Exhibit 10.2

 

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT
REQUIRED.

 

 

Warrant No. W-   

 

FORM OF COMMON STOCK PURCHASE WARRANT

 

To Purchase «Shares» Shares of Common Stock of

BIOSANTE PHARMACEUTICALS, INC.

 

THIS IS TO CERTIFY THAT «Name», or registered assigns (the “Holder”), is
entitled, during the Exercise Period (as hereinafter defined), to purchase from
BioSante Pharmaceuticals, Inc., a Delaware corporation (the “Company”), the
Warrant Stock (as hereinafter defined and subject to adjustment as provided
herein), in whole or in part, at a purchase price of $2.15 per share, all on and
subject to the terms and conditions hereinafter set forth.

 

1.                                       Definitions.  As used in this Warrant,
the following terms have the respective meanings set forth below:

 

“Affiliate” means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
under the Securities Act. With respect to a Holder of Warrants, any investment
fund or managed account that is managed on a discretionary basis by the same
investment manager as such Holder will be deemed to be an Affiliate of such
Holder.

 

“Appraised Value” means, in respect of any share of Common Stock on any date
herein specified, the fair saleable value of such share of Common Stock
(determined without giving effect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Stock or to the fact that the Company
may have no class of equity registered under the Exchange Act) as of the last
day of the most recent fiscal month ending prior to such date specified, based
on the value of the Company on a fully-diluted basis, as determined by a
nationally recognized investment banking firm selected by the Company’s Board of
Directors and having no prior relationship with the Company.

 

“Business Day” means any day except Saturday, Sunday and any day which shall be
a legal holiday or a day on which banking institutions in the State of Illinois
generally are authorized or required by law or other government actions to
close.

 

“Change of Control” means the (i) acquisition by an individual or legal entity
or group (as set forth in Section 13(d) of the Exchange Act) of more than
one-half of the voting rights or equity interests in the Company; or (ii) sale,
conveyance, or other disposition of all or

 

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substantially all of the assets, property or business of the Company or the
merger into or consolidation with any other corporation (other than a wholly
owned subsidiary corporation) or effectuation of any transaction or series of
related transactions where holders of the Company’s voting securities prior to
such transaction or series of transactions fail to continue to hold at least 50%
of the voting power of the Company.

 

“Closing Date” means August 4, 2003.

 

“Commission” means the Securities and Exchange Commission or any other federal
agency then administering the Securities Act and other federal securities laws.

 

“Common Stock” means (except where the context otherwise indicates) the Common
Stock, $0.0001 par value per share, of the Company as constituted on the Closing
Date, and any capital stock into which such Common Stock may thereafter be
changed or converted, and shall also include (i) capital stock of the Company of
any other class (regardless of how denominated) issued to the holders of shares
of Common Stock upon any reclassification thereof which is also not preferred as
to dividends or assets on liquidation over any other class of stock of the
Company and which is not subject to redemption and (ii) shares of common stock
of any successor or acquiring corporation received by or distributed to the
holders of Common Stock of the Company in the circumstances contemplated by
Section 4.3.

 

“Current Market Price” means, in respect of any share of Common Stock on any
date herein specified,

 

(1)                                  if there shall not then be a public market
for the Common Stock, the higher of

 

(a) the book value per share of Common Stock at such date, and

 

(b) the Appraised Value per share of Common Stock at such date,

 

or

 

(2)                                  if there shall then be a public market for
the Common Stock, the average of the daily market prices for the 20 consecutive
trading days immediately before such date. The daily market price for each such
trading day shall be (i) the closing bid price on such day on the principal
stock exchange (including Nasdaq) on which such Common Stock is then listed or
admitted to trading, or quoted, as applicable, (ii) if no sale takes place on
such day on any such exchange, the last reported closing bid price on such day
as officially quoted on any such exchange (including Nasdaq), (iii) if the
Common Stock is not then listed or admitted to trading on any stock exchange,
the last reported closing bid price on such day in the over-the-counter market,
as furnished by the National Association of Securities Dealers Automatic
Quotation System or the National Quotation Bureau, Inc., (iv) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business, or (v) if there is
no such firm, as furnished by any member of the NASD selected mutually by the
holder of this Warrant and the Company or, if they cannot agree upon such
selection, as selected by two such members of the NASD, one of which shall be
selected by holder of this Warrant and one of which shall be selected by the
Company.

