Document:

Exhibit
10.1

 

BIOSANTE PHARMACEUTICALS,
INC.

AMENDED AND RESTATED 1998 STOCK PLAN

(As amended
through May 30, 2003)

 

1.                                       Purpose
of Plan.

 

The purpose of the
BioSante Pharmaceuticals, Inc. 1998 Stock Plan (the “Plan”) is to advance the
interests of BioSante Pharmaceuticals, Inc. (the “Company”) and its
stockholders by enabling the Company and its Subsidiaries to attract and retain
persons of ability to perform services for the Company and its Subsidiaries by
providing an incentive to such individuals through equity participation in the
Company and by rewarding such individuals who contribute to the achievement by
the Company of its economic objectives.

 

2.                                       Definitions.

 

The following terms will
have the meanings set forth below, unless the context clearly otherwise
requires:

 

2.1                                 “Board”
means the Board of Directors of the Company.

 

2.2                                 “Broker
Exercise Notice” means a written notice pursuant to which a Participant,
upon exercise of an Option, irrevocably instructs a broker or dealer to sell a
sufficient number of shares or loan a sufficient amount of money to pay all or
a portion of the exercise price of the Option and/or any related withholding
tax obligations and remit such sums to the Company and directs the Company to
deliver stock certificates to be issued upon such exercise directly to such
broker or dealer.

 

2.3                                 “Change
in Control” means an event described in Section 10.1 of the Plan.

 

2.4                                 “Code”
means the Internal Revenue Code of 1986, as amended.

 

2.5                                 “Committee”
means the group of individuals administering the Plan, as provided in
Section 3 of the Plan.

 

2.6                                 “Common
Stock” means the common stock of the Company, par value $0.0001 per share,
or the number and kind of shares of stock or other securities into which such
common stock may be changed in accordance with Section 4.3 of the Plan.

 

2.7                                 “Disability”
means the disability of the Participant such as would entitle the Participant
to receive disability income benefits pursuant to the long-term disability plan
of the Company or Subsidiary then covering the Participant or, if no such plan
exists or is applicable to the Participant, the permanent and total disability
of the Participant within the meaning of Section 22(e)(3) of the Code.

 

2.8                                 “Eligible
Recipients” means all employees (including officers and directors who are
also employees) of the Company or any Subsidiary and any non-employee directors
and officers and individual consultants and independent contractors of the
Company or any Subsidiary, other than consultants or independent contractors
providing services in connection with the offer or sale of securities in a
capital raising transaction or who directly or indirectly promote or maintain a
market for the Company’s securities.

 

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

 

2.10                           “Fair
Market Value” means, with respect to the Common Stock, as of any date (or,
if no shares were traded or quoted on such date, as of the next preceding date
on which there was such a trade or quote) (a) the mean between the reported
high and low sale prices of the Common Stock if the Common

 

 

Stock is listed, admitted to unlisted trading privileges or reported on
any foreign or national securities exchange or on the Nasdaq National Market or
SmallCap Market or an equivalent foreign market on which sale prices are
reported; (b) if the Common Stock is not so listed, admitted to unlisted
trading privileges or reported, the closing bid price as reported by the OTC
Bulletin Board or the National Quotation Bureau, Inc. or other comparable
service; or (c) if the Common Stock is not so listed or reported, such price as
the Committee determines in good faith in the exercise of its reasonable
discretion.

 

2.11                           “Incentive
Award” means an Option or Stock Award granted to an Eligible Recipient
pursuant to the Plan.

 

2.12                           “Incentive
Stock Option” means a right to purchase Common Stock granted to an Eligible
Recipient pursuant to Section 6 of the Plan that qualifies as an
“incentive stock option” within the meaning of Section 422 of the Code.

 

2.13                           “Non-Statutory
Stock Option” means a right to purchase Common Stock granted to an Eligible
Recipient pursuant to Section 6 of the Plan that does not qualify as an
Incentive Stock Option.

 

2.14                           “Option”
means an Incentive Stock Option or a Non-Statutory Stock Option.

 

2.15                           “Participant”
means an Eligible Recipient who receives one or more Incentive Awards under the
Plan.

 

2.16                           “Previously
Acquired Shares” means shares of Common Stock or any other shares of
capital stock of the Company that are already owned by the Participant or, with
respect to any Option, that are to be issued upon the exercise of such Option.

 

2.17                           “Retirement”
means termination of employment or service pursuant to and in accordance with
the regular (or, if approved by the Board for purposes of the Plan, early)
retirement/pension plan or practice of the Company or Subsidiary then covering
the Participant, provided that if the Participant is not covered by any such
plan or practice, the Participant will be deemed to be covered by the Company’s
plan or practice for purposes of this determination.

 

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

 

2.19                           “Stock
Award” means an award of Common Stock granted to an Eligible Recipient
pursuant to Section 7 of the Plan.

 

2.20                           “Stock
Unit” means a bookkeeping entry representing the equivalent of one share of
Common Stock that is payable in the form of Common Stock, cash or any
combination of the foregoing.

 

2.21                           “Subsidiary”
means any entity that is directly or indirectly controlled by the Company or
any entity in which the Company has a significant equity interest, as
determined by the Committee.

 

2.22                           “Tax
Date” means the date any withholding tax obligation arises under the Code
or other applicable tax statute for a Participant with respect to an Incentive
Award.

 

3.                                       Plan
Administration.

 

3.1                                 The
Committee.  The Plan will be
administered by the Board or by a committee of the Board.  So long as the Company has a class of its
equity securities registered under Section 12 of the Exchange Act, any
committee administering the Plan will consist solely of two or more members of
the Board who are “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act and, if the Board so determines in its sole discretion,
who are “outside directors” within the meaning of Section 162(m)

 

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of the Code.  Such a committee,
if established, will act by majority approval of the members (but may also take
action with the written consent of all of the members of such committee), and a
majority of the members of such a committee will constitute a quorum.  As used in the Plan, “Committee” will refer
to the Board or to such a committee, if established; provided, however, that
with respect to the grant of any Incentive Award to a Participant who is then a
Committee Member, and to any action that may be taken hereunder by the
Committee regarding any such Incentive Award for so long as such Participant is
a Committee Member, such action may be taken only by the Board.  To the extent consistent with applicable
corporate law, the Committee may delegate to any officers of the Company the
duties, power and authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided, however,
that only the Committee may exercise such duties, power and authority with
respect to Eligible Recipients who are subject to Section 16 of the Exchange
Act and Section 162(m) of the Code.  The
Committee may exercise its duties, power and authority under the Plan in its
sole and absolute discretion without the consent of any Participant or other
party, unless the Plan specifically provides otherwise.  Each determination, interpretation or other
action made or taken by the Committee pursuant to the provisions of the Plan
will be final, conclusive and binding for all purposes and on all persons,
including, without limitation, the Company, the stockholders of the Company,
the participants and their respective successors-in-interest.  No member of the Committee will be liable
for any action or determination made in good faith with respect to the Plan or
any Incentive Award granted under the Plan.

 

3.2                                 Authority
of the Committee.

 

(a)                                  In
accordance with and subject to the provisions of the Plan, the Committee will
have the authority to determine all provisions of Incentive Awards as the
Committee may deem necessary or desirable and as consistent with the terms of
the Plan, including, without limitation, the following: (i) the Eligible
Recipients to be selected as Participants; (ii) the nature and extent of the
Incentive Awards to be made to each Participant (including the number of shares
of Common Stock to be subject to each Incentive Award, any exercise price, the
manner in which Incentive Awards will vest or become exercisable and whether
Incentive Awards will be granted in tandem with other Incentive Awards) and the
form of written agreement, if any, evidencing such Incentive Award; (iii) the
time or times when Incentive Awards will be granted; (iv) the duration of each
Incentive Award; and (v) the restrictions and other conditions to which
the payment or vesting of Incentive Awards may be subject.  In addition, the Committee will have the authority
under the Plan in its sole discretion to pay the economic value of any
Incentive Award in the form of cash, shares of Common Stock, shares of any
capital stock of the Company, Stock Units or any combination of the foregoing.

 

(b)                                 The
Committee will have the authority under the Plan to amend or modify the terms
of any outstanding Incentive Award in any manner, including, without
limitation, the authority to modify the number of shares or other terms and
conditions of an Incentive Award, extend the term of an Incentive Award,
accelerate the exercisability or vesting or otherwise terminate any
restrictions relating to an Incentive Award, accept the surrender of any
outstanding Incentive Award or, to the extent not previously exercised or
vested, authorize the grant of new Incentive Awards in substitution for
surrendered Incentive Awards; provided, however that the amended or modified
terms are permitted by the Plan as then in effect and that any Participant
adversely affected by such amended or modified terms has consented to such
amendment or modification.  No amendment
or modification to an Incentive Award, however, whether pursuant to this
Section 3.2 or any other provisions of the Plan, will be deemed to be a
re-grant of such Incentive Award for purposes of this Plan.

 

(c)                                  In
the event of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, extraordinary dividend or divestiture
(including a spin-off) or any other similar change in corporate structure or
shares, (ii) any purchase, acquisition, sale or disposition of a
significant amount of assets

 

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or a significant
business, (iii) any change in accounting principles or practices, or
(iv) any other similar change, in each case with respect to the Company or
any other entity whose performance is relevant to the grant or vesting of an
Incentive Award, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) may, without the consent of any affected Participant, amend or
modify the vesting criteria of any outstanding Incentive Award that is based in
whole or in part on the financial performance of the Company (or any Subsidiary
or division thereof) or such other entity so as equitably to reflect such
event, with the desired result that the criteria for evaluating such financial
performance of the Company or such other entity will be substantially the same
(in the sole discretion of the Committee or the board of directors of the
surviving corporation) following such event as prior to such event; provided,
however, that the amended or modified terms are permitted by the Plan as then
in effect.

 

(d)                                 The
Committee may permit or require the deferral of any payment, issuance or other
settlement of an Incentive Award subject to such rules and procedures as the
Committee may establish, including the conversion of such payment, issuance or
other settlement into Stock Units and the payment or crediting of interest,
dividends or dividend equivalents.

