formofoption.htm


    FORM
OF INCENTIVE STOCK OPTION AGREEMENT

    


    


    THIS INCENTIVE STOCK OPTION AGREEMENT
is entered into and effective as of this ____  day of ____________,
______ (the “Date of Grant”), by and between BioSante Pharmaceuticals, Inc. (the
“Company”) and ­­­­_________________ (the
“Optionee”).

    


    A.           The
Company has adopted the BioSante Pharmaceuticals, Inc. 2008 Stock Incentive Plan
(the “Plan”) authorizing the Board of Directors (the “Board”) of the Company, or
a committee as provided for in the Plan (the Board or such a committee to be
referred to as the “Committee”), to grant incentive stock options to employees
of the Company and its Subsidiaries (as defined in the Plan).

    


    B.           The
Company desires to give the Optionee an inducement to acquire a proprietary
interest in the Company and an added incentive to advance the interests of the
Company by granting to the Optionee an option to purchase shares of common stock
of the Company pursuant to the Plan.

    


    Accordingly, the parties agree as
follows:

    


    1. Grant of
Option.

     

    The Company hereby grants to the
Optionee the right, privilege, and option (the “Option”) to purchase
_______________ (______) shares (the “Option Shares”) of the Company’s common
stock, $0.0001 par value (the “Common Stock”), according to the terms and
subject to the conditions hereinafter set forth and as set forth in the
Plan.  Subject to Section 9 of this Agreement, the Option is intended
to be an “incentive stock option,” as that term is used in Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”).

    


    2. Option Exercise
Price.

     

    The per share price to be paid by
Optionee in the event of an exercise of the Option will be $______, which
represents 100% of the Fair Market Value of a share of Common Stock on the Date
of Grant, as determined in accordance with the Plan.

    


    3. Duration of Option and Time
of Exercise.

     

    3.1 Initial Period of
Exercisability.  The Option will become exercisable with
respect to the Option Shares [immediately/in _____
installments].  [The following table sets forth the initial dates of
exercisability of each installment and the number of Option Shares as to which
this Option will become exercisable on such dates:

     

    Exercisability                                                                        Available for
Exercise 

    


    ___________________                                                                                _______

    ___________________                                                                                _______

    ___________________                                                                                _______

    ___________________                                                                                _______]

    


    [The
foregoing rights to exercise this Option will be cumulative with respect to the
Option Shares becoming exercisable on each such date.]  In no event
will this Option be exercisable after, and this Option will become void and
expire as to all unexercised Option Shares at 5:00 p.m. Lincolnshire,
Illinois  time on ______________________ (the “Time of
Termination”).

    


    3.2     Termination of
Employment.

     

    (a) Termination Due to Death,
Disability or Retirement.  In the event the Optionee’s
employment with the Company and all Subsidiaries is terminated by reason of
death, Disability or Retirement, this Option will remain exercisable, to the
extent exercisable as of the date of such termination, for a period of one year
after such termination (but in no event after the Time of
Termination).

     

    (b) Termination for Reasons
Other Than Death, Disability or Retirement.  In the event that
the Optionee’s employment with the Company and all Subsidiaries is terminated
for any reason other than death, Disability or Retirement, or the Optionee is in
the employ of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the
Company (unless the Optionee continues in the employ of the Company or another
Subsidiary), all rights of the Optionee under the Plan and this Agreement will
immediately terminate without notice of any kind, and this Option will no longer
be exercisable; provided, however, that if such termination is due to any reason
other than termination by the Company or any Subsidiary for “cause” (as defined
in the Plan), this Option will remain exercisable to the extent exercisable as
of such termination for a period of three months after such termination (but in
no event after the Time of Termination).