 

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“Current Warrant Price” means, in respect of a share of Common Stock at any date
herein specified, the price at which a share of Common Stock may be purchased
pursuant to this Warrant on such date. Unless and until the Current Warrant
Price is adjusted pursuant to the terms herein, the initial Current Warrant
Price shall be $2.15 per share of Common Stock.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.

 

“Exercise Period” means the period during which this Warrant is exercisable
pursuant to Section 2.1.

 

“Expiration Date” means August 3, 2008.

 

“GAAP” means generally accepted accounting principles in the United States of
America as from time to time in effect.

 

“NASD” means the National Association of Securities Dealers, Inc., or any
successor corporation thereto.

 

“Other Property” has the meaning set forth in Section 4.3.

 

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, incorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, entity or government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).

 

“Purchase Agreement” means that certain Common Stock and Warrant Purchase
Agreement dated as of August 4, 2003 among the Company and the other parties
named therein, pursuant to which this Warrant was originally issued.

 

“Restricted Common Stock” means shares of Common Stock which are, or which upon
their issuance upon the exercise of any Warrant would be required to be,
evidenced by a certificate bearing the restrictive legend set forth in Section
3.2.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

 

“Trading Day” means any day on which the primary market on which shares of
Common Stock are listed is open for trading.

 

“Transfer” means any disposition of any Warrant or Warrant Stock or of any
interest in either thereof, which would constitute a sale thereof within the
meaning of the Securities Act.

 

“Warrants” means this Warrant and all warrants issued upon transfer, division or
combination of, or in substitution for, any thereof. All Warrants shall at all
times be identical as

 

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to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.

 

“Warrant Price” means an amount equal to (i) the number of shares of Common
Stock being purchased upon exercise of this Warrant pursuant to Section 2.1,
multiplied by (ii) the Current Warrant Price.

 

“Warrant Stock” means the «Shares» shares of Common Stock to be purchased upon
the exercise hereof, subject to adjustment as provided herein.

 

2.                                       Exercise of Warrant.

 

2.1.                              Manner of Exercise. From and after the Closing
Date, and until 5:00 P.M., New York time, on the Expiration Date (the “Exercise
Period”), the Holder may exercise this Warrant, on any Business Day, for all or
any part of the number of shares of Warrant Stock purchasable hereunder.

 

In order to exercise this Warrant, in whole or in part, the Holder shall deliver
to the Company at its principal office or at the office or agency designated by
the Company pursuant to Section 12, (i) a written notice of Holder’s election to
exercise this Warrant, which notice shall specify the number of shares of
Warrant Stock to be purchased, (ii) payment of the Warrant Price as provided
herein, and (iii) this Warrant. Such notice shall be substantially in the form
of the subscription form appearing at the end of this Warrant as Exhibit A, duly
executed by the Holder or its agent or attorney. Upon receipt thereof, the
Company shall, as promptly as practicable, and in any event within three
Business Days thereafter, execute or cause to be executed and deliver or cause
to be delivered to the Holder a certificate or certificates representing the
aggregate number of full shares of Warrant Stock issuable upon such exercise,
together with cash in lieu of any fraction of a share, as hereinafter provided.
The stock certificate or certificates so delivered shall be, to the extent
possible, in such denomination or denominations as the Holder shall request in
the notice and shall be registered in the name of the Holder or if permitted
pursuant to the terms of this Warrant such other name as shall be designated in
the notice. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other Person so designated to be named therein shall be deemed to have
become a Holder of record of such shares for all purposes, as of the date when
the notice, together with the payment of the Warrant Price and this Warrant, is
received by the Company as described above. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or at the request of the Holder, appropriate
notation may be made on this Warrant and the same returned to the Holder.