 

4.                                       Shares
Available for Issuance.

 

4.1                                 Maximum
Number of Shares Available.  Subject
to adjustment as provided in Section 4.3 of the Plan, the maximum number
of shares of Common Stock that will be available for issuance under the Plan
will be 2,000,000 shares of Common Stock, plus any shares of Common Stock
which, as of the date the Plan is approved by the stockholders of the Company,
are reserved for issuance under the Company’s existing Stock Option Plan and
which are not thereafter issued or which have been issued but are subsequently
forfeited and which would otherwise have been available for further issuance
under such plan.  The Committee may use
shares available for issuance under the Plan as the form of payment for
compensation, awards or rights earned or due under deferred or any other
compensation plans or arrangements of the Company or any Subsidiary.  The shares available for issuance under the
Plan may, at the election of the Committee, be either treasury shares or shares
authorized but unissued, and, if treasury shares are used, all references in
the Plan to the issuance of shares will, for corporate law purposes, be deemed
to mean the transfer of shares from treasury.

 

4.2                                 Calculation
of Shares Available.  Shares of
Common Stock (a) that are issued under the Plan or under any deferred or other
compensation plan or arrangement of the Company or any Subsidiary or (b) that
are subject to outstanding Incentive Awards, Stock Units or other awards or
rights earned or due under the Plan or under any deferred or other compensation
plan or arrangement of the Company or any Subsidiary, will be applied to reduce
the maximum number of shares of Common Stock remaining available for issuance
under the Plan.  To the extent that any
shares of Common Stock that are subject to an Incentive Award, Stock Unit or
other award or right earned or due under the Plan or under any deferred or
other compensation plan or arrangement of the Company or any Subsidiary (a) are
not issued to a Participant under the Plan or a participant under any deferred
or other compensation plan or arrangement of the Company or any Subsidiary due
to the fact that such Incentive Award, Stock Unit or other award or right
earned or due under the Plan or under any deferred or other compensation plan
or arrangement of the Company or any Subsidiary lapses, expires, is forfeited
or for any reason is terminated unexercised or unvested, or is settled or paid
in cash or (b) are used to satisfy any exercise price or withholding
obligations, such shares will automatically again become available for issuance
under the Plan.  In addition, to the
extent that a Participant tenders (either by actual delivery or by attestation)
shares of Common Stock already owned by the Participant to the Company in
satisfaction of any exercise price or withholding tax obligations, such shares
will automatically again become available for issuance under the Plan.

 

4.3                                 Adjustments
to Shares and Incentive Awards.  In
the event of any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split, combination of

 

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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) will make appropriate adjustment (which determination
will be conclusive) as to the number and kind of securities or other property
(including cash) available for issuance or payment under the Plan and, in order
to prevent dilution or enlargement of the rights of Participants, (a) the
number and kind of securities or other property (including cash) subject to
outstanding Options, and (b) the exercise price of outstanding Options.

 

5.                                       Participation.

 

Participants in the Plan
will be those Eligible Recipients who, in the judgment of the Committee, have
contributed, are contributing or are expected to contribute to the achievement
of economic objectives of the Company or its Subsidiaries.  Eligible Recipients may be granted from time
to time one or more Incentive Awards, singly or in combination or in tandem
with other Incentive Awards, as may be determined by the Committee in its sole
discretion.  Incentive Awards will be
deemed to be granted as of the date specified in the grant resolution of the Committee,
which date will be the date of any related agreement with the Participant.

 

6.                                       Options.

 

6.1                                 Grant.  An Eligible Recipient may be granted one or
more Options under the Plan, and such Options will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion.  The Committee may designate whether an Option is to be considered
an Incentive Stock Option or a Non-Statutory Stock Option.  To the extent that any Incentive Stock
Option granted under the Plan ceases for any reason to qualify as an “incentive
stock option” for purposes of Section 422 of the Code, such Incentive Stock
Option will continue to be outstanding for purposes of the Plan but will
thereafter be deemed to be a Non-Statutory Stock Option.

 

6.2                                 Exercise
Price.  The per share price to be
paid by a Participant upon exercise of an Option will be determined by the
Committee in its discretion at the time of the Option grant; provided, however,
that such price will not be less than 100% of the Fair Market Value of one
share of Common Stock on the date of grant with respect to an Incentive Stock
Option (110% of the Fair Market Value if, at the time the Incentive Stock
Option is granted, the Participant owns, directly or indirectly, more than 10%
of the total combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation of the Company).

 

6.3                                 Exercisability
and Duration.  An Option will become
exercisable at such times and in such installments as may be determined by the
Committee in its sole discretion at the time of grant; provided, however, that
no Incentive Stock Option may be exercisable after 10 years from its date of
grant (five years from its date of grant if at the time the Incentive Stock
Option is granted, the Participant owns, directly or indirectly, more than 10%
of the total combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation of the Company).

 

6.4                                 Payment
of Exercise Price.  The total
purchase price of the shares to be purchased upon exercise of an Option must be
paid 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 tender of a Broker Exercise Notice, Previously Acquired Shares
(including through delivery of a written attestation of ownership of such
Previously Acquired Shares if permitted, and on terms acceptable, to the
Committee in its sole discretion), a promissory note (on terms acceptable to
the Committee in its sole discretion) or by a combination of such methods.

 

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6.5                                 Manner
of Exercise.  An Option may be
exercised by a Participant in whole or in part from time to time, subject to
the conditions contained in the Plan and in the agreement evidencing such
Option, by delivery in person, by facsimile or electronic transmission or
through the mail of written notice of exercise to the Company (Attention: Chief
Financial Officer) at its principal executive office in Lincolnshire, Illinois
and by paying in full the total exercise price for the shares of Common Stock
to be purchased in accordance with Section 6.4 of the Plan.

 

6.6                                 Aggregate
Limitation of Stock Subject to Incentive Stock Options.  To the extent that the aggregate Fair Market
Value (determined as of the date an Incentive Stock Option is granted) 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 a
Participant during any calendar year (under the Plan and any other incentive
stock option plans of the Company or any subsidiary or parent corporation of
the Company (within the meaning of the Code)) exceeds $100,000 (or such other
amount as may be prescribed by the Code from time to time), such excess Options
will be treated as Non-Statutory Stock Options.  The determination will be made by taking incentive stock options
into account in the order in which they were granted.  If such excess only applies to a portion of an Incentive Stock
Option, the Committee, in its discretion, will designate which shares will be
treated as shares to be acquired upon exercise of an Incentive Stock Option.

 

7.                                       Stock
Awards.

 

An Eligible Recipient may
be granted one or more Stock Awards under the Plan, and such Stock Awards will
be subject to such terms and conditions, consistent with the other provisions
of the Plan, as may be determined by the Committee.  The Participant will have all voting, dividend, liquidation and
other rights with respect to the shares of Common Stock issued to a Participant
as a Stock Award under this Section 7 upon the Participant becoming the holder
of record of such shares; provided, however, that the Committee may impose such
restrictions on the assignment or transfer of a Stock Award as it deems
appropriate; and provided, further, that if the Participant defers the receipt
of the Stock Award under any deferred compensation plan or arrangement of the
Company or any Subsidiary and in lieu thereof receives a Stock Unit, such
Participant will not have all voting, dividend, liquidation and other rights
with respect to the shares of Common Stock issued to the Participant as a Stock
Award under this Section 7.

 

8.                                       Effect
of Termination of Employment or Other Service.

 

8.1                                 Termination
Due to Death, Disability or Retirement. 
Unless otherwise provided by the Committee in its sole discretion in the
agreement evidencing an Incentive Award:

 

(a)                                  In
the event a Participant’s employment or other service with the Company and all
Subsidiaries is terminated by reason of death or Disability, all outstanding
Options then held by the Participant will remain exercisable, to the extent
exercisable as of the date of such termination, for a period of six months
after such termination (but in no event after the expiration date of any such
Option) and all Stock Awards then held by a Participant will, to the extent
applicable, vest and/or continue to vest in the manner determined by the
Committee and set forth in any agreement evidencing such Stock Award.

 

(b)                                 In
the event a Participant’s employment or other service with the Company and all
Subsidiaries is terminated by reason of Retirement, all outstanding Options
then held by the Participant will remain exercisable, to the extent exercisable
as of the date of such termination, for a period of three months after such
termination (but in no event after the expiration date of any such Option) and
all Stock Awards then held by a Participant will, to the extent applicable,
vest and/or continue to vest in the manner determined by the Committee and set
forth in any agreement evidencing such Stock Award.

 

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8.2                                 Termination
for Reasons Other than Death, Disability or Retirement.

 

(a)                                  Unless
otherwise provided by the Committee in its sole discretion in the agreement
evidencing an Incentive Award, in the event a Participant’s employment or other
service is terminated with the Company and all Subsidiaries for any reason
other than death, Disability or Retirement, or a Participant is in the employ
or service of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the
Company (unless the Participant continues in the employ or service of the
Company or another Subsidiary), all rights of the Participant under the Plan
and any agreements evidencing an Option will immediately terminate without notice
of any kind, and no Options then held by the Participant will thereafter be
exercisable and all Stock Awards then held by a Participant will, to the extent
applicable, vest and/or continue to vest in the manner determined by the
Committee and set forth in any agreement evidencing such Stock Award; provided,
however, that if such termination is due to any reason other than termination
by the Company or any Subsidiary for “cause,” all outstanding Options then held
by such Participant 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 expiration date of any such Option).

 

(b)                                 For
purposes of this Section 8.2, “cause” (as determined by the Committee) will be
as defined in any employment or other agreement or policy applicable to the
Participant or, if no such agreement or policy exists, will mean (i)
dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or
attempted injury, in each case related to the Company or any Subsidiary, (ii)
any unlawful or criminal activity of a serious nature, (iii) any intentional
and deliberate breach of a duty or duties that, individually or in the
aggregate, are material in relation to the Participant’s overall duties, or
(iv) any material breach of any employment, service, confidentiality or
non-compete agreement entered into with the Company or any Subsidiary.

