and regulations, as amended.

4. Maintenance, Repair, Restoration, Prior Liens, Parking. The Mortgagor covenants that, so long as any portion of the Secured Obligations remains unpaid, the Mortgagor will:

(a) provided that Mortgagee makes available insurance proceeds to Mortgagor pursuant to Section 6 herein, promptly repair, restore or rebuild any Improvements now or hereafter on the Premises which may become damaged or be destroyed to a condition substantially similar to the condition immediately prior to such damage or destruction, whether or not proceeds of insurance are sufficient for the purpose;

(b) keep the Premises in good condition and repair, without waste, and free from mechanics’, materialmen’s or like liens or claims or other liens or claims for lien (subject to the Mortgagor’s right to contest liens as permitted by the terms of Section 26 hereof);

(c) pay when due any indebtedness which may be secured by a Permitted Lien or charge on the Premises on a parity with, superior to or inferior to the lien hereof, and upon request exhibit satisfactory evidence of the discharge of such lien to the Mortgagee (subject to the Mortgagor’s right to contest liens as permitted by the terms of Section 26 hereof);

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(d) comply with all requirements of law, municipal ordinances or restrictions and covenants of record with respect to the Premises and the use thereof;

(e) obtain and maintain in full force and effect, and abide by and satisfy the material terms and conditions of, all material permits, licenses, registrations and other authorizations with or granted by any governmental authorities that may be required from time to time with respect to the performance of its obligations under this Mortgage;

(f) make no material alterations in the Premises or demolish any portion of the Premises without the Mortgagee’s prior written consent, except as required by law or municipal ordinance;

(g) suffer or permit no change in the use or general nature of the occupancy of the Premises, without the Mortgagee’s prior written consent;

(h) pay when due all operating costs of the Premises;

(i) not initiate or acquiesce in any zoning reclassification with respect to the Premises, without the Mortgagee’s prior written consent;

(j) provide and thereafter maintain adequate parking areas within the Premises as may be required by law, ordinance or regulation (whichever may be greater), together with any sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved areas for ingress, egress and right-of-way to and from the adjacent public thoroughfares necessary or desirable for the use thereof.

(k) comply, and cause the Premises at all times to be operated in compliance, with all applicable federal, state, local and municipal environmental, health and safety laws, statutes, ordinances, rules and regulations.

5. Payment of Taxes and Assessments. The Mortgagor will pay when due and before any penalty attaches, all general and special taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever (all herein generally called “Taxes”), whether or not assessed against the Mortgagor, if applicable to the Premises or any interest therein, or the Secured Obligations, or any obligation or agreement secured hereby, subject to the Mortgagor’s right to contest the same, as provided by the terms hereof; and the Mortgagor will, upon written request, furnish to the Mortgagee duplicate receipts therefor within ten (10) business days after the Mortgagee’s request.

6. Insurance.

(a) The Mortgagor shall at all times keep all buildings, improvements, fixtures and articles of personal property now or hereafter situated on the Premises insured against loss or damage by fire and such other hazards as may reasonably be required by the Mortgagee and such other insurance as the Mortgagee may from time to time reasonably require. Unless the Mortgagor provides the Mortgagee evidence of the

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insurance coverages required hereunder, the Mortgagee may purchase insurance at the Mortgagor’s expense to cover the Mortgagee’s interest in the Premises. The insurance may, but need not, protect the Mortgagor’s interest. The coverages that the Mortgagee purchases may not pay any claim that the Mortgagor makes or any claim that is made against the Mortgagor in connection with the Premises. The Mortgagor may later cancel any insurance purchased by the Mortgagee, but only after providing the Mortgagee with evidence that the Mortgagor has obtained insurance as required by this Mortgage. If the Mortgagee purchases insurance for the Premises, the Mortgagor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which the Mortgagee may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Secured Obligations. The cost of the insurance may be more than the cost of insurance the Mortgagor may be able to obtain on its own.

(b) The Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless the Mortgagee is included thereon as the loss payee or an additional insured as applicable, under a standard mortgage clause acceptable to the Mortgagee and such separate insurance is otherwise acceptable to the Mortgagee.

(c) In the event of loss, the Mortgagor shall give prompt notice thereof to the Mortgagee, who shall have the sole and absolute right to make proof of loss; provided however, that if no Event of Default shall have occurred and be continuing, the Mortgagor may make, settle and adjust claims involving less than $250,000 in the aggregate without the Mortgagee’s consent. Mortgagee, solely and directly, shall receive such payment for loss from each insurance company concerned. If and only if (i) no Event of Default or event that with the passage of time, the giving of notice or both would constitute an Event of Default then exists, (ii) the Mortgagee determines that the work required to complete the repair or restoration of the Premises necessitated by such loss can be completed no later than six (6) months prior to the Maturity Date, and (iii) the total of the insurance proceeds and such additional amounts placed on deposit with the Mortgagee by the Mortgagor for the specific purpose of rebuilding or restoring the Improvements equals or exceeds, in the reasonable discretion of the Mortgagee, the reasonable costs of such rebuilding or restoration, then the Mortgagor may request, and at Mortgagee’s reasonable discretion upon such request, Mortgagee may endorse to the Mortgagor any such payment and the Mortgagor may collect such payment directly. The Mortgagee shall have the right, at its option and in its sole discretion, to apply any insurance proceeds received by the Mortgagee pursuant to the terms of this section, after the payment of all of the Mortgagee’s expenses, either (i) on account of the Secured Obligations, irrespective of whether such principal balance is then due and payable, whereupon the Mortgagee may declare the whole of the balance of Secured Obligations to be due and payable, or (ii) to the restoration or repair of the property damaged as provided in subsection (d) below; provided, however, that the Mortgagee hereby agrees to permit the application of such proceeds to the restoration or repair of the damaged property, subject to the provisions of subsection (d) below, if (i) the Mortgagee has received satisfactory evidence that such restoration or repair shall be completed no later

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than the date that is six (6) months prior to the Maturity Date, and (ii) no Event of Default, or event that with the passage of time, the giving of notice or both would constitute an Event of Default, then exists. If insurance proceeds are made available to the Mortgagor by the Mortgagee as hereinafter provided, the Mortgagor shall repair, restore or rebuild the damaged or destroyed portion of the Premises so that the condition and value of the Premises are substantially the same as the condition and value of the Premises prior to being damaged or destroyed. In the event of foreclosure of this Mortgage, all right, title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale.

(d) If insurance proceeds are made available by the Mortgagee to the Mortgagor, the Mortgagor shall comply with the following conditions:

(i) Before commencing to repair, restore or rebuild following damage to, or destruction of, all or a portion of the Premises, whether by fire or other casualty, the Mortgagor shall obtain from the Mortgagee its approval, which shall not be unreasonably withheld, conditioned or delayed, of all site and building plans and specifications pertaining to such repair, restoration or rebuilding.

(ii) Prior to each payment or application of any insurance proceeds to the repair or restoration of the improvements upon the Premises to the extent permitted in subsection (c) above (which payment or application may be made, at the Mortgagee’s option, through an escrow, the terms and conditions of which are reasonably satisfactory to the Mortgagee and the cost of which is to be borne by the Mortgagor), the Mortgagee shall be satisfied as to the following:

(A) no Event of Default or any event which, with the passage of time or giving of notice would constitute an Event of Default, has occurred;

(B) either such Improvements have been fully restored, or the expenditure of money as may be received from such insurance proceeds will be sufficient to repair, restore or rebuild the Premises, free and clear of all liens, claims and encumbrances, except the lien of this Mortgage and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Premises, the Mortgagor has deposited with the Mortgagee such amount of money which, together with the insurance proceeds shall be sufficient to restore, repair and rebuild the Premises; and

(C) prior to each disbursement of any such proceeds, the Mortgagee shall be furnished with a statement of the Mortgagee’s architect (the cost of which shall be borne by the Mortgagor), certifying the extent of the repair and restoration completed to the date thereof, and that such repairs, restoration, and rebuilding have been performed to date in conformity with the plans and specifications approved by the

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Mortgagee and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Premises; and the Mortgagee shall be furnished with appropriate evidence of payment for labor or materials furnished to the Premises, and total or partial lien waivers substantiating such payments.

(iii) If the Mortgagor shall fail to restore, repair or rebuild the Improvements within a time deemed satisfactory by the Mortgagee in its reasonable discretion and taking into account any force majeure that may have occurred, then the Mortgagee, at its option, may (A) commence and perform all necessary acts to restore, repair or rebuild the said Improvements for or on behalf of the Mortgagor, or (B) declare an Event of Default. If insurance proceeds shall exceed the amount necessary to complete the repair, restoration or rebuilding of the Improvements, such excess shall be applied on account of the Secured Obligations irrespective of whether such Secured Obligations is then due and payable without payment of any premium or penalty.

7. Condemnation. If all or any part of the Premises are damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking or damages made in consideration thereof, to the extent of the full amount of the remaining unpaid Secured Obligations, is hereby assigned to the Mortgagee , who is empowered to collect and receive the same and to give proper receipts therefor in the name of the Mortgagor and the same shall be paid forthwith to the Mortgagee. Such award or monies shall be applied on account of the Secured Obligations, without any prepayment or premium, irrespective of whether such Secured Obligations is then due and payable and, at any time from and after the taking the Mortgagee may declare the whole of the balance of the Secured Obligations to be due and payable. Notwithstanding the provisions of this section to the contrary, if any condemnation or taking of less than the entire Premises occurs and provided that no Event of Default and no event or circumstance which with the passage of time, the giving of notice or both would constitute an Event of Default then exists, and if such partial condemnation, in the reasonable discretion of the Mortgagee, has no material adverse effect on the operation or value of the Premises, then the award or payment for such taking or consideration for damages resulting therefrom may be collected and received by the Mortgagor, and the Mortgagee hereby agrees that in such event it shall not declare the Secured Obligations to be due and payable, if it is not otherwise then due and payable.

8. Lease Assignment. The Mortgagor acknowledges that, concurrently herewith, the Mortgagor has executed and delivered to the Mortgagee, as additional security for the repayment of the Secured Obligations, an Assignment of Rents and Leases (the “Assignment”) pursuant to which the Mortgagor has assigned to the Mortgagee interests in the leases of the Premises and the rents and income from the Premises. All of the provisions of the Assignment are hereby incorporated herein as if fully set forth at length in the text of this Mortgage. The Mortgagor agrees to abide by all of the provisions of the Assignment.

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9. Effect of Extensions of Time and Other Changes. If the payment of the Secured Obligations or any part thereof is extended or varied, if any part of any security for the payment of the Secured Obligations is released, if the rate of interest charged under the Financing Agreement is changed or if the time for payment thereof is extended or varied, all persons now or at any time hereafter liable therefor, or interested in the Premises or having an interest in the Mortgagor, shall be held to assent to such extension, variation, release or change and their liability and the lien and all of the provisions hereof shall continue in full force, any right of recourse against all such persons being expressly reserved by the Mortgagee, notwithstanding such extension, variation, release or change.

10. Effect of Changes in Laws Regarding Taxation. If any law is enacted after the date hereof requiring (a) the deduction of any lien on the Premises from the value thereof for the purpose of taxation, or (b) the imposition upon the Mortgagee of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by the Mortgagor, so as to affect this Mortgage or the Secured Obligations or the holders thereof, then the Mortgagor, upon demand by the Mortgagee, shall pay such Taxes or charges, or reimburse the Mortgagee therefor to the extent such Taxes or charges relate to this Mortgage; provided, however, that the Mortgagor shall not be deemed to be required to pay any income or franchise taxes of the Mortgagee.

11. Mortgagee’s Performance of Defaulted Acts and Expenses Incurred by Mortgagee. If an Event of Default has occurred, the Mortgagee may, but need not, make any payment or perform any act herein required of the Mortgagor in any form and manner deemed expedient by the Mortgagee, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Premises or consent to any tax or assessment or cure any default of the Mortgagor in any lease of the Premises. All monies paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including reasonable attorneys’ fees, and any other monies advanced by the Mortgagee in regard to any tax referred to in Section 9 above or to protect the Premises or the lien hereof, shall be so much additional Secured Obligations, and shall become immediately due and payable by the Mortgagor to the Mortgagee, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate. In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys’ fees, incurred by the Mortgagee in connection with (a) sustaining the lien of this Mortgage or its priority, (b) protecting or enforcing any of the Mortgagee’s rights hereunder, (c) recovering any Secured Obligations, (d) any litigation or proceedings affecting the Financing Agreement, this Mortgage, any of the other Transaction Documents or the Premises, including without limitation, bankruptcy and probate proceedings, or (e) preparing for the commencement, defense or participation in any threatened litigation or proceedings affecting the Financing Agreement, this Mortgage, any of the other Transaction Documents or the Premises, shall be so much additional Secured Obligations, and shall become immediately due and payable by the Mortgagor to the Mortgagee, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate (as defined in the Financing Agreement). The interest accruing under this section shall be immediately due and payable by the Mortgagor to the Mortgagee, and shall be additional Secured Obligations evidenced by the Financing Agreement and secured by this

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Mortgage. The Mortgagee’s failure to act shall never be considered as a waiver of any right accruing to the Mortgagee on account of any Event of Default. Should any amount paid out or advanced by the Mortgagee hereunder, or pursuant to any agreement executed by the Mortgagor in connection with the Secured Obligations, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the Premises or any part thereof, then the Mortgagee shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, regardless of whether said liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment.