 

Payment of the Warrant Price may be made at the option of the Holder by: (i)
certified or official bank check payable to the order of the Company, (ii) wire
transfer of immediately available funds to the account of the Company or (iii)
the surrender and cancellation of a portion of shares of Common Stock then held
by the Holder or issuable upon such exercise of this Warrant, which shall be
valued and credited toward the total Warrant Price due the Company for

 

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the exercise of the Warrant based upon the Current Market Price of the Common
Stock. All shares of Common Stock issuable upon the exercise of this Warrant
pursuant to the terms hereof shall be validly issued and, upon payment of the
Warrant Price, shall be fully paid and nonassessable and not subject to any
preemptive rights.

 

2.2.                              Fractional Shares. The Company shall not be
required to issue a fractional share of Common Stock upon exercise of any
Warrant. As to any fraction of a share which the Holder of one or more Warrants,
the rights under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company shall pay an amount in cash
equal to the Current Market Price per share of Common Stock on the date of
exercise multiplied by such fraction.

 

2.3.                              Continued Validity. A Holder of shares of
Common Stock issued upon the exercise of this Warrant, in whole or in part
(other than a Holder who acquires such shares after the same have been publicly
sold pursuant to a Registration Statement under the Securities Act or sold
pursuant to Rule 144 thereunder), shall continue to be entitled with respect to
such shares to all rights to which it would have been entitled as the Holder
under Sections 10 and 13 of this Warrant.

 

2.4.                              Restrictions on Exercise Amount.

 

(i)                                     Unless a Holder delivers to the Company
irrevocable written notice prior to the date of issuance hereof or sixty-one
days prior to the effective date of such notice that this Section 2.4(i) shall
not apply to such Holder, the Holder may not acquire a number of shares of
Warrant Stock to the extent that, upon such exercise, the number of shares of
Common Stock then beneficially owned by such holder and its Affiliates and any
other persons or entities whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act
(including shares held by any “group” of which the holder is a member, but
excluding shares beneficially owned by virtue of the ownership of securities or
rights to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) exceeds 4.95%
of the total number of shares of Common Stock of the Company then issued and
outstanding. For purposes hereof, “group” has the meaning set forth in Section
13(d) of the Exchange Act and applicable regulations of the Securities and
Exchange Commission, and the percentage held by the holder shall be determined
in a manner consistent with the provisions of Section 13(d) of the Exchange Act.
Each delivery of a notice of exercise by a Holder will constitute a
representation by such Holder that it has evaluated the limitation set forth in
this paragraph and determined, based on the most recent public filings by the
Company with the Commission, that the issuance of the full number of shares of
Warrant Stock requested in such notice of exercise is permitted under this
paragraph.

 

(ii)                                  In the event the Company is prohibited
from issuing shares of Warrant Stock as a result of any restrictions or
prohibitions under applicable law or the rules or regulations of any stock
exchange, interdealer quotation system or other self-regulatory organization,
the Company shall as soon as possible seek the approval of its stockholders and
take such other action to authorize the issuance of the full number of shares of
Common Stock issuable upon exercise of this Warrant.

 

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3.                                       Transfer, Division and Combination.