 

8.3                                 Modification
of Rights Upon Termination. 
Notwithstanding the other provisions of this Section 8, upon a
Participant’s termination of employment or other service with the Company and
all Subsidiaries, the Committee may, in its sole discretion (which may be
exercised at any time on or after the date of grant, including following such
termination), cause Options (or any part thereof) then held by such Participant
to become or continue to become exercisable and/or remain exercisable following
such termination of employment or service and all Stock Awards then held by a
Participant will, to the extent applicable, vest and/or continue to vest in the
manner determined by the Committee and set forth in any agreement evidencing
such Stock Award; provided, however, that no Option may remain exercisable
beyond its expiration date.

 

8.4                                 Exercise
of Incentive Stock Options Following Termination.  Any Incentive Stock Option that remains unexercised more than one
year following termination of employment by reason of 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.

 

8.5                                 Date
of Termination of Employment or Other Service.  Unless the Committee otherwise determines in its sole discretion,
a Participant’s employment or other service will, for purposes of the Plan, be
deemed to have terminated on the date recorded on the personnel or other
records of the Company or the Subsidiary for which the Participant provides
employment or other service, as determined by the Committee in its sole
discretion based upon such records.

 

9.                                       Payment
of Withholding Taxes.

 

9.1                                 General
Rules.  The Company is entitled to (a) withhold and deduct from
future wages of the Participant (or from other amounts that may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to

 

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satisfy any and all foreign, federal, state and local withholding and
employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment of
dividends with respect to, an Incentive Award or a disqualifying disposition of
stock received upon exercise of an Incentive Stock Option, or (b) require the
Participant 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 an Incentive Award.

 

9.2                                 Special
Rules.  The Committee may, in its
sole discretion and upon terms and conditions established by the Committee,
permit or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in Section 9.1 of
the Plan by electing to tender Previously Acquired Shares, a Broker Exercise
Notice or a promissory note (on terms acceptable to the Committee in its sole
discretion), or by a combination of such methods.

 

10.                                 Change
in Control.

 

10.1                           Change
in Control.  For purposes of this
Section 10, a “Change in Control” of the Company will mean the following:

 

(a)                                  the
sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of the Company (in one transaction or in a
series of related transactions) to a person or entity that is not controlled by
the Company;

 

(b)                                 the
approval by the stockholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company;

 

(c)                                  any
person becomes after the effective date of the Plan the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of (i) 20% or
more, but not 50% or more, of the combined voting power of the Company’s
outstanding securities ordinarily having the right to vote at elections of
directors, unless the transaction resulting in such ownership has been approved
in advance by the Continuity Directors (as defined in Section 10.2 below), or
(ii) 50% or more of the combined voting power of the Company’s outstanding
securities ordinarily having the right to vote at elections of directors
(regardless of any approval by the Continuity Directors);

 

(d)                                 a
merger or consolidation to which the Company is a party if the stockholders of
the Company immediately prior to effective date of such merger or consolidation
have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange
Act), immediately following the effective date of such merger or consolidation,
of securities of the surviving corporation representing (i) more than 50%, but
less than 80%, of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of
directors, unless such merger or consolidation has been approved in advance by
the Continuity Directors, or (ii) 50% or less of the combined voting power
of the surviving corporation’s then outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any approval by the
Continuity Directors);

 

(e)                                  the
Continuity Directors cease for any reason to constitute at least a majority of
the Board; or

 

(f)                                    any
other change in control of the Company of a nature that would be required to be
reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or not
the Company is then subject to such reporting requirement.

 

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10.2                           Continuity
Directors.  For purposes of this
Section 10, “Continuity Directors” of the Company will mean any individuals who
are members of the Board on the effective date of the Plan and any individual
who subsequently becomes a member of the Board whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of at least
a majority of the Continuity Directors (either by specific vote or by approval
of the Company’s proxy statement in which such individual is named as a nominee
for director without objection to such nomination).

 

10.3                           Acceleration
of Vesting.  Without limiting the
authority of the Committee under Sections 3.2 and 4.3 of the Plan, if a Change
in Control of the Company occurs, then, unless otherwise provided by the
Committee in its sole discretion either in the agreement evidencing an
Incentive Award at the time of grant or at any time after the grant of an
Incentive Award, all outstanding Options will become immediately exercisable in
full and will remain exercisable for the remainder of their terms, regardless
of whether the Participant to whom such Options have been granted remains in
the employ or service of the Company or any Subsidiary and all outstanding
Stock Awards then held by a Participant will, to the extent applicable, vest
and/or continue to vest in the manner determined by the Committee and set forth
in any agreement evidencing such Stock Award.

 

11.                                 Rights
of Eligible Recipients and Participants; Transferability.

 

11.1                           Employment
or Service.  Nothing in the Plan
will interfere with or limit in any way the right of the Company or any
Subsidiary to terminate the employment or service of any Eligible Recipient or
Participant at any time, nor confer upon any Eligible Recipient or Participant
any right to continue in the employ or service of the Company or any
Subsidiary.

 

11.2                           Rights
as a Stockholder.  As a holder of
Options, a Participant will have no rights as a stockholder unless and until
such Options are exercised for, or paid in the form of, shares of Common Stock
and the Participant becomes the holder of record of such shares.  Except as otherwise provided in the Plan, no
adjustment will be made for dividends or distributions with respect to such
Options as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may
determine in its discretion.

 

11.3                           Restrictions
on Transfer.

 

(a)                                  Except
pursuant to testamentary will or the laws of descent and distribution and
except as expressly permitted by Section 11.3(b) of the Plan, no right or
interest of any Participant in an Incentive Award prior to the exercise or
vesting of such Incentive Award will be assignable or transferable, or
subjected to any lien, during the lifetime of the Participant, either
voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise.  A Participant will, however,
be entitled to designate a beneficiary to receive an Incentive Award upon such
Participant’s death.  In the event of a
Participant’s death, payment of any amounts due under the Plan will be made to,
and exercise of any Options (to the extent permitted pursuant to Section 8 of
the Plan) will be made by, the Participant’s designated beneficiary.  For purposes of the Plan, a “designated
beneficiary” will be the beneficiary or beneficiaries designated by the
Participant in a writing filed with the Committee in such form and at such time
as the Committee will require in its sole discretion.  If a Participant fails to designate a beneficiary, or if the
designated beneficiary does not survive the Participant or dies before the
designated beneficiary’s exercise of all rights under the Plan, payment of any
amounts due under the Plan will be made to, and exercise of any Options (to the
extent permitted pursuant to Section 8 of the Plan) may be made by, the
Participant’s personal representative.

 

(b)                                 The
Committee may, in its discretion, authorize all or a portion of the Options to
be granted to a Participant to be on terms which permit transfer by such
Participant to (i) the spouse, ex-spouse,

 

9

 

children,
step-children or grandchildren of the Participant (the “Family Members”), (ii)
a trust or trusts for the exclusive benefit of such Family Members, (iii) a
partnership in which such Family Members are the only partners, or (iv) such
other persons or entities as the Committee, in its discretion, may permit, provided
that (1) there may be no consideration for such a transfer (other than the
possible receipt of an ownership interest in an entity to which such a transfer
is made), (2) the award agreement pursuant to which such Options are granted
must be approved by the Committee and must expressly provide for
transferability in a manner consistent with this Section 11.3(b), (3) timely
written notice of the transfer must be provided to the Company by the
Participant, and (4) subsequent transfers of the transferred Options shall be
prohibited except for those in accordance with Section 11.3(a).  Following transfer, any such Option and the
rights of any transferee with respect thereto will continue to be subject to
the same terms and conditions as were applicable immediately prior to the
transfer, including that the events of termination of employment or other
service as provided in the Plan and in any applicable award agreement will
continue to be applied with respect to the original Participant, with the
transferee bound by the consequences of any such termination of employment or
service as specified in the Plan and the applicable award agreement.  The Company will be under no obligation to
provide notice of termination of a Participant’s employment or other service to
any transferee of such Participant’s Options. 
Notwithstanding any Option transfer pursuant to this Section 11.3(b),
the Participant will remain subject to and liable for any employment-related
taxes in connection with the exercise of such Option.

 

11.4                           Breach
of Confidentiality or Non-Compete Agreements.  Notwithstanding anything in the Plan to the contrary, in the
event that a Participant materially breaches the terms of any confidentiality
or non-compete agreement entered into with the Company or any Subsidiary,
whether such breach occurs before or after termination of such Participant’s
employment or other service with the Company or any Subsidiary, the Committee
in its sole discretion may immediately terminate all rights of the Participant
under the Plan and any agreements evidencing an Incentive Award then held by
the Participant without notice of any kind.

 

11.5                           Non-Exclusivity
of the Plan.  Nothing contained in
the Plan is intended to modify or rescind any previously approved compensation
plans or programs of the Company or create any limitations on the power or
authority of the Board to adopt such additional or other compensation
arrangements as the Board may deem necessary or desirable.

 

12.                                 Securities
Law and Other Restrictions.

 

Notwithstanding any other
provision of the Plan or any agreements entered into pursuant to the Plan, the
Company will not be required to issue any shares of Common Stock under this
Plan, and a Participant may not sell, assign, transfer or otherwise dispose of
shares of Common Stock issued pursuant to Incentive Awards granted under the
Plan, unless (a) there is in effect with respect to such shares a
registration statement under the Securities Act and any applicable state or
foreign securities laws or an exemption from such registration under the
Securities Act and applicable state or foreign securities laws, and
(b) there has been obtained any other consent, approval or permit from any
other regulatory body which the Committee, in its sole discretion, deems
necessary or advisable.  The Company may
condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.

