Exhibit 10.2

 

BIOSANTE PHARMACEUTICALS, INC.

 

SECURITIES EXCHANGE AGREEMENT

 

FEBRUARY 15, 2012

 

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

 

BIOSANTE PHARMACEUTICALS, INC.

 

SECURITIES EXCHANGE AGREEMENT

 

This Securities Exchange Agreement (this “Agreement”) is made as of February 15,
2012 (the “Effective Date”) by and between BIOSANTE PHARMACEUTICALS, INC., a
Delaware corporation (the “Company”), and TANG CAPITAL PARTNERS, LP, a Delaware
limited partnership (the “Bond Holder”).

 

RECITALS

 

WHEREAS, the Bond Holder wishes to exchange an aggregate of $4,000,000.00
principal amount of the Company’s 3.125% convertible senior notes due May 1,
2013 (collectively, the “Bonds”).

 

WHEREAS, the Company wishes to issue to the Bond Holder, pursuant to the
exemption from registration provided by Section 3(a)(9) (“Section 3(a)(9)”)
under the Securities Act of 1933, as amended (the “Securities Act”), 4,485,159
shares of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”), in exchange for the Bonds (the “Exchange”) and to cancel the Bonds upon
the terms and conditions set forth herein.

 

AGREEMENT

 

1.     Exchange; Delivery. Bond Holder hereby assigns, sells and transfers the
Bonds, plus all claims arising out of or relating to the Bonds, including but
not limited to any accrued but unpaid interest, to the Company in exchange for
the issuance by the Company, effective as of the Effective Date, of 4,485,159
shares of Common Stock (the “Shares”) to the Bond Holder (the “Exchange”).  On
the business day immediately following the Effective Date, the Company shall
deliver the Shares to the Bond Holder via DWAC to an account specified in
writing by the Bond Holder, and Bond Holder shall deliver the Bonds to the
Company via DTC to an account specified in writing by the Company.

 

2.     Representations and Warranties of the Company.  The Company hereby
represents and warrants to the Bond Holder that as of the Effective Date:

 

2.1          Organization.  The Company is duly incorporated and validly
existing in good standing under the laws of the State of Delaware. The Company
has full corporate power and authority to own, operate and occupy its properties
and to conduct its business as presently conducted and is registered or
qualified to do business and is in good standing in each jurisdiction in which
it owns or leases property or transacts business and where the failure to be so
qualified would have a material adverse effect on the Company, and, to the
Company’s knowledge (as defined below), no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.

 

2

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

 

2.2          Due Authorization.  The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly authorized and validly executed and
delivered by the Company and no other corporate action on the part of the
Company, its board of directors or its stockholders is necessary to authorize
the execution and delivery by the Company of this Agreement or the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the issuance and delivery of the Shares.  Furthermore, the Company’s
board of directors has authorized the execution and delivery by the Company of
this Agreement and the transactions contemplated hereunder.  This Agreement,
assuming due and valid authorization, execution and delivery hereof and thereof
by the Bond Holder, constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnity and contribution may be limited by state or federal
securities laws, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally, and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

2.3          Valid Issuance; Reservation of Shares; Preemptive Rights.  The
Shares are duly authorized and, when issued and exchanged in accordance with the
terms hereof, (i) will be duly and validly issued, free and clear of any liens,
claims or encumbrances (“Liens”) imposed by or through the Company or by
operation of law of which the Company has knowledge and (ii) will be issued and
delivered in compliance with all applicable Federal and state securities laws. 
Neither the cancellation of the Bonds, nor the Exchange nor the performance by
the Company of its obligations under this Agreement will trigger any preemptive,
“poison-pill”, anti-takeover, anti-dilution, reset or other similar rights.

 

2.4          Non-Contravention.  The execution and delivery of this Agreement,
the issuance of the Shares and the consummation of the transactions contemplated
hereby and thereby will not (a) conflict with or constitute a material violation
of or default (with the passage of time or otherwise) under or give rise to any
right of termination, material amendment, cancellation or acceleration or loss
of any material rights under (i) any material contracts to which the Company is
a party, or (ii) the certificate of incorporation or the bylaws of the Company
or any similar organizational document of the Company, or (b) (i) result in the
creation or imposition (or the obligation to create or impose) of any material
lien, encumbrance, claim, security interest, pledge, charge or restriction of
any kind upon any of the properties or assets of the Company or (ii) result in
an acceleration of indebtedness pursuant to any obligation, agreement or
condition contained in agreement or document to which the Company is a party or
is bound, other than with respect to the Bonds, or (c) to the Company’s
knowledge, violate any order or decree applicable to the Company, or by which it
or any of its operations are bound, and no such violation or default currently
exists. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency or
other governmental body in the United States is required for the execution and
delivery of the Agreement and the valid issuance of the Shares prior to the
Effective Date except for any securities filings required to be made under state
securities laws.