 

3.1.                              Transfer. The Warrants and the Warrant Stock
shall be freely transferable, subject to compliance with this Section 3.1 and
all applicable laws, including, but not limited to the Securities Act.  If, at
the time of the surrender of this Warrant in connection with any transfer of
this Warrant or the resale of the Warrant Stock, the transfer of this Warrant or
the resale of the Warrant Stock, as applicable, shall not be registered under
the Securities Act, the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant or the Warrant Stock
as the case may be, furnish to the Company a written opinion of counsel that is
reasonably acceptable to the Company to the effect that such transfer may be
made without registration under the Securities Act, (ii) that the Holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and substantially in the form attached as
Exhibit C hereto and (iii) that the transferee be an “accredited investor” as
defined in Rule 501(a) promulgated under the Securities Act. Transfer of this
Warrant and all rights hereunder, in whole or in part, in accordance with the
foregoing provisions, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company referred to in Section 2.1 or the office or agency
designated by the Company pursuant to Section 12, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Following a transfer that complies
with the requirements of this Section 3.1, the Warrant may be exercised by a new
Holder for the purchase of shares of Common Stock regardless of whether the
Company issued or registered a new Warrant on the books of the Company.

 

3.2.                              Restrictive Legends. Each certificate for
Warrant Stock initially issued upon the exercise of this Warrant, and each
certificate for Warrant Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with legends in
substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.”

 

“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS
AGREEMENT DATED AS OF AUGUST 4, 2003, AS AMENDED FROM TIME TO TIME, AMONG THE
COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT

 

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NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY.”

 

3.3.                              Division and Combination; Expenses; Books.
This Warrant may be divided or combined with other Warrants upon presentation
hereof at the aforesaid office or agency of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Company shall prepare, issue and deliver at its own
expense the new Warrant or Warrants under this Section 3. The Company agrees to
maintain, at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.

 

4.                                       Adjustments. The number of shares of
Common Stock for which this Warrant is exercisable, and the price at which such
shares may be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4. The Company shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with Sections 5.1 and 5.2.

 

4.1.                              Stock Dividends, Subdivisions and
Combinations. If at any time while this Warrant is outstanding the Company
shall:

 

(i)                                     declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock,

 

(ii)                                  subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, or

 

(iii)                               combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then:

 

(1)                                  the number of shares of Common Stock
acquirable upon exercise of this Warrant immediately after the occurrence of any
such event shall be adjusted to equal the number of shares of Common Stock which
a record holder of the same number of shares of Common Stock that would have
been acquirable under this Warrant immediately prior to the record date for such
dividend or distribution or the effective date of such subdivision or
combination would own or be entitled to receive after such record date or the
effective date of such subdivision or combination, as applicable, and

 

(2)                                  the Warrant Price shall be adjusted to
equal:

 

(A)                              the Current Warrant Price in effect at the time
of the record date for such dividend or distribution or of the effective date of
such subdivision or combination, multiplied by the number of shares of Common
Stock into which this Warrant is exercisable immediately prior to the
adjustment, divided by

 

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(B)                                the number of shares of Common Stock into
which this Warrant is exercisable immediately after such adjustment.

 

Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

 

4.2.                              Other Provisions Applicable to Adjustments.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock into which this Warrant is exercisable and the
Current Warrant Price provided for in Section 4:

 

(a) When Adjustments to Be Made. The adjustments required by Section 4 shall be
made whenever and as often as any specified event requiring an adjustment shall
occur, except that any that would otherwise be required may be postponed (except
in the case of a subdivision or combination of shares of the Common Stock, as
provided for in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made adds
or subtracts less than 1% of the shares of Common Stock into which this Warrant
is exercisable immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 4 and not
previously made, would result in a minimum adjustment or on the date of
exercise. For the purpose of any adjustment, any specified event shall be deemed
to have occurred at the close of business on the date of its occurrence.

 

(b)  Fractional Interests. In computing adjustments under this Section 4,
fractional interests in Common Stock shall be taken into account to the nearest
1/100th of a share.

 

(c)  When Adjustment Not Required. If the Company undertakes a transaction
contemplated under this Section 4 and as a result takes a record of the holders
of its Common Stock for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights or other benefits contemplated
under this Section 4 and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights or other benefits contemplated
under this Section 4, then thereafter no adjustment shall be required by reason
of the taking of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.