12. Security Agreement. The Mortgagor and the Mortgagee agree that this Mortgage shall constitute a “Security Agreement” within the meaning of the Code with respect to (a) all sums at any time on deposit for the benefit of the Mortgagor or held by the Mortgagee (whether deposited by or on behalf of the Mortgagor or anyone else) pursuant to any of the provisions of this Mortgage or the other Transaction Documents, and (b) with respect to any personal property included in the granting clauses of this Mortgage, which personal property may not be deemed to be affixed to the Premises or may not constitute a “Fixture” (within the meaning of Section 9-102(41) of the Code and which property is hereinafter referred to as “Personal Property”), and all replacements of, substitutions for, additions to, and the proceeds thereof, and the “Supporting Obligations” (as defined in the Code) (all of said Personal Property and the replacements, substitutions and additions thereto and the proceeds thereof being sometimes hereinafter collectively referred to as “UCC Collateral”), and that a security interest in and to the UCC Collateral is hereby granted to the Mortgagee and its successors and assigns (for the benefit of the Lenders and the Holders), and the UCC Collateral and all of the Mortgagor’s right, title and interest therein are hereby assigned to the Mortgagee, all to secure payment of the Secured Obligations. All of the provisions contained in this Mortgage pertain and apply to the UCC Collateral as fully and to the same extent as to any other property comprising the Premises; and the following provisions of this section shall not limit the applicability of any other provision of this Mortgage but shall be in addition thereto:

(a) The Mortgagor (being the Debtor as that term is used in the Code) is and will be the true and lawful owner of the UCC Collateral, subject to no liens, charges or encumbrances other than the lien hereof, other liens and encumbrances benefiting the Mortgagee and Permitted Liens and no other party, and liens and encumbrances, if any, expressly permitted by the other Transaction Documents.

(b) The UCC Collateral is to be used by the Mortgagor solely for business purposes.

(c) The UCC Collateral will be kept at the Real Estate and, except for Obsolete Collateral (as hereinafter defined), will not be removed therefrom without the consent of the Mortgagee (being the Secured Party as that term is used in the Code). The UCC Collateral may be affixed to the Real Estate but will not be affixed to any other real estate.

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(d) The only persons having any interest in the Premises are the Mortgagor, the tenant, the Mortgagee and holders of interests, if any, expressly permitted hereby.

(e) No Financing Statement (other than Financing Statements showing the Mortgagee as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted hereby) covering any of the UCC Collateral or any proceeds thereof is on file in any public office except pursuant hereto; and the Mortgagor, at its own cost and expense, upon demand, will furnish to the Mortgagee such further information and will execute and deliver to the Mortgagee such financing statements and other documents in form satisfactory to the Mortgagee and will do all such acts as the Mortgagee may request at any time or from time to time or as may be necessary or appropriate to establish and maintain a perfected security interest in the UCC Collateral as security for the Secured Obligations, subject to no other liens or encumbrances, other than liens or encumbrances benefiting the Mortgagee and no other party, and liens and encumbrances (if any) expressly permitted hereby; and the Mortgagor will pay the cost of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is deemed by the Mortgagee to be desirable. The Mortgagor hereby irrevocably authorizes the Mortgagee at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto, without the signature of the Mortgagor that (i) indicate the UCC Collateral (A) is comprised of all assets of the Mortgagor or words of similar effect, regardless of whether any particular asset comprising a part of the UCC Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed, or (B) as being of an equal or lesser scope or within greater detail as the grant of the security interest set forth herein, and (ii) contain any other information required by Section 5 of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether the Mortgagor is an organization, the type of organization and any organizational identification number issued to the Mortgagor, and (B) in the case of a financing statement filed as a fixture filing or indicating UCC Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which the UCC Collateral relates. The Mortgagor agrees to furnish any such information to the Mortgagee promptly upon request. The Mortgagor further ratifies and affirms its authorization for any financing statements and/or amendments thereto, executed and filed by the Mortgagee in any jurisdiction prior to the date of this Mortgage. In addition, the Mortgagor shall make appropriate entries on its books and records disclosing the Mortgagee’s security interests in the UCC Collateral.

(f) Upon an Event of Default hereunder, the Mortgagee shall have the remedies of a secured party under the Code, including, without limitation, the right to take immediate and exclusive possession of the UCC Collateral, or any part thereof, and for that purpose, so far as the Mortgagor can give authority therefor, with or without judicial process, may enter (if this can be done without breach of the peace) upon any place which the UCC Collateral or any part thereof may be situated and remove the same therefrom (provided that if the UCC Collateral is affixed to real estate, such removal shall

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be subject to the conditions stated in the Code); and the Mortgagee shall be entitled to hold, maintain, preserve and prepare the UCC Collateral for sale, until disposed of, or may propose to retain the UCC Collateral subject to the Mortgagor’s right of redemption in satisfaction of the Mortgagor’s obligations, as provided in the Code. The Mortgagee may render the UCC Collateral unusable without removal and may dispose of the UCC Collateral on the Premises. The Mortgagee may require the Mortgagor to assemble the UCC Collateral and make it available to the Mortgagee for its possession at a place to be designated by the Mortgagee which is reasonably convenient to both parties. The Mortgagee will give the Mortgagor at least ten (10) days notice of the time and place of any public sale of the UCC Collateral or of the time after which any private sale or any other intended disposition thereof is made. The requirements of reasonable notice shall be met if such notice is mailed, by certified United States mail or equivalent, postage prepaid, to the address of the Mortgagor hereinafter set forth at least fifteen (15) days before the time of the sale or disposition. The Mortgagee may buy at any public sale. The Mortgagee may buy at private sale if the UCC Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. Any such sale may be held in conjunction with any foreclosure sale of the Premises. If the Mortgagee so elects, the Premises and the UCC Collateral may be sold as one lot. The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling and the reasonable attorneys’ fees and legal expenses incurred by the Mortgagee shall be applied against the Secured Obligations in such order or manner as the Mortgagee shall select. The Mortgagee will account to the Mortgagor for any surplus realized on such disposition.

(g) The terms and provisions contained in this section, unless the context otherwise requires, shall have the meanings and be construed as provided in the Code.

(h) This Mortgage is intended to be a financing statement within the purview of Section 9-502(c) of the Code with respect to the UCC Collateral and the goods described herein, which goods are or may become fixtures relating to the Premises. The addresses of the Mortgagor (Debtor) and the Mortgagee (Secured Party) are set forth in Section 23 herein. This Mortgage is to be filed for recording with the Recorder of Deeds of the county or counties where the Premises are located. The Mortgagor is the record owner of the Premises.

(i) To the extent permitted by applicable law, the security interest created hereby is specifically intended to cover all Leases between the Mortgagor or its agents as lessor, and various tenants named therein, as lessee, including all extended terms and all extensions and renewals of the terms thereof, as well as any amendments to or replacement of said Leases, together with all of the right, title and interest of the Mortgagor, as lessor thereunder.

(j) The Mortgagor represents and warrants that: (i) the Mortgagor is the record owner of the Premises; and (ii) the Mortgagor’s principal place of business is located in the State of New Jersey.

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(k) The Mortgagor hereby agrees that: (i) where UCC Collateral is in possession of a third party, the Mortgagor will join with the Mortgagee in notifying the third party of the Mortgagee’s interest and obtaining an acknowledgment from the third party that it is holding the UCC Collateral for the benefit of the Mortgagee; (ii) the Mortgagor will cooperate with the Mortgagee in obtaining control with respect to UCC Collateral consisting of: deposit accounts, investment property, letter of credit rights and electronic chattel paper; and (iii) until the Secured Obligations is paid in full, Mortgagor will not change the state where it is located or change its name or form of organization without giving the Mortgagee at least thirty (30) days prior written notice in each instance.

13. Prohibited Transfers. The Mortgagor, without the prior written consent of the Lender, shall not effect, suffer or permit any Prohibited Transfer (as defined herein). Any conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest or other encumbrance or alienation (or any agreement to do any of the foregoing) of the Premises or any part thereof or interest therein shall constitute a “Prohibited Transfer” (excepting only sales or other dispositions of UCC Collateral (“Obsolete Collateral”) no longer useful in connection with the operation of the Premises, provided that prior to the sale or other disposition thereof, such Obsolete Collateral has been replaced by UCC Collateral of at least equal value and utility which is subject to the lien hereof with the same priority as with respect to the Obsolete Collateral), whether any such conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest, encumbrance or alienation is effected directly, indirectly (including the nominee agreement), voluntarily or involuntarily, by operation of law or otherwise; provided, however, that the foregoing provisions of this section shall not apply (i) to liens securing the Secured Obligations, (ii) to the lien of current taxes and assessments not in default, (iii) to any transfers of the Premises, or part thereof, or interest therein, or any beneficial interests, or shares of stock or partnership or joint venture interests, as the case may be, by or on behalf of an owner thereof who is deceased or declared judicially incompetent, to such owner’s heirs, legatees, devisees, executors, administrators, estate or personal representatives, (iv) to leases permitted by the terms of the Transaction Documents, if any, or (v) to any transfers of the Premises expressly permitted by the Financing Agreement.

14. Events of Default; Acceleration. Each of the following shall constitute an “Event of Default” for purposes of this Mortgage:

(a) The occurrence of an “Event of Default” under the Financing Agreement or any other Transaction Document; or

(b) The occurrence of a Prohibited Transfer.

If an Event of Default occurs, the Mortgagee may, at its option, declare the whole of the Secured Obligations to be immediately due and payable without further notice to the Mortgagor, with interest thereon accruing from the date of such Event of Default until paid at the Default Rate.

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15. Judicial and Non-Judicial Foreclosure; Expense of Litigation.

(a) When all or any part of the Secured Obligations shall become due, whether by acceleration or otherwise, the Mortgagee shall have the right to foreclose the lien hereof for such Secured Obligations or part thereof and/or exercise any right, power or remedy provided in this Mortgage or any of the other Transaction Documents in accordance with applicable New Jersey law and commence a non-judicial foreclosure of this Mortgage by power of sale pursuant to then applicable New Jersey law. To the extent permitted by law, the Mortgagor waives any right granted pursuant to applicable New Jersey law to challenge the Mortgagee’s election to enforce this Mortgage by means of such non-judicial foreclosure by power of sale. To the extent permitted by New Jersey law, in the event of a foreclosure sale (whether judicial or non-judicial by power of sale), the Mortgagee is hereby authorized, without the consent of the Mortgagor, to assign any and all insurance policies to the purchaser at such sale or to take such other steps as the Mortgagee may deem advisable to cause the interest of such purchaser to be protected by any of such insurance policies.

(b) In any suit to foreclose the lien hereof, there shall be allowed and included as additional indebtedness in the decree for sale all expenditures and expenses which may be paid or incurred by or on behalf of the Mortgagee for reasonable attorneys’ fees, appraisers’ fees, outlays for documentary and expert evidence, stenographers’ charges, publication costs, and costs (which may be estimated as to items to be expended after entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to the title as the Mortgagee may deem reasonably necessary either to prosecute such suit or to evidence to bidders at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Premises. All expenditures and expenses of the nature mentioned in this section and such other expenses and fees as may be incurred in the enforcement of the Mortgagor’s obligations hereunder, the protection of said Premises and the maintenance of the lien of this Mortgage, including the reasonable fees of any attorney employed by the Mortgagee in any litigation or proceeding affecting this Mortgage, the Financing Agreement, or the Premises, including probate and bankruptcy proceedings, or in preparations for the commencement or defense of any proceeding or threatened suit or proceeding shall be immediately due and payable by the Mortgagor, with interest thereon until paid at the Default Rate and shall be secured by this Mortgage.

16. Application of Proceeds of Foreclosure Sale. The proceeds of any foreclosure sale of the Premises (whether judicial or non-judicial by power of sale) shall be distributed and applied in accordance with applicable New Jersey law and, unless otherwise specified therein, in such order as the Mortgagee may determine in its sole and absolute discretion.