 

13.                                 Plan
Amendment, Modification and Termination.

 

The Board may suspend or
terminate the Plan or any portion thereof at any time, and may amend the Plan
from time to time in such respects as the Board may deem advisable in order
that Incentive Awards

 

10

 

under the Plan will conform to any change in applicable laws or
regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no amendments to the Plan
will be effective without approval of the stockholders of the Company if
stockholder approval of the amendment is then required pursuant to Section 422
of the Code or the rules of any stock exchange or Nasdaq or similar regulatory
body.  No termination, suspension or
amendment of the Plan may adversely affect any outstanding Incentive Award
without the consent of the affected Participant; provided, however, that this
sentence will not impair the right of the Committee to take whatever action it
deems appropriate under Sections 3.2, 4.3 and 10 of the Plan.

 

14.                                 Effective
Date and Duration of the Plan.

 

The Plan is effective as
of December 8, 1998, the date it was adopted by the Board.  The Plan will terminate at midnight on
December 8, 2008 and may be terminated prior to such time to by Board
action, and no Incentive Award will be granted after such termination.  Incentive Awards outstanding upon termination
of the Plan may continue to be exercised, or become free of restrictions, in
accordance with their terms.

 

15.                                 Miscellaneous.

 

14.1                           Governing
Law.  The validity, construction,
interpretation, administration and effect of the Plan and any rules, regulations
and actions relating to the Plan will be governed by and construed exclusively
in accordance with the laws of the State of Delaware, notwithstanding the
conflicts of laws principles of any jurisdictions.

 

14.2                           Successors
and Assigns.  The Plan will be
binding upon and inure to the benefit of the successors and permitted assigns
of the Company and the Participants.

 

11BIOSANTE
PHARMACEUTICALS, INC.

DEFERRED
COMPENSATION PLAN

 

TABLE OF CONTENTS

 

	
  ARTICLE 1. NAME, PURPOSES, BACKGROUND

  
	
  1.1.

  	
  Plan Name

  
	
  1.2.

  	
  Plan Purposes

  
	
  1.3.

  	
  Plan Type

  
	
  1.4.

  	
  Plan Background

  
	
  1.5.

  	
  Applicability

  
	
   

  	
   

  
	
  ARTICLE 2. PARTICIPATION

  
	
  2.1.

  	
  Eligibility for Participant Deferral Credits

  
	
  2.2.

  	
  Loss of Eligibility For Participant Deferral
  Credits

  
	
  2.3.

  	
  Transfer Among Participating Employers

  
	
  2.4.

  	
  Multiple Employment

  
	
  2.5.

  	
  Conditions of Participation

  
	
  2.6.

  	
  Termination of Participation

  
	
   

  	
   

  
	
  ARTICLE 3. BENEFITS

  
	
  3.1.

  	
  Participant Stock Accounts

  
	
  3.2.

  	
  Participant Deferral Credits

  
	
  3.3.

  	
  Earnings Credits

  
	
   

  	
   

  
	
  ARTICLE 4. DISTRIBUTION

  
	
  4.1.

  	
  Distribution to Participant Before Severance or
  Disability

  
	
  4.2.

  	
  Distribution to Participant After Severance or
  Disability

  
	
  4.3.

  	
  Distribution to Beneficiary

  
	
  4.5.

  	
  Payment in Event of Incapacity

  
	
  4.6.

  	
  Suspension

  
	
   

  	
   

  
	
  ARTICLE 5. SOURCE OF PAYMENTS; NATURE OF
  INTEREST

  
	
  5.1.

  	
  Establishment of Trust

  
	
  5.2.

  	
  Source of Payments

  
	
  5.3.

  	
  Status of Plan

  
	
  5.4.

  	
  Non-assignability of Benefits

  
	
   

  	
   

  
	
  ARTICLE 6. ADOPTION, AMENDMENT, TERMINATION

  
	
  6.1.

  	
  Adoption

  
	
  6.2.

  	
  Amendment

  
	
  6.3.

  	
  Termination of Participation

  
	
  6.4.

  	
  Termination

  
	
   

  	
   

  
	
  ARTICLE 7. CONSTRUCTION, INTERPRETATION AND
  DEFINITIONS

  
	
  7.1.

  	
  Cross Reference

  
	
  7.2.

  	
  Governing Law

  
	
  7.3.

  	
  Headings

  

 

i

 

	
  7.4.

  	
  Number and Gender

  
	
  7.5.

  	
  Definitions

  
	
   

  	
   

  
	
  ARTICLE 8. ADMINISTRATION

  
	
  8.1.

  	
  Administrator

  
	
  8.2.

  	
  Plan Rules

  
	
  8.3.

  	
  Administrator’s Discretion

  
	
  8.4.

  	
  Specialist’s Assistance

  
	
  8.5.

  	
  Indemnification

  
	
  8.6.

  	
  Benefit Claim Procedure

  
	
  8.7.

  	
  Disputes

  
	
   

  	
   

  
	
  ARTICLE 9. MISCELLANEOUS

  
	
  9.1.

  	
  Withholdings and Offsets

  
	
  9.2.

  	
  Other Benefits

  
	
  9.3.

  	
  No Warranties Regarding Tax Treatment

  
	
  9.4.

  	
  No Rights to Continued Service Created

  
	
  9.5.

  	
  Special Provisions

  
	
  9.6.

  	
  Successors

  

 

 

BIOSANTE PHARMACEUTICALS, INC.

DEFERRED COMPENSATION PLAN

 

 

BIOSANTE
PHARMACEUTICALS, INC.

DEFERRED COMPENSATION PLAN

 

ARTICLE 1.

NAME, PURPOSES, BACKGROUND

 

1.1.                            Plan
Name.  The name of the Plan is
the “BioSante Pharmaceuticals, Inc. Deferred Compensation Plan.”

 

1.2.                            Plan
Purposes.  The purposes of the
Plan are to:

 

(a)                                  assist
the Participating Employers in attracting and retaining key executives,

 

(b)                                 provide
an employer-sponsored tax-deferred capital accumulation vehicle for key
executives and members of the Company’s board of directors, and

 

(c)                                  encourage
additional retirement savings by eligible executives and directors.

 

1.3.                            Plan
Type.  The Plan is an unfunded
plan maintained primarily for the purpose of providing deferred compensation
for non-employee, independent directors and a select group of management or
highly compensated employees of the Company. 
It is intended that, with respect to participation by Qualified Directors,
ERISA will not apply to the Plan and that, with respect to participation by
Qualified Employees, the Plan is exempt from the provisions of Parts 2, 3 and 4
of Subtitle B of Title I of ERISA by operation of sections 201(2), 301(a)(3)
and 401(a)(4) thereof, respectively, and from the provisions of Title IV of
ERISA, to the extent otherwise applicable, by operation of section 4021(b)(6)
thereof.  The Plan is also intended to
be unfunded for tax purposes.  The Plan
will be construed and administered in a manner that is consistent with and
gives effect to the foregoing.

 

1.4.                            Plan
Background.  The Company adopted
the Plan effective as of June 1, 2003.

 

1.5.                            Applicability.  The terms of the Plan apply only to a
Participant who elects deferrals pursuant to Section 3.2 for a Plan Year
beginning after June 1, 2003.

 

ARTICLE 2.

PARTICIPATION

 

2.1.                            Eligibility
for Participant Deferral Credits.

 

(a)                                  First
Day of Plan Year.

 

(i)                                     Qualified
Employee.  An individual who is a
Qualified Employee on the first day of a Plan Year is eligible to defer his or
her Annual Stock Bonus pursuant to Section 3.2(a) with respect to the Plan
Year.

 

1

 

(ii)                                  Qualified
Director.  An individual who is a
Qualified Director on the first day of a Plan Year is eligible to defer his or
her Annual Stock Retainer pursuant to Section 3.2(b) with respect to the Plan
Year and/or his or her Board Meeting Stock Compensation pursuant to Section
3.2(c) with respect to the Plan Year.

 

(b)                                 During
Plan Year.

 

(i)                                     Qualified
Employee.  An individual who becomes
a Qualified Employee after the first day of a Plan Year is eligible to defer
his or her Annual Stock Bonus pursuant to Section 3.2(a) with respect to the
remainder of the Plan Year.

 

(ii)                                  Qualified
Director.  An individual who becomes
a Qualified Director after the first day of a Plan Year is eligible to defer
his or her Annual Stock Retainer pursuant to Section 3.2(b) with respect to the
remainder of the Plan Year and his or her Board Meeting Stock Compensation
pursuant to Section 3.2(c) with respect to the remainder of the Plan Year.

 

2.2.                            Loss
of Eligibility For Participant Deferral Credits.

 

(a)                                  Reasons.

 

(i)                                     Ceasing
to be Qualified Employee.  An
Employee Participant will cease to be eligible to defer his or her Annual Stock
Bonus as of the date on which he or she ceases to be a Qualified Employee.

 

(ii)                                  Ceasing
to be a Qualified Director.  A
Director Participant will cease to be eligible to defer his or her Annual Stock
Retainer and his or her Board Meeting Stock Compensation as of the date on
which he or she ceases to be a Qualified Director.

 

(iii)                               Unforeseeable
Emergency.  A Participant who,
pursuant to Section 3.2(d), has revoked a deferral election in connection with
an Unforeseeable Emergency, or pursuant to Section 4.1(b), has received a
distribution due to an Unforeseeable Emergency, is not eligible to defer Annual
Stock Bonus, Annual Stock Retainer or Board Meeting Stock Compensation with
respect to the remainder of the Plan Year during which the revocation occurs or
the distribution is received, as the case may be, and the immediately following
Plan Year.

 

(iv)                              Accelerated
Distribution.  A Participant who,
pursuant to Section 4.1(c), has received an accelerated distribution, is not
eligible to defer Annual Stock Bonus, Annual Stock Retainer or Board Meeting
Stock Compensation with respect to the remainder of the Plan Year during which
the distribution is received and the immediately following Plan Year.

 

2

 

(v)                                 401(k)
Plan Hardship Withdrawal.  A
Qualified Employee who receives a hardship withdrawal from a 401(k) plan
maintained by a Participating Employer, or by any other employer required to be
aggregated with the Participating Employer under Code section 414(b), (c), (m)
or (o), is not eligible to defer Annual Stock Bonus under the Plan to the
extent required to comply with the terms of the 401(k) plan.

