<PAGE>

                   ----------------------------------------------
                                  SUPPLY AGREEMENT

                                      between

                          BIOSANTE  PHARMACEUTICALS, INC.

                                        and

                              PERMATEC TECHNOLOGIE, AG

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

[PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.  A COPY OF THIS EXHIBIT INTACT HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
<PAGE>

                                 TABLE OF CONTENTS

<TABLE>
<S>                                                                       <C>
Article 1 - Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .1

Article 2 - Supply of Products.. . . . . . . . . . . . . . . . . . . . . .2

Article 3 - Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Article 4 - Forecasts; Ordering; Shipments.. . . . . . . . . . . . . . . .4

Article 5 - Specifications; Quality Control; Records.. . . . . . . . . . .5

Article 6 - Inspections; Product Recalls.. . . . . . . . . . . . . . . . .6

Article 7 - Nonconforming Products.. . . . . . . . . . . . . . . . . . . .7

Article 8 - Consents, Representations, and Warranties. . . . . . . . . . .7

Article 9 - Limitations on Warranty; Indemnification.. . . . . . . . . . .8

Article 10 - Term and Termination. . . . . . . . . . . . . . . . . . . . .8

Article 11 - Governing law; Conciliation; Arbitration. . . . . . . . . . .9

Article 12 - Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . 11

Article 13 - Confidentiality.. . . . . . . . . . . . . . . . . . . . . . 11

Article 14 - Force Majeure.. . . . . . . . . . . . . . . . . . . . . . . 12

Article 15 - Assignment. . . . . . . . . . . . . . . . . . . . . . . . . 12

Article 16 - Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Article 17 - Entirety. . . . . . . . . . . . . . . . . . . . . . . . . . 13

Article 18 - Modification. . . . . . . . . . . . . . . . . . . . . . . . 14

Article 19 - Enforceability. . . . . . . . . . . . . . . . . . . . . . . 14

Article 20 - Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Article 21 - Relationship of Parties . . . . . . . . . . . . . . . . . . 14

Article 22 - Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 14

<PAGE>

Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Exhibit A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Exhibit B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Exhibit C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Exhibit D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

</TABLE>

<PAGE>

                                   SUPPLY AGREEMENT


This Agreement, effective the 13th day of June, 2000, is made between BioSante
Pharmaceuticals, Inc., a Wyoming corporation, with an office at 175 Olde Half
Day Road, Lincolnshire, Illinois (hereinafter, "BIOSANTE") and Permatec
Technologie, AG, a corporation organized and existing under the laws of
Switzerland and having its principal office at Grienbachstrasse 17 CH 6301 Zug
Switzerland (hereinafter, "PERMATEC").

      BIOSANTE and PERMATEC do hereby agree as follows:


ARTICLE 1 - DEFINITIONS.

1.1   "COMPOUNDS" shall mean the respective active ingredients in any of the
Products.

1.2   "CONTRACT MANUFACTURER" shall mean any company or companies designated by
PERMATEC to Manufacture and/or Package the Products hereunder.

1.3   "DEA" shall mean the United States Drug Enforcement Administration.

1.4   "FDA" shall mean the United States Food and Drug Administration.

1.5   "GOOD MANUFACTURING PRACTICES" or "GMP" shall mean the then-current
requirements of FDA or other relevant authority relating to the manufacture of
pharmaceutical products and related activities, as set forth in applicable FDA
or other relevant authority regulations and Guidance Documents.

1.6   "GOVERNMENT AGENCIES" shall mean the respective governmental health
authorities that control or in any way regulate the manufacture, packaging,
distribution, sale, export or import of the Products in any jurisdiction of the
Territory.  Each reference in this Agreement to "Government Agencies" shall be
deemed to refer to the relevant governmental health authorities for the
respective jurisdictions of the Territory into which the Products will be or
were sold by BIOSANTE, its Affiliates or the sublicensees of any of them (e.g.,
for the United States, "Government Agencies" shall include the FDA and the DEA).

1.7   "GOVERNMENTAL APPROVALS" shall mean the respective approvals sought or
obtained by BIOSANTE, its Affiliates or the sublicensees of any of them from the
appropriate Government Agencies to market and sell the Products in each of the
jurisdictions of the Territory into which BIOSANTE or such other entity chooses
to market the Products.  Each reference in this Agreement to "Governmental
Approvals" shall be deemed to refer to the relevant approval obtained for the
respective jurisdiction into which the Products will be or were sold by
BIOSANTE, its Affiliates or the sublicensees of any of them (e.g., for the
United States, "Governmental Approvals" shall mean the NDA, ANDA or IND).

                                          4
<PAGE>

1.8   "LICENSE AGREEMENT" shall mean the written agreement between PERMATEC
TECHNOLOGIE, AG and BIOSANTE PHARMACEUTICALS, INC., executed by the parties at
or about the same time as this Supply Agreement.

1.9   "MANUFACTURING" shall mean all of the following:  (a) the purchasing and
warehousing of raw materials, the preparation of the formulation like adding
excipients, solubilizing, mixing, incoming and outgoing quality control and
other procedures associated with the preparation of the formulation (the
"Preparation"); or (b) incorporating of the finished Products containing the
Compounds into a delivery system and other procedures associated with all of the
foregoing (the "Filling"); and (c) the Preparation, Filling and final packaging
and labeling of the finished Products in packaged form and other procedures
associated with all of the foregoing (the "Packaging"); each of (a), (b) and (c)
above all done in accordance with the Specifications and the Governmental
Approvals (including, without limitation, with respect to sales of the Products
into the U.S., all applicable requirements of the FDA and DEA and GMP).  The
terms "Manufacture", "Manufactured" and "Manufacturing" in this Agreement shall
refer to the same activities.