 

(d)  Escrow of Stock. If after any property becomes distributable pursuant to
Section 4 by reason of the taking of any record of the holders of Common Stock,
but prior to the occurrence of the event for which such record is taken, a
holder of this Warrant exercises the Warrant during such time, then such holder
shall continue to be entitled to receive any shares of Common Stock issuable
upon exercise hereunder by reason of such adjustment and such shares or other
property shall be held in escrow for the holder of this Warrant by the Company
to be issued to holder of this Warrant upon and to the extent that the event
actually takes place. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be canceled by the Company and
escrowed property returned to the Company.

 

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4.3.                              Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets.

 

(a)  If there shall occur a Change of Control and, pursuant to the terms of such
Change of Control, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of any
nature whatsoever (including warrants or other subscription or purchase rights)
in addition to or in lieu of common stock of the successor or acquiring
corporation (“Other Property”), are to be received by or distributed to the
holders of Common Stock of the Company, then the Holder of this Warrant shall
have the right thereafter to receive, upon the exercise of the Warrant, the
number of shares of common stock of the successor or acquiring corporation or of
the Company, if it is the surviving corporation, and the Other Property
receivable upon or as a result of such Change of Control by a holder of the
number of shares of Common Stock into which this Warrant is exercisable
immediately prior to such event.

 

(B)  In case of any such Change of Control described in Section 4.3(a) above,
the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of contained in this Warrant to be performed and
observed by the Company and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of shares of the Common Stock into which this Warrant is exercisable
which shall be as nearly equivalent as practicable to the adjustments provided
for in Section 4. For purposes of Section 4, common stock of the successor or
acquiring corporation shall include stock of such corporation of any class which
is not preferred as to dividends or assets on liquidation over any other class
of stock of such corporation and which is not subject to redemption and shall
also include any evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 4 shall similarly apply
to successive Change of Control transactions.

 

4.4.                              Other Action Affecting Common Stock. In case
at any time or from time to time the Company shall take any action in respect of
its Common Stock, other than the payment of dividends permitted by Section 4 or
any other action described in Section 4, then, unless such action will not have
a materially adverse effect upon the rights of the holder of this Warrant, the
number of shares of Common Stock or other stock into which this Warrant is
exercisable and/or the purchase price thereof shall be adjusted in such manner
as may be equitable in the circumstances.

 

4.5.                              Certain Limitations. Notwithstanding anything
herein to the contrary, the Company agrees not to enter into any transaction
which, by reason of any adjustment hereunder, would cause the Current Warrant
Price to be less than the par value per share of Common Stock.

 

4.6.                              Stock Transfer Taxes. The issue of stock
certificates upon exercise of this Warrant shall be made without charge to the
holder for any tax in respect of such issue. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares in any name other than that of the holder of

 

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this Warrant, and the Company shall not be required to issue or deliver any such
stock certificate unless and until the person or persons requesting the issue
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

 

5.                                       Notices to Warrant Holders.

 

5.1.                              Certificate as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the Current Warrant Price, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder of
this Warrant a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of the Holder of this
Warrant, furnish or cause to be furnished to such Holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Current Warrant
Price at the time in effect and (iii) the number of shares of Common Stock and
the amount, if any, or other property which at the time would be received upon
the exercise of Warrants owned by such Holder.

 

5.2.                              Notice of Corporate Action. If at any time:

 

(a)                                  the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend (other than a cash dividend payable out of earnings or earned surplus
legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution, or any
right to subscribe for or purchase any evidences of its indebtedness, any shares
of stock of any class or any other securities or property, or to receive any
other right, or

 

(b)                                 there shall be any capital reorganization of
the Company, any reclassification or recapitalization of the capital stock of
the Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another corporation, or

 

(c)                                  there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;

 

(d)                                 the Company shall cause the holders of its
Common Stock to be entitled to receive (i) any dividend or other distribution of
cash, (ii) any evidences of its indebtedness, or (iii) any shares of stock of
any class or any other securities or property or assets of any nature whatsoever
(other than cash or additional shares of Common Stock as provided in Section 4.1
hereof); or (iv) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property or assets of any nature whatsoever;

 

then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 15 days’ prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,

 

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consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 15 days’ prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 15.2.

