Exhibit 10.3

 

INVESTOR RIGHTS AGREEMENT

 

This Investor Rights Agreement (this “Agreement”) is made and entered into as of
August 4, 2003 among BioSante Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and each of the purchasers executing this Agreement and listed on
Schedule 1 attached hereto (collectively, the “Purchasers”).

 

This Agreement is being entered into pursuant to the Common Stock and Warrant
Purchase Agreement, dated as of the date hereof, by and among the Company and
the Purchasers (the “Purchase Agreement”).

 

The Company and the Purchasers hereby agree as follows:

 

1.                                       Definitions.

 

Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:

 

“Advice” shall have the meaning set forth in Section 3(m).

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by or under common control with such
Person. For the purposes of this definition, “control,” when used with respect
to any Person, means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms of “affiliated,” “controlling” and “controlled” have meanings correlative
to the foregoing.

 

“Blackout Period” shall have the meaning set forth in Section 3(n).

 

“Board” shall have the meaning set forth in Section 3(n).

 

“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.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the Company’s Common Stock, par value $0.0001 per share.

 

“Effectiveness Period” shall have the meaning set forth in Section 2.

 

“Event” shall have the meaning set forth in Section 7(e).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Filing Date” means the 35th day following the Closing Date.

 

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

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities, including without limitation the Purchasers
and their assignees.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

“Losses” shall have the meaning set forth in Section 5(a).

 

 “Person” means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.

 

“Purchased Shares” means the shares of Common Stock purchased by the Purchasers
pursuant to the Purchase Agreement.

 

“Registrable Securities” means (a) the Purchased Shares and the Warrant Shares
(without regard to any limitations on beneficial ownership contained in the
Purchase Agreement or Warrants) or other securities issued or issuable to each
Purchaser or its transferee or designee (i) upon exercise of the Warrants, or
(ii) upon any distribution with respect to, any exchange for or any replacement
of such Purchased Shares or Warrants or (iii) upon any conversion, exercise or
exchange of any securities issued in connection with any such distribution,
exchange or replacement; (b) securities issued or issuable upon any stock split,
stock dividend, recapitalization or similar event with respect to the foregoing;
and (c) any other security issued as a dividend or other distribution with
respect to, in exchange for, in replacement or redemption of, or in reduction of
the liquidation value of, any of the securities referred to in the preceding
clauses; provided, however, that such securities shall cease to be Registrable
Securities when such securities have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction or
when such securities may be sold without any restriction pursuant to Rule 144(k)
as determined by the counsel to the Company pursuant to a written opinion
letter, addressed to the Company’s transfer agent to such effect as described in
Section 2 of this Agreement.

 

2

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

 

“Registration Statement” means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 158” means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Special Counsel” means one special counsel to the Holders selected by a
majority in interest of the Holders with notice of such selection given to the
Company.

 

“Warrant Shares” means the shares of Common Stock issuable upon the exercise of
the warrants issued or to be issued to the Purchasers or their assignees or
designees in connection with the offering consummated under the Purchase
Agreement.

 

2.                                       Registration. As soon as possible
following the Closing Date (but not later than the Filing Date), the Company
shall prepare and file with the Commission a “shelf” Registration Statement
covering all Registrable Securities for a secondary or resale offering to be
made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (or if such form is not available to the Company on another
form appropriate for such registration in accordance herewith). The Company
shall use its reasonable best efforts to cause the Registration Statement to be
declared effective under the Securities Act not later than ninety (90) days
after the Closing Date (including filing with the Commission a request for
acceleration of effectiveness in accordance with Rule 12dl-2 promulgated under
the Exchange Act within five (5) Business Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be “reviewed,” or not be subject to further
review) and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold or
(y) with respect to any Holder, such time as all Registrable Securities held by
such Holder may be sold without any restriction pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company’s

 

3

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

 

transfer agent to such effect (the “Effectiveness Period”).  Such Registration
Statement also shall cover, to the extent allowable under the Securities Act and
the Rules promulgated thereunder (including Securities Act Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities.  The Registration Statement filed in accordance with Section 2 may
include other shares of the Company with respect to which registration rights
have been granted, and may include shares of the Company being sold for the
account of the Company; provided, however, that such inclusions do not adversely
affect the registration of the Registrable Securities.

 

3.                                       Registration Procedures.

 

In connection with the Company’s registration obligations hereunder, the Company
shall:

 

(a) Prepare and file with the Commission on or prior to the Filing Date, a
Registration Statement on Form S-3 (or if such form is not available to the
Company on another form appropriate for such registration in accordance
herewith) (which shall include a Plan of Distribution substantially in the form
of Exhibit A attached hereto), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to the Special Counsel, copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the review of such Special Counsel, and (ii) at
the request of any Holder cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of counsel to such Holders, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities or the Special Counsel shall reasonably object within
three (3) Business Days after their receipt thereof.  In the event of any such
objection, the Holders shall provide the Company with any requested revisions to
such prospectus or supplement within two (2) Business Days of such objection.

 

(b)                                 (i) Prepare and file with the Commission
such amendments, including post-effective amendments, to the Registration
Statement as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and to the extent any Registrable Securities are not included in such
Registration Statement for reasons other than the failure of the Holder to
comply with Section 3(m) hereof, shall prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all Registrable Securities; (ii) cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act; (iii) respond as
promptly as reasonably possible to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as

 

4

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

 

reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

 

(c)                                  Notify the Special Counsel as promptly as
reasonably possible (A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed
(but in no event in the case of this subparagraph (A), less than three (3)
Business Days prior to date of such filing) and (B) when the Commission notifies
the Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement; and
notify the Holders of Registrable Securities to be sold and the Special Counsel
as promptly as reasonably possible, with respect to the Registration Statement
or any post-effective amendment, when the same has become effective, and after
the effectiveness thereof: (i) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iii) of 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; and (iv) if the financial statements included in the Registration
Statement become ineligible for inclusion therein or of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

 

(d)                                 Use its reasonable best efforts to avoid the
issuance of, or, if issued, use reasonable best efforts to obtain the withdrawal
of, (i) any order suspending the effectiveness of the Registration Statement or
(ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the earliest
reasonably practicable moment.