1.10  "NDA" shall mean a New Drug Application, Abbreviated New Drug Application,
or Investigational New Drug application filed by or on behalf of BIOSANTE with
the FDA for any of the Products.

1.11  "PRODUCT" or "PRODUCTS" shall mean one or more of the finished, packaged
products which are Manufactured by PERMATEC for sale to BIOSANTE, its Affiliates
or the licensees or sublicensees of any of them pursuant to this Agreement. The
products are listed in Exhibit D.

1.12  "SPECIFICATIONS" shall mean the procedures, requirements, standards and
other items set forth in Exhibit A attached hereto, as the same may be
supplemented and amended from time to time in accordance with Article 5.3.

1.13  "TERRITORY" shall mean the United States and those of its territories and
possessions over which the FDA has regulatory authority; Canada; Australia; New
Zealand; South Africa; Israel; Mexico; and The People's Republic of China
(including Hong Kong); Malaysia; and Indonesia.


ARTICLE 2 - SUPPLY OF PRODUCTS.

2.1   Subject to the terms hereof, PERMATEC agrees to Manufacture, or have
Manufactured, and sell exclusively to BIOSANTE in the Territory, and BIOSANTE
shall purchase exclusively from PERMATEC, BIOSANTE's total requirements for
Products pursuant to purchase orders submitted by BIOSANTE to PERMATEC from time
to time in accordance with Article 4.2.  PERMATEC or its Contract Manufacturer
shall supply all equipment, raw and packaging materials, and labor, and shall
assure its own or its Contract Manufacturer's compliance, whichever is
applicable, with current GMP necessary to Manufacture the Products.

2.2   Upon request from BIOSANTE, PERMATEC, with full assistance of BIOSANTE in
North America, shall cause an audit to be performed at its manufacturing
facilities or that of its

                                          5
<PAGE>

Contract Manufacturer for the purpose of determining whether such facilities are
likely to obtain FDA or other relevant agencies' approval, and shall promptly
provide BIOSANTE with a copy of such audit.  If such audit indicates that the
manufacturing facilities are in substantial compliance with FDA or other
relevant agencies' requirements to be a Manufacturer of the Products, PERMATEC
shall use all commercially reasonable efforts to provide Products to BIOSANTE as
soon as possible (in response to its orders) for clinical and commercial use by
BIOSANTE and in its other efforts to obtain all requisite Government Approvals.
BIOSANTE shall provide full assistance to PERMATEC to select and validate an
adequate Contract Manufacturer and to obtain the necessary approvals in the
United States of America or such other part of the Territory where BIOSANTE may
have regulatory expertise.

2.3   Notwithstanding the foregoing, PERMATEC shall not sell Products, and
BIOSANTE shall not be obligated to purchase Products from PERMATEC, unless and
until PERMATEC or its Contract Manufacturer shall have complied with all
relevant requirements from the appropriate Government Agencies to Manufacture
and sell the Products in the respective jurisdictions (e.g., for sales of
Products in the United States, BIOSANTE shall have obtained FDA approval for
PERMATEC or its Contract Manufacturer to be a manufacturer of the Products under
the NDA).

2.4   Throughout this Agreement, all references to "PERMATEC" that relate to its
rights and duties as the manufacturer and/or packager of the Products shall be
deemed to include any Contract Manufacturer designated by PERMATEC to
Manufacture the Products hereunder; provided, however, that such Contract
Manufacturer has complied with all relevant requirements from the appropriate
Government Agencies to Manufacture the Products for BIOSANTE and provided
further, that notwithstanding any such designation, PERMATEC shall continue to
be jointly and severally liable, along with such designee, to BIOSANTE under
every provision of this Agreement.

2.5   Within two (2) years following first commercial sale of each Products in a
country of the Territory, BIOSANTE may ask PERMATEC to assure that a second
company (which it shall designate in addition to the then current manufacturer
of the Products) becomes qualified as an alternative manufacturer of the
Products and complies with all relevant requirements from the appropriate
Government Agencies to Manufacture and sell the Products in certain commonly
agreed jurisdictions of the Territory. PERMATEC shall use all commercially
reasonable efforts whenever possible to identify and propose an alternative
Contract Manufacturer to BIOSANTE.


ARTICLE 3 - PRICE.

3.1   The price of the Products shall be determined in accordance with the
pricing schedule attached hereto as Exhibit B.

3.2   The price of the Products referenced on Exhibit B shall be adjusted upward
or downward on an annual basis in accordance with the terms of Exhibit B,
commencing on January 1 of the year following the first full year of commercial
sale of the Products in the United States.  Notwithstanding the foregoing, in
the event the prices of the Products increase or decrease due to

                                          6
<PAGE>

any supplement or amendment to the Specifications as provided in Article 5.3
below, whether or not such increase or decrease occurs prior to or following the
first commercial sale of the Products in the United States, the price of the
Products shall be adjusted by the actual change in cost to PERMATEC due to such
supplement or amendment to the Specifications.  Such change in price shall be
effective only with respect to Products manufactured after the date of
implementation of the change to the Specifications.