     

    (c) Breach of Employment,
Consulting, Confidentiality or Non-Compete
Agreements.  Notwithstanding anything in this Agreement to the
contrary and in addition to the rights of the Committee under Section 12.4 of
the Plan, in the event that the Optionee materially breaches the terms of any
employment, consulting, confidentiality or non-compete agreement entered into
with the Company or any Subsidiary (including an employment, consulting,
confidentiality or non-compete agreement made in connection with the grant of
the Option), whether such breach occurs before or after termination of the
Optionee’s employment with the Company or any Subsidiary, the Committee in its
sole discretion may require the Optionee to surrender shares of Common Stock
received, and to disgorge any profits (however defined by the Committee), made
or realized by the Optionee in connection with this Option or any shares issued
upon the exercise or vesting of this Option.

     

    3.3 Change in
Control.  If a Change in Control (as defined in the Plan) of
the Company occurs, this Option will become immediately exercisable in full and
will remain exercisable until the Time of Termination.  In addition,
if a Change in Control of the Company occurs, the Committee, in its sole
discretion and without the consent of the Optionee, may determine that the
Optionee will receive, with respect to some or all of the Option Shares, as of
the effective date of any such Change in Control of the Company, cash in an
amount equal to the excess of the Fair Market Value (as defined in the Plan) of
such Option Shares immediately prior to the effective date of such Change in
Control of the Company over the option exercise price per share of this Option
(or, in the event that there is no excess, that this Option will be
terminated).

     

    4. Manner of Option
Exercise.

     

    4.1 Notice.  This
Option may be exercised by the Optionee in whole or in part from time to time,
subject to the conditions contained in the Plan and in this Agreement, by
delivery, in person, by facsimile or electronic transmission or through the
mail, to the Company at its principal executive office in Lincolnshire,
Illinois, of a written notice of exercise.  Such notice must be in a
form satisfactory to the Committee, must identify the Option, must specify the
number of Option Shares with respect to which the Option is being exercised, and
must be signed by the person or persons so exercising the
Option.  Such notice must be accompanied by payment in full of the
total purchase price of the Option Shares purchased.  In the event
that the Option is being exercised, as provided by the Plan and Section 3.2
above, by any person or persons other than the Optionee, the notice must be
accompanied by appropriate proof of right of such person or persons to exercise
the Option.  As soon as practicable after the effective exercise of
the Option, the Optionee will be recorded on the stock transfer books of the
Company as the owner of the Option Shares purchased, and the Company will
deliver to the Optionee certificated or uncertificated (“book entry”)
shares.  In the event that the Option is being exercised, as provided
by resolutions of the Committee and Section 4.2 below, by tender of a Broker
Exercise Notice, the Company will deliver such shares directly to the Optionee’s
broker or dealer or their nominee.

     

    4.2 Payment.

     

    (a) At the
time of exercise of this Option, the Optionee must pay the total purchase price
of the Option Shares to be purchased entirely in cash (including check, bank
draft or money order); provided, however, that the Committee, in its sole
discretion and upon terms and conditions established by the Committee, may allow
such payments to be made, in whole or in part, by (i) tender of a Broker
Exercise Notice; (ii) by tender, or attestation as to ownership, of Previously
Acquired Shares that are acceptable to the Committee; (iii) by a “net exercise”
of the Option (as described below);  or  (iv) by a
combination of such methods.

     

    (b) In the
event the Optionee is permitted to pay the total purchase price of this Option
in whole or in part with Previously Acquired Shares, the value of such shares
will be equal to their Fair Market Value on the date of exercise of this
Option.

     

    (c) In the
case of a “net exercise” of an Option, the Company will not require a payment of
the exercise price of the Option from the Optionee but will reduce the number of
shares of Common Stock issued upon the exercise by the largest number of whole
shares that has a Fair Market Value on the exercise date that does not exceed
the aggregate exercise price for the shares exercised under this
method.