 

(e)                                  If requested by the Holders of a majority
in interest of the Registrable Securities, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
such information as the Company reasonably agrees should be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective

 

5

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

 

amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 3(e) that would, in the written opinion of
counsel for the Company (addressed to the Holder’s Special Counsel), violate
applicable law.

 

(f)                                    Furnish to each Holder and the Special
Counsel, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, including financial statements and
schedules, and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly after the
filing of such documents with the Commission.

 

(g)                                 Promptly deliver to each Holder and the
Special Counsel, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

 

(h)                                 Prior to any public offering of Registrable
Securities, use its reasonable best efforts to register or qualify or cooperate
with the selling Holders and the Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder reasonably requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any jurisdiction where it is not then so subject or subject the
Company to any material tax in any such jurisdiction where it is not then so
subject.

 

(i)                                     Cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to a Registration Statement, which certificates
shall be free, to the extent permitted by applicable law and the Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any Holder may
request at least two (2) Business Days prior to any sale of Registrable
Securities. In connection therewith, the Company shall promptly after the
effectiveness of the Registration Statement cause an opinion of counsel to be
delivered to and maintained with its transfer agent, together with any other
authorizations, certificates and directions required by the transfer agent,
which authorize and direct the transfer agent to issue such Registrable
Securities without legend upon sale by the Holder of such shares of Registrable
Securities under the Registration Statement.

 

(j)                                     Following the occurrence of any event
contemplated by Section 3(c)(iv), as promptly as possible, prepare a supplement
or amendment, including a post-effective

 

6

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

 

amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

 

(k)                                  Cause all Registrable Securities relating
to such Registration Statement to be listed on any United States securities
exchange, quotation system, market or over-the-counter bulletin board, if any,
on which similar securities issued by the Company are then listed.

 

(l)                                     Comply in all material respects with all
applicable rules and regulations of the Commission and make generally available
to its security holders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 not later than 45 days after the end of
any 3-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) commencing on the first day of the first fiscal quarter
of the Company after the effective date of the Registration Statement, which
statement shall conform to the requirements of Rule 158.

 

(m)                               Request each selling Holder to furnish to the
Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law or the Commission to be disclosed
in the Registration Statement (“Holder Information”), and the Company may
exclude from such registration the Registrable Securities of any such Holder who
fails to furnish such information within a reasonable time prior to the filing
of each Registration Statement, supplemented Prospectus and/or amended
Registration Statement.  Each Holder agrees promptly to furnish to the Company
all Holder Information required to be disclosed in such Registration Statement
in order to make the information previously furnished to the Company by such
Holder not misleading.  No Holder of Registrable Securities shall be entitled to
liquidated damages pursuant to Section 7(e) hereof unless and until such Holder
shall have provided all such Holder Information.  Any sale of any Registrable
Securities by any Holder shall constitute a representation and warranty by such
Holder that the Holder Information does not as of the time of such sale contain
any untrue statement of a material fact relating to such Holder or its plan of
distribution and that such Prospectus does not as of the time of such sale omit
to state any material fact relating to such Holder or its plan of distribution
necessary to make the statements in such Prospectus, in the light of the
circumstances under which they were made, not misleading.

 

If the Registration Statement refers to any Holder by name or otherwise as the
holder of any securities of the Company, then such Holder shall have the right
to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.

 

Each Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in

 

7

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

 

Section 3(c)(i), 3(c)(ii), 3(c)(iii), 3(c)(iv), or 3(n), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(j), or until it is advised in writing (the “Advice”) by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.

 

(n)                                 If (i) there is material non-public
information regarding the Company which the Company’s Board of Directors (the
“Board”) reasonably determines not to be in the Company’s best interest to
disclose and which the Company is not otherwise required to disclose, or (ii)
there is a significant business opportunity (including, but not limited to, the
acquisition or disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which the Board reasonably determines not
to be in the Company’s best interest to disclose and which the Company would be
required to disclose under the Registration Statement, then the Company may
postpone or suspend filing or effectiveness of a registration statement for a
period not to exceed 30 consecutive days, provided that the Company may not
postpone or suspend its obligation under this Section 3(n) for more than 60 days
in the aggregate during any 12 month period (each, a “Blackout Period”).

 

4.                                       Registration Expenses.

 

All fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with any
securities exchange, quotation system, market or over-the-counter bulletin board
on which Registrable Securities are required hereunder to be listed, (B) with
respect to filings required to be made with the Commission, and (C) in
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable and documented fees and disbursements of Special Counsel
in connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing or photocopying prospectuses), (iii) messenger, telephone and delivery
expenses, (iv) Securities Act liability insurance, if the Company so desires
such insurance, (v) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement, including, without limitation, the Company’s independent public
accountants (including, in the case of an underwritten offering, the expenses of
any comfort letters or costs associated with the delivery by independent public
accountants of a comfort letter or comfort letters) and legal counsel, and (vi)
reasonable and documented fees and expenses of the Special Counsel in connection
with any Registration Statement hereunder. In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with

 

8

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

 

the consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

 

5.                                       Indemnification.

 

(a)                                  Indemnification by the Company. The Company
shall, notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a result of a
pledge or any failure to perform under a margin call of Common Stock),
investment advisors and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable attorneys’
fees) and expenses (collectively, “Losses”), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
or incorporated by reference in the Registration Statement, any Prospectus or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
amendment or supplement thereto, in the light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, which information was reasonably relied on by the
Company for use therein or to the extent that such information relates to (x)
such Holder and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
prospectus or in any amendment or supplement thereto or (y) such Holder’s
proposed method of distribution of Registrable Securities as set forth in
Exhibit A (or as such Holder otherwise informs the Company in writing); or (ii)
in the case of an occurrence of an event of the type described in Section
3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), the use by a Holder of an outdated or
defective Prospectus after the delivery to the Holder of written notice from the
Company that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 3(m); provided, however, that
the indemnity agreement contained in this Section 5(a) shall not apply to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld.  The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of an Indemnified Party (as defined in Section 5(c) to this
Agreement) and shall survive the transfer of the Registrable Securities by the
Holders.