3.3   All Products ordered by BIOSANTE prior to the notification of any price
increase will be supplied and invoiced to BIOSANTE by PERMATEC at the prices
current as of the date on which the order was received by PERMATEC.

3.4   Payment for each order shall be made within forty-five (45) days following
the date of invoice or delivery, whichever is later; provided, however, that
BIOSANTE shall not be required to pay for nonconforming Products.

3.5   All payments required to be made pursuant to this Agreement shall be made
in U.S. dollars, unless otherwise agreed in writing between the parties.

3.6   PERMATEC shall keep full, true and accurate books of account containing
all particulars and reasonable supporting documentation which may be necessary
for determining the costs of the Products as outlined in Exhibit B.  Such
records shall be kept at PERMATEC's principal place of business or at the
Contract Manufacturer's place of business and shall be open at all reasonable
times and upon reasonable notice to the inspection of an independent certified
public accounting firm retained by BIOSANTE, and reasonably acceptable to
PERMATEC, for the purpose of verifying any price charged under the Agreement.
BIOSANTE shall bear the full cost of such audit, unless the audit discloses that
the price charged exceeded the actual cost of the Products by (i) ten percent
(10%) or more during the first two (2) years following the first commercial sale
of the Products; or (ii) five percent (5%) or more thereafter, in which case
PERMATEC shall bear the full cost of the audit. BIOSANTE's audit right shall be
limited to the twelve (12) months preceding the last invoice. The audit cost
that may be charged to PERMATEC pursuant to what is described above shall be
capped at Twenty Thousand Dollars (USD 20,000).


ARTICLE 4 - FORECASTS; ORDERING; SHIPMENTS.

      The procedures to be followed with respect to the purchase by BIOSANTE of
the Products shall be as follows:

4.1   In order to permit PERMATEC to regularly supply BIOSANTE with the
Products, at least three (3) months prior to the first day of January and July
of each year during the term hereof, BIOSANTE shall advise PERMATEC in writing
of BIOSANTE's estimated requirements for the Products for each twelve (12) month
period commencing respectively on the first day of such January and July.  All
Products sold to BIOSANTE hereunder will be shipped to BIOSANTE no later than
three (3) months after release of the finished goods by the

                                          7
<PAGE>

Quality Control Department.  PERMATEC will use its best efforts to ship product
within one (1) month of such release.

4.2   BIOSANTE shall order the Products by firm non-cancelable purchase order
specifying a quantity, description of the Products with relevant Quality
Compliance data, address of delivery, method of shipment and delivery date.
Orders shall be placed on PERMATEC's standard purchase order form, a copy of
which is attached hereto as Exhibit C; provided, however, that the terms of this
Agreement shall prevail in the event of any inconsistency between this Agreement
and the terms and conditions of PERMATEC's standard purchase order form. Firm
orders will be issued by BIOSANTE at least nine  (9) months prior to the
requested delivery date during a 2 year launch period, thereafter firm orders
will be issued at least six (6) months prior to requested delivery date.
PERMATEC shall promptly acknowledge acceptance of such order in writing and
shall advise BIOSANTE of the anticipated ship date of the quantity ordered. In
case of material change in specifications, the orders will be issued nine months
(9) before delivery time for the 3 first orders.  PERMATEC agrees to make its
best efforts with respect to all orders to deliver ordered goods as quickly as
possible after receipt of the order.

4.3   Delivery of Products to be sold by PERMATEC under this Agreement shall be
made as may be mutually agreed between the parties, and be ex factory, in all
instances in which BIOSANTE has specified both the method of shipment and
carrier.  All shipments shall be made pursuant to instructions received from
BIOSANTE or, if not specified, in a commercially reasonable manner.  PERMATEC
will provide shipping documentation in accordance with that requested in
BIOSANTE's firm order as well as a certificate of analysis for each Production
lot sent separately, but in every instance, it shall be sent so as to be
received by BIOSANTE within two (2) weeks of shipment.


ARTICLE 5 - SPECIFICATIONS; QUALITY CONTROL; RECORDS.

5.1   Products supplied to BIOSANTE pursuant to this Agreement shall be
Manufactured, stored and shipped by PERMATEC in accordance with the
Specifications, in compliance with the Governmental Approvals and in conformance
with all applicable requirements of the Government Agencies (including, without
limitation, all applicable GMP with respect to Products sales into the U.S. or
any other territories and possessions over which the FDA has jurisdiction).

5.2   Neither party may supplement or amend the Specifications without the other
party's prior written approval, which shall not be unreasonably withheld;
provided, however, that the Specifications will be supplemented or amended if
BIOSANTE determines that such change or amendment is necessitated by applicable
requirements of the FDA or other Government Agencies.  The parties agree that
BIOSANTE may supplement Exhibit A hereto with Specifications for Products to be
sold in other countries of the Territory in addition to the United States.  All
such changes shall be approved in writing at least sixty (60) days in advance of
their implementation. The cost of the Products will be amended according to the
changes required by BIOSANTE or any governmental requirements.

                                          8
<PAGE>

5.3   PERMATEC shall perform and have sole responsibility for all quality
control tests and assays on raw and packaging materials and on finished
Products, all in a manner consistent with the Specifications and PERMATEC's
internal quality control procedures for similar products.  PERMATEC shall retain
records pertaining to such testing and shall, upon written request by BIOSANTE,
furnish BIOSANTE with copies thereof.