17. Appointment of Receiver. Upon or at any time after the filing of a complaint to foreclose this Mortgage, the court in which such complaint is filed shall, upon petition by the Mortgagee, appoint a receiver for the Premises in accordance with applicable New Jersey law. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of the Mortgagor at the time of application for such receiver and without

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regard to the value of the Premises or whether the same shall be then occupied as a homestead or not and the Mortgagee hereunder or any other holder of the Financing Agreement may be appointed as such receiver. Such receiver shall have power to collect the rents, issues and profits of the Premises (i) during the pendency of such foreclosure suit, (ii) in case of a sale and a deficiency, during the full statutory period of redemption, whether there be redemption or not, and (iii) during any further times when the Mortgagor, but for the intervention of such receiver, would be entitled to collect such rents, issues and profits. Such receiver also shall have all other powers and rights that may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during said period, including, to the extent permitted by law, the right to lease all or any portion of the Premises for a term that extends beyond the time of such receiver’s possession without obtaining prior court approval of such lease. The court from time to time may authorize the application of the net income received by the receiver in payment of (a) the Secured Obligations, or by any decree foreclosing this Mortgage, or any tax, special assessment or other lien which may be or become superior to the lien hereof or of such decree, provided such application is made prior to foreclosure sale, and (b) any deficiency upon a sale and deficiency.

18. Mortgagee’s Right of Possession in Case of Default. At any time after an Event of Default has occurred, the Mortgagor shall, upon demand of the Mortgagee, surrender to the Mortgagee possession of the Premises. The Mortgagee, in its discretion, may, with process of law, enter upon and take and maintain possession of all or any part of the Premises, together with all documents, books, records, papers and accounts relating thereto, and may exclude the Mortgagor and its employees, agents or servants therefrom, and the Mortgagee may then hold, operate, manage and control the Premises, either personally or by its agents. The Mortgagee shall have full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Premises, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent. Without limiting the generality of the foregoing, the Mortgagee shall have full power to:

(a) cancel or terminate any lease or sublease for any cause or on any ground which would entitle the Mortgagor to cancel the same;

(b) elect to disaffirm any lease or sublease which is then subordinate to the lien hereof;

(c) extend or modify any then existing leases and to enter into new leases, which extensions, modifications and leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon the Mortgagor and all persons whose interests in the Premises are subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Secured Obligations, satisfaction of any foreclosure judgment, or issuance of any certificate of sale or deed to any purchaser;

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(d) make any repairs, renewals, replacements, alterations, additions, betterments and improvements to the Premises as the Mortgagee deems are necessary;

(e) insure and reinsure the Premises and all risks incidental to the Mortgagee’s possession, operation and management thereof; and

(f) receive all of such avails, rents, issues and profits.

19. Application of Income Received by Mortgagee. The Mortgagee, in the exercise of the rights and powers hereinabove conferred upon it, shall have full power to use and apply the avails, rents, issues and profits of the Premises to the payment of or on account of the following, in such order as the Mortgagee may determine:

(a) to the payment of the operating expenses of the Premises, including cost of management and leasing thereof (which shall include compensation to the Mortgagee and its agent or agents, if management be delegated to an agent or agents, and shall also include lease commissions and other compensation and expenses of seeking and procuring tenants and entering into leases), established claims for damages, if any, and premiums on insurance hereinabove authorized;

(b) to the payment of taxes and special assessments now due or which may hereafter become due on the Premises; and

(c) to the payment of any Secured Obligations, including any deficiency which may result from any foreclosure sale.

20. Provisions Construed. Where any provision of this Mortgage is inconsistent with any provision of law of the New Jersey regulating the creation or enforcement of a lien or security interest in real or personal property including, but not by way of limitation, the Code, as amended, modified and/or replaced from time to time, the provisions of the law of New Jersey shall take precedence over the provisions of this Mortgage, but shall not invalidate or render unenforceable any other provisions of this Mortgage that can be construed in a manner consistent with the law of New Jersey.

21. Rights Cumulative. Each right, power and remedy herein conferred upon the Mortgagee is cumulative and in addition to every other right, power or remedy, express or implied, given now or hereafter existing under any of the Transaction Documents or at law or in equity, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by the Mortgagee, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission of the Mortgagee in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Event of Default or acquiescence therein.

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22. Mortgagee’s Right of Inspection. The Mortgagee and its representatives shall have the right to inspect the Premises and the books and records with respect thereto at all reasonable times during regular business hours upon not less than twenty four (24) hours prior notice to the Mortgagor, and access thereto, subject to the rights of tenants in possession, shall be permitted for that purpose.

23. Release Upon Payment and Discharge of Mortgagor’s Obligations. By its acceptance of this Mortgage, the Mortgagee agrees, at the Mortgagor’s election, to either release this Mortgage and the lien hereof or assign the same, without recourse, to the Mortgagor’s designee, by proper instrument upon payment and discharge of all Secured Obligations, including payment of all reasonable expenses incurred by the Mortgagee in connection with the execution of such release or assignment.

24. Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Mortgage must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided, confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

To the Mortgagee:	VICTORY PARK MANAGEMENT, LLC 227 W. Monroe Street Suite 3900 Chicago, IL 60606
	Telephone:	312.701.0788
	Facsimile:	312.701.0794
	Attention:	Matthew Ray
With a copy to:	LATHAM & WATKINS LLP Sears Tower, Suite 5800 233 S. Wacker Drive Chicago, Illinois 60606
	Telephone:	312.876.7700
	Facsimile:	312.993.9767
	Attention:	Bradley Kotler
To the Mortgagor:	UNIGENE LABORATORIES, INC. 81 Fulton Street Boonton, New Jersey 07005
	Telephone:	973.265.1100
	Facsimile:	973.335.0972
	Attention:	Warren Levy

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With copy to:	DECHERT LLP 902 Carnegie Center, Suite 500 Princeton, New Jersey 08540
	Telephone:	609.955.3211
	Facsimile:	609.873.9127
	Attention:	Ella DeTrizio

or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clauses (i), (ii) or (iii) above, respectively.

25. Waiver of Rights. The Mortgagor hereby covenants and agrees that it will not at any time insist upon or plead, or in any manner claim or take any advantage of, any stay, exemption or extension law or any so-called “Moratorium Law” now or at any time hereafter in force providing for the valuation or appraisement of the Premises, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or to decree, judgment or order of any court of competent jurisdiction; or, to the extent permitted by law, after such sale or sales, claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other enforcement hereof; and without limiting the foregoing:

(a) To the extent permitted by law, the Mortgagor hereby expressly waives any and all rights of reinstatement and redemption, if any, under any order or decree of foreclosure of this Mortgage, on its own behalf and on behalf of each and every person, it being the intent hereof that any and all such rights of reinstatement and redemption of the Mortgagor and of all other persons are and shall be deemed to be hereby waived to the full extent permitted by the provisions of applicable law; and

(b) The Mortgagor will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power remedy herein or otherwise granted or delegated to the Mortgagee but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted.

26. Contests. Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right to contest by appropriate legal proceedings diligently prosecuted any Taxes imposed or assessed upon the Premises or which may be or become a lien thereon and any mechanics’, materialmen’s or other liens or claims for lien upon the Premises (each, a “Contested Lien”), and no Contested Lien shall constitute an Event of Default hereunder, if, but only if:

(a) The Mortgagor shall forthwith give notice of any Contested Lien to the Mortgagee at the time the same shall be asserted;

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(b) The Mortgagor shall either pay under protest or deposit with the Mortgagee the full amount (the “Lien Amount”) of such Contested Lien, together with such amount as the Mortgagee may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment the Mortgagor may furnish to the Mortgagee a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to the Mortgagee;

(c) The Mortgagor shall diligently prosecute the contest of any Contested Lien by appropriate legal proceedings having the effect of staying the foreclosure or forfeiture of the Premises, and shall permit the Mortgagee to be represented in any such contest and shall pay all expenses incurred, in so doing, including fees and expenses of the Mortgagee’s counsel (all of which shall constitute so much additional Secured Obligations bearing interest at the highest rate then applicable to the Notes until paid, and payable upon demand);

(d) The Mortgagor shall pay each such Contested Lien and all Lien Amounts together with interest and penalties thereon (i) if and to the extent that any such Contested Lien shall be determined adverse to the Mortgagor, or (ii) forthwith upon demand by the Mortgagee if, in the opinion of the Mortgagee, and notwithstanding any such contest, the Premises shall be in jeopardy or in danger of being forfeited or foreclosed; provided that if the Mortgagor shall fail so to do, the Mortgagee may, but shall not be required to, pay all such Contested Liens and Lien Amounts and interest and penalties thereon and such other sums as may be necessary in the judgment of the Mortgagee to obtain the release and discharge of such liens; and any amount expended by the Mortgagee in so doing shall be so much additional Secured Obligations bearing interest at the highest rate then applicable to the Notes until paid, and payable upon demand; and provided further that the Mortgagee may in such case use and apply monies deposited as provided in subsection (b) above and may demand payment upon any bond or title indemnity furnished as aforesaid.

27. Expenses Relating to Transaction Documents.

(a) The Mortgagor will pay all expenses, charges, costs and fees relating to the Secured Obligations or necessitated by the terms of the Financing Agreement, this Mortgage and the other Transaction Documents, including without limitation, the Mortgagee’s reasonable attorneys’ fees, in connection with the enforcement of the Financing Agreement, this Mortgage and the other Transaction Documents all filing, registration and recording fees and all other expenses incident to the execution and acknowledgment of this Mortgage, excluding, however, any federal, state, county and municipal taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery this Mortgage, and further excluding any income or franchise taxes of the Mortgagee. The Mortgagor recognizes that, during the term of this Mortgage, the Mortgagee:

(i) May be involved in court or administrative proceedings, including, without restricting the foregoing, foreclosure, probate, bankruptcy, creditors’ arrangements, insolvency, housing authority and pollution control proceedings of any kind, to which the Mortgagee shall be a party by reason of the Transaction Documents or in which the Transaction Documents or the Premises are involved directly or indirectly;

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(ii) May make preparations following the occurrence of an Event of Default hereunder for the commencement of any suit for the foreclosure hereof, which may or may not be actually commenced;

(iii) May make preparations following the occurrence of an Event of Default hereunder for, and do work in connection with, the Mortgagee’s taking possession of and managing the Premises, which event may or may not actually occur;

(iv) May make preparations for and commence other private or public actions to remedy an Event of Default hereunder, which other actions may or may not be actually commenced;

(v) May enter into negotiations with the Mortgagor or any of its agents, employees or attorneys in connection with the existence or curing of any Event of Default hereunder, the sale of the Premises, the assumption of liability for any of the Secured Obligations or the transfer of the Premises in lieu of foreclosure; or

(vi) May enter into negotiations with the Mortgagor or any of its agents, employees or attorneys pertaining to the Mortgagee’s approval of actions taken or proposed to be taken by the Mortgagor which approval is required by the terms of this Mortgage.

(b) All expenses, charges, costs and fees described in this section shall be so much additional Secured Obligations, shall bear interest from the date so incurred until paid at the Default Rate (or with respect to (vi) above, the Current Interest Rate (as defined in the Financing Agreement) unless an Event of Default is then existing) and shall be paid, together with said interest, by the Mortgagor forthwith upon demand.

28. Further Instruments. Upon request of the Mortgagee, the Mortgagor shall execute, acknowledge and deliver all such additional instruments and further assurances of title and shall do or cause to be done all such further acts and things as may reasonably be necessary fully to effectuate the intent of this Mortgage and of the other Transaction Documents.

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29. Indemnity. The Mortgagor hereby covenants and agrees that no liability shall be asserted or enforced against the Mortgagee or the Lenders and the Holders in the exercise of the rights and powers granted to the Mortgagee in this Mortgage, and the Mortgagor hereby expressly waives and releases any such liability, except to the extent resulting from the gross negligence or willful misconduct of the Mortgagee. The Mortgagor shall indemnify and save the Mortgagee and the Lenders and the Holders harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses, including reasonable attorneys’ fees and court costs (collectively, “Claims”), of whatever kind or nature which may be imposed on, incurred by or asserted against the Mortgagee or the Lenders and the Holders at any time by any third party which relate to or arise from: (a) any suit or proceeding (including probate and bankruptcy proceedings), or the threat thereof, in or to which the Mortgagee or a Lender or Holder may or does become a party, either as plaintiff or as a defendant, by reason of this Mortgage or for the purpose of protecting the lien of this Mortgage; (b) the offer for sale or sale of all or any portion of the Premises; and (c) the ownership, leasing, use, operation or maintenance of the Premises, if such Claims relate to or arise from actions taken prior to the surrender of possession of the Premises to the Mortgagee in accordance with the terms of this Mortgage; provided, however, that the Mortgagor shall not be obligated to indemnify or hold the Mortgagee or the Lenders and the Holders harmless from and against any Claims directly arising from the gross negligence or willful misconduct of the Mortgagee. All costs provided for herein and paid for by the Mortgagee or any Lender or Holder shall be so much additional Secured Obligations and shall become immediately due and payable upon demand by the Mortgagee and with interest thereon from the date incurred by the Mortgagee or such Lender or Holder until paid at the Default Rate.