 

(b)                                 Indemnification by Holders. Each Holder
shall, severally and not jointly,

 

9

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

 

indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents and employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred,
arising out of or based upon any untrue statement of a material fact contained
in the Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto, or arising out of or based upon any
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that (i) such
untrue statement or omission is contained in or omitted from any information so
furnished in writing by such Holder to the Company specifically for inclusion in
the Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus, or in any amendment or supplement thereto, or to the extent
that such information relates to (x) such Holder and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus, or such form of prospectus or in any amendment or
supplement thereto or (y) such Holder’s proposed method of distribution of
Registrable Securities as set forth in Exhibit A (or as such Holder otherwise
informs the Company in writing) or (ii) in the case of an occurrence of an event
of the type described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(n), the use
by a Holder of an outdated or defective Prospectus after the delivery to the
Holder of written notice from the Company that the Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice contemplated in
Section 3(m); provided, however, that the indemnity agreement contained in this
Section 5(b) shall not apply to amounts paid in settlement of any Losses if such
settlement is effected without the prior written consent of the Holder, which
consent shall not be unreasonably withheld. Notwithstanding anything to the
contrary contained herein, the Holder shall be liable under this Section 5(b)
for only that amount as does not exceed the net proceeds to such Holder as a
result of the sale of Registrable Securities pursuant to such Registration
Statement.

 

(c)                                  Conduct of Indemnification Proceedings. If
any Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an “Indemnified Party”), such Indemnified Party promptly
shall notify the Person from whom indemnity is sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all reasonable fees and expenses incurred in connection
with defense thereof; provided, that the failure of any Indemnified Party to
give such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the

 

10

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

 

Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the reasonable expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding and does not impose any monetary
or other obligation or restriction on the Indemnified Party.

 

All reasonable fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party, which notice
shall be delivered no more frequently than on a monthly basis (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).

 

(d)                                 Contribution. If a claim for indemnification
under Section 5(a) or 5(b) is unavailable to an Indemnified Party because of a
failure or refusal of a governmental authority to enforce such indemnification
in accordance with its terms (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying, Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys’ or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for

 

11

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

 

in this Section was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Holder shall be
required to contribute under this Section 5(d) for only that amount as does not
exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

 

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. The indemnity and contribution agreements herein are in
addition to and not in diminution or limitation of any indemnification
provisions under the Purchase Agreement.

 

6.                                       Rule 144.

 

As long as any Holder owns Purchased Shares, Warrants or Warrant Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. As long as any Holder owns Purchased Shares, Warrants or Warrant Shares, if
the Company is not required to file reports pursuant to Section 13(a) or 15(d)
of the Exchange Act, it will prepare and furnish to the Holders and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Person to sell Purchased Shares and Warrant Shares without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including compliance with the provisions
of the Purchase Agreement relating to the transfer of the Purchased Shares and
Warrant Shares. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.

 

7.                                       Miscellaneous.

 

(a)                                  Remedies. In the event of a breach by the
Company or by a Holder, of any of their obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would not

 

12

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

 

provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.

 

(b)                                 No Inconsistent Agreements. Except as
otherwise disclosed in the Purchase Agreement, neither the Company nor any of
its subsidiaries is a party to an agreement currently in effect, nor shall the
Company or any of its subsidiaries, on or after the date of this Agreement,
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. Without limiting the generality of the foregoing,
without the written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted do not impair the rights of the
Holders set forth herein, and are not otherwise in conflict with the provisions
of this Agreement.  For avoidance of doubt, the subsequent grant of a right to
require that the Company file one or more registration statements shall not in
and of itself be deemed to impair the rights granted to the Holders hereunder.

 

(c)                                  Notice of Effectiveness. Within two (2)
Business Days after the Registration Statement which includes the Registrable
Securities is ordered effective by the Commission, the Company shall deliver,
and shall cause legal counsel for the Company to deliver, to the transfer agent
for such Registrable Securities (with copies to the Holders whose Registrable
Securities are included in such Registration Statement) confirmation that the
Registration Statement has been declared effective by the Commission in the form
attached hereto as Exhibit B.

 

(d)                                 Piggy-Back Registrations. If at any time
when there is not an effective Registration Statement covering all of the
Registrable Securities, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or its then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Holder of Registrable Securities
written notice of such determination and, if within seven (7) Business Days
after receipt of such notice, any such Holder shall so request in writing (which
request shall specify the Registrable Securities intended to be disposed of by
the Holder), the Company will cause the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the Holder, to the extent required to permit the disposition of the
Registrable Securities so to be registered, provided that if at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection

 

13

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

 

with such registration (but not from its obligation to pay expenses in
accordance with Section 4 hereof), and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities being registered pursuant to this Section 7(d) for the same period as
the delay in registering such other securities. The Company shall include in
such registration statement all or any part of such Registrable Securities such
Holder requests to be registered. In the case of an underwritten public
offering, if the managing underwriter(s) or underwriter(s) should reasonably
object to the inclusion of the Registrable Securities in such registration
statement, then if the Company after consultation with the managing underwriter
should reasonably determine that the inclusion of such Registrable Securities,
would materially adversely affect the offering contemplated in such registration
statement, and based on such determination recommends inclusion in such
registration statement of fewer or none of the Registrable Securities of the
Holders, then (x) the number of Registrable Securities of the Holders included
in such registration statement shall be reduced pro-rata among such Holders
(based upon the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided, however, that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction of
the number of Registrable Securities intended to be offered by the Holders than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).