     

    (d) Shares of
Common Stock will no longer be outstanding under this Option (and will therefore
not thereafter be exercisable) following the exercise of such Option to the
extent of (i) shares used to pay the exercise price of an Option under the “net
exercise,” (ii) shares actually delivered to the Optionee as a result of such
exercise and (iii) any shares withheld for purposes of tax
withholding.

     

    5. Rights of Optionee;
Transferability.

     

    5.1 Employment.  Nothing
in this Agreement will interfere with or limit in any way the right of the
Company or any Subsidiary to terminate the employment of the Optionee at any
time, nor confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary at any particular position or rate of pay or for any
particular period of time.

     

    5.2 Rights as a
Stockholder.  The Optionee will have no rights as a stockholder
of the Company unless and until all conditions to the effective exercise of this
Option (including, without limitation, the conditions set forth in Sections 4
and 6 of this Agreement) have been satisfied and the Optionee has become the
holder of record of such shares.  No adjustment will be made for
dividends or distributions with respect to this Option as to which there is a
record date preceding the date the Optionee becomes the holder of record of such
shares, except as may otherwise be provided in the Plan or determined by the
Committee in its sole discretion.

     

    5.3 Restrictions on
Transfer.  Except pursuant to testamentary will or the laws of
descent and distribution or as otherwise expressly permitted by the Plan, no
right or interest of the Optionee in this Option prior to exercise may be
assigned or transferred, or subjected to any lien, during the lifetime of the
Optionee, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise.  The Optionee will, however, be
entitled to designate a beneficiary to receive this Option upon such Optionee’s
death, and, in the event of the Optionee’s death, exercise of this Option (to
the extent permitted pursuant to Section 3.2(a) of this Agreement) may be made
by the Optionee’s legal representatives, heirs and legatees.

     

    6. Withholding
Taxes.

     

    The Company is entitled to (a)
withhold and deduct from future wages of the Optionee (or from other amounts
that may be due and owing to the Optionee from the Company or a Subsidiary), or
make other arrangements for the collection of, all amounts the Company
reasonably determines are necessary to satisfy any and all federal, foreign,
state and local withholding and employment-related tax requirements attributable
to the Option, including, without limitation, the grant, exercise or vesting of,
this Option or a disqualifying disposition of any Option Shares; (b) withhold
cash paid or payable or shares of Common Stock from the shares issued or
otherwise issuable to the Optionee in connection with this Option; or (c)
require the Optionee promptly to remit the amount of such withholding to the
Company before taking any action, including issuing any shares of Common Stock,
with respect to this Option.  Shares of Common Stock issued or
otherwise issuable to the Optionee in connection with this Option that gives
rise to the tax withholding obligation that are withheld for purposes of
satisfying the Optionee’s withholding or employment-related tax obligation will
be valued at their Fair Market Value on the Tax Date.

    


    7. Adjustments.

     

    In the event of any reorganization,
merger, consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin-off), or any other similar change in
the corporate structure or shares of the Company, the Committee (or, if the
Company is not the surviving corporation in any such transaction, the board of
directors of the surviving corporation), in order to prevent dilution or
enlargement of the rights of the Optionee, will make appropriate adjustment
(which determination will be conclusive) as to the number and kind of securities
or other property (including cash) subject to, and the exercise price of, this
Option.

    


    8. Stock Subject to
Plan.

     

    The Option and the Option Shares
granted and issued pursuant to this Agreement have been granted and issued
under, and are subject to the terms of, the Plan.  The terms of the
Plan are incorporated by reference in this Agreement in their entirety, and the
Optionee, by execution of this Agreement, acknowledges having received a copy of
the Plan.  The provisions of this Agreement will be interpreted as to
be consistent with the Plan, and any ambiguities in this Agreement will be
interpreted by reference to the Plan.  In the event that any provision
of this Agreement is inconsistent with the terms of the Plan, the terms of the
Plan will prevail.