 

(b)                                 Effect
on Deferral Elections.  An Active
Participant who, pursuant to subsection (a) above, loses his or her eligibility
to defer for a Plan Year is not eligible for further deferral credits in the
form of Stock Units relating to deferral elections made pursuant to Section 3.2
for the Plan Year other than credits relating to Annual Stock Bonus, Annual
Stock Retainer or Board Meeting Stock Compensation with respect to the period
before the loss of eligibility, and any other Annual Stock Bonus, Annual Stock
Retainer or Board Meeting Stock Compensation that would have otherwise been
deferred in connection with a deferral election made pursuant to Section 3.2
for the Plan Year will be paid to the Participant as if he or she had not made
the deferral election.

 

2.3.                            Transfer
Among Participating Employers. 
An Employee Participant who transfers employment from one Participating
Employer to another Participating Employer and who continues to be a Qualified
Employee after the transfer will, for the duration of the Plan Year during
which the transfer occurs, continue to receive credits in the form of Stock
Units pursuant to Section 3.2(a) of the Plan, in accordance with the deferral
election in effect for the portion of the Plan Year before the transfer, as a
Qualified Employee of such other Participating Employer.

 

2.4.                            Multiple
Employment.  An Employee
Participant who is simultaneously employed as a Qualified Employee with more
than one Participating Employer will participate in the Plan as a Qualified
Employee of all such Participating Employers on the basis of a single deferral
election pursuant to Section 3.2(a) applied ratably to his or her Annual Stock
Bonus from each Participating Employer.

 

2.5.                            Conditions
of Participation.  Each
Qualified Employee and Qualified Director, as a condition of participation in
the Plan, is bound by all the terms and conditions of the Plan and the Plan
Rules, and must furnish to the Administrator such pertinent information and
execute such election forms and other instruments as the Administrator or Plan
Rules may require by such dates as the Administrator or Plan Rules may
establish.  All elections, directions,
designations and similar actions required in connection with the Plan must be
made in accordance with and are subject to the terms of the Plan and Plan
Rules.

 

2.6.                            Termination
of Participation.  A Participant
will cease to be a Participant as of the date on which he or she is not then
eligible to make deferrals and his or her entire Stock Account balance has been
distributed.

 

3

 

ARTICLE 3.

BENEFITS

 

3.1.                            Participant
Stock Accounts.

 

(a)                                  Stock
Account.  For each Participant who
elects deferrals pursuant to Section 3.2, the Administrator will establish and
maintain a Stock Account.

 

(b)                                 Subaccounts.  If an Employee Participant makes deferrals
with respect to Annual Stock Bonus from more than one Participating Employer,
amounts attributable to each Participating Employer will be credited to
separate subaccounts within the appropriate Stock Account.

 

3.2.                            Participant
Deferral Credits.

 

(a)                                  Annual
Stock Bonus.  Annual Stock Bonus
deferrals by an Employee Participant will be made in accordance with the
following rules:

 

(i)                                     An
Employee Participant may elect to defer all or any portion of his or her Annual
Stock Bonus for the Plan Year.

 

(ii)                                  An
election made by an Employee Participant pursuant to this subsection will be
effective at the time and in the manner specified in Plan Rules after the
Administrator receives a complete and accurate election provided receipt is
prior to the last day of the Plan Year immediately preceding the Plan Year in
which the Annual Stock Bonus is earned or, in the case of an individual who
becomes a Qualified Employee after the first day of a Plan Year, within 30 days
after he or she becomes a Qualified Employee. 
In connection with the adoption of this Plan, a Qualified Employee’s
election must be received by the Administrator within 30 days after the
Effective Date.

 

(b)                                 Annual
Stock Retainer.  Annual Stock
Retainer deferrals by a Director Participant will be made in accordance with
the following rules:

 

(i)                                     A
Director Participant may elect to defer all or any portion of his or her Annual
Stock Retainer for the Plan Year.

 

(ii)                                  An
election made by a Director Participant pursuant to this subsection will be
effective at the time and in the manner specified in Plan Rules after the
Administrator receives a complete and accurate election provided receipt is
prior to the last day of the Plan Year immediately preceding the Plan Year in
which the Annual Stock Retainer is earned or, in the case of an individual who
becomes a Qualified Director after the first day of a Plan Year, within 30 days
after he or she becomes a Qualified Director. 
In connection with the adoption of this Plan, a Qualified Director’s
election must be received by the Administrator within 30 days after the
Effective Date.

 

4

 

(c)                                  Board
Meeting Stock Compensation.  Board
Meeting Stock Compensation deferrals by a Director Participant will be made in
accordance with the following rules:

 

(i)                                     A
Director Participant may elect to defer all or any portion of his or her Board
Meeting Stock Compensation for the Plan Year.

 

(ii)                                  An
election made by a Director Participant pursuant to this subsection will be
effective at the time and in the manner specified in Plan Rules after the
Administrator receives a complete and accurate election provided receipt is
prior to the last day of the Plan Year immediately preceding the Plan Year in
which the Board Meeting Stock Compensation is earned or, in the case of an
individual who becomes a Qualified Director after the first day of a Plan Year,
within 30 days after he or she becomes a Qualified Director.  In connection with the adoption of this
Plan, a Qualified Employee’s election must be received by the Administrator
within 30 days after the Effective Date.

 

(d)                                 Revocation
of Deferral Election.  An Active
Participant may revoke a deferral election made pursuant to Section 3.2(a), (b)
or (c) after the election becomes effective if, and only if, the Participant
submits a request to the Administrator at the time and in the manner specified
in Plan Rules and the Administrator determines that the Participant has
experienced an Unforeseeable Emergency. 
The revocation will be effective as soon as administratively practicable
after the Administrator’s determination that the Participant has experienced an
Unforeseeable Emergency.

 

(e)                                  Participants
Who Become Participants After First Day of Plan Year.  Any election pursuant to Section 3.2(a) for
a Plan Year by an Employee Participant who becomes a Qualified Employee after
the first day of the Plan Year applies only to the portion of the Annual Stock
Bonus relating to services performed after the effective date of the election,
as determined by the Administrator.  Any
election pursuant to Section 3.2(b) for a Plan Year by a Director Participant
who becomes a Qualified Director after the first day of the Plan Year applies
only to the portion of the Annual Stock Retainer relating to services performed
after the effective date of the election, as determined by the
Administrator.  Any election pursuant to
Section 3.2(c) for a Plan Year by a Director Participant who becomes a
Qualified Director after the first day of the Plan Year applies only to the
portion of the Board Meeting Stock Compensation relating to services performed
after the effective date of the election, as determined by the Administrator.

 

(f)                                    Amount
and Timing of Credits.  An Active
Participant’s Stock Account will be credited with the number of whole and
fractional Stock Units equal to the number of Shares such Active Participant
would have otherwise received in connection with his or her Annual Stock Bonus,
Annual Stock Retainer and/or Board Meeting Stock Compensation but for his or
her deferral election pursuant to this section on the date on which the
Participant would have otherwise received the

 

5

 

Annual Stock Bonus, Annual Stock Retainer and/or Board
Meeting Stock Compensation but for his or her deferral election pursuant to
this section.

 

(g)                                 Administrative
Reduction.  The Administrator may
reduce the amount of any deferral that would otherwise be made pursuant to this
section to the extent determined by the Administrator to be necessary to effect
any required payroll withholding, contributions or deferrals pursuant to any
other plan maintained by any Affiliate or any other deductions.

 

3.3.                            Earnings
Credits.  A Participant’s Stock
Account will be credited as of the date on which dividends are paid on the
Shares with that number of whole and fractional Stock Units determined by
dividing the dollar amount of the dividends that would have been payable to the
Participant if the number of Stock Units credited to the Participant’s Stock
Account on the record date for such dividend payment had then been Shares
registered in the name of such Participant by the Price per Stock on the date
as of which the credit is made.

 

3.4.                            Adjustments
to Stock Units.  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 Company’s corporate structure or the Shares, the Administrator
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind
of securities or other property (including cash) available for issuance or
distribution under the Plan and as to the number and kind of Stock Units
credited to Stock Accounts.

 

ARTICLE 4.

DISTRIBUTION

 

4.1.                            Distribution
to Participant Before Severance or Disability.

 

(a)                                  In-Service
Distributions.

 

(i)                                     Each
Participant will be provided with one opportunity to elect to receive a
distribution of all or any portion of his or her Stock Account as of a
specified date or dates prior to his or her Severance date or Disability.  The election must be made in conjunction
with the first deferral election that the Participant makes pursuant to Section
3.2.  The Participant will not have any
other opportunity to make an election pursuant to this subsection.

 

(ii)                                  The
first distribution date specified in an election made pursuant to clause (i)
may not be before the first day of the second Plan Year after the Plan Year to
which the deferral election relates.  A
Participant may not specify more than one distribution date per Plan Year.

 

6

 

(iii)                               A
Participant will be provided with one opportunity to elect to either delay or
cancel each date specified in an election made pursuant to clause (i).  An election pursuant to this clause will not
be valid and will not have any effect unless it is made on a properly completed
form received by the Administrator before the first day of the Plan Year
immediately preceding the Plan Year that includes the distribution date
originally specified.

 

(iv)                              If
the Participant experiences a Severance or Disability before a specified date,
the Participant’s election pursuant to this subsection will become ineffective
on his or her Severance date or Disability and distribution of his or her
remaining Stock Account balance will be made pursuant to Section 4.2 or 4.3, as
the case may be.

 

(v)                                 Any
distribution pursuant to this subsection will be made in a lump sum payment of
whole Shares on or as soon as administratively practicable after the date
specified by the Participant.  If the
Participant elected a specific Stock amount, the amount of the distribution
will be the specified amount or the balance of the Participant’s Stock Account
as of the Valuation Date coinciding with or immediately preceding the date on
which the payment is made (reduced by the amount of any other distribution from
the Stock Account after that Valuation Date), whichever is less.  If the Participant elected a specific
percentage of the Stock Account, the amount of the distribution will be the
specified percentage of the Participant’s Stock Account as of the Valuation
Date coinciding with or immediately preceding the date on which the payment is
made (reduced by the amount of any other distribution from the Stock Account
after that Valuation Date).  Any
fractional Share will be valued based on the Price per Share on the date of the
distribution and the value of the fractional Share will be distributed to the
Participant in cash.