 

(e)                                  Failure to File Registration Statement and
Other Events. The Company and the Holders agree that the Holders will suffer
damages if the Registration Statement is not filed on or prior to the
thirty-fifth (35th) day following the Closing Date and maintained in the manner
contemplated herein during the Effectiveness Period. The Company and the Holders
further agree that it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, if (i) the Registration Statement is not
filed on or prior to the thirty-fifth (35th) day following the Closing Date, or
(ii) the Company fails to file with the Commission a request for acceleration in
accordance with Rule 12d1-2 promulgated under the Exchange Act within five (5)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not
be “reviewed,” or not subject to further review, or (iii) the Registration
Statement is filed with and declared effective by the Commission but thereafter
ceases to be effective as to all Registrable Securities at any time prior to the
expiration of the Effectiveness Period due to an intentional and willful act by
the Company, without being succeeded immediately by a subsequent Registration
Statement filed with the Commission, except as otherwise permitted by this
Agreement, including pursuant to Section 3(n), or (iv) trading in the Common
Stock shall be suspended or if the Common Stock is delisted from any securities
exchange, quotation system, market or over-the-counter bulletin board on which
Registrable Securities are required hereunder to be listed (each an “Exchange”),
without immediately being listed on any other Exchange, for any reason for more
than one (1) Business Day, other than pursuant to Section 3(n), due to an
intentional and willful act by the Company, or (v) the rights of the Holders to
exercise into Warrant Shares are suspended for any reason due to an intentional
and willful act by the Company without the consent of the particular

 

14

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

 

Holder other than as set forth in the Purchase Agreement (any such failure or
breach being referred to as an “Event”), the Company shall pay in cash as
liquidated damages for such failure and not as a penalty to each Holder an
amount equal to one percent (1%) of such Holder’s pro rata share of the purchase
price paid by all Holders for Purchased Shares purchased and then outstanding
pursuant to the Purchase Agreement for the initial thirty (30) day period until
the applicable Event has been cured, which shall be pro rated for such periods
less than thirty (30) days and one percent (1%) of such Holder’s pro rata share
of the purchase price paid by all Holders for Purchased Shares purchased and
then outstanding pursuant to the Purchase Agreement for each subsequent thirty
(30) day period until the applicable Event has been cured which shall be pro
rated for such periods less than thirty days (the “Periodic Amount”). Payments
to be made pursuant to this Section 7(e) shall be due and payable immediately
upon demand in immediately available cash funds. The parties agree that the
Periodic Amount represents a reasonable estimate on the part of the parties, as
of the date of this Agreement, of the amount of damages that may be incurred by
the Holders if an Event as described herein has occurred.

 

(f)                                    Specific Enforcement, Consent to
Jurisdiction.

 

(i)                                     The Company and the Holders acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.

 

(ii)                                  Each of the Company and the Holders (i)
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts located in New York City, New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Holders consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 7(f) shall affect or limit any right to serve process in any other
manner permitted by law.

 

(g)                                 Amendments and Waivers. The provisions of
this Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of at least a majority of the Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of the Registrable Securities to which
such waiver or consent relates; provided, however,

 

15

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

 

that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

 

(h)                                 Notices. Any and all notices or other
communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earlier of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified for notice prior to 5:00
p.m., New York City time, on a Business Day, (ii) the next Business Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is not
a Business Day or later than 5:00 p.m., New York City time, on any date and
earlier than 11:59 p.m., New York City time, on such date, (iii) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service such as Federal Express or (iv) actual receipt by the party to
whom such notice is required to be given. The addresses for such communications
shall be with respect to each Holder at its address set forth under its name on
Schedule 1 attached hereto, or with respect to the Company, addressed to:

 

BioSante Pharmaceuticals, Inc.
111 Barclay Boulevard
Lincolnshire, Illinois 60069
Attention:  Stephen M. Simes, President and Chief Executive Officer
Facsimile No. (847) 478-9260

 

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to:

 

Oppenheimer Wolff & Donnelly LLP
Plaza VII Building, Suite 3300
45 South Seventh Street
Minneapolis, Minnesota 55402
Attention:  Amy E. Culbert, Esq.
Facsimile No.: (612) 607-7100

 

Copies of notices to any Holder shall be sent to the addresses, if any, listed
on Schedule 1 attached hereto.

 

(i)                                     Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and their
successors and permitted assigns and shall inure to the benefit of each Holder
and its successors and assigns; provided, that the Company may not assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of Holders holding at least 75% of the Registrable Securities;
and provided, further, that each Holder may assign its rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.

 

(j)                                     Assignment of Registration Rights. The
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in

 

16

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

 

accordance with the terms of this Agreement, shall be automatically assignable
by each Holder to any transferee of such Holder of all or a portion of the
Purchased Shares, the Warrants or the Registrable Securities if: (i) the Holder
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)
following such transfer or assignment the further disposition of such securities
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section 7(j),
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions of this Agreement, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Purchase Agreement. The
rights to assignment shall apply to the Holders (and to subsequent) successors
and assigns.

 

The Company may require, as a condition of allowing such assignment in
connection with a transfer of Purchased Shares, Warrants or Registrable
Securities (i) that the Holder or transferee of all or a portion of the
Purchased Shares, the Warrants or the Registrable Securities 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 (iii) that the transferee be an “accredited
investor” as defined in Rule 501(a) promulgated under the Securities Act.

 

(k)                                  Counterparts; Facsimile. This Agreement 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, 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 facsimile signature were the original
thereof.

 

(l)                                     Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of law thereof.

 

(m)                               Cumulative Remedies. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law;
provided, however, that the liquidated damages provided in Section 7(e) shall be
the Holders exclusive remedy in the event an Event as described in Section 7(e)
has occurred.

 

(n)                                 Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable in any respect, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an

 

17

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

 

alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(o)                                 Headings. The headings herein are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.

 

[signature page follows]

 

18

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.

 

COMPANY:

 

BIOSANTE PHARMACEUTICALS, INC.

 

 

By:

/s/ Stephen M. Simes

 

Name: Stephen M. Simes

Title:  President and Chief Executive Officer

 

19

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

 

 

PURCHASERS:

 

Print Exact Name:

  SCO Capital Partners LLC

 

 

By:

  /s/ Steven H. Rouhandeh

 

Name:

Steven H. Rouhandeh

Title:  Chairman

 

 

Print Exact Name:

  SDS Merchant Fund, LP

 

 

By:

  /s/ Scott E. Derby

 

Name:  Scott E. Derby

Title:  General Counsel

 

 

Print Exact Name:

  North Sound Legacy Fund LLC

 

 

By:

  /s/ Andrew Wilder

 

Name:  Andrew Wilder

Title:  Chief Financial Officer

 

 

Print Exact Name:

  North Sound Legacy Institutional Fund LLC

 

 

By:

  /s/ Andrew Wilder

 

Name:  Andrew Wilder

Title:  Chief Financial Officer

 

 

Print Exact Name:

  North Sound Legacy International Ltd.