30. Subordination of Property Manager’s Lien. Any property management agreement for the Premises entered into hereafter with a property manager shall contain a provision whereby the property manager agrees that any and all mechanics’ lien rights that the property manager or anyone claiming by, through or under the property manager may have in the Premises shall be subject and subordinate to the lien of this Mortgage and shall provide that the Mortgagee may terminate such agreement, without penalty or cost, at any time after the occurrence of an Event of Default hereunder. Such property management agreement or a short form thereof, at the Mortgagee’s request, shall be recorded with the Recorder of Deeds of the county where the Premises are located. In addition, if the property management agreement in existence as of the date hereof does not contain a subordination provision, the Mortgagor shall cause the property manager under such agreement to enter into a subordination of the management agreement with the Mortgagee, in recordable form, whereby such property manager subordinates present and future lien rights and those of any party claiming by, through or under such property manager to the lien of this Mortgage.

31. Compliance with Environmental Laws. Concurrently herewith the Mortgagor has executed and delivered to the Mortgagee that certain Environmental Indemnity Agreement dated as of the date hereof (the “Indemnity”) pursuant to which the Mortgagor has indemnified the Mortgagee for environmental matters concerning the Premises, as more particularly described therein. The provisions of the Indemnity are hereby incorporated herein and this Mortgage shall secure the obligations of the Mortgagor thereunder.

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32. Miscellaneous.

(a) Successors and Assigns. This Mortgage and all provisions hereof shall be binding upon and enforceable against the Mortgagor and its assigns and other successors. This Mortgage and all provisions hereof shall inure to the benefit of the Mortgagee, its successors and assigns and any Person from time to time a Lender or a Holder under the Financing Agreement.

(b) Invalidity of Provisions; Governing Law. THIS MORTGAGE SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, PROVIDED, HOWEVER, THAT TO THE EXTENT THE MANDATORY PROVISIONS OF THE LAWS OF ANOTHER JURISDICTION RELATING TO (I) THE PERFECTION OR THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTERESTS IN ANY OF THE PREMISES, (II) THE LIEN, ENCUMBRANCE OR OTHER INTEREST IN THE PROPERTY GRANTED OR CONVEYED BY THIS MORTGAGE, OR (III) THE AVAILABILITY OF AND PROCEDURES RELATING TO ANY REMEDY HEREUNDER OR RELATED TO THIS MORTGAGE ARE REQUIRED TO BE GOVERNED BY SUCH OTHER JURISDICTION’S LAWS, THOSE OTHER LAWS SHALL BE DEEMED TO GOVERN AND CONTROL. THE INVALIDITY, ILLEGALITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS MORTGAGE OR THE TRANSACTION DOCUMENTS SHALL NOT AFFECT OR IMPAIR THE VALIDITY, LEGALITY OR ENFORCEABILITY OF THE REMAINDER OF THIS MORTGAGE AND THE OTHER TRANSACTION DOCUMENTS, AND TO THIS END, THE PROVISIONS OF THIS MORTGAGE AND THE OTHER TRANSACTION DOCUMENTS ARE DECLARED TO BE SEVERABLE.

(c) Municipal Requirements. The Mortgagor shall not by act or omission permit any building or other improvement on premises not subject to the lien of this Mortgage to rely on the Premises or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and the Mortgagor hereby assigns to the Mortgagee any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used. Similarly, no building or other improvement on the Premises shall rely on any premises not subject to the lien of this Mortgage or any interest therein to fulfill any governmental or municipal requirement. Any act or omission by the Mortgagor which would result in a violation of any of the provisions of this subsection shall be void.

(d) Rights of Tenants. The Mortgagee shall have the right and option to commence a civil action to foreclose this Mortgage and to obtain a decree of foreclosure and sale subject to the rights of any tenant or tenants of the Premises having an interest in the Premises prior to that of the Mortgagee. The failure to join any such tenant or tenants of the Premises as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose their rights shall not be asserted by the

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Mortgagor as a defense in any civil action instituted to collect the Secured Obligations, or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Premises, any statute or rule of law at any time existing to the contrary notwithstanding.

(e) Option of Mortgagee to Subordinate. At the option of the Mortgagee, this Mortgage shall become subject and subordinate, in whole or in part (but not with respect to priority of entitlement to insurance proceeds or any condemnation or eminent domain award) to any and all leases of all or any part of the Premises upon the execution by the Mortgagee of a unilateral declaration to that effect and the recording thereof in the Office of the Recorder of Deeds in and for the county wherein the Premises are situated.

(f) Mortgagee-in-Possession. Nothing herein contained shall be construed as constituting the Mortgagee a mortgagee-in-possession in the absence of the actual taking of possession of the Premises by the Mortgagee pursuant to this Mortgage.

(g) Relationship of Mortgagee and Mortgagor. The Mortgagee shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of the Mortgagor or of any lessee, operator, concessionaire or licensee of the Mortgagor in the conduct of their respective businesses, and, without limiting the foregoing, the Mortgagee shall not be deemed to be such partner, joint venturer, agent or associate on account of the Mortgagee becoming a Mortgagee-in-possession or exercising any rights pursuant to this Mortgage, any of the other Transaction Documents, or otherwise. The relationship of the Mortgagor and the Mortgagee hereunder is solely that of debtor/creditor.

(h) Time of the Essence. Time is of the essence of the payment by the Mortgagor of all amounts due and owing to the Mortgagee under the Financing Agreement and the other Transaction Documents and the performance and observance by the Mortgagor of all terms, conditions, obligations and agreements contained in this Mortgage and the other Transaction Documents.

(i) No Merger. The parties hereto intend that the Mortgage and the lien hereof shall not merge in fee simple title to the Premises, and if the Mortgagee acquires any additional or other interest in or to the Premises or the ownership thereof, then, unless a contrary intent is manifested by the Mortgagee as evidenced by an express statement to that effect in an appropriate document duly recorded, this Mortgage and the lien hereof shall not merge in the fee simple title and this Mortgage may be foreclosed as if owned by a stranger to the fee simple title.

(j) Maximum Indebtedness Secured. Notwithstanding anything to the contrary in this Mortgage, the maximum principal amount of indebtedness or obligations that are, or under any contingency may be, secured by this Mortgage (including the Mortgagor’s obligation to reimburse advances made by the Mortgagee), either at execution or at any time thereafter, is TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00), plus amounts that the Mortgagee or any Lender or Holder expends after a declaration of default under this Mortgage to the extent that any such amounts

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shall constitute payment of (i) taxes, charges or assessments that may be imposed by law upon the Premises; (ii) premiums on insurance policies covering the Premises; (iii) expenses incurred in upholding the lien of this Mortgage, including the expenses of any litigation to prosecute or defend the rights and lien created by this Mortgage; or (iv) any amount, cost or charge to which the Mortgagee or any Lender or Holder becomes subrogated, upon payment, whether under recognized principles of law or equity, or under express statutory authority; then, and in each such event, such amounts or costs, together with interest thereon, shall be added to the Secured Obligations secured hereby and shall be secured by this Mortgage. This Mortgage secures the payment of the entire indebtedness secured hereby; provided, however the total amount secured by this Mortgage shall not exceed an amount equal to two hundred percent (200%) of the face amount of the Notes.

(k) CONSENT TO JURISDICTION. TO INDUCE THE MORTGAGEE TO ACCEPT THE LOAN AGREEMENT, THE MORTGAGOR IRREVOCABLY AGREES THAT, SUBJECT TO THE MORTGAGEE’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THE LOAN AGREEMENT AND THIS MORTGAGE WILL BE LITIGATED IN COURTS HAVING SITUS IN CHICAGO, ILLINOIS. THE MORTGAGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN CHICAGO, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS UPON THE MORTGAGOR, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO THE MORTGAGOR AT THE ADDRESS STATED IN SECTION 24 HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

(l) WAIVER OF JURY TRIAL. THE MORTGAGOR AND THE MORTGAGEE (BY ACCEPTANCE HEREOF), HAVING BEEN REPRESENTED BY COUNSEL EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS MORTGAGE OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS MORTGAGE OR (B) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS MORTGAGE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

(m) Complete Agreement. This Mortgage, the Financing Agreement and the other Transaction Documents constitute the complete agreement between the parties with respect to the subject matter hereof and the Transaction Documents may not be modified, altered or amended except by an agreement in writing signed by both the Mortgagor and the Mortgagee.

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(n) Commercial Property. The Mortgagor represents that this Mortgage does not encumber real property principally improved or to be improved by one or more structures containing in the aggregate not more than six (6) residential dwelling units, each having its own separate cooking facilities.

(o) Lien Law. The Mortgagor agrees that it will receive the advances secured hereby and will hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the cost of improvements to the Real Estate and Improvements, if any, before using any part of such advances for any other purpose.

33. Future Advances. The lien of this Mortgage with respect to any future advances, modifications, extensions, and renewals referred to herein and made from time to time shall have the same priority to which this Mortgage otherwise would be entitled as of the date this Mortgage is executed and recorded without regard to the fact that any such future advance, modification, extension, or renewal may occur after the Mortgage is executed.

34. Reduction Of Secured Amount. In the event that the amount secured by this Mortgage is less than the Secured Obligations, then the amount secured shall be reduced only by the last and final sums that the Borrowers repay with respect to the Secured Obligations and shall not be reduced by any intervening repayments of the Secured Obligations unless arising from the Premises. So long as the balance of the Secured Obligations exceeds the amount secured, any payments of the Secured Obligations shall not be deemed to be applied against, or to reduce, the portion of the Secured Obligations secured by this Mortgage. Such payments shall instead be deemed to reduce only such portions of the Secured Obligations as are secured by other collateral located outside of the state in which the Premises is located or as are unsecured.

35. Business Purposes. The proceeds of the indebtedness secured hereby referred to herein shall be used solely for business purposes and in furtherance of the regular business affairs of Mortgagor, and the entire principal obligation secured by this Mortgage constitutes (i) a “business loan” as that term is defined in, and for all purposes of, 815 ILCS 205/4 (1) (c), and (ii) a “loan secured by a mortgage on real estate” within the purview and operation of 815 ILCS 205/4(1)(l). Mortgagor acknowledges that the Real Estate does not constitute “agricultural real estate”, as said term is defined in Section 15-1201 of the Illinois Mortgage Foreclosure Law or “residential real estate” as defined in Section 15-1219 of the Illinois Mortgage Foreclosure Law.

36. State Specific Provisions.

(a) Principles of Construction. In the event of any inconsistencies between the terms and conditions of this Section 36 and other terms and conditions of this Mortgage, the terms and conditions of this Section 36 shall control and be binding.

(b) Provisions Subject to Applicable Law. All rights, powers, remedies and waivers provided in this Mortgage may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law of the state in which the Mortgage is recorded and are intended to be limited to the extent necessary so that they will not render this Mortgage invalid, unenforceable or not entitled to be recorded,

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registered, filed or enforced under the provisions of any such applicable law. If any term of this Mortgage or any application thereof shall be invalid or unenforceable, the remainder of this Mortgage and any other application of the terms hereof shall not be affected thereby.

(c) Certain Waivers. Mortgagor hereby waives and releases all benefit that might accrue to Mortgagor by virtue of any present or future law exempting the Premises, or any part of the proceeds arising from any sale thereof, from attachment, levy or sale on execution, or providing for any stay of execution, exemption from civil process or extension of time for payment, or any right of marshalling in the event of any sale hereunder of the Premises. Mortgagor waives all rights or defenses arising by reason of any “one action” or “anti-deficiency” law, or any other law which may prevent Mortgagee from bringing any action against Mortgagor, including a claim for deficiency to the extent Mortgagee is otherwise entitled to a claim for deficiency, before or after Mortgagee’s commencement or completion of any foreclosure action or any other action to exercise its remedies hereunder or otherwise available at a law or in equity.