    


    9. Incentive Stock Option
Limitations.

     

    9.1 Limitation on
Amount.  To the extent that the aggregate Fair Market Value
(determined as of the date of grant) of the shares of Common Stock with respect
to which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by the Optionee during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or parent corporation of the Company (within the meaning of the
Code)) exceeds $100,000 (or such other amount as may be prescribed by the Code
from time to time), such excess incentive stock options will be treated as
non-statutory stock options in the manner set forth in the Plan.

     

    9.2 Limitation on
Exercisability; Disposition of Option Shares.  Any incentive
stock option that remains unexercised more than one year following termination
of employment by reason of death or disability or more than three months
following termination for any reason other than death or disability will
thereafter be deemed to be a non-statutory stock option.  In addition,
in the event that a disposition (as defined in Section 424(c) of the Code) of
shares of Common Stock acquired pursuant to the exercise of an incentive stock
option occurs prior to the expiration of two years after its date of grant or
the expiration of one year after its date of exercise (a “disqualifying
disposition”), such incentive stock option will, to the extent of such
disqualifying disposition, be treated in a manner similar to a non-statutory
stock option.

     

    9.3 No Representation or
Warranty.  Section 422 of the Code and the rules and
regulations thereunder are complex, and neither the Plan nor this Agreement
purports to summarize or otherwise set forth all of the conditions that need to
be satisfied in order for this Option to qualify as an incentive stock
option.  In addition, this Option may contain terms and conditions
that allow for exercise of this Option beyond the periods permitted by Section
422 of the Code, including, without limitation, the periods described in Section
9.2 of this Agreement.  Accordingly, the Company makes no
representation or warranty regarding whether the exercise of this Option will
qualify as the exercise of an incentive stock option, and the Company recommends
that the Optionee consult with the Optionee’s own advisors before making any
determination regarding the exercise of this Option or the sale of the Option
Shares. 

     

    10. Miscellaneous.

     

    10.1 Binding
Effect.  This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this
Agreement.

     

    10.2 Governing
Law.  This Agreement and all rights and obligations under this
Agreement will be construed in accordance with the Plan and governed by the laws
of the State of Illinois, without regard to conflicts of laws
provisions.  Any legal proceeding related to this Agreement will be
brought in an appropriate Illinois court, and the parties to this Agreement
consent to the exclusive jurisdiction of the court for this
purpose.

     

    10.3 Entire
Agreement.  This Agreement and the Plan set forth the entire
agreement and understanding of the parties to this Agreement with respect to the
grant and exercise of this Option and the administration of the Plan and
supersede all prior agreements, arrangements, plans and understandings relating
to the grant and exercise of this Option and the administration of the
Plan.

     

    10.4 Amendment and
Waiver.  Other than as provided in the Plan, this Agreement may
be amended, waived, modified or canceled only by a written instrument executed
by the parties to this Agreement or, in the case of a waiver, by the party
waiving compliance.

     

    10.5 Construction.  Wherever
possible, each provision of this Agreement will be interpreted so that it is
valid under the applicable law.  If any provision of this Agreement is
to any extent invalid under the applicable law, that provision will still be
effective to the extent it remains valid.  The remainder of this
Agreement also will continue to be valid, and the entire Agreement will continue
to be valid in other jurisdictions.

     

    10.6 Counterparts.  For
convenience of the parties hereto, this Agreement may be executed in any number
of counterparts, each such counterpart to be deemed an original instrument, and
all such counterparts together to constitute the same agreement.

     

    


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    The parties to this Agreement have
executed this Agreement effective the day and year first above
written.

    


    BIOSANTE PHARMACEUTICALS,
INC.

    


    By                                                                  

    


    Its                                                                  

    


    


    


    


    
      	
              By
      execution of this Agreement,

            	
              OPTIONEE

            


    

    the
Optionee acknowledges having

    received
a copy of the
Plan.                                                                         

    
      	
               
      

            	
                (Signature)

            


    

    


    


    
      	
               
      

            	
                (Name
      and Address)