Document:

Exhibit
10.2

 

FORM OF INCENTIVE STOCK
OPTION AGREEMENT

 

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

 

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

 

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

 

Accordingly, the parties
agree as follows:

 

1.     Grant of Option.

 

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

 

2.     Option Exercise Price.

 

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

 

3.     Duration of Option and Time of Exercise.

 

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

 

	
  Exercisability

  	
   

  	
  Available for Exercise

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ]

  

 

[The foregoing rights to exercise this Option will
be cumulative with respect to the Option Shares becoming exercisable on each
such date.]  In no event will this Option
be exercisable

 

 

after, and this Option will become void and expire
as to all unexercised Option Shares at 5:00 p.m. Lincolnshire, Illinois time
on                                             
(the “Time of Termination”).

 

3.2           Termination of Employment.

 

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

 

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

 

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

 

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

 

4.     Manner of Option Exercise.

 

4.1           Notice.  This Option may be exercised by the Optionee
in whole or in part from time to time, subject to the conditions contained in
the Plan and in this Agreement, by delivery, in person, by facsimile or electronic
transmission or through the mail, to the Company at its principal executive
office in Lincolnshire, Illinois, of a written notice of exercise.  Such notice must be in a form satisfactory to
the Committee, must identify the Option, must specify the number of Option
Shares with respect to which the Option is being exercised, and must be signed
by the person or persons so exercising the Option.  

 

2

 

Such notice must be accompanied by payment in
full of the total purchase price of the Option Shares purchased.  In the event that the Option is being
exercised, as provided by the Plan and Section 3.2 above, by any person or
persons other than the Optionee, the notice must be accompanied by appropriate
proof of right of such person or persons to exercise the Option.  As soon as practicable after the effective exercise of
the Option, the Optionee will be recorded on the stock transfer books of the
Company as the owner of the Option Shares purchased, and the Company will
deliver to the Optionee certificated or uncertificated (“book entry”)
shares.  In the event that the Option is
being exercised, as provided by resolutions of the Committee and Section 4.2
below, by tender of a Broker Exercise Notice, the Company will deliver such
shares directly to the Optionee’s broker or dealer or their nominee.

 

4.2           Payment.

 

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

 

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

 

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

 

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

 

5.     Rights of Optionee; Transferability.

 

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

 

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

 

3

 

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

 

6.     Withholding Taxes.

 

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

 

7.     Adjustments.

 

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

 

8.     Stock Subject to Plan.

 

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

 

9.     Incentive Stock Option Limitations.

 

9.1           Limitation on Amount.  To the extent that the aggregate Fair Market
Value (determined as of the date of grant) of the shares of Common Stock with
respect to which incentive stock options (within the meaning of Section 422
of the Code) are exercisable for the first time by the Optionee during any
calendar year (under the Plan and any other incentive stock option plans of the
Company or any 

 

4

 

subsidiary or parent corporation of the
Company (within the meaning of the Code)) exceeds $100,000 (or such other
amount as may be prescribed by the Code from time to time), such excess
incentive stock options will be treated as non-statutory stock options in the
manner set forth in the Plan.

 

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

 

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

 

10.   Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

[Remainder of page intentionally left blank]

 

6

 

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

 

	
   

  	
  BIOSANTE PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By execution of this Agreement,

  	
  OPTIONEE

  
	
  the Optionee acknowledges having received a copy of the Plan.

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name and Address)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

7Exhibit 10.3

 

FORM OF NON-STATUTORY STOCK
OPTION AGREEMENT

 

THIS NON-STATUTORY STOCK
OPTION AGREEMENT is entered into and effective as of this           day of                         ,
             (the “Date
of Grant”), by and between BioSante Pharmaceuticals, Inc. (the “Company”)
and                                   
(the “Optionee”).

 

A.            The Company has adopted the BioSante Pharmaceuticals, Inc.
Amended and Restated 2008 Stock Incentive Plan (the “Plan”) authorizing the
Board of Directors (the “Board”) of the Company, or a committee as provided for
in the Plan (the Board or such a committee to be referred to as the “Committee”),
to grant non-statutory stock options to employees (including, without
limitation, officers and directors who are also employees) of the Company or
any Subsidiary, and any non-employee directors, consultants, advisors and
independent contractors of the Company or any Subsidiary (as defined in the
Plan).

 

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

 

Accordingly, the parties
agree as follows:

 

1.     Grant of Option.

 

The Company hereby grants to
the Optionee the right, privilege, and option (the “Option”) to purchase                               
(            ) shares
(the “Option Shares”) of the Company’s common stock, $0.0001 par value (the “Common
Stock”), according to the terms and subject to the conditions hereinafter set
forth and as set forth in the Plan.  The
Option is not intended to be an “incentive stock option,” as that term is used
in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

2.     Option Exercise Price.

 

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

 

3.     Duration of Option and Time of Exercise.

 

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

 

	
  Exercisability

  	
   

  	
  Available for Exercise

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ]

  

 

 

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

 

3.2           Termination of Employment or
Other Service.

 

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

 

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

 

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

 

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

 

4.     Manner of Option Exercise.

 

4.1           Notice.  This Option may be exercised by the Optionee
in whole or in part from time to time, subject to the conditions contained in
the Plan and in this Agreement, by delivery, in person, by 

 

2

 

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

 

4.2           Payment.

 

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

 

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

 

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

 

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

 

5.     Rights of Optionee; Transferability.

 

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

 

5.2           Rights as a Stockholder.  The Optionee will have no rights as a stockholder
of the Company unless and until all conditions to the effective exercise of
this Option (including, without limitation, the conditions set forth in
Sections 4 and 6 of this Agreement) have been satisfied and the Optionee has
become the holder of record of such shares. 
No adjustment will be made for dividends or 

 

3

 

distributions with respect to this Option as
to which there is a record date preceding the date the Optionee becomes the
holder of record of such shares, except as may otherwise be provided in the
Plan or determined by the Committee in its sole discretion.

 

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

 

6.     Withholding Taxes.

 

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

 

7.     Adjustments.

 

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

 

8.     Stock Subject to Plan.

 

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

 

4

 

9.     Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

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

 

[Remainder of page intentionally left blank]

 

5

 

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

 

	
   

  	
  BIOSANTE PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By execution of this Agreement,

  	
  OPTIONEE

  
	
  the Optionee acknowledges having received a copy of the Plan.

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name and Address)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
				

 

6

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