(d) Continuing Enforcement of Mortgage. If, after receipt of any payment of all or any part of the Secured Obligations, Mortgagee is compelled under the Transaction Documents or pursuant to a judgment to surrender such payment to any person or entity for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance or a diversion of trust funds), then this Mortgage and the other Transaction Documents shall continue in full force and effect, and Mortgagor shall be liable for, and shall indemnify, defend and hold harmless Mortgagee with respect to the full amount so surrendered. The provisions of this Section 36(d) shall survive the cancellation or discharge of this Mortgage and shall remain effective notwithstanding the payment of the Secured Obligations, the cancellation of the Notes, the release of any security interest, lien or encumbrance securing the Secured Obligations or any other action which Mortgagee may have taken in reliance upon its receipt of such payment. Any cancellation, release or other such action by Mortgagee shall be deemed to have been conditioned upon any payment of the Secured Obligations having become final and irrevocable.

(e) Interest Rate Not Reduced on Judgment. In the event the Mortgagee obtains any judgment against the Mortgagor on this Mortgage, the Notes, the Financing Agreement or on the other Transaction Documents, whether such judgment is obtained by confession or otherwise, interest shall accrue on the judgment in the same manner and at the same rate as provided in the Financing Agreement, notwithstanding any law, custom or legal presumption to the contrary, subject only to the usury savings clauses of the Financing Agreement and this Mortgage, until the Mortgagee has received payment in full of all amounts due pursuant to this Mortgage, the Notes, the Financing Agreement and the other Transaction Documents secured hereby.

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(f) No Construction against Drafting Party. The Mortgagor and the Mortgagee have been represented by independent counsel of their own selection in connection with the negotiation, execution and delivery of this Mortgage and the other documents, instruments, records and papers relating hereto, and, without waiving the attorney-client privilege and expressly preserving the same, the Mortgagor and the Mortgagee acknowledge that they have made such comments on this Mortgage and the other documents, instruments, records and papers relating hereto as they have deemed necessary under the circumstances. The Mortgagor and the Mortgagee intend that this Mortgage and the other documents, instruments, records and papers relating hereto, shall not be construed against one party or the other based upon any rule of any applicable law giving preference in interpretation to the drafting or non-drafting party or its counsel.

(g) New Jersey Modification Statute. Pursuant to N.J.S.A. 46:9-8.1 et seq., this Mortgage and the other Transaction Documents are subject to modification by written agreement between the Borrowers, Mortgagee and each Lender party to the Financing Agreement. To the extent permitted by law, this Mortgage secures all modifications from the date upon which this Mortgage was originally recorded, including future loans and extensions of credit and changes in the interest rate, due date, amount or other terms and conditions of any obligations. This Mortgage may be modified from time to time without affecting the priority of the lien created hereby.

[Remainder of Page Intentionally Left Blank – Signature Page Follows]

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IN WITNESS WHEREOF, the Mortgagor has executed and delivered this Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing the day and year first above written as the execution date.

UNIGENE LABORATORIES, INC.
By:	/s/ Warren P. Levy
Name:	Warren P. Levy
Title:	President and CEO

SIGNATURE PAGE

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING

STATE OF NEW JERSEY,

COUNTY OF PASSAIC: SS:.

I CERTIFY that on September 30, 2008, Warren Levy personally came before me and this person acknowledged under oath, to my satisfaction, that:

a) this person signed and delivered the attached document as President – CEO of the corporation named in this document; and

b) this document was signed and made by the corporation as its voluntary act and deed by virtue of authority from its Board of Directors.

/s/ Linda L. Rohloff

Linda L. Rohloff, Notary Public

LINDA L. ROHLOFF

Notary Public, State of New Jersey

County of Passaic

Registration No. 2057307

Commission Expires April 11, 2009

ACKNOWLEDGEMENT PAGE

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING

EXHIBIT “A”

LEGAL DESCRIPTION OF REAL ESTATE

All the real property located in the Township of Fairfield, County of Essex, State of New Jersey and more particularly described as follows:

BEGINNING at a point on the West side of Little Falls Road distant 805.68 feet northerly from the intersection of the West side of Little Falls Road and North side of Pier Lane; thence

(1) Running through the lands formerly of Carrie DeVito, South 40 degrees 57 minutes, West 506.81 feet to a point; thence

(2) Still through the lands of Carrie DeVito, North 89 degrees 09 minutes West, 59.13 feet to the West line of lands formerly of Carrie DeVito; thence

(3) Running along the West line of lands formerly of Carrie DeVito, North 6 degrees 19 minutes East, 352.04 feet to a pint; thence

(4) Still along the West line of lands formerly of Carrie, DeVito, North 54 degrees 15 minutes East, 262.37 feet to the West side of Little Falls Road; thence

(5) Running along the West side of Little Falls Road, South 49 degrees 03 minutes East, 185.00 feet to the point and place of Beginning.

NOTE: Being Lot(s) 22, Block 2801, Tax Map of the Township of Fairfield,

BEING commonly known as 110 Little Falls Road, Fairfield, New Jersey.

BEING the same premises conveyed to the Mortgagor herein by Deed recorded on June 23, 1982 in the Essex County Register’s Office in Book 4754, page 450.

EX-10.6

Exhibit 10.6

THIS DOCUMENT WAS PREPARED BY, AND AFTER RECORDING, RETURN TO:
John Krol, Esq. Katten Muchin Rosenman LLP 525 W. Monroe Street, Suite 1900 Chicago, Illinois 60661
PROPERTY ADDRESS:	This space reserved for Recorder’s use only.
110 Little Falls Road
Fairfield, Essex County, New Jersey 07004

FIRST AMENDMENT TO MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING

This FIRST AMENDMENT TO MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING executed as of March 17, 2010 and effective and dated as of March 17, 2010 (this “Amendment”), is made by and between UNIGENE LABORATORIES, INC., a Delaware corporation (the “Mortgagor”), and VICTORY PARK MANAGEMENT, LLC, a Delaware limited liability company, its successors and assigns (the “Mortgagee”), in its capacity as administrative agent and collateral agent for the Lenders and the Holders (as defined in the Mortgage to which reference is hereinafter made) under the Financing Agreement (as defined in the Mortgage to which reference is hereinafter made), for the benefit of the Lenders and the Holders.

R E C I T A L S:

A. Mortgagor entered into that certain Financing Agreement dated as of September 30, 2008 by and among the Lenders party thereto from time to time and Mortgagee, as administrative agent and collateral agent for the Lenders and the Holders (as the same may be amended, restated, modified or otherwise supplemented and in effect from time to time, hereinafter the “Original Financing Agreement”), under which the Lenders agreed to purchase from the Borrowers (as defined in the Original Financing Agreement, which definition includes Mortgagor) certain notes in an aggregate principal amount up to TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00).

B. To secure Borrowers’ obligations under the Original Financing Agreement, Mortgagor executed and delivered to the Mortgagee, on behalf of the Lenders and the Holders, that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of September 30, 2008 (as the same may be amended, restated, modified or otherwise, from time to time, the “Mortgage”) encumbering, among other things, the real estate located in the County of Essex, State of New Jersey and legally described on Exhibit “A” attached hereto and made a part hereof, which Mortgage was recorded October 27, 2008 in Book 12164, Page 3423, in the Records of Essex County, New Jersey.

C. In connection with the execution and delivery of this Amendment, the Borrowers, the Mortgagee, the Lenders and the Holders entered into that certain Amended and Restated Financing Agreement dated as of March 16, 2010 (as the same may be amended, restated, modified or otherwise supplemented in effect from time to time, the “Amended and Restated Financing Agreement”), under which the Lenders agreed to purchase from the Borrowers certain notes in an aggregate principal amount of THIRTY-THREE MILLION AND NO/100 DOLLARS ($33,000,000.00).

D. As a condition to the Mortgagee, the Lenders and the Holders executing the Amended and Restated Financing Agreement, the Mortgagee, the Lenders and the Holders are requiring the execution and delivery of this Amendment.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor and Mortgagee agree as follows:

A G R E E M E N T S:

1. The parties hereto agree that all references in the Mortgage to (a) the Financing Agreement shall be deemed to refer to the Amended and Restated Financing Agreement, (b) all references to the Mortgage shall refer to the Mortgage as the same may be amended, restated, modified or otherwise supplemented from time to time, including, without limitation, pursuant to this Amendment and (c) without limiting the generality of the foregoing, all capitalized terms used but not defined in the Mortgage shall have the meanings ascribed to them in the Amended and Restated Financing Agreement.

2. Section 24 of the Mortgage is hereby amended by deleting the reference to Latham & Watkins and substituting the following therefor:

With a copy to:	KATTEN MUCHIN ROSENMAN LLP 525 West Monroe Street Suite 1900 Chicago, Illinois 60661
	Telephone:	312.902.5659
	Facsimile:	312.577.4747
	Attention:	John Krol, Esq.

3. Section 32(j) of the Mortgage is hereby amended by deleting such Section in its entirety and substituting the following thereto:

“(j) Maximum Indebtedness Secured. Notwithstanding anything to the contrary in the Mortgage, the maximum principal amount of indebtedness or obligations that are, or under any contingency may be, secured by this Mortgage (including the

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Mortgagor’s obligation to reimburse advances made by the Mortgagee), either at execution or at any time thereafter, is THIRTY-THREE MILLION AND NO/100 DOLLARS ($33,000,000.00) plus the face amount of any additional promissory notes issued in connection with a Subsequent Closing, plus amounts that the Mortgagee or any Lender or Holder expends after a declaration of default under this Mortgage to the extent that any such amounts shall constitute payment of (i) taxes, charges or assessments that may be imposed by law upon the Premises; (ii) premiums on insurance policies covering the Premises; (iii) expenses incurred in upholding the lien of this Mortgage, including the expenses of any litigation to prosecute or defend the rights and lien created by this Mortgage; or (iv) any amount, cost or charge to which the Mortgagee or any Lender or Holder becomes subrogated, upon payment, whether under recognized principles of law or equity, or under express statutory authority; then, and in each such event, such amounts or costs, together with interest thereon, shall be added to the Secured Obligations secured hereby and shall be secured by this Mortgage. This Mortgage secures the payment of the entire indebtedness secured hereby; provided, however the total amount secured by this Mortgage shall not exceed an amount equal to two hundred percent (200%) of the face amount of the sum of the Notes plus any additional promissory notes issued in connection with a Subsequent Closing.”

4. Miscellaneous.

(a) Successors and Assigns. This Amendment and all provisions hereof shall be binding upon and enforceable against the Mortgagor and its assigns and other successors. This Amendment and all provisions hereof shall inure to the benefit of the Mortgagee, its successors and assigns and any Person from time to time a Lender or a Holder under the Financing Agreement.

(b) Except as amended hereby, the Mortgage remains in full force and effect.

[Remainder of Page Intentionally Left Blank – Signature Page Follows]

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IN WITNESS WHEREOF, the Mortgagor and Mortgagee have executed and delivered this Amendment the day and year first above written as the execution date.

UNIGENE LABORATORIES, INC.
By:	/s/ Warren P. Levy
Name:	Warren P. Levy
Title:	Chief Executive Officer
VICTORY PARK MANAGEMENT, LLC
By:	/s/ Matthew Ray
Name:	Matthew Ray
Title:	Manager

Signature Page to First Amendment to Mortgage,

Security Agreement, Assignment of Rents and Leases and Fixture Filing

STATE OF NEW JERSEY,

COUNTY OF PASSAIC: SS:.

I CERTIFY that on March 16, 2010, Warren P. Levy personally came before me and this person acknowledged under oath, to my satisfaction, that:

a) this person signed and delivered the attached document as Chief Executive Officer of Unigene Laboratories, Inc.; and

b) this document was signed and made by the corporation as its voluntary act and deed by virtue of authority from its Board of Directors.

/s/ Linda L. Rohloff (Print Name), Notary Public LINDA L. ROHLOFF Notary Public, State of New Jersey County of Passaic Registration No. 2057307 Commission Expires April 11, 2014

STATE OF ILLINOIS

COUNTY OF COOK: SS:.

I CERTIFY that on March 12, 2010, Matthew Ray personally came before me and this person acknowledged under oath, to my satisfaction, that:

a) this person signed and delivered the attached document as Manager of Victory Park Management, LLC; and

b) this document was signed and made by the limited liability company as its voluntary act and deed by virtue of authority from its governing body.

