Exhibit 10.12

BIOSANTE PHARMACEUTICALS, INC.

DESCRIPTION OF NON-EMPLOYEE DIRECTOR
COMPENSATION ARRANGEMENTS

Retainer and Meeting Fees. The cash compensation paid to our non-employee
directors consists of annual cash retainers paid to each Board member, our
Chairman of the Board and each Board committee chair, except for the chair of
our Scientific Review Committee. The following table sets forth the annual cash
retainers currently paid to our non-employee directors:

          Description   Annual Cash Retainer
Board Member (other than Chairman of the Board)
  $ 18,000  
Chairman of the Board
    22,500  
Audit and Finance Committee Chair
    9,000  
Compensation Committee Chair
    4,500  
Nominating and Corporate Governance Committee Chair
    4,500  

The annual cash retainers are paid on a quarterly basis in the beginning of each
calendar quarter. For example, the retainers paid in the beginning of the first
calendar quarter are for the period from January 1 through March 31.

We also pay each of our non-employee directors an additional cash fee of $1,800
for each Board meeting attended in person and $900 for each Board meeting
attended via telephone and each Board committee meeting attended in person or
via telephone.

We do not compensate Mr. Simes separately for serving on the Board of Directors
or any of the Board committees. We do, however, reimburse each member of the
Board of Directors, including Mr. Simes, for out-of-pocket expenses incurred in
connection with attending Board and Board committee meetings.

Stock Options. In February 2009, we granted each non-employee director a
ten-year stock option to purchase 50,000 shares of common stock at an exercise
price equal to the fair market value of our common stock on the date of grant.
These stock options were granted on February 2, 2009 and vested in full on
February 2, 2010. In October 2009, we granted each of Dr. Potts and Dr. Sherwin
a ten-year stock option to purchase 15,000 shares of common stock at an exercise
price equal to the fair market value of our common stock on the date of grant.
These stock options were granted on October 14, 2009 and vests with respect to
25 percent of the underlying shares of common stock on each of the following
dates, so long as the individual remains a director of our company as of such
date: October 14, 2010, October 14, 2011, October 14, 2012 and October 14, 2013.

 

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In February 2010, the Board of Directors, upon recommendation of the Nominating
and Corporate Governance Committee, approved resolutions providing for automatic
initial and annual stock option grants to our non-employee directors. Pursuant
to these resolutions, each new non-employee director will be granted on the date
of the director’s initial election to the Board of Directors an initial option
to purchase 15,000 shares of our common stock at an exercise price equal to the
fair market value of our common stock on the date of grant, which option will
vest in four equal annual installments and expire on the ten-year anniversary of
the date of grant. In addition, each non-employee director will be granted on
the last business day of each March a ten-year option to purchase 10,000 shares
of our common stock at an exercise price equal to the fair market value of our
common stock on the date of grant, which option will vest in full on the
one-year anniversary of the date of grant. In addition, our then Chairman of the
Board will be granted on the last business day of each March an additional
ten-year option to purchase 5,000 shares of our common stock at an exercise
price equal to the fair market value of our common stock on the date of grant,
which option will vest in full on the one-year anniversary of the date of grant
On March 31, 2010, we will grant each non-employee director a ten-year option to
purchase 10,000 shares of common stock at an exercise price equal to the fair
market value of our common stock on the date of grant. These stock options will
vest in full on March 31, 2011. We also will grant our Chairman of the Board an
additional option to purchase 5,000 shares of common stock at an exercise price
equal to the fair market value of our common stock on the date of grant. This
stock option also will be granted on March 31, 2010 and will vest in full on
March 31, 2011.

Reimbursement of Expenses. We reimburse each member of our Board of Directors,
including Mr. Simes, for out-of-pocket expenses incurred in connection with
attending Board and Board committee meetings.

 

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