 

 

By:

  /s/ Andrew Wilder

 

Name:  Andrew Wilder

Title:  Chief Financial Officer

 

 

Print Exact Name:

  Perceptive Life Sciences Master Fund, Ltd.

 

 

By:

  /s/ Andrew C. Sankin

 

Name:  Andrew C. Sankin

Title:  Director

 

20

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

 

Print Exact Name:

  Joseph Edelman

 

 

By:

  /s/ Joseph Edelman

 

Name:   Joseph Edelman

Title:

 

 

Print Exact Name:

  Multi-National Consulting Services, IV, LLC

 

 

By:

  /s/ Andrew C. Sankin

 

Name:  Andrew C. Sankin

Title:    Executive Director

 

 

Print Exact Name:

  Daniel B. Heller

 

 

By:

  /s/ Daniel B. Heller

 

Name:   Daniel B. Heller

Title: 

 

 

Print Exact Name:

  Paul Scharfer

 

 

By:

  /s/ Paul Scharfer

 

Name:   Paul Scharfer

Title: 

 

 

Print Exact Name:

  Quogue Capital LLC

 

 

By:

  /s/ Wayne Philip Rothbaum

 

Name:   Wayne Philip Rothbaum

Title:  Principal

 

 

Print Exact Name:

  Orion Biomedical Offshore Fund, LP

 

 

By:

  /s/ Lindsay A. Rosenwald, M.D.

 

Name:   Lindsay A. Rosenwald, M.D.

Title:  Managing Member of G.P.

 

21

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

 

 

Print Exact Name:

  Orion Biomedical Fund, LP

 

 

By:

  /s/ Lindsay A. Rosenwald, MD

 

Name:   Lindsay A. Rosenwald, MD

Title:  Managing Member of G.P.

 

 

Print Exact Name:

  Richard B. Stone

 

 

By:

  /s/ Richard B. Stone

 

Name:   Richard B. Stone

Title: 

 

 

Print Exact Name:

  Steven M. Oliveira 1998 Charitable Remainder Unitrust

 

 

By:

  /s/ Steven Oliveira

 

Name:   Steven Oliveira

Title:  Trustee

 

 

Print Exact Name:

  Morningstar Trust

 

 

By:

 

 

Name: 

Title: 

 

 

Print Exact Name:

  Victor A. Morgenstern

 

 

By:

 

 

Name: 

Title: 

 

 

Print Exact Name:

  Panacea Fund, LLC

 

 

By:

  /s/ William Harris Investors, Inc.

 

Name:   Jack Polsky

Title:  Chief Executive Officer

 

22

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

 

Print Exact Name:

  Irving B. Harris Revocable Trust

 

 

By:

  /s/ Irving B. Harris

 

Name:   Irving B. Harris

Title:  Trustee

 

 

Print Exact Name:

  Virginia H. Polsky Trust

 

 

By:

  /s/ Jack R. Polsky

 

Name:   Jack R. Polsky

By:  Delegation of Authority dated 6/6/96

 

 

Print Exact Name:

  Roxanne H. Frank Trust

 

 

By:

  /s/ Jack R. Polsky

 

Name:   Jack R. Polsky

By:  Delegation of Authority dated 12/3/99

 

 

By:

  /s/ Jerome Kahn, Jr.

 

Name:   Jerome Kahn, Jr.

By:  Delegation of Authority dated 12/3/99

 

 

Print Exact Name:

  Couderay Partners

 

 

By:

  /s/ Michael S. Resnick

 

Name:   Michael S. Resnick

Title:  Management Agent

 

 

By:

  /s/ Jerome Kahn, Jr.

 

Name:   Jerome Kahn, Jr.

Title:   Co-Managing Agent

 

 

Print Exact Name:

  JO & Co.

 

 

By:

  /s/ Ross J. Mangano

 

Name:   Ross J. Mangano

Title:  Partner

 

23

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

 

Print Exact Name:

  Crestview Capital Fund II, LP

 

 

By:

  /s/ Richard Levy

 

Name:   Richard Levy

Title:  Managing Member

 

 

Print Exact Name:

  James S. Levy Living Trust

 

 

By:

  /s/ James S. Levy

 

Name:   James S. Levy

Title:

 

 

Print Exact Name:

  Mitchell I. Dolins as Trustee of theMitchell I. Dolins Revocable Trust U/A/D
12/24/91

 

 

By:

  /s/ Mitchell I. Dolins

 

Name:   Mitchell I. Dolins

Title:

 

 

Print Exact Name:

  Bradley S. Glaser and Amy E. Glaser, as Tenant by the Entirety

 

 

By:

  /s/ Amy E. Glaser

 

Name:   Amy E. Glaser

Title:

 

 

By:

  /s/ Bradley S. Glaser

 

Name:   Bradley S. Glaser

Title:

 

 

Print Exact Name:

  Dr. Herman S. Graf Zu Munster

 

 

By:

  Herman S. Graf Zu Munster

 

Name:  Herman S. Graf Zu Munster

Title:

 

 

Print Exact Name:

  Richard Sheiner

 

 

By:

  /s/ Richard Sheiner

 

Name:   Richard Sheiner

Title:

 

24

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

 

Print Exact Name:

  Roscoe F. Nicholson II for Roscoe F. Nicholson II Profit Sharing Plan

 

 

By:

  /s/ Roscoe F.  Nicholson II

 

Name:   Roscoe F.  Nicholson II

Title:

 

 

Print Exact Name:

  Shirley F. Nicholson for IRA Shirley M. Nicholson

 

 

By:

  /s/ Shirley M. Nicholson

 

Name:   Shirley M. Nicholson

Title:

 

 

Print Exact Name:

  Dr. Terry L. Lazarus

 

 

By:

  /s/ Terry Lazarus, D.D.S.