/s/ Mary Quinn Morris (Print Name), Notary Public “OFFICIAL SEAL” Mary Quinn Morris Notary Public, State of Illinois County of Passaic My Commission Expires January 14, 2012

Acknowledgement Page to First Amendment to Mortgage,

Security Agreement, Assignment of Rents and Leases and Fixture Filing

EXHIBIT “A”

LEGAL DESCRIPTION OF REAL ESTATE

(ATTACHED)

Legal Description

110 Little Falls Road, Fairfield, NJ

All the real property located in the Township of Fairfield, County of Essex, State of New Jersey and more particularly described as follows:

BEGINNING at a point on the West side of Little Falls Road distant 805.68 feet northerly from the intersection of the West side of Little Falls Road and North side of Pier Lane; thence

(1) Running through the lands formerly of Carrie DeVito, South 40 degrees 57 minutes, West 506.81 feet to a point; thence

(2) Still through the lands of Carrie DeVito, North 89 degrees 09 minutes West, 59.13 feet to the West line of lands formerly of Carrie DeVito; thence

(3) Running along the West line of lands formerly of Carrie DeVito, North 6 degrees 19 minutes East, 352.04 feet to a pint; thence

(4) Still along the West line of lands formerly of Carrie, DeVito, North 54 degrees 15 minutes East, 262.37 feet to the West side of Little Falls Road; thence

(5) Running along the West side of Little Falls Road, South 49 degrees 03 minutes East, 185.00 feet to the point and place of Beginning.

NOTE: Being Lot(s) 22, Block 2801, Tax Map of the Township of Fairfield.

BEING commonly known as 110 Little Falls Road, Fairfield, New Jersey.

BEING the same premises conveyed to the Mortgagor herein by Deed recorded on June 23, 1982 in the Essex County Register’s Office in Book 4754, page 450.

EX-10.7

Exhibit 10.7

REAFFIRMATION OF AFFILIATE SUBORDINATION AGREEMENT

This REAFFIRMATION OF AFFILIATE SUBORDINATION AGREEMENT (this “Agreement”) is entered into as of March 17, 2010, by and among Jean Levy (“Levy”), Jaynjean Levy Family Limited Partnership, a Delaware limited partnership (the “Partnership” and, together with Levy, the “Subordinated Creditors”), Unigene Laboratories, Inc., a Delaware corporation (the “Company”), and Victory Park Management, LLC, a Delaware limited liability company, as Agent for all Senior Lenders party to the Senior Credit Agreement described in the Subordination Agreement. Capitalized terms used (including in the Recitals) but not defined herein shall have the meanings set forth in that certain Affiliate Subordination Agreement dated September 30, 2008 among Subordinated Creditors (with respect to Levy, as successor-in-interest to Jay Levy), Company and Agent (or the same may be amended, restated, supplemented and in effect from time to time, the “Subordination Agreement”).

R E C I T A L S

A. The Company, Agent and Senior Lenders have entered into that certain Financing Agreement dated September 30, 2008 pursuant to which, among other things, Senior Lenders have agreed, subject to the terms and conditions set forth in such Financing Agreement, to purchase certain senior notes from the Company. All of the Company’s obligations to Agent and Senior Lenders under the Senior Credit Agreement and the other Senior Debt Documents are secured by first-priority liens on and security interests in substantially all of the now existing and hereafter acquired real and personal property of the Company (the “Collateral”).

B. The Company has issued the Subordinated Notes to the Subordinated Creditors. All of the Company’s obligations evidenced by the Subordinated Notes are secured by second-priority liens on and security interests in certain of the Collateral as described in Schedule A attached to the Subordination Agreement.

C. In connection with the execution and delivery of this Agreement, the Company, Agent and Senior Lenders entered into that certain Amended and Restated Financing Agreement dated as of March 16, 2010 (as the same may be amended, restated, supplemented and in effect from time to time, the “Amended and Restated Financing Agreement”), pursuant to which among other things, the Lenders are amending and restating the existing obligations and extending to the Company additional extensions of credit.

D. As an inducement to and as one of the conditions precedent to the agreement of Agent and Senior Lenders to consummate the transactions contemplated by the Amended and Restated Financing Agreement (the “Transactions”), Agent and Senior Lenders have required the execution and delivery of this Agreement, and the consent to the Transactions, by Subordinated Creditors and the Company.

NOW, THEREFORE, in order to induce Agent and Senior Lenders to consummate the transactions contemplated by the Senior Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:

1. Consent and Reaffirmation.

(a) Each Subordinated Creditor (i) acknowledges that it has received a copy of the Amended and Restated Financing Agreement, (ii) acknowledges and agrees that the Amended and Restated Financing Agreement constitutes a Senior Credit Agreement and VPC Loan Document, that the agreements, documents and instruments executed and delivered in connection therewith constitute Senior Debt Documents and VPC Loan Documents, that the Obligations of the Obligors have increased as a result thereof and all such increased obligations constitute “Senior Debt” for purposes of the Subordination Agreement and (iii) consents to the execution, delivery and performance of the terms of the Amended and Restated Financing Agreement and the agreements, documents and instruments executed and delivered in connection therewith. Each Subordinated Creditor hereby (i) ratifies and reaffirms the continued subordination of the Subordinated Debt and the Lien securing the Subordinated Debt to the Senior Debt and to the Liens securing the Senior Debt, (ii) acknowledges that except as specifically set forth herein, the Agent does not waive, diminish or limit any term or condition contained in the Subordination Agreement, and (iii) agrees that the Subordination Agreement, the subordination effected thereby and the rights and obligations of each Subordinated Creditor, the Senior Lenders and the Obligors arising thereunder shall not be affected, modified or impaired in any manner or to any extent by the Amended and Restated Financing Agreement or the transactions contemplated thereby, except to the extent herein set forth.

(b) Agent, on behalf of itself and the Senior Lenders, consents to the amendment and restatement of the Subordinated Notes in form and substance as attached hereto as Exhibit A (without amendment, waiver or change of any term or provision thereof not agreed to in writing by Agent, the “Amended and Restated Subordinated Notes”). The parties hereto hereby agree that the Amended and Restated Subordinated Notes constitute Subordinated Notes for all purposes of the Subordination Agreement and all obligations, liabilities and indebtedness of the Company evidenced thereby constitutes Subordinated Debt.

2. Amendment to Subordination Agreement. The parties hereto hereby agree that the Subordination Agreement shall be amended as follows:

(a) Section 2.3(a) of the Subordination Agreement shall be amended and restated in its entirety to read as follows:

(a) Notwithstanding the terms of the Subordinated Debt Documents, the Company hereby agrees that it shall not make, and each Subordinated Creditor hereby agrees that it shall not accept, any Distribution with respect to the Subordinated Debt (other than Permitted Subordinated Debt Payments subject to the terms of subsection 2.2

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of this Agreement) until the Senior Debt has been indefeasibly paid in full in cash and all commitments to lend under the Senior Debt Documents shall have been terminated; provided, however, that the Company and Subordinated Creditors further agree that no Permitted Subordinated Debt Payment may be made by the Company or accepted by any Subordinated Creditor if, at the time of such payment, either (i) a Senior Default exists and such Senior Default shall not have been waived or (ii) the Company is Insolvent (as defined in the Senior Credit Agreement) or would be rendered Insolvent after giving effect to such payment.

(b) Schedule B to the Subordination Agreement shall be replaced in its entirety with Exhibit B attached hereto.

3. Representations and Warranties of Subordinated Creditor. Each Subordinated Creditor hereby represents and warrants, severally and not jointly, to the Agent and Senior Lenders that as of the date hereof: (a) such Subordinated Creditor is an individual or a partnership duly formed and validly existing under the laws of the State of Delaware, as applicable; (b) such Subordinated Creditor has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (c) the execution of this Agreement by such Subordinated Creditor will not violate or conflict with the organizational documents of such Subordinated Creditor, as applicable, any material agreement binding upon such Subordinated Creditor or any law, regulation or order or require any consent or approval which has not been obtained; (d) this Agreement is the legal, valid and binding obligation of such Subordinated Creditor, enforceable against such Subordinated Creditor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles; (e) such Subordinated Creditor is the sole owner, beneficially and of record, of its Subordinated Debt Documents and its Subordinated Debt; (f) no Person other than the Company is obligated in respect of the Subordinated Debt or under any Subordinated Debt Documents; (g) its Subordinated Debt is not secured by any assets of the Company that do not constitute Collateral; (h) its Subordinated Debt is not secured by any assets of the Company that are not described in Schedule A attached to the Subordination Agreement; (i) no defaults have occurred and are continuing under the Subordinated Debt or any of the Subordinated Debt Documents or would arise thereunder upon the execution, delivery and performance of the Amended and Restated Financing Agreement; and (j) each of the Subordinated Debt Documents in existence as of the date hereof are identified in Schedule C attached to the Subordination Agreement (as amended in the manner provided by the documents attached hereto as Exhibit A).

4. Further Assurances. Each party to this Agreement promptly will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or desirable in order to effect fully the purposes of this Agreement.

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5. Successors and Assigns. This Agreement and the rights and benefits hereof shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of Agent, Senior Lenders, Subordinated Creditors and the Company.

6. Conflict. In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant or condition of any of the Subordinated Debt Documents, the provisions of this Agreement shall control and govern.

7. Headings. The paragraph headings used in this Agreement are for convenience only and shall not affect the interpretation of any of the provisions hereof.

8. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Furthermore, such counterparts may be delivered by facsimile or by electronic mail in “portable document format” (or “.pdf”), with any such counterpart delivered in such way deemed an original.

9. Severability. In the event that any provision of this Agreement is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Agreement.

10. Continuation of Subordination; Termination of Agreement. This Agreement shall remain in full force and effect until the indefeasible payment in full in cash of the Senior Debt and the termination of all lending commitments under the Senior Debt Documents, after which this Agreement shall terminate without further action on the part of the parties hereto.

11. Applicable Law. This Agreement shall be governed by and shall be construed and enforced in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois.

12. CONSENT TO JURISDICTION. EACH SUBORDINATED CREDITOR AND THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH SUBORDINATED CREDITOR AND THE COMPANY EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH SUBORDINATED

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CREDITOR AND THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUBORDINATED CREDITORS AND THE COMPANY AT THEIR RESPECTIVE ADDRESSES SET FORTH IN THE SUBORDINATION AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF ANY SUBORDINATED CREDITOR, THE COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF SUCH SUBORDINATED CREDITOR OR THE COMPANY, AS APPLICABLE, FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT TRIAL OR OTHERWISE). EACH SUBORDINATED CREDITOR AND THE COMPANY AGREES THAT AGENT’S OR ANY SENIOR LENDER’S COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. EACH SUBORDINATED CREDITOR AND THE COMPANY IN ANY EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.

13. WAIVER OF JURY TRIAL. EACH SUBORDINATED CREDITOR, THE COMPANY AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE SUBORDINATED DEBT DOCUMENTS OR ANY OF THE SENIOR DEBT DOCUMENTS. EACH SUBORDINATED CREDITOR, THE COMPANY AND AGENT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE SENIOR DEBT DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH SUBORDINATED CREDITOR, THE COMPANY AND AGENT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

(Signature Page Follows)

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IN WITNESS WHEREOF, each Subordinated Creditors, the Company and Agent have caused this Agreement to be executed as of the date first above written.

SUBORDINATED CREDITORS:
/s/ Jay Levy
By: Jay Levy, as Attorney-in-Fact for Jean Levy
JAYNJEAN LEVY FAMILY LIMITED PARTNERSHIP, a Delaware limited partnership
By:	Ronald S. Levy,
	Its general partner
	/s/ Ronald Levy
	By: Ronald S. Levy
By:	Warren P. Levy,
	Its general partner
	/s/ Warren Levy
	By: Warren P. Levy
COMPANY:
UNIGENE LABORATORIES, INC., a Delaware corporation
/s/ William Steinhauer
By:	William Steinhauer
Its:	Vice President of Finance
AGENT:
VICTORY PARK MANAGEMENT, LLC, a Delaware limited liability company
/s/ Matthew Ray
By:	Matthew Ray
Its:	Manager

6

EXHIBIT A

Second Amended and Restated Subordinated Notes

(see attached)

EXHIBIT B

Revised Schedule B

PAYMENT TO JEAN LEVY

Date	Principal Due		Interest Due*		Total
May 10, 2010	$	500,000.00	$	0	$	500,000.00

PAYMENTS TO JAYNJEAN LEVY FAMILY LIMITED PARTNERSHIP

Date	Principal Due		Interest Due*		Total
May 10, 2010	$	500,000.00	$	0	$	500,000.00
November 10, 2010	$	500,000.00	$	0	$	500,000.00
May 10, 2011	$	250,000.00	$	0	$	250,000.00

* Interest accrued under or otherwise evidenced by the Subordinated Notes shall not be due and payable until the maturity date thereof.

EX-10.8

Exhibit 10.8

AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

This Amended and Restated Change in Control Agreement (“Agreement”) is being entered into on the last date listed on the signature page hereof by and between                              (“Vice President”) and Unigene Laboratories, Inc. (“Company”). As used herein, “Parties” refers to Vice President and Company.