 

5.3.                              No Rights as Stockholder. This Warrant does
not entitle the Holder to any voting or other rights as a stockholder of the
Company prior to exercise and payment for the Warrant Price in accordance with
the terms hereof.

 

6.                                       No Impairment. The Company shall not by
any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, 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
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of the Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to the
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.

 

7.                                       Reservation and Authorization of Common
Stock; Registration With Approval of Any Governmental Authority. From and after
the Closing Date, the Company shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants (without regard to any ownership limitations provided
in Section 2.4(i)). All shares of Common Stock which shall be so issuable, when
issued upon exercise of any Warrant and payment therefor in accordance with the
terms of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights. Before taking any action
which would cause an adjustment reducing the Current Warrant Price below the
then par value, if any, of the shares of Common Stock issuable upon exercise of
the Warrants, the Company shall take any corporate action which may be necessary
in order that the

 

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Company may validly and legally issue fully paid and non-assessable shares of
such Common Stock at such adjusted Current Warrant Price. Before taking any
action which would result in an adjustment in the number of shares of Common
Stock for which this Warrant is exercisable or in the Current Warrant Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof. If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants require registration or qualification with
any governmental authority under any federal or state law before such shares may
be so issued (other than as a result of a prior or contemplated distribution by
the Holder of this Warrant), the Company will in good faith and as expeditiously
as possible and at its expense endeavor to cause such shares to be duly
registered.

 

8.                                       Taking of Record; Stock and Warrant
Transfer Books. In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any provision
of Section 4 refers to the taking of a record of such holders, the Company will
in each such case take such a record and will take such record as of the close
of business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.

 

9.                                       Registration Rights. The resale of the
Warrant Stock shall be registered in accordance with the terms and conditions
contained in that certain Investor Rights Agreement dated of even date hereof,
among the Holder, the Company and the other parties named therein (the “Investor
Rights Agreement”). The Holder acknowledges that pursuant to the Investor Rights
Agreement, the Company has the right to request that the Holder furnish
information regarding such Holder and the distribution of the Warrant Stock as
is required by law or the Commission to be disclosed in the Registration
Statement (as such term is defined in the Investor Rights Agreement), and the
Company may exclude from such registration the shares of Warrant Stock
acquirable hereunder if Holder fails to furnish such information within a
reasonable time prior to the filing of each Registration Statement, supplemented
prospectus included therein and/or amended Registration Statement.

 

10.                                 Supplying Information. Upon any default by
the Company of its obligations hereunder or under the Investor Rights Agreement,
the Company shall cooperate with the Holder in supplying such information as may
be reasonably necessary for such Holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.

 

11.                                 Loss or Mutilation. Upon receipt by the
Company from the Holder of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of this Warrant and
indemnity or security reasonably satisfactory to it and reimbursement to the
Company of all reasonable expenses incidental thereto and in case of mutilation
upon surrender and cancellation hereof, the Company will execute and deliver in
lieu hereof a new Warrant of like tenor to the Holder; provided, however, that
in the case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation.

 

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12.                                 Office of the Company. As long as any of the
Warrants remain outstanding, the Company shall maintain an office or agency
(which may be the principal executive offices of the Company) where the Warrants
may be presented for exercise, registration of transfer, division or combination
as provided in this Warrant.