 

Name:   Terry L. Lazarus

Title:  Private Investor

 

 

Print Exact Name:

  Charles Burns

 

 

By:

  /s/ Charles Burns

 

Name:   Charles Burns

Title:

 

 

Print Exact Name:

  John E. Urheim

 

 

By:

  /s/ John E. Urheim

 

Name:   John E. Urheim

Title:

 

 

Print Exact Name:

  Stephen M. Simes, Rev. Trust U/A/D. 7/6/98

 

 

By:

  /s/ Stephen M. Simes

 

Name:   Stephen M. Simes

Title:  Trustee

 

25

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

 

 

Print Exact Name:

  Leah M. Lehman

 

 

By:

  /s/ Leah M. Lehman

 

Name:   Leah M. Lehman

Title:

 

 

Print Exact Name:

  Phillip B. Donenberg

 

 

By:

  /s/ Phillip B. Donenberg

 

Name:   Phillip B. Donenberg

Title:

 

 

[Omnibus BioSante Pharmaceuticals, Inc. Investor Rights Agreement Signature
Page]

 

26

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

 

SCHEDULE 1

 

PURCHASERS

 

Name and Address

 

Copy of Notice to:

 

 

 

SCO Capital Partners LLC

 

Michael Grundei, Esq.

1285 Avenue of the Americas, 35th Floor

 

Wiggin & Dana LLP

New York, NY 10019

 

400 Atlantic Street

Steven H. Rouhandeh

 

Stamford, CT  06901

T: 212-554-4158

 

Tel: 203-363-7630

F: 212-554-4058

 

Fax: 203-363-7676

Srouhandeh@SCOGroup.com

 

Email: mgrundei@wiggin.com

 

 

 

SDS Merchant Fund, LP

 

 

53 Forest Ave., 2nd Floor

 

 

Old Greenwich, CT 06870

 

 

Attn: Scott Derby

 

 

T: 203-967-5880

 

 

F: 203-967-5851

 

 

scott@sdscapital.com

 

 

 

 

 

North Sound Legacy Fund LLC

 

 

53 Forest Avenue

 

 

Suite 202

 

 

Old Greenwich, CT 06870

 

 

Attn: Andrew Wilder

 

 

T: 203-967-5700

 

 

F: 203-967-5701

 

 

Andrew@northsound.com

 

 

 

 

 

North Sound Legacy Institutional Fund LLC

 

 

53 Forest Avenue

 

 

Suite 202

 

 

Old Greenwich, CT 06870

 

 

Attn: Andrew Wilder

 

 

T: 203-967-5700

 

 

F: 203-967-5701

 

 

Andrew@northsound.com

 

 

 

27

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

 

Name and Address

 

Copy of Notice to:

 

 

 

North Sound Legacy International Ltd.

 

 

53 Forest Avenue

 

 

Suite 202

 

 

Old Greenwich, CT 06870

 

 

Attn: Andrew Wilder

 

 

T: 203-967-5700

 

 

F: 203-967-5701

 

 

Andrew@northsound.com

 

 

 

 

 

Perceptive Life Sciences Master Fund, Ltd.

 

 

5437 Connecticut Ave., NW

 

 

Suite 100

 

 

Washington, DC  20015

 

 

Attn: Andrew Sankin

 

 

P: 202-537-0029

 

 

F: 202-537-0030

 

 

sankin@hedgesource.org

 

 

 

 

 

 

 

 

Deliver Securities to:

 

 

 

 

 

Perceptive Life Sciences Master Fund, Ltd.

 

 

c/o First New York Securities

 

 

850 Third Ave, 17th Floor

 

 

New York, NY 10022

 

 

Attn: Kenny Kountouras

 

 

 

 

 

Joseph Edelman

 

 

300 Central Park West

 

 

Apt. 25-G

 

 

New York, NY 10024

 

 

T: 202-537-0029

 

 

F: 202-537-0030

 

 

sankin@hedgesource.org

 

 

 

 

 

Deliver Securities to:

 

 

 

 

 

Northeast Securities

 

 

2425 Post Road

 

 

Southport, CT 06890

 

 

Attn: Nick DiFalco

 

 

 

28

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

 

Name and Address

 

Copy of Notice to:

 

 

 

Multi-National Consulting Services, IV, LLC

 

 

5437 Connecticut Ave., NW

 

 

Suite 100

 

 

Washington, DC  20015

 

 

Attn: Andrew Sankin

 

 

P: 202-537-0029

 

 

F: 202-537-0030

 

 

sankin@hedgesource.org

 

 

 

 

 

Deliver Securities to:

 

 

Multi-National Consulting Services, IV, LLC

 

 

c/o Punk Ziegel

 

 

520 Madison Avenue

 

 

7th Floor

 

 

New York, NY  10022

 

 

Attn: John Bligh

 

 

 

 

 

Daniel B. Heller

 

 

48 CardinalFlower Lane

 

 

West Windsor, NJ 08550

 

 

T: 609-448-8760

 

 

F: 212-331-6777

 

 

d.heller@fnysllc.com

 

 

 

 

 

Paul Scharfer

 

 

265 East 66th Street, Apt. 6C

 

 

New York, NY 10021

 

 

T: 917-763-2015

 

 

F:

 

 

PSCHARFER@aol.com

 

 

 

 

 

Quogue Capital LLC

 

 

1285 Avenue of the Americas, 35th Floor

 

 

New York, NY 10019

 

 

Attn: Wayne Philip Rothbaum

 

 

T: 212-554-4475

 

 

F: 212-554-4450

 

 

wrothbaum@quoguecapital.com

 

 

 

29

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

 

Name and Address

 

Copy of Notice to:

 

 

 

Orion Biomedical Offshore Fund, LP

 

 

787 Seventh Avenue, 48th Floor

 

 

New York, NY 10019

 

 

Attn: Lindsay A. Rosenwald, MD

 

 

T: 212-554-4284

 