WHEREAS, Vice President serves the Company in a position of substantial authority and responsibility;

WHEREAS, Company and Vice President entered into the Change in Control Agreement, dated as of June     , 2008 (the “Original Agreement”), in order to establish certain protections for Vice President in the event of the termination of Vice President’s employment with Company for specified reasons following a Change in Control;

WHEREAS, Company and Vice President desire to amend and restate the Original Agreement in order to make certain changes thereto, including the establishment of certain protections for Vice President in the event of termination of Vice President’s employment with the Company for specified reasons following the Transaction (as defined below);

NOW, THEREFORE, in consideration of the mutual promises and undertakings contained herein, and intending to be legally bound hereby, the Parties agree as follows:

Section 1. Severance Benefits

(a) Severance Payment. If (1) Vice President is not hired by Surviving Company following a Change in Control other than for Cause, (2) within twelve (12) months following a Change in Control, Vice President’s employment with Surviving Company is terminated (i) by Surviving Company other than for Cause or (ii) by Vice President for Good Reason, (3) within twelve (12) months following the Transaction, Vice President’s employment is terminated by the Company without Cause, or (4) within six (6) months following the Company’s hiring of a new Chief Executive Officer (provided such new Chief Executive Officer is hired within the twelve (12) months following the Transaction), Vice President’s employment is terminated by the Company without Cause, Vice President will be entitled to, in addition to all compensation and benefits accrued but unpaid up to the date of termination, severance pay in a gross amount equal to twelve (12) months of Vice President’s annualized base salary as of the date of Vice President’s termination, except that in the event that Vice President terminates his employment with Surviving Company due to a material diminution by Surviving Company in Vice President’s base salary without Vice President’s consent, the severance pay will be calculated based on Vice President’s base salary immediately preceding the diminution giving rise to Vice President’s resignation (“Severance Payment”). Company will pay Vice President the Severance Payment unless Surviving Company, if applicable, assumes Company’s obligations under this Agreement, in which case Company shall not be liable for the Severance Payment. The Severance Payment, to which Vice President would not otherwise be entitled, is contingent upon Vice President’s execution and nonrevocation of a general release of all claims against the Company, Surviving Company (if applicable), and all related entities or persons

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within 60 days of Vice President’s termination of employment. The Severance Payment will be paid in the form of base salary continuation for twelve (12) months, commencing with the first regular pay cycle following 60 days after Vice President’s termination and otherwise in accordance with Company’s or Surviving Company’s, as applicable, regular payroll cycle as may be amended from time to time. The period beginning on Vice President’s date of termination and ending on the date on which the last installment of the Severance Payment is paid to Vice President is referred to herein as the “Severance Period.”

(b) Certain Adjustments. The severance benefits to be provided to the Vice President hereunder and all other payments or benefits which are “parachute payments” (as defined in Section 280G(b)(2)(A) of the Code) payable to Vice President under other arrangements or agreements (the “Total Payments”) shall be adjusted as set forth in this Section 1(b). If the Total Payments as a result of any Change in Control would (in the aggregate) result in an amount not being deductible under Code Section 280G or an excise tax under Section 4999, the Total Payments shall be reduced to the extent necessary so that the deductibility of the full amount of such reduced Total Payments is not limited by Code Section 280G or such Total Payment is not subject to an excise tax under Section 4999. The Company or Surviving Company, as applicable, shall make all determinations required to be made under this Section 1(b) in good faith and shall, upon Vice President’s request, provide supporting calculations to Vice President.

(c) Section 409A.

(i) Notwithstanding anything to the contrary in this Agreement, no portion of the Severance Payment will be payable until Vice President has a “separation from service” from the Company or the Surviving Company, as applicable, within the meaning of Code Section 409A.

(ii) Further, if upon Vice President’s separation from service, Vice President is a “specified employee” (within the meaning of Code Section 409A and the regulations thereunder) of Company or Surviving Company, and if the payments under this Agreement would be subject to excise tax under Code Section 409A because such payments are made within the 6-month period commencing upon the Vice President’s separation from service, then such payments shall be delayed until the first payroll cycle following six (6) months after such separation from service and paid in lump sum at such time. All subsequent installments of the Severance Payment will be payable monthly for the remaining months in the schedule set forth in Section 1(a). Notwithstanding anything herein to the contrary, in the event of Vice President’s death following Vice President’s separation from service but prior to the six (6) month anniversary of Vice President’s separation from service (or any later delay date), then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Vice President’s death and all subsequent installments of the Severance Payment will be payable monthly for the remaining months in the schedule set forth in Section 1(a). Each installment of the Severance Payment is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

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(iii) The foregoing provisions are intended to comply with, or be exempt from, the requirements of Code Section 409A so that no portion of the Severance Payment will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply or be exempt. Vice President and the Company agree to work together in good faith to consider amendments to the Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Vice President under Section 409A. In no event will the Company reimburse Vice President for any taxes that may be imposed on Vice President as result of Section 409A.

(d) No Duplication of Benefits. In the event of the termination of Vice President’s employment under the circumstances described in this Section 1, the only obligations of Company or Surviving Company, as applicable, are provided in this Section 1 and Vice President acknowledges and agrees that Vice President shall not be entitled to any other severance payments upon such termination.

(e) Mitigation. In the event of Vice President’s termination pursuant to Section 1(a)(3) or 1(a)(4) hereof, each periodic installment of Vice President’s Severance Payment shall be reduced on a dollar-for-dollar basis (appropriately adjusted to take into account tax withholdings, as applicable) to reflect any amount paid to Vice President during the Severance Period by any subsequent employer. Vice President covenants and agrees to inform the Company of any employment Vice President obtains during the Severance Period.

Section 2. Definitions

(a) “Cause” means the occurrence of any of the following events: (i) Vice President’s failure to substantially perform his employment duties (other than due to disability), provided that such failure (if curable) is not cured within thirty (30) days after delivery of notice to Vice President of such failure; (ii) a material breach of this Agreement by Vice President, including without limitation any breach of Vice President’s obligations pursuant to Section 1(e) or Section 3 of this Agreement; (iii) Vice President’s dishonesty, which includes without limitation any misuse or misappropriation of Company’s or Surviving Company’s assets, or other gross or willful misconduct, which includes without limitation any conduct by Vice President intended to or likely to injure the business of Company or Surviving Company; (iv) Vice President’s conviction (including a plea of nolo contendere) for any felony or gross misdemeanor under federal or state law; or (v) Vice President’s insobriety or use of drugs, or controlled substances either (a) in the course of performing his duties and responsibilities or (b) otherwise affecting his ability to perform the same. In addition to the foregoing, Vice President’s death or disability (Vice President’s inability to perform the essential functions of his position for a period of six (6) months in the twelve (12) month period following a Change in Control), shall constitute Cause. The existence of any of the foregoing events or conditions is to be determined by Company or Surviving Company, as applicable, in the exercise of its reasonable judgment.

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(b) “Change in Control” means:

(i) any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) acquires beneficial ownership (within the meaning of Rule l3d-3 promulgated under the Exchange Act) of more than 50% of either (A) the then outstanding shares of common stock or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”); provided, however, that any acquisition by the Company, by any employee benefit plan (or related trust) of the Company, or by any corporation with respect to which, following such acquisition, more than 50%, respectively, of the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the common stock and Voting Securities immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the common stock and Voting Securities, as the case may be, shall not constitute a Change in Control;

(ii) individuals who, as of the effective date of this Agreement, constitute the Board of Directors of Company (the “Incumbent Board”) cease for any reason during any 12-month period to constitute at least a majority of the Board of Directors of the Company, provided that any individual becoming a director subsequent to the effective date of this Agreement whose election was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in settlement of an actual or threatened election contest relating to the election of the directors of the Company; or

(iii) the consummation (following approval by the Company’s stockholders) of (A) a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the persons who were the respective beneficial owners of the common stock and the Voting Securities immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50%, respectively, of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation or (B) a complete liquidation or dissolution of the Company or of the sale or other disposition of all or substantially all of the assets of the Company.

(c) “Code” means the Internal Revenue Code of 1986, as amended.

(d) “Good Reason” means the occurrence of any of the following events: (i) a material diminution by Surviving Company in Vice President’s base salary without Vice President’s consent; (ii) a material diminution by Surviving Company in Vice President’s authority, duties or responsibilities without Vice President’s consent; or (iii) a relocation, without Vice President’s consent, by Surviving Company of Vice President’s base site of employment to a location greater than fifty (50) miles from Vice President’s base site of employment

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immediately preceding such relocation, except for travel reasonably required in the performance of Vice President’s duties and responsibilities, or unless the new base site of employment is located closer to Vice President’s home. Notwithstanding the foregoing, none of the foregoing events or conditions will constitute Good Reason if Vice President failed to give Surviving Company (A) written notice stating Vice President’s intention to claim Good Reason and the basis for that claim within ninety (90) days of the occurrence of the event or circumstance giving rise to the claim of Good Reason and (B) at least thirty (30) days for Surviving Company to cure such event or circumstance, if such event or circumstance is susceptible of cure.

(e) “Surviving Company” means the entity surviving the Change in Control of Company.

(f) “Transaction” means the closing of the transactions contemplated by that certain Amended and Restated Financing Agreement dated as of March 16, 2010, by and among the Company, the lenders and Victory Park Management, LLC, as agent.

Section 3. Restrictive Covenants

(a) Non-competition. Vice President agrees that for so long as he is employed by Company or Surviving Company, and for a period of one (1) year after the termination or cessation of his employment with Company or Surviving Company for any reason, Vice President will not directly or indirectly:

(i) Within the United States or elsewhere where Company, Surviving Company, or any of their affiliates or subsidiaries conducts its business, as an individual proprietor, partner, stockholder, officer, employee, director, joint venturer, investor, lender, or in any other capacity whatsoever (other than as the holder of not more than two percent (2%) of the total outstanding stock of a publicly held company), engage in the business of developing, producing, marketing or selling products or rendering services of the kind or type developed or being (or planned to be) developed, produced, marketed or sold, by Company or Surviving Company while Vice President was employed by Company or Surviving Company, including without limitation the business of developing, producing, or selling Calcitonin products or amidated peptides; or

(ii) Recruit, solicit or induce, any employee or employees of Company or Surviving Company to terminate their employment with, or otherwise cease their relationship with, Company or Surviving Company; or

(iii) Solicit, encourage or induce any of the clients, customers, suppliers, joint venturers, licensees or accounts, or prospective clients, customers, suppliers, joint venturers, licensees or accounts, of Company or Surviving Company to terminate its/his/her relationship (contractual or otherwise) with Company or Surviving Company (in whole or in part) or to refrain from entering into a relationship (contractual or otherwise) with Company or Surviving Company.

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(b) Protection of Confidential Information. Vice President acknowledges that by reason of his employment with Company (and Surviving Company, if applicable), he has had close contact with the confidential affairs of Company (and Surviving Company, if applicable), its affiliates, subsidiaries, customers, suppliers, and potential and actual business partners. During and after Vice President’s employment with Company (and Surviving Company, if applicable), Vice President agrees not to directly or indirectly, by himself or through other persons or entities, disclose, without the prior written consent of Company (or Surviving Company, as applicable) or its authorized representative, any Confidential Information (except as reasonably required in the performance of Vice President’s job duties with Company or Surviving Company, as applicable, or as required by law). As used herein, “Confidential Information” means all confidential, proprietary, or nonpublic information (in whatever form) in any way relating to Company, Surviving Company, or their affiliates, subsidiaries, customers, suppliers, potential and actual business partners, or others that do business with Company or Surviving Company that Company or Surviving Company may receive, including but not limited to lists of customers, business plans, financial or cost information, scientific and clinical information, and business techniques, know-how, designs, methods, processes, strategies, and the like relating to or concerning the research, financial matters, marketing, investments, budgets, business plans, marketing plans, development activities, personnel matters, contracts/agreements, prospective contracts/agreements, business contacts, products, and the like of Company, Surviving Company, or their affiliates, subsidiaries, customers, suppliers, potential and actual business partners, or others that do business with them, irrespective of whether any of the foregoing items constitute a trade secret under any applicable law. Where disclosure of Confidential Information is required by law, Vice President must use his best efforts to notify and consult with Company or Surviving Company, as applicable, prior to such disclosure.