 

2.5          Exchange Act Compliance. The documents that the Company filed under
the Securities Exchange Act of 1934 (the “Exchange Act”) since December 31, 2010

 

3

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

 

(including all exhibits included therein and documents incorporated by reference
therein hereinafter being referred to as the “Required Documents”) complied in
all material respects with the requirements of the Exchange Act, and the
rules and regulations of the Commission promulgated thereunder as of their
respective filing dates, and none of the Required Documents, when filed,
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 light of the circumstances under which they were made, not
misleading.

 

2.6          Non-Public Information.  Other than information concerning the
Exchange and this Agreement, which will be disclosed to the public pursuant to
Section 5.11, the Company is not in possession of any material non-public
information as of the execution of this Agreement, and the Company has not
disclosed any material non-public information to the Bond Holder.

 

2.7          Exemption from Registration. The Exchange is exempt from the
registration requirements of the Securities Act pursuant to the provisions of
Section 3(a)(9) thereof .  The Company has complied in all material respects
with such provisions and, without limiting the generality thereof, has not paid
to any person, directly or indirectly, any commission or other remuneration for
soliciting the Exchange. Neither the Company nor any of its Affiliates, nor any
person acting on its or their behalf, (i) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the Exchange, (ii) in the three months prior to Effective Date,
has, other than the transactions contemplated with respect to the Bonds and
pursuant to this Agreement, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy or exchange any security, under any
circumstances that would require registration of the Shares under the Securities
Act or (iii) has issued any shares of Common Stock or shares of any series of
preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares of
Common Stock which would be integrated with the Exchange or the issuance of the
Shares for purposes of the Securities Act or of any applicable stockholder
approval provisions, nor will the Company or any of its Affiliates take any
action or steps that would require registration of the Shares under the
Securities Act.

 

2.8          No Reliance.  In entering into this Agreement, the Company (i) is
not relying on any advice or representation of the Bond Holder or any of its
affiliates (other than the representations of the Bond Holder contained herein),
(ii) has not received from the Bond Holder or any of its affiliates any
assurance or guarantee as to the merits (whether legal, regulatory, tax,
financial or otherwise) of the Exchange or entering into this Agreement,
(iii) has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed necessary,
and (iv) has entered into this Agreement based on its own independent judgment
and on the advice of its advisors as it has deemed necessary, and not on any
view (whether written or oral) expressed by the Bond Holder or any of its
affiliates.  Neither the Bond Holder nor any of its affiliates is now or has
ever been a financial advisor, or other fiduciary, with respect to the Company.

 

2.9          Bankruptcy Protection.  The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to 11
U.S.C. §§ 101 et seq. (the “Bankruptcy Code”) or any similar state bankruptcy
law nor does the Company have

 

4

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

 

any knowledge or reason to believe that its creditors intend to initiate an
involuntary proceeding under the Bankruptcy Code or any such state law.

 

2.10        Solvency.  To the Company’s knowledge, as of the date of this
Agreement and, based upon fair and reasonable estimates made by the Company,
after giving effect to the Exchange, (a) the fair value of the Company’s assets
will exceed the amount of its liabilities, contingent or otherwise, as
determined in accordance with generally accepted accounting principles, and
(b) the Company will be able to pay its debts as they mature.

 

3.     Representations, Warranties and Covenants of the Bond Holder. The Bond
Holder hereby represents and warrants to the Company and agrees as follows:

 

3.1          Due Authorization.  The Bond Holder has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, and this Agreement has been duly authorized and validly executed and
delivered by the Bond Holder and no other corporate action on the part of the
Bond Holder is necessary to authorize the execution and delivery by the Bond
Holder of this Agreement.  This Agreement constitutes a legal, valid and binding
agreement of the Bond Holder, enforceable against the Bond Holder in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally, and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

3.2          No Legal, Tax or Investment Advice.  The Bond Holder understands
that nothing in this Agreement or any other materials presented to the Bond
Holder by or on behalf of the Company in connection with the Exchange
constitutes legal, tax or investment advice and represents and warrants to the
Company that it has consulted such legal, regulatory, accounting, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with the Exchange or determining the merits thereof.

 

3.3          Affiliate Status; 20% Holder Status.

 

(a)           As of Effective Date, the Bond Holder represents and warrants that
the Bond Holder is not an Affiliate of the Company, and has not been an
Affiliate of the Company for the three months preceding the Effective Date.

 

(b)           The Bond Holder further represents and warrants that, immediately
after the consummation of the transactions contemplated herein, the Bond Holder
will not beneficially own more than 19.99% of the Company’s issued and
outstanding Common Stock, based on the total shares of Common Stock outstanding
as set forth in the Company’s Quarterly Report on Form 10-Q for the period ended
September 30, 2011.

 

3.4          Voting of Shares.  The Bond Holder covenants and agrees that at the
Company’s 2012 Annual Meeting of Stockholders (the “Annual Meeting”), the Bond
Holder will, to the extent that the Bond Holder owns the Shares on the record
date for the Annual Meeting, vote the Shares in accordance with the Company’s
recommendations on proposals

 

5

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

 

presented to stockholders, as such proposals are set forth in a definitive proxy
statement on Schedule 14A under the Exchange Act.