 

F: 212-554-4314

 

 

jkazam@paramountcapital.com

 

 

 

 

 

Orion Biomedical Fund, LP

 

 

787 Seventh Avenue, 48th Floor

 

 

New York, NY 10019

 

 

Attn: Lindsay A. Rosenwald, MD

 

 

T: 212-554-4284

 

 

F: 212-554-4314

 

 

jkazam@paramountcapital.com

 

 

 

 

 

Richard Stone

 

 

44 West 77th Street

 

 

New York, NY 10024

 

 

T: 917-502-2809

 

 

F: 212-750-7277

 

 

 

 

 

Steven M. Oliveira 1998 Charitable Remainder Unitrust

 

 

18 Fieldstone Court

 

 

New City, NY 10956

 

 

T: 845-634-5620

 

 

F:

 

 

Steve_oliveira@yahoo.com

 

 

 

 

 

Morningstar Trust

 

 

By Fay Morgenstern, Trustee

 

 

106 Vine Avenue

 

 

Highland Park, IL  60035

 

 

T: 847-432-8632

 

 

F:

 

 

vmstar@msn.com

 

 

 

30

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

 

Name and Address

 

Copy of Notice to:

 

 

 

Victor A. Morgenstern

 

 

106 Vine Avenue

 

 

Highland Park, IL  60035

 

 

T: 847-432-8632

 

 

F:

 

 

vmstar@msn.com

 

 

 

 

 

Panacea Fund, LLC

 

 

c/o William Harris Investors, Inc.

 

 

2 North LaSalle Street, Suite 400

 

 

Chicago, IL  60602

 

 

T: 312-621-0590

 

 

F: 312-621-0984

 

 

 

 

 

Irving B. Harris Revocable Trust

 

 

c/o William Harris Investors, Inc.

 

 

2 N. LaSalle Street, Suite 400

 

 

Chicago, IL  60602

 

 

T: 312-621-0590

 

 

F: 312-621-0984

 

 

 

 

 

Virginia H. Polsky Trust

 

 

c/o William Harris Investors, Inc.

 

 

2 N. LaSalle Street, Suite 400

 

 

Chicago, IL  60602

 

 

T: 312-621-0590

 

 

F: 312-621-0984

 

 

 

 

 

Roxanne H. Frank Trust

 

 

c/o William Harris Investors, Inc.

 

 

2 N. LaSalle Street, Suite 400

 

 

Chicago, IL  60602

 

 

T: 312-621-0590

 

 

F: 312-621-0984

 

 

 

31

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

 

Name and Address

 

Copy of Notice to:

 

 

 

Couderay Partners

 

 

c/o William Harris Investors, Inc.

 

 

2 N. LaSalle Street, Suite 400

 

 

Chicago, IL  60602

 

 

T: 312-621-0590

 

 

F: 312-621-0984

 

 

 

 

 

JO & Co

 

 

P.O. Box 1655

 

 

South Bend, IN  46634

 

 

Attn: Ross Mangano

 

 

T: 574-232-8213

 

 

F: 574-232-8223

 

 

 

 

 

Crestview Capital Fund II, LP

 

 

95 Revere Drive, Suite F

 

 

Northbrook, IL 60062

 

 

Attn: Richard Levy

 

 

T: 847-559-0060

 

 

F: 847-559-5807

 

 

Richard@crestviewcap.com

 

 

 

 

 

James S. Levy Living Trust

 

 

1349 N. Thatcher Avenue

 

 

River Forest, IL  60305

 

 

Attn: James S. Levy

 

 

T: 312-595-6475

 

 

F: 312-595-6139

 

 

jlevy@mesirowfinancial.com

 

 

 

 

 

Mitchell I. Dolins as Trustee of the

 

 

Mitchell I. Dolins Revocable Trust

 

 

U/A/D 12/24/91

 

 

427 Brierhill Road

 

 

Deerfield, IL  60015

 

 

T: 847-940-1228

 

 

F: 847-940-1253

 

 

mickydd24@aol.com

 

 

 

32

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

 

Name and Address

 

Copy of Notice to:

 

 

 

Bradley S. Glaser and Amy E. Glaser,

 

 

as Tenant by the Entirety

 

 

1204 Berans Road

 

 

Owings Mills, MD  21117

 

 

T: 410-252-2766

 

 

F: 410-296-0973

 

 

bglaser@vanguardequities.com

 

 

 

 

 

Dr. Hermann S. Graf Zu Munster

 

 

Umweger Str. 66

 

 

D-76488 Baden-Baden

 

 

Germany

 

 

T: 011-49 7223 60014

 

 

F: 011-49 7223 60016

 

 

hs.muenster@t-online.de

 

 

 

 

 

Richard Sheiner

 

 

4771 Trenton Court

 

 

Long Grove, IL  60047

 

 

T: 312-364-8752

 

 

F: 847-913-9256

 

 

deployant@aol.com

 

 

 

33

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

 

Name and Address

 

Copy of Notice to:

 

 

 

Roscoe F. Nicholson II for Roscoe F. Nicholson II Profit Sharing Plan (Mesirow
Financial Inc.)

 

 

1222 Forest Hill Drive

 

 

Hendersonville, NC  28791

 

 

T: 828-692-4433

 

 

F: 828-693-9032

 

 

roscoeii@ioa.com

 

 

 

 

 

Shirley M. Nicholson

 

 

for IRA Shirley M. Nicholson at Mesirow Financial

 

 

1222 Forest Hill Drive

 

 

Hendersonville, NC  28791

 

 

T: 828-692-4433

 

 

F: 828-693-9032

 

 

roscoeii@ioa.com

 

 

 

 

 

Dr. Terry L. Lazarus

 

 

1951-A Weston Road

 

 

Weston, Ontario M9N 1W8

 

 

Canada

 

 

T: 416-241-3472

 

 

F:

 

 

tllaz@rogers.com

 

 

 

 

 

Charles Burns

 

 

245 Waterloo Avenue

 

 

Toronto, Ontario M3H 3Z5

 

 

Canada

 

 

T: 416-398-5995

 