5.4   PERMATEC shall prepare and maintain batch records and a file sample,
properly stored, from each lot or batch of Products.  Upon any termination of
this Agreement, PERMATEC shall offer copies of such batch records and file
samples to BIOSANTE.

5.5   PERMATEC shall be responsible for the procurement of raw material and
container materials, intermediate and final product testing and stability
studies, complaint investigations and inspections by Government agencies at the
manufacturing facility.  PERMATEC shall make available the records pertaining to
the foregoing to BIOSANTE for such lawful purpose as BIOSANTE may reasonably
request.

5.6   PERMATEC shall obtain and maintain all licenses, permits and registrations
necessary to Manufacture and supply Products to BIOSANTE.

5.7   Each party shall keep complete and accurate records pertaining to (a) the
Manufacture, including quality control, of the Products (in the case of
PERMATEC); or (b) the use, sale and other disposition of the Products (in the
case of BIOSANTE) for at least three (3) years or for such longer period if and
as required by law.  Each party shall make available such records to the other
party for such lawful purpose as such other party may reasonably request in
writing.


ARTICLE 6 - INSPECTIONS; PRODUCT RECALLS.

6.1   PERMATEC shall promptly notify BIOSANTE of any inspections by
representatives of any of the Government Agencies of the manufacturing facility
and the results of any such inspections, including actions taken by PERMATEC to
remedy conditions cited in such inspections.

6.2   Each party agrees to promptly (but in no event later than one (1) business
day) inform the other of product quality, health or safety related complaints or
inquiries that raise potentially serious quality, health or safety concerns
regarding the Products.  All other such information not involving the above-
described situations shall be transmitted to the other party within five (5)
days of receipt.

6.3   To the extent permitted by law, any decision to recall or cease
distribution of Products in any jurisdiction of the Territory shall be made by
BIOSANTE in its sole discretion and under its sole responsibility and shall be
communicated promptly to PERMATEC.  In the event of any such recall, BIOSANTE
shall assume complete responsibility and bear all the costs for the recall.
BIOSANTE will provide PERMATEC with any information concerning the Manufacturing
of Products which may reasonably be required in connection with the recall, and
will manage such

                                          9
<PAGE>

recall.  Notwithstanding BIOSANTE's assumption of responsibility for the conduct
of recalls, recall costs shall be borne by BIOSANTE until the respective
responsibilities are established.


ARTICLE 7 - NONCONFORMING PRODUCTS.

7.1   BIOSANTE shall be deemed to have accepted delivery of the Products in good
order and condition, unless it has given a written notice of any short delivery
or nonconformity in respect of the Products within sixty (60) days after the
date of delivery.  Notwithstanding the foregoing, in the case of any
nonconformity which is not readily discoverable within such sixty (60) day
period, the claim therefor under this Article 7.1 shall not be deemed waived if
made by BIOSANTE within thirty (30) days after BIOSANTE learns of such
nonconformity.

7.2   All such claims by BIOSANTE shall be accompanied by a report of analysis
of the allegedly nonconforming Products that shall have been prepared by
BIOSANTE or its agent.  If, after its own analysis of the Product sample,
PERMATEC confirms such nonconformity, PERMATEC shall, at PERMATEC's election,
either replace the nonconforming Products with conforming Products at PERMATEC's
expense or refund to BIOSANTE the entire purchase price therefor.  The
nonconforming Products shall either be returned to PERMATEC, at PERMATEC's
request and its expense, or destroyed, at PERMATEC's expense.

7.3   If, after its own analysis, PERMATEC does not confirm such nonconformity,
the parties shall in good faith attempt to agree upon a settlement of the issue.
In the event that the parties cannot resolve the issue, they shall submit the
disputed Products to an independent laboratory, mutually selected by the
parties, for testing and the results of such testing shall be binding upon the
parties.  The party whose assertion as to the conformity or nonconformity of the
Products in question is not borne out by the results of testing of the
independent laboratory shall bear all costs and expenses of such testing.
Notwithstanding anything to the contrary in this Article 7, PERMATEC's
warranties and indemnification obligations under this Agreement shall survive
any failure by BIOSANTE to reject the Products in question.


ARTICLE 8 - CONSENTS, REPRESENTATIONS, AND WARRANTIES.

      PERMATEC hereby covenants, represents and warrants to BIOSANTE, and its
Affiliates as follows:

8.1   On the date of shipment, all Products sold hereunder will have been
Manufactured, stored and shipped by PERMATEC or its designated Contract
Manufacturer in accordance with the Specifications, in compliance with the
Governmental Approvals and in conformance with all applicable requirements of
the Government Agencies (including, without limitation, all applicable GMP with
respect to Products sales into the U.S. or any other territories and possessions
over which the FDA has jurisdiction).

8.2   PERMATEC will have good title to all Products sold hereunder, which title
shall pass to BIOSANTE free and clear of any lien, encumbrance or other
conflicting interest of any kind.

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<PAGE>

8.3   If PERMATEC enters into a contract with a Contract Manufacturer, it will
promptly provide BIOSANTE with a complete and accurate copy of such contract
(plus all amendments thereto) if any, redacted so that only BIOSANTE-related
terms are revealed.