 

(b)                                 Withdrawals
Due to Unforeseeable Emergency. 
Prior to a Participant’s Severance date or Disability, a distribution
will be made to a Participant from his or her Stock Account if the Participant
submits a written distribution request to the Administrator and the
Administrator determines that the Participant has experienced an Unforeseeable
Emergency.  The amount of the
distribution may not exceed the lesser of (a) the amount necessary to satisfy
the emergency, as determined by the Administrator, and (b) the balance of the
Stock Account as of the Valuation Date coinciding with or immediately preceding
the date of the distribution (reduced by the amount of any other distribution
from the Stock Account after that Valuation Date).  The distribution will be made in the form of a lump sum payment
of whole Shares as soon as administratively practicable after the
Administrator’s determination that the Participant has experienced an
Unforeseeable Emergency.  Any fractional
Share will be valued based on the Price per Share on the date of the distribution
and the value of the fractional Share will be distributed to the Participant in
cash.

 

(c)                                  Accelerated
Distribution.  Prior to a
Participant’s Severance date or Disability, the

 

7

 

Participant may
elect to receive a distribution in an amount equal to 90 percent of his or her
Stock Account balance as of the Valuation Date coinciding with or immediately
preceding the date on which the payment is made (reduced by the amount of any
other distribution from the Stock Account after that Valuation Date), and the
remaining 10 percent balance of the Stock Account will be permanently forfeited
as of that Valuation Date.  The
distribution will be made in the form of a lump sum payment of whole Shares as
soon as administratively practicable after the Participant’s properly completed
written election is filed with the Administrator.  Any fractional Share will be valued based on the Price per Share
on the date of the distribution and the value of the fractional Share will be
distributed to the Participant in cash.

 

(d)                                 Reduction
of Stock Account Balance.  The
balance of the Participant’s Stock Account will be reduced (but not below zero)
by the amount of the distribution as of the beginning of the next day after the
Valuation Date coinciding with or last preceding the date of the distribution.

 

4.2.                            Distribution
to Participant After Severance or Disability.

 

(a)                                  Time.  Distribution to a Participant will be made
or commence on or as soon as administratively practicable after the date of the
Participant’s Disability, Retirement, or other Severance.

 

(b)                                 Form.

 

(i)                                     Severance
Before Retirement or Disability. 
Upon a Participant’s Severance before his or her Retirement or
Disability, distribution to the Participant will be made in the form of a lump
sum payment of whole Shares.  Any
fractional Share will be valued based on the Price per Share on the date of the
distribution and the value of the fractional Share will be distributed to the
Participant in cash.

 

(ii)                                  Retirement
or Disability.  Upon a Participant’s
Retirement or Disability, distribution to the Participant will be made in the
form of a lump sum payment of whole Shares unless (1) the Participant made a
written election, on a form provided by the Administrator, to receive his or
her distribution in the form of up to 10 annual installment payments of whole
Shares and (2) his or her properly completed election form is filed with the
Administrator before the first day of the Plan Year immediately preceding the
Plan Year that includes his or her Retirement or Disability.  Any fractional Share will be valued based on
the Price per Share on the date of the distribution and the value of the
fractional Share will be distributed to the Participant in cash.  Not more than once during any 12-month
period, a Participant may change an election made pursuant to this subsection,
but the change will not be valid and will not have any effect unless it is made
on a properly completed form received by the Administrator before the first day
of the Plan Year immediately preceding the Plan Year that

 

8

 

includes the
Participant’s Retirement or Disability. 
Until an election becomes effective, it will have no effect on any prior
election whether or not such prior election became effective before or after
the Administrator received the later election. 
When an election becomes effective, it will automatically supersede any
prior election then in effect.

 

(c)                                  Amount.

 

(i)                                     Lump
Sum.  The amount of a lump sum
payment in the form of whole Shares from a Participant’s Stock Account will be
equal to the number of Stock Units remaining in the Stock Account as of the
Valuation Date coinciding with or immediately preceding the date on which the
payment is made (reduced by the amount of any other distribution from the Stock
Account after that Valuation Date).  Any
fractional Share will be valued based on the Price per Share on the date of the
distribution and the value of the fractional Share will be distributed to the
Participant in cash.

 

(ii)                                  Installments.  The amount of an installment payment in the
form of Shares from a Participant’s Stock Account will be determined by
dividing the number of whole Stock Units remaining in the Stock Account as of
the Valuation Date coinciding with or immediately preceding the date on which
the payment is made (reduced by the amount of any other distribution from the
Stock Account after that Valuation Date) by the total number of remaining
payments (including the current payment). 
Any fractional Share will be valued based on the Price per Share on the
date of the distribution and the value of the fractional Share will be
distributed to the Participant in cash. 
The undistributed portion of a Stock Account distributed in the form of
installment payments will continue to be credited with earnings in accordance
with Section 3.3.

 

(d)                                 Special
Rules.  The provisions of this
subsection apply notwithstanding subsection (a), (b) or (c) above or any
election by a Participant to the contrary.

 

(i)                                     Divestitures.

 

(1)                                  If
some or all of the assets of a Participating Employer are sold or otherwise
disposed of to an unrelated third party, the Administrator may, but is not
required to, cause to be distributed the Stock Account of any Employee
Participant whose employment with all Affiliates is terminated in connection
with the sale or disposition.  Any such
distribution will be made in the form of a lump sum payment of whole Shares as
soon as administratively practicable after the date of the sale or
disposition.  Any fractional Share will
be valued based on the Price per Share on the date of the distribution and the
value of the fractional Share will be distributed to the Participant in
cash.  The amount of the payment will be
determined in accordance with subsection (c).

 

9

 

(2)                                  If
a Participating Employer ceases to be an Affiliate, unless otherwise provided
in an agreement between an Affiliate and the Participating Employer or an
Affiliate and an unrelated third-party acquirer:

 

(A)                              An Employee
Participant who is employed with the Participating Employer or

 

(B)                                a
Participant who is not employed with the Participating Employer but has a Stock
Account balance attributable to service with the Participating Employer as a
Qualified Employee

 

will not become
entitled to his or her Stock Account balance attributable to service with the
Participating Employer as a Qualified Employee solely as a result of the
cessation and the Participating Employer will, after the date on which it
ceases to be an Affiliate, continue to be solely responsible to provide
benefits to the Participant at least equal to the balance of the Stock Account
as of the effective date of the cessation and as thereafter increased by
deferral credits relating to the period before the effective date and earnings
credits pursuant to Section 3.3.

 

(ii)                                  Withdrawals
Due to Unforeseeable Emergency.  If
a Participant is receiving installment payments, a distribution will be made to
a Participant from his or her Stock Account if the Participant submits a
written distribution request to the Administrator and the Administrator
determines that the Participant has experienced an Unforeseeable
Emergency.  The amount of the
distribution may not exceed the lesser of (a) the amount necessary to satisfy
the emergency, as determined by the Administrator, and (b) the balance of the
Stock Account as of the Valuation Date coinciding with or immediately preceding
the date of the distribution (reduced by the amount of any other distribution
from the Stock Account after that Valuation Date).  The distribution will be made in the form of a lump sum payment
of whole Shares as soon as administratively practicable after the
Administrator’s determination that the Participant has experienced an
Unforeseeable Emergency.  Any fractional
Share will be valued based on the Price per Share on the date of the
distribution and the value of the fractional Share will be distributed to the
Participant in cash.

 

(iii)                               Accelerated
Distribution.  If a Participant is
receiving installment payments, the Participant may elect to receive a
distribution in an amount equal to 90 percent of his or her Stock Account
balance as of the Valuation Date coinciding with or immediately preceding the
date on which the payment is made (reduced by the amount of any other
distribution from the Stock Account after that Valuation Date), and the

 

10

 

remaining 10
percent balance of the Stock Account will be permanently forfeited as of that
Valuation Date.  The distribution will
be made in the form of a lump sum payment of whole Shares as soon as
administratively practicable after the Participant’s properly completed written
election is filed with the Administrator. 
Any fractional Share will be valued based on the Price per Share on the
date of the distribution and the value of the fractional Share will be
distributed to the Participant in cash.

 

(e)                                  Reduction
of Stock Account Balance.  The
balance of the Stock Account from which a distribution is made will be reduced
(but not below zero) by the amount of the distribution as of the beginning of
the next day after the Valuation Date coinciding with or last preceding the
date of the distribution.

 

4.3.                            Distribution
to Beneficiary.

 

(a)                                  Time.  Distribution to a Beneficiary will be made
as soon as administratively practicable after the date on which the
Administrator receives notice of the Participant’s death and determines that
the Beneficiary is entitled to receive the distribution.

 

(b)                                 Form.  Distribution to the Participant’s
Beneficiary will be made in the form of a lump sum payment whether or not
payments had commenced to the Participant in the form of installments prior to
his or her death.  The distribution will
be made in the form of whole Shares. 
Any fractional Share will be valued based on the Price per Share on the
date of the distribution and the value of the fractional Share will be
distributed to the Beneficiary in cash.

 

(c)                                  Amount.  The amount of a lump sum payment will be
equal to the number of whole Stock Units remaining in the Participant’s Stock
Account as of the Valuation Date coinciding with or immediately preceding the
date on which the payment is made (reduced by the amount of any other
distribution from the Stock Account after that Valuation Date).  Any fractional Share will be valued based on
the Price per Share on the date of the distribution and the value of the
fractional Share will be distributed to the Participant in cash.  If there are multiple Beneficiaries, the
total amount distributed will be divided among the Beneficiaries as directed by
the Participant in the Beneficiary designation.

 

(d)                                 Reduction
of Stock Account Balance.  The
balance of the Stock Account from which a distribution is made will be reduced
(but not below zero) by the amount of the distribution as of the beginning of
the next day after the Valuation Date coinciding with or immediately preceding
the date of the distribution.