 

13.                                 Financial and Business Information.

 

13.1.                        Quarterly Information. The Company will deliver to
the Holder, as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Company, one copy
of an unaudited consolidated balance sheet of the Company and its subsidiaries
as at the end of such quarter, and the related unaudited consolidated statements
of income, retained earnings and cash flow of the Company and its subsidiaries
for such quarter and, in the case of the second and third quarters, for the
portion of the fiscal year ending with such quarter, setting forth in each case
in comparative form the figures for the corresponding periods in the previous
fiscal year. Such financial statements shall be prepared by the Company in
accordance with GAAP (except as may be indicated thereon or in the notes
thereto) and accompanied by the certification of the Company’s chief executive
officer or chief financial officer that such financial statements present fairly
the consolidated financial position, results of operations and cash flow of the
Company and its subsidiaries as at the end of such quarter and for such
year-to-date period, as the case may be; provided, however, that the Company
shall have no obligation to deliver such quarterly information under this
Section 13.1 to the extent it is publicly available.

 

13.2.                        Annual Information. The Company will deliver to the
Holder as soon as available and in any event within 90 days after the end of
each fiscal year of the Company, one copy of an audited consolidated balance
sheet of the Company and its subsidiaries as at the end of such year, and
audited consolidated statements of income, retained earnings and cash flow of
the Company and its subsidiaries for such year; setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year; all prepared in accordance with GAAP, and which audited financial
statements shall be accompanied by an opinion thereon of the independent
certified public accountants regularly retained by the Company, or any other
firm of independent certified public accountants of recognized national standing
selected by the Company; provided, however, that the Company shall have no
obligation to deliver such annual information under this Section 13.2 to the
extent it is publicly available.

 

13.3.                        Filings. The Company will file on or before the
required date all regular or periodic reports (pursuant to the Exchange Act)
with the Commission and will deliver to Holder promptly upon their becoming
available one copy of each report, notice or proxy statement sent by the Company
to its stockholders generally.

 

14.                                 Limitation of Liability. No provision
hereof, in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of the Holder for the purchase
price of any Common Stock, whether such liability is asserted by the Company or
by creditors of the Company.

 

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15.                                 Miscellaneous.

 

15.1.                        Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice Holder’s rights, powers
or remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other material provision of this Warrant,
the Company shall pay to the Holder such amounts as shall be sufficient to cover
any reasonable and documented third party costs and expenses including, but not
limited to, reasonable attorneys’ fees, including those of appellate
proceedings, incurred by the Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

 

15.2.                        Notice Generally. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be given
in the manner and to the addresses set forth in the Purchase Agreement.

 

15.3.                        Successors and Assigns. Subject to compliance with
the provisions of Section 3.1, this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant,
and shall be enforceable by any such Holder.

 

15.4.                        Amendment. This Warrant may be modified or amended
or the provisions of this Warrant waived with the written consent of both the
Company and the Holder.

 

15.5.                        Severability. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be modified to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.

 

15.6.                        Headings. The headings used in this Warrant are for
the convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.

 

15.7.                        Governing Law. This Warrant and the transactions
contemplated hereby shall be deemed to be consummated in the State of New York
and shall be governed by and interpreted in accordance with the local laws of
the State of New York without regard to the provisions thereof relating to
conflicts of laws. The Company hereby irrevocably consents to the exclusive
jurisdiction of the State and Federal courts located in New York City, New York
in connection with any action or proceeding arising out of or relating to this
Warrant. In any such litigation the Company agrees that the service thereof may
be made by certified or registered mail directed to the Company pursuant to
Section 15.2.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, BioSante Pharmaceuticals, Inc. has caused this Warrant to be
executed by its duly authorized officer and attested by its Secretary.

 

Dated:  August 4, 2003

 

 

 

BIOSANTE PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name: Stephen M. Simes

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

Attest:

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name: Phillip B. Donenberg

 

 

Title: Secretary

 

 

 

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EXHIBIT A

 

SUBSCRIPTION FORM

 

[To be executed only upon exercise of Warrant]

 

1.                                       The undersigned hereby elects to
purchase               shares of the Common Stock of BioSante Pharmaceuticals,
Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment
of the purchase price of such shares in full.