 

3.5          Stand-Still. The Bond Holder agrees that, through the date of the
Annual Meeting, without the prior written consent of the board of directors of
the Company:

 

(a)           the Bond Holder will not acquire, offer to acquire, or agree to
acquire, directly or indirectly, by purchase or otherwise, any voting securities
or direct or indirect rights to acquire any voting securities of the Company
other than the Shares; provided, however, in the absence of a public
solicitation, the restriction in this Section 3.5 shall not apply if, as a
result of such acquisition, the Bond Holder would not beneficially own more than
9.999% of the then outstanding Common Stock;

 

(b)           make, or in any way participate, directly or indirectly, in any
“solicitation” of “proxies” to vote (as such terms are used in the rules of the
Commission), or seek to advise or influence any person or entity with respect to
the voting of any voting securities of the Company, except as contemplated in
Section 3.4;

 

(c)           make any public announcement with respect to, or submit a proposal
for, or offer of (with or without conditions) any extraordinary transaction
involving the Company or any of its securities or assets;

 

(d)           form, join or in any way participate in a “group” as defined in
Section 13(d)(3) of the Exchange Act, in connection with any of the foregoing;

 

(e)           otherwise act or seek to control or influence the management,
Board of Directors or policies of the Company;

 

(f)            take any action that could reasonably be expected to require the
Company to make a public announcement regarding the possibility of any of the
events described in clauses (a) through (e) above; or

 

(g)           request the Company, the board of directors of the Company or any
committee thereof directly or indirectly, to amend or waive any provision of
this Section 3.5.

 

3.6          No Transactions in Company Securities.  Neither the Bond Holder,
directly or indirectly, nor any person acting on behalf of or pursuant to any
understanding with the Bond Holder, has engaged in any transactions in the
securities of the Company (including, without limitation, any short sales
involving any of the Company’s securities) since the time that Bond Holder and
the Company reached agreement regarding the Exchange. The Bond Holder covenants
that neither it nor any person acting on its behalf or pursuant to any
understanding with the Bond Holder will engage, directly or indirectly, in any
transactions in the securities of the Company (including short sales) prior to
the time the transactions contemplated by this Agreement are first publicly
disclosed.

 

3.7          Ownership.  The Bond Holder owns the Bonds, free and clear of all
Liens and upon execution of this Agreement, the Company will take title to the
Bonds, free

 

6

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

 

and clear of all Liens. There are no actions, suits or proceedings against the
Bond Holder affecting the title of any of the Bonds or the right of the Bond
Holder to execute, deliver and perform this Agreement.

 

4.     Amendment and Waiver.  No provision of this Agreement may be amended or
modified except upon the written consent of the Company and the Bond Holder, and
no provision hereof may be waived other than by a written instrument signed by
the party against whom enforcement of any such waiver is sought.

 

5.     Miscellaneous.

 

5.1          Attorneys’ Fees.  In the event that any suit or action is
instituted under or in relation to this Agreement, including without limitation
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

 

5.2          Headings; Construction.  The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement. The language used in this Agreement
is and 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.

 

5.3          Pronouns.  All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.

 

5.4          Severability.  In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

 

5.5          Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law. The parties agree that any action
brought by either party under or in relation to this Agreement, including
without limitation to interpret or enforce any provision of this Agreement,
shall be brought in, and each party agrees to and does hereby submit to the
jurisdiction and venue of, any state or federal court located in New York.

 

5.6          Entire Agreement.  This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof, and no party shall be liable or bound to any other in any manner by any
oral or written representations, warranties, covenants and agreements except as
specifically set forth herein.  Each party expressly represents and warrants
that it is not relying on any oral or written representations, warranties,
covenants or agreements outside of this Agreement.

 

7

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

 

5.7          Counterparts.  This Agreement may be executed in two (2) or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one (1) instrument, and shall become
effective when one (1) or more counterparts have been signed by each party
hereto and delivered to the other parties.

 

5.8          Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.

 

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

 

5.10        Further Assurances.  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.

 

5.11        Form 8-K.  The Company agrees that it will on or before 9:30 a.m.,
Eastern Time, on the business day immediately following the date on which this
Agreement is executed and delivered by the Company and the Bond Holder file with
the Commission a Current Report on Form 8-K disclosing the material terms of
this Agreement and the transactions contemplated hereby, including the issuance
of the Shares, ; provided, however, that the Bond Holder shall have a reasonable
opportunity to review and comment on any such Form 8-K prior to the filing
thereof..

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

8

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

 

IN WITNESS WHEREOF, the parties hereto have executed this SECURITIES EXCHANGE
AGREEMENT as of the date set forth in the first paragraph hereof.

 

COMPANY:

 

BOND HOLDERS:

 

 

 

BIOSANTE PHARMACEUTICALS, INC.

 

TANG CAPITAL PARTNERS, LP

 

 

 

By:

/s/ Stephen M. Simes

 

By:

/s/ Kevin Tang

 

 

 

 

 

Name:

Stephen M. Simes

 

Name:

Kevin Tang

 

 

 

 

 

Title:

President and Chief Executive Officer

 

Title:

Managing Director

 

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