(c) Protection of Intellectual Property. Vice President agrees that any Confidential Information, as well as any idea, invention, copyrightable or patentable work, improvement, technique, design, method, development, product, service, technology, writing, discovery, and the like, whether tangible or intangible, directly or indirectly resulting or arising from, or created through, Company’s (or Surviving Company’s, if applicable) business, in which a property interest exists or may exist if asserted under federal, state or international law (hereafter “Intellectual Property”), will be and is the sole and exclusive property of, and Vice President hereby assigns all of his interest therein to, Company or Surviving Company, as applicable, with all copyrightable Intellectual Property to be deemed “works for hire” under the federal Copyright Act. Vice President further agrees to make full and prompt disclosure to Company or Surviving Company, as applicable, of all Intellectual Property described in the previous sentence. To the extent that Vice President retains any interest in such Intellectual Property, Vice President further agrees to, at Company’s or Surviving Company’s, as applicable, request and expense, but without additional compensation to Vice President, whether it be during or after the termination of Vice President’s employment (for any or no reason), assist Company or Surviving Company, as applicable, or its designee in obtaining patents and copyrights therefore that are deemed suitable for United States or foreign letters patent or copyrights and will execute all documents and do all things necessary to obtain letters patent, copyrights, trademarks and trade names, or to otherwise vest Company or Surviving Company, as applicable, with full and exclusive title thereto, and protect the same against infringement by others.

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(d) Return of Company’s Property. In the event of termination of Vice President’s employment with Company or Surviving Company for any reason, Vice President agrees to return to Company or Surviving Company, as applicable, all of its property, including documents, data, and equipment (and any copies thereof) of any nature and in whatever medium and not to keep any such property whether or not it contains or pertains to any Confidential Information. Vice President further agrees to deliver to Company or Surviving Company, as applicable, all passwords in use by Vice President at the time of Vice President’s termination, a list of any documents that Vice President created or of which Vice President is otherwise aware that are password protected, and the password or passwords necessary to access such password-protected documents.

(e) Acknowledgements. Vice President acknowledges and agrees that the restrictions set forth in this Section 3 of this Agreement serve as a significant inducement for Company to offer Vice President the benefits conferred in this Agreement, to which he would not otherwise be entitled, and are critical and necessary to protect Company’s and Surviving Company’s legitimate business interests (including the protection of their Confidential Information); are reasonably drawn to this end with respect to duration, scope, and otherwise; are not unduly burdensome; are not injurious to the public interest; and are supported by adequate consideration. Vice President also acknowledges and agrees that, in the event that he breaches any of the provisions in this Section 3, Company and Surviving Company shall suffer immediate, irreparable injury and will, therefore, be entitled to injunctive relief, in addition to any other damages to which they may be entitled, as well as the costs and reasonable attorneys’ fees incurred in enforcing their rights under this Section. Vice President further acknowledges that (i) any breach or claimed breach of the provisions set forth in this Agreement will not be a defense to enforcement of the restrictions set forth in this Section 3; (ii) the circumstances of Vice President’s termination of employment with Company or Surviving Company, as applicable, will have no impact on his obligations under this Section 3; and (iii) Vice President is bound by the terms of Section 3 and Section 4 of this Agreement, whether or not a Change in Control occurs or Vice President becomes entitled to the Severance Payment.

(f) Modifications By Court. If any covenant set forth in this Section 3 is deemed invalid or unenforceable for any reason, it is the Parties’ intention that such covenants be equitably reformed or modified only to the extent necessary to render them valid and enforceable in all respects. In the event that the time period and/or geographic scope referenced above is deemed unreasonable, overbroad, or otherwise invalid, it is the Parties’ intention that the enforcing court reduce or modify the time period and/or geographic scope only to the extent necessary to render such covenants reasonable, valid, and enforceable in all respects.

(g) Tolling During Periods Of Breach. It is agreed and intended that Vice President’s obligations under this Section 3 be tolled during any period that Vice President is in breach of any of the obligations under this Section 3, so that Company or Surviving Company, as applicable, is provided with the full benefit of the restrictive periods set forth herein.

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Section 4. Nondisparagement

Vice President agrees that neither he nor any person acting on his behalf shall disparage or cause to be disparaged, whether directly or indirectly, in any forum or through any medium of communication, Company, Surviving Company, or any of their affiliates or subsidiaries, or any of those entities’ respective directors, officers, stockholders, employees, consultants, agents or representatives.

Section 5. Notice

Any notice, request, or other communication required or permitted to be delivered under this Agreement must be in writing and will be considered received as of the date delivered if delivered in person, on the next business day if sent by a nationally recognized overnight courier service, and on the second business day if mailed by registered mail, return receipt requested, postage prepaid. If to Vice President, the notice, request, or other communication must be addressed and sent to Vice President at his most recent residential address as then on file with Company. If to Company, the notice, request, or other communication must be addressed to Unigene Laboratories, Inc., 81 Fulton Street, Boonton, NJ 07005, Attention: President & CEO, or to such other address as Company furnishes to Vice President in accordance with this Section.

Section 6. Governing Law; Consent to Arbitration

(a) Governing Law. This Agreement shall be governed by the laws of the State of New Jersey, irrespective of the principles of conflicts of law applicable therein.

(b) Consent to Arbitration. It is agreed that any and all claims that one Party may have against the other arising out of or relating to this Agreement shall be adjudicated and resolved exclusively through binding arbitration before the American Arbitration Association pursuant to the American Arbitration Association’s then-in-effect National Rules for the Resolution of Employment Disputes (hereafter “Rules”). Any such actions shall take place in New Jersey. If the American Arbitration Association withholds its arbitration services for any reason, then the arbitration will instead be conducted by a bona fide neutral arbitration service provider selected by Company. The initiation and conduct of any arbitration hereunder shall be in accordance with the Rules and the administrative filing fees of the arbitration, and the arbitrator’s fees shall be split equally between Company and Vice President unless the Parties agree otherwise. Company and Vice President shall each be responsible for paying their own attorneys’ fees and all other costs they incur related to any arbitration proceeding, except to the extent that applicable law provides for the shifting or the recovery of such fees and costs. The arbitrator’s decision will be final and binding in accordance with the Federal Arbitration Act. The arbitrator will not have the right to modify or change any of the terms of this Agreement. Notwithstanding anything to the contrary contained in this Section 6(b), claims under Section 3 of this Agreement need not be submitted to arbitration and may be filed in any court of competent jurisdiction.

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Section 7. Employment Status

Vice President acknowledges and agrees that this Agreement does not alter Vice President’s status as an employee at will. Vice President’s employment with Company or Surviving Company may be terminated at any time, with or without reason, by either Company or Surviving Company, as applicable, or Vice President.

Section 8. Enurement and Assignment

The rights and obligations contained in this Agreement shall be binding upon and inure to the benefit of Company, its assigns, and its successors. Company, but not Vice President, shall have the right to assign its rights under this Agreement without Vice President’s consent. In the event that Company assigns its rights and obligations under this Agreement to Surviving Company, Company’s obligations under this Agreement shall be extinguished and Surviving Company shall be solely liable for any obligations to Vice President under this Agreement

Section 9. Waiver

The waiver by Company or Vice President of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach.

Section 10. Severability

If any provision of this Agreement is adjudged to be invalid for whatever reason, such invalidity shall not affect any other clause of this Agreement, and such clauses shall remain in full force and effect.

Section 11. Entire Agreement

This Agreement contains the entire agreement of the Parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous agreements, oral or written, including, without limitation, the Original Agreement.

Section 12. Modification

No provision of this Agreement may be modified, waived, or discharged unless (1) in writing and (2) agreed to by (A) Vice President and (B) a Company executive authorized by Company.

Section 13. Headings

Headings contained in this Agreement are inserted for reference and convenience only and in no way define, limit, extend or describe the scope of this Agreement or the meaning or construction of any of the provisions hereof.

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Section 14. Counterparts and Facsimiles

This Agreement may be executed, including by facsimile signature, in one or more counterparts, each of which shall be deemed an original and all of which together will be deemed to be one and the same instrument.

Section 15. Survival of Terms

In the event that this Agreement is terminated for any reason, Sections 3 and 4 shall survive the termination of this Agreement, and the Parties shall continue to be bound by the terms thereof.

Section 16. Acknowledgements

Vice President acknowledges that he has carefully reviewed this Agreement, that he has had an opportunity to consult with counsel of his choice, that he has entered into this Agreement freely and voluntarily and without reliance on any promises not expressly contained herein, that he has been afforded an adequate time to review carefully the terms hereof, and that this Agreement will not be deemed void or avoidable by claims of duress, deception, mistake of fact, or otherwise. The principle of construction whereby all ambiguities are to be construed against the drafter will not be employed in the interpretation of this Agreement. There is absolutely no agreement or reservation that is not clearly expressed in this Agreement. This Agreement should not be construed for or against any Party.

[Signature Page Follows]

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THE UNDERSIGNED, INTENDING TO BE LEGALLY BOUND BY THE FOREGOING TERMS, HEREBY APPLY THEIR SIGNATURES VOLUNTARILY AND WITH FULL UNDERSTANDING OF THE TERMS OF THIS AGREEMENT AND EXECUTE THIS AGREEMENT AS OF THE DATES SET FORTH BELOW.

VICE PRESIDENT
	Date
Printed Name:
UNIGENE LABORATORIES, INC.
	Date
By:
Title:

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EX-99.1

Exhibit 99.1

Investor Contact:

The Investor Relations Group

Erika Moran/Dian Griesel, Ph.D.

Media Contact: Janet Vasquez

Phone: 212-825-3210

Unigene Receives Additional Capital in Debt Restructuring;

Begins to Revamp Management Team

BOONTON, N.J. – March 17, 2010 – Unigene Laboratories, Inc. (OTCBB: UGNE, http://www.unigene.com) today announced that it has entered into an amended and restated financing agreement for $33 million three-year convertible senior secured term notes. At the closing, which is scheduled to occur today, Unigene will issue $33,000,000 of new convertible senior secured notes due in 2013, in exchange for approximately $19,360,000 of existing non-convertible senior secured term notes which are due in 2011 and the payment to the Company of approximately $13,640,000 in cash at the closing, minus fees related to this restructuring. An entity managed by Victory Park Capital Advisors, LLC is the sole investor in the transaction. Victory Park has the right to designate two directors to the Board of the Company, one as the Chairman of the Board. In connection with this restructuring, Unigene has also restructured notes held by family members of its management. The Company has also agreed to make changes to its senior management. Details of the transaction and copies of the material transaction documents can be found in the Company’s 8-K which will be filed today with the SEC.

“We are pleased to be able to complete this debt restructuring with our largest stockholder and senior lender to provide the Company with approximately $13.6 million in additional capital,” commented Dr. Warren P. Levy, President and CEO of Unigene. “This infusion of additional capital, coupled with the fact that we will not need to make interest payments on the notes until their maturity and that maturity date has been extended by approximately 18 months, will significantly improve our financial condition.”

This press release shall not constitute an offer to sell or the solicitation of offers to buy securities. The convertible notes and the shares of Unigene common stock issuable upon conversion have not been registered under the Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

About Unigene

Unigene Laboratories, Inc. is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. Due to the size of the worldwide osteoporosis market, Unigene is targeting its initial efforts on developing calcitonin and PTH-based therapies. Fortical^®, Unigene’s nasal calcitonin product for the treatment of postmenopausal osteoporosis, received FDA approval and was launched in 2005. Unigene has licensed the U.S. rights for Fortical to Upsher-Smith Laboratories, worldwide rights for its oral PTH technology to GlaxoSmithKline, worldwide rights for its calcitonin manufacturing technology to Novartis and worldwide rights (except for China) for its oral calcitonin program to Tarsa Therapeutics, Inc. Unigene’s patented oral delivery technology has successfully delivered, in preclinical and/or clinical trials, various peptides including calcitonin and PTH analogs. Unigene’s patented manufacturing technology is designed to cost-effectively produce peptides in quantities sufficient to support their worldwide commercialization as oral or nasal therapeutics. For more information about Unigene, call (973) 265-1100 or visit www.unigene.com. For information about Fortical, visit www.fortical.com.

Safe Harbor statements under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements regarding us and our business, financial condition, results of operations and prospects. Such forward-looking statements include those which express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. We have based these forward-looking statements on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown which could cause actual results and developments to differ materially from those expressed or implied in such statements. These forward-looking statements include statements about the following: general economic and business conditions, our financial condition, competition, our dependence on other companies to commercialize, manufacture and sell products using our technologies, the ability of our products to gain market acceptance and increase market share, the uncertainty of results of animal and human testing, the risk of product liability and liability for human trials, our dependence on patents and other proprietary rights, dependence on key management officials, the availability and cost of capital, the availability of qualified personnel, changes in, or the failure to comply with, governmental regulations, the failure to obtain regulatory approvals for our products and other risk factors discussed in our Securities and Exchange Commission filings. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “potential,” “continue,” and variations of these words (or negatives of these words) or similar expressions, are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various risk factors.