Exhibit
10.2


 


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


 


 


Warrant No. W-   


 


FORM OF COMMON STOCK PURCHASE WARRANT


 


To Purchase «Shares» Shares of Common Stock of


BIOSANTE PHARMACEUTICALS, INC.


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


“Closing Date” means August 4, 2003.


 


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


 


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


 


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


 


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


 


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


 


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


 


or


 


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


 


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


 


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


 


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


 


“Expiration Date” means August 3, 2008.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2.                                       Exercise
of Warrant.


 


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


 


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


 


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


 


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


 


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


 


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


 


2.4.                              Restrictions
on Exercise Amount.


 


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


 


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


 


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3.                                       Transfer,
Division and Combination.


 


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


 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9

















 


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


 


5.                                       Notices
to Warrant Holders.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


10

















 


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


 


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


 


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


 


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


 


11

















 


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


 


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


 


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


 


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


 


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


 


12

















 


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


 


13.                                 Financial
and Business Information.


 


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


 


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


 


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


 


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


 


13

















 


15.                                 Miscellaneous.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


[Signature Page Follows]


 


14

















 


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


 


Dated:  August
4, 2003


 


 


	
   

  	
  BIOSANTE
  PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Stephen M.
  Simes

  	
   

  
	
   

  	
  Title: President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name: Phillip B.
  Donenberg

  	
   

  	
   

  
	
  Title: Secretary

  	
   

  	
   

  
								



 


15

















 


EXHIBIT A


 


SUBSCRIPTION FORM


 


[To be executed only upon exercise of Warrant]


 


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


 


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


 


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


 


 


	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  



 


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


 


 


	
   

  	
   

  
	
  (Name of
  Registered Owner)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature of
  Registered Owner)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Street Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (State) (Zip
  Code)

  	
   

  



 


 


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


 


16

















 


EXHIBIT B


 


ASSIGNMENT FORM


 


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


 


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Name and
  Address of Assignee)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Number of
  Shares of Common Stock)

  	
   

  



 


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


 


 


	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Print Name and
  Title)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Witness)

  	
   

  



 


 


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


 


17

















 


EXHIBIT C


 


FORM OF INVESTMENT REPRESENTATION LETTER


 


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


 


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


 


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


 


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


 


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


 












*
Bracketed language to be inserted if applicable.


 


18

















 


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


 


[Name]


 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  



 


19