 

(e)                                  Beneficiary
Designation.

 

(i)                                     Each
Participant may designate, on a form furnished by the Administrator, one or
more primary Beneficiaries or alternative Beneficiaries to receive all or a
specified part of his or her Stock Account after his or her death, and the
Participant may change or revoke any such designation from time

 

11

 

to time.  No such designation, change or revocation is
effective unless executed by the Participant and received by the Administrator
during the Participant’s lifetime.

 

(ii)                                  If
a Participant:

 

(1)                                  fails
to designate a Beneficiary, or

 

(2)                                  revokes
a Beneficiary designation without naming another Beneficiary, or

 

(3)                                  designates
one or more Beneficiaries, none of whom survives the Participant or exists at
the time in question,

 

for all or any
portion of his or her Stock Account, such Stock Account or portion will be paid
to the Participant’s surviving spouse or, if the Participant is not survived by
a spouse, to the representative of the Participant’s estate.

 

(iii)                               The
automatic Beneficiaries specified above and, unless the designation otherwise
specifies, the Beneficiaries designated by the Participant, become fixed as of
the Participant’s death so that, if a Beneficiary survives the Participant but
dies before the receipt of the payment due such Beneficiary, the payment will
be made to the representative of such Beneficiary’s estate.  Any designation of a Beneficiary by name
that is accompanied by a description of relationship or only by statement of
relationship to the Participant is effective only to designate the person or
persons standing in such relationship to the Participant at the Participant’s
death.

 

4.4.                            Payment
in Event of Incapacity.  If any
individual entitled to receive any payment under the Plan is, in the judgment
of the Administrator, physically, mentally or legally incapable of receiving or
acknowledging receipt of the payment, and no legal representative has been
appointed for the individual, the Administrator may (but is not required to)
cause the payment to be made to any one or more of the following as may be
chosen by the Administrator:  the
Beneficiary (in the case of the incapacity of a Participant); the institution
maintaining the individual; a custodian for the individual under the Uniform
Transfers to Minors Act of any state; or the individual’s spouse, children,
parents, or other relatives by blood or marriage.  The Administrator is not required to see to the proper
application of any such payment and the payment completely discharges all
claims under the Plan against the Participating Employer, the Plan and Trust to
the extent of the payment.

 

4.5.                            Suspension.  If a Participant who is receiving
installment payments again becomes a Qualified Employee or Qualified Director,
the installment payments will stop.  The
remaining balance of the Participant’s Stock Account will be distributed upon
the Participant’s subsequent Severance or Disability in accordance with Article
4 without regard to any election made pursuant to Section 4.2(b)(ii) prior to
the Participant’s last

 

12

 

preceding
Retirement or Disability.

 

4.6.                            Shares
Available for Issuance.  Any
Shares distributed under this Plan will be issued under the Company’s Amended
and Restated 1998 Stock Plan.  Shares
available for issuance pursuant to Stock Units credited to a Participant’s
Stock Account will be reserved for issuance under the Company’s Amended and
Restated 1998 Stock Plan.

 

4.7.                            Securities
Laws and Other Restrictions. 
Notwithstanding any other provision of the Plan or any agreements entered
into pursuant to the Plan to the contrary, neither the Company nor the Trustee
is required to issue or distribute any Shares under the Plan, and a Participant
or distributee may not sell, assign, transfer or otherwise dispose of Shares
issued or distributed pursuant to the Plan, unless (a) there is in effect with
respect to such Shares a registration statement under the Securities Act and
any applicable securities laws of a state or foreign jurisdiction or an
exemption from such registration under the Securities Act and applicable state
or foreign securities laws, and (b) there has been obtained any other consent,
approval or permit from any other regulatory body which the Company, in its
sole discretion, deems necessary or advisable. 
The Company or the Trustee may condition such issuance, distribution,
sale or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates representing
Shares, as may be deemed necessary or advisable by the Company in order to
comply with such securities law or other restrictions.

 

ARTICLE 5.

SOURCE OF PAYMENTS; NATURE OF INTEREST

 

5.1.                            Establishment
of Trust.  A Participating
Employer may establish a Trust, or may be covered by a Trust established by
another Participating Employer, with an independent corporate trustee.  The Trust must (a) be a grantor trust with
respect to which the Participating Employer is treated as the grantor for
purposes of Code section 677, (b) not cause the Plan to be funded for purposes
of Title I of ERISA and (c) provide that the Trust assets will, upon the
insolvency of a Participating Employer, be used to satisfy claims of the
Participating Employer’s general creditors. 
The Participating Employers may from time to time transfer to the Trust
cash, shares of Company Stock or other marketable securities or other property
acceptable to the Trustee in accordance with the terms of the Trust.

 

5.2.                            Source
of Payments.

 

(a)                                  Each
Participating Employer will pay, from its general assets, the portion of any
benefit pursuant to Article 4 or Section 6.3 or 6.4 attributable to a
Participant’s Stock Account with respect to that Participating Employer, and
all costs, charges and expenses relating thereto.

 

(b)                                 The
Trustee will make distributions to Participants and Beneficiaries from the
Trust in satisfaction of a Participating Employer’s obligations under the Plan
in accordance with the terms of the Trust. 
The Participating Employer is responsible for paying any benefits
attributable to a Participant’s Stock Account with respect

 

13

 

to that
Participating Employer that are not paid by the Trust.

 

5.3.                            Status
of Plan.  Nothing contained in
the Plan or Trust is to be construed as providing for assets to be held for the
benefit of any Participant or any other person or persons to whom benefits are
to be paid pursuant to the terms of the Plan, the Participant’s or other
person’s only interest under the Plan being the right to receive benefits in
accordance with the terms of the Plan. 
The Trust is established only for the convenience of the Participating
Employers and the Participants, and no Participant has any interest in the
assets of the Trust.  To the extent the
Participant or any other person acquires a right to receive benefits under the
Plan or the Trust, such right is no greater than the right of any unsecured
general creditor of the Participating Employer.

 

5.4.                            Non-assignability
of Benefits.  The benefits
payable under the Plan and the right to receive future benefits under the Plan
may not be anticipated, alienated, sold, transferred, assigned, pledged,
encumbered or subjected to any charge or legal process.

 

ARTICLE 6.

ADOPTION, AMENDMENT, TERMINATION

 

6.1.                            Adoption.  With the prior approval of the
Administrator, an Affiliate may adopt the Plan and become a Participating
Employer by furnishing to the Administrator a certified copy of a resolution of
its Board adopting the Plan.

 

6.2.                            Amendment.

 

(a)                                  Right.  The Company reserves the right to amend the
Plan at any time to any extent that it may deem advisable.

 

(b)                                 Method.  To be effective, an amendment must be stated
in a written instrument approved in advance or ratified by the Company’s Board
and executed in the name of the Company by its President or a Vice President
and attested by the Secretary, the Deputy Secretary or an Assistant Secretary.

 

(c)                                  Binding
Effect.  An amendment adopted in
accordance with subsection (b) above is binding on all interested parties as of
the effective date stated in the amendment; provided, however, that no
amendment may retroactively deprive any Participant, or the Beneficiary of a
deceased Participant, of any benefit to which he or she is entitled under the
terms of the Plan in effect immediately prior to the effective date of the
amendment or the date on which the amendment is adopted, whichever is later.

 

(d)                                 Applicability
to Participants Who Have Experienced a Severance or Disability.  The provisions of the Plan in effect on a
Participant’s Severance date or Disability will, except as otherwise expressly
provided by a subsequent amendment, continue to apply to such Participant.

 

(e)                                  Change
of Control.  Notwithstanding
anything in the Plan to the contrary, from and after the occurrence of a Change
of Control, no amendment may be made to

 

14

 

the Plan that
would adversely affect the terms and conditions associated with the Stock
Account balance of any Participant as of the date of the Change of Control.

 

6.3.                            Termination
of Participation. 
Notwithstanding any other provision of the Plan to the contrary, if
determined by the Administrator to be necessary to ensure that the Plan is
exempt from ERISA to the extent contemplated by Section 1.3, or upon the
Administrator’s determination that a Participant’s interest in the Plan has
been or is likely to be includable in the Participant’s gross income for
federal income tax purposes prior to the actual payment of benefits pursuant to
the Plan, the Administrator may take any or all of the following steps:

 

(a)                                  terminate
the Participant’s future participation in the Plan;

 

(b)                                 cause
the Participant’s entire interest in the Plan to be distributed to the
Participant in the form of an immediate lump sum payment of whole Shares in an
amount determined in accordance with Section 4.2(c); and/or

 

(c)                                  transfer
the benefits that would otherwise be payable pursuant to the Plan for all or
any of the Participants to a new plan that is similar in all material respects
(other than those which require the action in question to be taken.)

 

6.4.                            Termination.  The Company reserves the right to terminate
the Plan in its entirety at any time. 
Each Participating Employer reserves the right to cease its
participation in the Plan at any time.  The
Plan will terminate in its entirety or with respect to a particular
Participating Employer as of the date specified by the Company or such
Participating Employer in a written instrument adopted in the same manner as an
amendment.  Upon the termination of the
Plan in its entirety or with respect to any Participating Employer, the Company
or Participating Employer, as the case may be, will either cause (a) any
benefits to which Participants have become entitled prior to the effective date
of the termination to continue to be paid in accordance with the provisions of
Article 4 or (b) the entire interest in the Plan of any or all Participants, or
the Beneficiaries of any or all deceased Participants, to be distributed in the
form of an immediate lump sum payment of whole Shares in an amount determined
in accordance with Section 4.2(c).

 

ARTICLE 7.

CONSTRUCTION, INTERPRETATION AND DEFINITIONS

 

7.1.                            Cross
Reference.  References within a
section of the Plan to a particular subsection refer to that subsection within
the same section and references within a section or subsection to a particular
clause refer to that clause within the same section or subsection, as the case
may be.