 

F: 905-762-2386

 

 

caburns@rogers.com

 

 

 

34

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

 

Name and Address

 

Copy of Notice to:

 

 

 

John E. Urheim

 

 

5417 Taylor Lane

 

 

Fort Collins, CO  80528

 

 

T: 970-282-8108

 

 

F: 970-282-8384

 

 

jeurheim@aol.com

 

 

 

 

 

Stephen M. Simes, Rev. Trust U/A/D 7/6/98

 

 

Stephen M. Simes, Trustee

 

 

111 Barclay Blvd, Suite 280

 

 

Lincolnshire, IL  60069

 

 

T: 847-478-0500 x100

 

 

F: 847-478-9260

 

 

ssimes@biosantepharma.com

 

 

 

 

 

Leah M. Lehman

 

 

14308 W. Braemore Close

 

 

Libertyville, IL  60048

 

 

T: 847-816-8921

 

 

F: 847-478-9263

 

 

llehman@biosantepharma.com

 

 

 

 

 

Phillip B. Donenberg

 

 

2090 Sheridan Road

 

 

Buffalo Grove, IL  60089

 

 

T: 847-821-0922

 

 

F: 847-478-9263

 

 

donenber@biosantepharma.com

 

 

 

 

 

SCO Securities LLC

 

Michael Grundei, Esq.

1285 Avenue of the Americas, 35th Floor

 

Wiggin & Dana LLP

New York, NY 10019

 

400 Atlantic Street

Steven H. Rouhandeh

 

Stamford, CT  06901

T: 212-554-4158

 

Tel: 203-363-7630

F: 212-554-4058

 

Fax: 203-363-7676

Srouhandeh@SCOGroup.com

 

Email: mgrundei@wiggin.com

 

35

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

 

EXHIBIT A

 

PLAN OF DISTRIBUTION

 

We are registering the shares of common stock on behalf of the selling security
holders. Sales of shares may be made by selling security holders, including
their respective donees, transferees, pledgees or other successors-in-interest
directly to purchasers or to or through underwriters, broker-dealers or through
agents. Sales may be made from time to time on the over-the-counter market or
otherwise, at market prices prevailing at the time of sale, at prices related to
market prices, or at negotiated or fixed prices. The shares may be sold by one
or more of, or a combination of, the following:

 

•                                          a block trade in which the
broker-dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction (including crosses in which the same broker acts as agent for both
sides of the transaction);

 

•                                          purchases by a broker-dealer as
principal and resale by such broker-dealer, including resales for its account,
pursuant to this prospectus;

 

•                                          ordinary brokerage transactions and
transactions in which the broker solicits purchases;

 

•                                          through options, swaps or
derivatives;

 

•                                          in privately negotiated transactions;

 

•                                          in making short sales or in
transactions to cover short sales; and

 

•                                          put or call option transactions
relating to the shares.

 

The selling security holders may effect these transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. These broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling security holders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The selling security
holders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities.

 

The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
security holders. The selling security holders may also enter into options or
other transactions with broker-dealers or other financial institutions which
require the delivery of

 

36

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

 

shares offered by this prospectus to those broker-dealers or other financial
institutions. The broker-dealer or other financial institution may then resell
the shares pursuant to this prospectus (as amended or supplemented, if required
by applicable law, to reflect those transactions).

 

The selling security holders and any broker-dealers that act in connection with
the sale of shares may be deemed to be “underwriters” within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling security holders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares against liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify each of the selling security holders
and each selling security holder has agreed, severally and not jointly, to
indemnify us against some liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.

 

The selling security holders will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling security
holders that the anti-manipulative provisions of Regulation M promulgated under
the Securities Exchange Act of 1934 may apply to their sales in the market.

 

Selling security holders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of Rule 144.

 

Upon being notified by a selling security holder that a material arrangement has
been entered into with a broker-dealer for the sale of shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer, we will file a supplement to this prospectus, if
required pursuant to Rule 424(b) under the Securities Act, disclosing:

 

•                                          the name of each such selling
security holder and of the participating broker-dealer(s);

 

•                                          the number of shares involved;

 

•                                          the initial price at which the shares
were sold;

 

•                                          the commissions paid or discounts or
concessions allowed to the broker-dealer(s), where applicable;

 

•                                          that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this prospectus; and

 

•                                          other facts material to the
transactions.

 

In addition, if required under applicable law or the rules or regulations of the

 

37

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

 

Commission, we will file a supplement to this prospectus when a selling security
holder notifies us that a donee or pledgee intends to sell more than 500 shares
of common stock.

 

We are paying all expenses and fees customarily paid by the issuer in connection
with the registration of the shares. The selling security holders will bear all
brokerage or underwriting discounts or commissions paid to broker-dealers in
connection with the sale of the shares.

 

38

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

 

EXHIBIT B

 

FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

 

[Name and Address of Transfer Agent]

 

Re:  BioSante Pharmaceuticals, Inc.

 

Dear [            ]:

 

We are counsel to BioSante Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and have represented the Company in connection with that certain
Common Stock and Warrant Purchase Agreement (the “Purchase Agreement”) dated as
of                                    , 2003 by and among the Company and the
buyers named therein (collectively, the “Holders”) pursuant to which the Company
issued to the Holders shares of its Common Stock, par value $0.0001 per share
(the “Common Stock”), and warrants to purchase shares of the Common Stock (the
“Warrants”). Pursuant to the Purchase Agreement, the Company has also entered
into an Investor Rights Agreement with the Holders (the “Investor Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the shares of Common Stock issued pursuant to the Purchase Agreement
and the Common Stock issuable upon exercise of the Warrants, under the
Securities Act of 1933, as amended (the “1933 Act”). In connection with the
Company’s obligations under the Investor Rights Agreement,
on                               , 2003, the Company filed a Registration
Statement on Form S-     (File No. 333-                           ) (the
“Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names each of the Holders as
a selling securityholder thereunder.

 

In connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us 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 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.

 

Very truly yours,

 

 

By:

 

 

cc:  [LIST NAMES OF HOLDERS]

 

39

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