 

2.                                       The undersigned hereby elects to
convert the attached Warrant into Common Stock of BioSante Pharmaceuticals, Inc.
through “cashless exercise” in the manner specified in the Warrant.  This
conversion is exercised with respect to                       of the Shares
covered by the Warrant.

 

3.                                       Please issue a certificate or
certificates representing said shares in the name of the undersigned or in such
other name as is specified below:

 

 

 

 

 

 

(Name)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Address)

 

 

[and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable hereunder
be delivered to the undersigned.]

 

 

 

 

(Name of Registered Owner)

 

 

 

 

 

 

 

(Signature of Registered Owner)

 

 

 

 

 

(Street Address)

 

 

 

 

 

(State) (Zip Code)

 

 

 

NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the Warrant in every particular, without alteration or
enlargement or any change whatsoever.

 

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EXHIBIT B

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the
purchase of shares of common stock of BioSante Pharmaceuticals, Inc. hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
common stock set forth below:

 

 

 

 

 

 

 

 

 

 

 

 

(Name and Address of Assignee)

 

 

 

 

 

(Number of Shares of Common Stock)

 

 

and does hereby irrevocably constitute and appoint              attorney-in-fact
to register such transfer on the books of the Company, maintained for the
purpose, with full power of substitution in the premises.

 

 

Dated:

 

 

 

 

 

 

(Print Name and Title)

 

 

 

 

 

(Signature)

 

 

 

 

 

(Witness)

 

 

 

NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the Warrant in every particular, without alteration or
enlargement or any change whatsoever.

 

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EXHIBIT C

 

FORM OF INVESTMENT REPRESENTATION LETTER

 

In connection with the acquisition of [warrants (the “Warrants”) to purchase
     shares of common stock of BioSante Pharmaceuticals, Inc. (the “Company”),
par value $0.0001 per share (the “Common Stock”)][   shares of common stock of
BioSante Pharmaceuticals, Inc. (the “Company”), par value $0.0001 per share (the
“Common Stock”) upon the exercise of warrants by         ], by                
(the “Holder”) from              , the Holder hereby represents and warrants to
the Company as follows:

 

The Holder (i) is an “Accredited Investor” as that term is defined in Rule 501
of Regulation D promulgated under the Securities Act of 1933, as amended (the
“Act”); and (ii) has the ability to bear the economic risks of such Holder’s
prospective investment, including a complete loss of Holder’s investment in the
Warrants and the shares of Common Stock issuable upon the exercise thereof
(collectively, the “Securities”).

 

The Holder, by acceptance of the Warrants, represents and warrants to the
Company that the Warrants and all securities acquired upon any and all exercises
of the Warrants are purchased for the Holder’s own account, and not with view to
distribution of either the Warrants or any securities purchasable upon exercise
thereof in violation of applicable securities laws.

 

[The Holder acknowledges that (i) the Securities have not been registered under
the Act, (ii) the Securities are “restricted securities” and the certificate(s)
representing the Securities shall bear the following legend, or a similar legend
to the same effect, until (i) in the case of the shares of Common Stock
underlying the Warrants, such shares shall have been registered for resale by
the Holder under the Act and effectively been disposed of in accordance with a
registration statement that has been declared effective; or (ii) in the opinion
of counsel for the Company such Securities may be sold without registration
under the Act:

 

“[NEITHER] THE SECURITIES REPRESENTED BY THIS CERTIFICATE [NOR THE SECURITIES
INTO WHICH THEY ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), AND ALL SUCH SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. [NEITHER] THE
SECURITIES REPRESENTED HEREBY [NOR THE SECURITIES INTO WHICH THEY ARE
EXERCISABLE] MAY [NOT] BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT
THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT
REGISTRATION UNDER THE ACT.”]*

 

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* Bracketed language to be inserted if applicable.

 

18

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IN WITNESS WHEREOF, the Holder has caused this Investment Representation Letter
to be executed this    day of            200 .

 

[Name]

 

 

By:

 

 

Name:

Title:

 

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