ARTICLE 9 - LIMITATIONS ON WARRANTY; INDEMNIFICATION.

9.1   Without affecting any other remedies available under this Agreement,
PERMATEC shall defend, indemnify and hold BIOSANTE and its directors, officers
and employees, harmless from and against any and all claims, suits or demands
for liability, damages, costs and expenses (including the reasonable fees, costs
and expenses of attorneys and other professionals and court costs) resulting
from product recall, personal injury, product liability or property damage or
otherwise, arising from or relating to the negligence or willful misconduct of
PERMATEC or the Contract Manufacturer of PERMATEC.

9.2   Without affecting any other remedies available under this Agreement,
BIOSANTE shall defend, indemnify and hold PERMATEC and its directors, officers
and employees, harmless from and against any and all claims, suits or demands
for liability, damages, costs and expenses (including the reasonable fees, costs
and expenses of attorneys and other professionals and court costs, but excluding
consequential damages for lost profits) arising from or relating to the
negligence or willful misconduct of BIOSANTE or its Affiliates or its sub
licensees.


ARTICLE 10 - TERM AND TERMINATION.

10.1  This Agreement shall commence as of the date of this Agreement and shall
continue for the longer of twenty (20) years, or as long as BIOSANTE is paying
royalties on any product, unless the Agreement is terminated in accordance with
the terms hereof.

10.2  (a) Failure by either party to comply with any of the obligations
contained in this Agreement in any material respect shall entitle the other
party to give to the party in default written notice specifying the nature of
the default and requiring it to cure such default.  If such default is not cured
within sixty (60) days after the receipt of such notice, the notifying party
shall be entitled, without prejudice to any of its rights conferred on it by
this Agreement, in addition to any other remedies available to it by law or in
equity, to terminate this Agreement with respect only to the involved Product or
Products, or country or countries of the Territory, respectively, by giving
written notice.  The right of either party to terminate this Agreement shall not
be affected in any way by its waiver or failure to take action with respect to
any previous default.

      (b) Further, failure by either party to comply with any of the obligations
contained in the License Agreement in any material respect (or a material breach
of any representation, warranty or covenant contained therein) shall entitle the
other party to give to the party in default written notice specifying the nature
of the default and requiring it to cure such default.  If such default is not
cured within the cure period specified under said Agreement, the notifying party
shall be

                                          11
<PAGE>

entitled, without prejudice to any of its rights conferred on it by this
Agreement, in addition to any other remedies available to it by law or in
equity, to terminate this Agreement, with respect only to the involved Product
or Products, or country or countries of the Territory, respectively, by giving
written notice.  Further, in the event that the License Agreement is terminated
by either Party in its entirety with respect to all Products in all countries of
the Territory, either party shall have the right to terminate this Agreement
immediately upon written notice.  The right of either party to terminate this
Agreement shall not be affected in any way by its waiver or failure to take
action with respect to any previous default.

10.3  Either party may, in addition to any other remedies available to it by law
or in equity, terminate this Agreement by written notice to the other party in
the event the other party shall have become insolvent or bankrupt, or shall have
made an assignment for the benefit of its creditors, or there shall have been
appointed a trustee or receiver of the other party or for all or a substantial
part of its property, or any case or proceeding shall have been commenced or
other action taken by or against the other party in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up, arrangement, composition
or readjustment of its debts or any other relief under any bankruptcy,
insolvency, reorganization or other similar act or law of any jurisdiction now
or hereafter in effect, or there shall have been issued a warrant of attachment,
execution, distraint or similar process against any substantial part of the
property of the other party, and any such event shall have continued for sixty
(60) days undismissed, unbonded and undischarged.

10.4  BIOSANTE may terminate this Agreement upon a determination, in its sole
discretion, that there is an available alternative source of Products at a lower
price than that of PERMATEC.  BIOSANTE agrees to promptly notify PERMATEC of its
alternative opportunity, and the parties agree to negotiate in good faith in an
attempt to give PERMATEC an opportunity to match the alternative.  If it is
determined that this will not be possible, BIOSANTE may give notice of
termination.  Termination under this Article 10.4 shall not be construed as
giving rise to a breach of this Agreement by PERMATEC.  Termination pursuant to
this Article 10.4 shall be effective upon six (6) months written notice to
PERMATEC.

10.5  Notwithstanding anything in this Agreement to the contrary, BIOSANTE may
terminate this Agreement at any time by written notice to PERMATEC in the event
that BIOSANTE is unable to obtain the FDA approval of PERMATEC or its Contract
Manufacturer as the manufacturer of the Products under the NDA.

10.6  Termination or expiration of this Agreement for any reason shall be
without prejudice to any rights which shall have accrued to the benefit of
either party prior to such termination or expiration.  Such termination or
expiration shall not relieve either party from obligations which are expressly
indicated to survive termination or expiration of this Agreement.


ARTICLE 11 - GOVERNING LAW; CONCILIATION; ARBITRATION.

11.1  GOVERNING LAW:    This Agreement is governed by and construed in all
respects in accordance with the laws of the State of Illinois, USA and the
United States of America (without

                                          12
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regard to conflicts of laws principles), excluding the United Nations Convention
on Contracts for the International Sale of Goods.

11.2  DISPUTE RESOLUTION:

      (a)   CONCILIATION.  The parties wish first to seek an amicable settlement
            of all disputes, controversies or claims arising out of or relating
            to this Agreement by conciliation in accordance with the UNCITRAL
            Conciliation Rules now in force.  The conciliation shall take place
            in Chicago, Illinois (USA) before a conciliator.  If assistance is
            needed in connection with the appointment of a conciliator or other
            administrative matters, JAMS Endispute, Inc., 222 S. Riverside
            Plaza, Chicago, Illinois, USA (telephone 312-739-0200), shall be the
            institution to render such assistance.  The language to be used in
            the conciliation proceedings shall be English.

      (b)   ARBITRATION.  Subject to possible court proceedings under Section
            11.2(d) of this Agreement, if any conciliation proceedings under
            Section 11.2(a) of this Agreement are terminated in accordance with
            Article 15 of the UNCITRAL Conciliation Rules or rejected in
            accordance with Article 2 of those Rules, without resolution of the
            disputes, controversies or claims, then all said disputes,
            controversies or claims shall be determined by arbitration in
            accordance with the UNCITRAL Arbitration Rules now in force, as
            supplemented by the IBA Rules on the Taking of Evidence in
            International Commercial Arbitration, as adopted June 1, 1999,
            insofar as said IBA Rules are not inconsistent with the express
            provisions of this Agreement.  The language to be used in the
            arbitral proceedings shall be English.  There shall be three (3)
            arbitrators, the place of arbitration shall be Chicago, Illinois
            (USA) and the appointing authority shall be JAMS Endispute, Inc.  In
            rendering the award, the arbitrator shall follow and apply the
            substantive laws of the State of Illinois (without regard to
            conflict or choice of laws principles).  The arbitrator shall have
            the authority to award compensatory damages only, subject to the
            limitations described in this Agreement.  Each party shall pay the
            fees of its own attorneys, expenses of witnesses and all other
            expenses and costs in connection with the presentation of such
            party's case (collectively, "Attorneys' Fees").  The remaining costs
            of the arbitration, including without limitation, fees of the
            arbitrator, costs of records or transcripts and administrative fees
            (collectively, "Arbitration Costs") shall be borne equally by the
            parties.  Notwithstanding the foregoing, the arbitrator in the award
            may apportion said Attorneys' Fees and Arbitration Costs, pursuant
            to articles 38 through 40 of the UNCITRAL Arbitration Rules.  The
            award rendered by the arbitrator shall be final, and judgment may be
            entered in accordance with the applicable law by any court having
            jurisdiction thereof.

      (c)   CONFIDENTIALITY.  The existence and resolution of any conciliation
            and/or arbitration shall be kept confidential, and the parties, the
            conciliator and the arbitrator shall not disclose to any person any
            information about such arbitration.

                                          13
<PAGE>

      (d)   COURT PROCEEDINGS.  Notwithstanding the arbitration provisions in
            Section 11.2(b) of this Agreement, PERMATEC shall have the right to
            sue in any court of competent jurisdiction to collect from BIOSANTE
            funds due and owing PERMATEC hereunder.  Section 11.2(b) of this
            Agreement shall not be construed to prevent either party from
            seeking injunctive relief against the other party from any judicial
            or administrative authority of competent jurisdiction to enjoin that
            party from breaching this Agreement pending the resolution of a
            dispute by arbitration, pursuant to said Section 11.2(b).  Any
            action to confirm an arbitration award or any other legal action
            related to this Agreement between the parties may be instituted in
            any court of competent jurisdiction.  PERMATEC and BIOSANTE each
            waive their right to a trial by jury in any such court proceedings.


ARTICLE 12 - TRADEMARKS.

12.1  BIOSANTE shall determine and own the trademarks and trade names to be used
in connection with the marketing of Products in the Territory.  PERMATEC shall
have no right to use such trademarks and trade names other than in connection
with its Manufacturing Products for sale to BIOSANTE under this Agreement.  Upon
termination of this Agreement, PERMATEC shall not use any of such trademarks or
trade names, whether or not they have been registered in the relevant
jurisdiction, or use or adopt any trademark or trade name that may be
confusingly similar therewith.

12.2  PERMATEC owns certain trademarks and trade names to be used in connection
with the Products in the Territory.  BIOSANTE shall have no right to use such
trademarks and trade names unless approved by PERMATEC.  Upon termination of
this Agreement, BIOSANTE shall not use any of such trademarks or trade names,
whether or not they have been registered in the relevant jurisdiction, or use or
adopt any trademark or trade name that may be confusingly similar therewith.


ARTICLE 13 - CONFIDENTIALITY.

      Except to the extent expressly authorized by this Agreement or otherwise
agreed in writing, the parties agree that, at all times during the term of this
Agreement and for five (5) years thereafter, the receiving party shall keep
completely confidential, shall not publish or otherwise disclose and shall not
use directly or indirectly for any purpose any information furnished to it by
the other party pursuant to this Agreement, except to the extent that it can be
established by the receiving party by competent proof that such information:

      (a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure by the other party;

      (b) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving party;

                                          14
<PAGE>

      (c) became generally available to the public or otherwise part of the
public domain after its disclosure, other than through any act or omission of
the receiving party in breach of this Agreement; or

      (d) was disclosed to the receiving party, other than under an obligation
of confidentiality, by a third party who had no obligation to the disclosing
party not to disclose such information to others.

Each party may disclose the other's information to the extent that such
disclosure is reasonably necessary in complying with applicable governmental
regulations, provided that if a party intends to make any such disclosure, it
shall give reasonable advance written notice to the other party of such
disclosure.


ARTICLE 14 - FORCE MAJEURE.

      No failure by either party to carry out or observe any of the stipulations
or conditions of this Agreement shall give rise to any claims against the party
in question, or be deemed a breach of this Agreement, if such failure or
omission is caused by any cause beyond the reasonable control of the party
including, without limitation, strikes, acts of God, public enemy, riots, fire,
flood, compliance with governmental laws, rules and regulations, delays in
transit or delivery, inability to secure necessary governmental priorities for
materials or any other event beyond the control and without the fault or
negligence of the party in question; provided that the party affected shall give
prompt notice of any such cause to the other party.  The party giving such
notice shall thereupon be excused from such of its obligations hereunder as it
is thereby disabled from performing for so long as it is so disabled, provided
however, that in the event that PERMATEC is prevented from performing its
obligations hereunder for a continuous period of three (3) months or for a total
period of six (6) months in any period of twelve (12) calendar months, BIOSANTE
may terminate this Agreement immediately and such cause of non-performance shall
not be deemed a breach by PERMATEC.


ARTICLE 15 - ASSIGNMENT.

      Neither this Agreement nor any interest hereunder shall be assignable by
either party without the prior written consent of the other party.
Notwithstanding the foregoing, either party may assign this Agreement to any
successor by merger or sale of substantially all of its assets.  In the event
that BIOSANTE sublicenses its rights under the License Agreement, BIOSANTE may
also assign its rights and obligations hereunder to such sublicensee.  This
Agreement shall be binding upon the successors and permitted assigns of the
parties and the name of a party appearing herein shall be deemed to include the
names of such party's successors and permitted assigns to the extent necessary
to carry out the intent of this Agreement.  Any assignment not in accordance
with this Article shall be null and void.

                                          15
<PAGE>

ARTICLE 16 - NOTICE.

      All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by facsimile transmission,
mailed by registered or certified mail (return receipt requested, postage
prepaid) or sent by overnight courier service to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):


                  If to BIOSANTE

                  Stephen M. Simes
                  President and CEO
                  BioSante Pharmaceuticals, Inc.
                  175 Olde Half Day Road
                  Lincolnshire, Illinois  60069
                  Tel.  +1 (847) 793-2434
                  Fax   +1 (847) 793-2435

WITH COPY TO:     Eric F. Greenberg
                  Ungaretti & Harris
                  3500 Three First National Plaza
                  Chicago, Illinois  60602-4283
                  Tel:  (312) 977-4647
                  Fax:  (312) 977-4405


                  If to PERMATEC

                  Dr. Philippe Dro
                  President and COO
                  PERMATEC TECHNOLOGIE, AG
                  c/o Permatec Pharma AG
                  Hardstrasse 18
                  CH-4132 Muttenz, Switzerland
                  Fax.  +41 61 465 92-91

WITH COPY TO:     Rinderknecht Klein & Stadelhofer
                  Beethovenstrasse 7
                  CH-8022 Zurich, Switzerland
                  Fax No: ++41 1 287 24 00


ARTICLE 17 - ENTIRETY.

      The terms and conditions of this Agreement, together with the License
Agreement, constitute the entire agreement and understanding of the parties,
supersede all previous

                                          16
<PAGE>

communications whether oral or written between the parties, including any
previous agreement or understanding varying or extending the same.  There are no
further or other agreements or understandings, written or oral, in effect
between the parties with respect to the subject matter hereof.


ARTICLE 18 - MODIFICATION.

      This Agreement may be released, discharged, abandoned, changed or modified
only by an instrument in writing of equal formality, signed by the duly
authorized officer or representative of the parties.


ARTICLE 19 - ENFORCEABILITY.

      Whenever possible, each provision of this Agreement will be interpreted in
such a manner as to be effective and valid under applicable law, but in the
event of a conflict between any provision of this Agreement and any applicable
law, regulation, ordinance or decree, the provision of this Agreement so
affected shall be curtailed and limited to the extent necessary to bring it
within the legal requirements but otherwise it shall not render null and void
other provisions of this Agreement, unless either of the parties, in the absence
of the provision in question, would not have entered into this Agreement.


ARTICLE 20 - WAIVER.

      The failure of either party at any time or from time to time to exercise
any of its rights or to enforce any of the terms, conditions or provisions under
this Agreement shall not be deemed to be a waiver of any such rights nor shall
it prevent such party from subsequently asserting or exercising any such rights.


ARTICLE 21 - RELATIONSHIP OF PARTIES.

      Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency or joint venture relationship between the parties.


ARTICLE 22 - PUBLICITY.

      If either party wishes to make a public disclosure concerning this
Agreement and such disclosure mentions the other party by name or description,
such other party will be provided with an advance copy of the disclosure and
will have three (3) business days within which to approve or disapprove such use
of its name or description.  Disclosures once approved do not need to be
re-approved for further dissemination.  The parties will provide copies of such
disclosures to the other party within a reasonable time.  Approval shall not be
unreasonably

                                          17
<PAGE>

withheld by either party.  Absent approval, no public disclosure shall use the
name of or otherwise describe such party except to the extent required by law.
However, the initial news release announcing the signing of this Agreement shall
be approved by both parties simultaneously with signing.

      IN WITNESSETH WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers with effect as of the date first
above written.


BioSante Pharmaceuticals, Inc.


 /s/ Stephen M. Simes
-------------------------------------------
By: Stephen M. Simes
Its: President and Chief Executive Officer




Permatec Technologie, AG



 /s/ Dr. Jacques Gonella
-------------------------------------------
By: Dr. Jacques Gonella
Its: Executive Chairman



 /s/ Dr. Philippe Dro
-------------------------------------------
By: Dr. Philippe Dro
Its: President and COO


                                          18
<PAGE>

                        EXHIBIT A - PRODUCTS SPECIFICATIONS

          TO BE SUPPLIED BY PERMATEC BEFORE START OF MANUFACTURING OF THE
                               FIRST COMMERCIAL BATCH






                                          19
<PAGE>

                            EXHIBIT B - PRICING SCHEDULE

[PORTIONS OF THIS EXHIBIT B HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.  A COPY OF THIS EXHIBIT INTACT HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]

      (1)   The price of the Products shall be made up of:

                  (a)   Raw material: In case the raw material (compound,
                        excipients, dispensing device, packaging material and
                        shipment material) are to be supplied by PERMATEC, this
                        supply will be charged to BIOSANTE at PERMATEC's actual
                        cost plus XXXXX%.

                  (b)   Primary manufacturing:  A portion per unit of finished
                        Product equivalent to PERMATEC's actual costs of
                        synthesis of the Products (consisting of the reasonable
                        overhead and out-of-pocket expenses attributable
                        thereto), will be charged to BIOSANTE at PERMATEC's
                        actual cost plus XXXXX%;

                  (c)   Filling:  A portion per unit of Products equivalent to
                        PERMATEC's actual Filling costs (consisting of
                        reasonable overhead and out-of-pocket expenses
                        attributable thereto), will be charged to BIOSANTE at
                        PERMATEC's actual cost plus XXXXX%;

                  (d)   Packaging:  A Portion per unit of Products equivalent to
                        PERMATEC's actual Packaging costs (consisting of
                        reasonable overhead and out-of-pocket expenses
                        attributable thereto), will be charged to BIOSANTE at
                        PERMATEC's actual cost plus XXXXX%;

                  (e)   Quality Control and release:  A portion per unit of
                        Products equivalent to PERMATEC's actual in process and
                        finished products quality control costs (consisting of
                        overhead and out-of-pocket expenses and stability tests)
                        will be charged to BIOSANTE at PERMATEC's actual cost
                        plus XXXXX%;

                  (f)   Shipment:  The price is understood to be ex factory in
                        accordance with subsection 4.3 of this Agreement. Any
                        special shipment instructions given by BIOSANTE will be
                        charged by PERMATEC to BIOSANTE at XXXXX;

                  (g)   Financial costs:  Any reasonable financial costs
                        (consisting of working capital increase, inventory
                        costs, leasing costs, letter of credit) related to the
                        manufacturing and shipment of Products to BIOSANTE is to
                        be charged at XXXXX to BIOSANTE.

                                          20
<PAGE>

      (2)   Once determined, the price may only be adjusted in accordance with
            Article 3.2 of the Agreement.

      (3)   (A) Notwithstanding the above terms of this Exhibit B, if Product or
            Products are Manufactured or Packaged by a third party Contract
            Manufacturer, the price charged BIOSANTE for all activities
            performed by the third party shall equal the amount invoiced for the
            Products to PERMATEC plus XXXXX% and shall reflect any credits,
            discounts, allowances or rebates given thereon.  (B) When a Contract
            Manufacturer is utilized, to the extent that PERMATEC devotes
            personnel (other than administrative), e.g., QA/QC function to
            comply with its obligations under this Supply Agreement, PERMATEC
            may charge BIOSANTE for the cost of such activity related solely to
            BIOSANTE Products, at its actual cost plus XXXXX%.

      (4)   PERMATEC shall use all commercially reasonable efforts to minimize
            all costs of the Products whether incurred by PERMATEC directly or
            by a Contract Manufacturer.

      (5)   BIOSANTE shall use all commercially reasonable efforts to provide
            PERMATEC with timely and accurate forecasts and to inform PERMATEC
            about any material specifications changes as early as possible.

                                                              21
<PAGE>

                    EXHIBIT C- FORM OF PERMATEC PURCHASE ORDER-

          TO BE PROVIDED BY PERMATEC UPON BIOSANTE REQUEST AND BEFORE THE
                               FIRST COMMERCIAL ORDER








                                         22
<PAGE>

                                     EXHIBIT D

                                  List of Products

[PORTIONS OF THIS EXHIBIT D HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.  A COPY OF THIS EXHIBIT INTACT HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]



Gel E2 (where estradiol is the sole active ingredient, and where the gel is
applied to the skin)

Gel Testosterone (where testosterone is the sole active ingredient and where the
gel is applied to the skin)

Patch E2 (where estradiol is the sole active ingredient and where the patch is
applied to the skin)

E2-XXXXX Combi Gel (where estradiol and XXXXX XXXXX are the two active
                ingredients and where the gel is applied to the skin)


Option regarding XXXXX Combi gel

XXXXX Combi Gel (where XXXXX and XXXXX are the two active ingredients and where
              the gel is applied to the skin)


                                          23