 

7.2.                            Governing
Law.  To the extent that state
law is not preempted by the provisions of ERISA, or any other laws of the
United States, all questions pertaining to the construction, validity, effect
and enforcement of the Plan will be determined in accordance with the internal,
substantive laws of the State of Illinois without regard to the conflict of law
rules of the State of Illinois or any other jurisdiction.

 

15

 

7.3.                            Headings.  The headings of articles and sections are
included solely for convenience of reference; if there exists any conflict
between such headings and the text of the Plan, the text will control.

 

7.4.                            Number
and Gender.  Wherever
appropriate, the singular may be read as the plural, the plural may be read as
the singular and one gender may be read as the other gender.

 

7.5.                            Definitions.  The definitions set forth in this Section
apply in constructing this instrument unless the context otherwise indicates.

 

Active
Participant. 
“Active Participant” means a Director Participant or an Employee
Participant.

 

Administrator.
 “Administrator” means the Company
or the person to whom administrative duties are delegated pursuant to the
provisions of Section 8.1, as the context requires.

 

Affiliate.  “Affiliate” means the Company and any
corporation at least a majority of whose outstanding securities ordinarily
having the right to vote at elections of directors is owned, directly or
indirectly, by the Company.

 

Amended
and Restated 1998 Stock Plan.  “Amended and Restated 1998 Stock Plan” means the BioSante
Pharmaceuticals, Inc. Amended and Restated 1998 Stock Plan, as such plan is
hereafter amended from time to time, and any successor plan thereto.

 

Annual
Stock Bonus.  “Annual Stock Bonus” for a Plan Year means that portion of an
annual bonus earned by an Employee Participant during the Plan Year for his or
her services during the Plan Year as a Qualified Employee that is intended to
be paid in whole Shares to the Employee Participant by a Participating Employer
during the succeeding Plan Year, net of any contributions and deductions specified
in Plan Rules, under the Amended and Restated 1998 Stock Plan.

 

Beneficiary.
 “Beneficiary” with respect to a
Participant is the person designated or otherwise determined under the
provisions of Section 4.3(e) as the distributee of benefits payable after the
Participant’s death.  A person
designated or otherwise determined to be a Beneficiary under the terms of the
Plan has no interest in or right under the Plan until the Participant in
question has died.  A Beneficiary will
cease to be such on the day on which all benefits to which he, she or it is
entitled under the Plan have been distributed.

 

Board.  “Board” means the board of directors of the
Affiliate in question.  When the Plan
provides for an action to be taken by the Board, the action may be taken by any
committee or individual authorized to take such action pursuant to a proper
delegation by the board of directors in question.

 

Change
of Control. 
“Change of Control” shall mean the first of the following events to
occur:

 

16

 

(a)                                  the
sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of the Company (in one transaction or in a
series of related transactions) to a person or entity that is not controlled by
the Company;

 

(b)                                 the
approval by the stockholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company;

 

(c)                                  any
person becomes after the effective date of the Plan the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (i)
20% or more, but not 50% or more, of the combined voting power of the Company’s
outstanding securities ordinarily having the right to vote at elections of
directors, unless the transaction resulting in such ownership has been approved
in advance by the Continuity Directors (as defined in below), or (ii) 50% or
more of the combined voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors (regardless of
any approval by the Continuity Directors);

 

(d)                                 a
merger or consolidation to which the Company is a party if the stockholders of
the Company immediately prior to effective date of such merger or consolidation
have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange
Act), immediately following the effective date of such merger or consolidation,
of securities of the surviving corporation representing (i) more than 50%, but
less than 80%, of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of
directors, unless such merger or consolidation has been approved in advance by
the Continuity Directors, or (ii) 50% or less of the combined voting power
of the surviving corporation’s then outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any approval by the
Continuity Directors);

 

(e)                                  the
Continuity Directors cease for any reason to constitute at least a majority of
the Board; or

 

(f)                                    any
other change in control of the Company of a nature that would be required to be
reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or not
the Company is then subject to such reporting requirement.

 

Continuity Directors.  “Continuity Directors” of the Company shall
mean any individuals who are members of the Board on the effective date of the
Plan and any individual who subsequently becomes a member of the Board whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the Continuity Directors (either
by specific vote or by approval of the Company’s proxy statement in which such
individual is named as a nominee for director without objection to such nomination).

 

17

 

Code.
 “Code” means the Internal Revenue
Code of 1986, as amended.  Any reference
to a specific provision of the Code includes a reference to that provision as
it may be amended from time to time, to any successor provision, to any
regulations promulgated thereunder and to any binding pronouncements relating
thereto.

 

Company.  “Company” means BioSante Pharmaceuticals,
Inc., a Delaware corporation.

 

Company
Stock.  “Company
Stock” means common stock, par value $0.0001 per share, of the Company or such
other class or kind of shares or other securities as may be applicable pursuant
to Section 3.4.

 

Director
Participant. 
“Director Participant” means a Participant who is a Qualified Director.

 

Disability.
 “Disability” means a disability for
which a Participant is receiving disability benefits pursuant to a long-term
disability plan maintained by an Affiliate or as a result of which the
Participant is certified as being disabled by the Social Security
Administration and is receiving disability benefits under the disability
provisions of the Social Security Act. 
The Participant must provide the Administrator with proof of his or her
Disability that is satisfactory to the Administrator.  For purposes of the Plan, a Disability occurs on the date
following the Administrator’s receipt of such proof on which the Administrator
determines that the Participant has experienced a Disability.

 

Effective
Date.  “Effective
Date” means June 1, 2003.

 

Employee
Participant. 
“Employee Participant” means a Participant who is a Qualified Employee.

 

ERISA.  “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.  Any
reference to a specific provision of ERISA includes a reference to that
provision as it may be amended from time to time and to any successor
provision.

 

Exchange
Act.  “Exchange
Act” means the Securities Exchange Act of 1934, as amended.  Any reference to a specific provision of the
Exchange Act includes a reference to that provision as it may be amended from
time to time and to any successor provision.

 

Participant.  “Participant” means a current or former
Active Participant to whose Stock Account amounts have been credited pursuant
to Article 3 and who has not ceased to be a Participant pursuant to Section
2.6.

 

Participating
Employer. 
“Participating Employer” means the Company and any other Affiliate that
has adopted the Plan, or all of them collectively, as the context
requires.  An Affiliate will cease to be
a Participating Employer upon a termination of the Plan as to its Qualified
Employees (and, in the case of the Company, its Qualified Directors) and the
satisfaction in full of all of its obligations under the Plan or upon its
ceasing to be an Affiliate.

 

18

 

Plan.  “Plan” means the BioSante Pharmaceuticals,
Inc. Deferred Compensation Plan, as from time to time amended or restated.

 

Plan
Year.  “Plan Year”
means with respect to a Qualified Employee, the calendar year (provided, that
the first Plan Year is the period beginning on June 1, 2003 and ending on
December 31, 2003), and with respect to a Qualified Director, the one-year
period which begins on June 1 of each year and ends on May 31 of the next
succeeding year (provided, that the first Plan Year is the period beginning on
June 1, 2003 and ending on May 31, 2003).

 

Plan
Rules.  “Plan
Rules” are rules, policies, practices or procedures adopted by the
Administrator pursuant to Section 8.2.

 

Price
per Share.  The
“Price per Share” on a given date (or, if no shares were traded or quoted on
such date, as of the next preceding date on which there was such a trade or
quote) is (a) the mean between the reported high and low sale prices of the
Company Stock if the Company Stock is listed, admitted to unlisted trading
privileges or reported on any foreign or national securities exchange or on the
Nasdaq National Market or SmallCap Market or an equivalent foreign market on
which sale prices are reported; (b) if the Company Stock is not so listed,
admitted to unlisted trading privileges or reported, the closing bid price as
reported by the OTC Bulletin Board or the National Quotation Bureau, Inc. or
other comparable service; or (c) if the Company Stock is not so listed or
reported, such price as the Board determines in good faith in the exercise of
its reasonable discretion.

 

Qualified
Director. 
“Qualified Director” means an individual who is a member of the
Company’s board of directors and is independent (i.e., is not an employee of
the Company or any of its affiliates or subsidiaries).

 

Qualified
Employee. 
“Qualified Employee” means an individual who performs services for a
Participating Employer as an employee of the Participating Employer (as
classified by the Participating Employer at the time the services are performed
without regard to any subsequent reclassification), who is an officer of the
Participating Employer elected by the Participating Employer’s Board or a Vice
President of the Participating Employer. 
The Company may, pursuant to Plan Rules, establish additional
requirements or conditions an employee must satisfy in order to be treated as a
Qualified Employee under the Plan.

 

Retirement.  “Retirement” means:

 

(a)                                  in
the case of an Employee Participant, the Participant’s Severance after his or
her attainment of age 55; or

 

(b)                                 in
the case of a Director Participant, the Participant’s Severance after his or
her completion of at least three complete years of service as a Qualified
Director.

 

19

 

Securities
Act.  “Securities
Act” means the Securities Act of 1933, as amended.  Any reference to a specific provision of the Securities Act
includes a reference to that provision as it may be amended from time to time
and to any successor provision.

 

Severance.  “Severance” means:

 

(a)                                  the
date on which an Employee Participant has completely severed his or her
employment relationship with all Affiliates; or

 

(b)                                 the
date on which a Director Participant ceases to be a member of the Company’s Board.

 

Shares.  “Shares” means shares of common stock of the
Company, $0.0001 par value, or such other class or kind of shares or other
securities as may be applicable pursuant to Section 3.4.

 

Stock
Account.  “Stock
Account” means the bookkeeping account or accounts maintained with respect to a
Participant pursuant to Section 3.1.

 

Stock
Units.  “Stock
Units” means a unit credited to a Participant’s Stock Account pursuant to
Sections 3.2(a), (b) and (c), each of which represents the economic equivalent
of one Share.  A Participant will not
have any rights as a stockholder with respect to Stock Units until the
Participant is distributed Shares pursuant to Article 4 of the Plan.

 

Trust.  “Trust” means any trust or trusts
established by a Participating Employer pursuant to Section 5.1.

 

Trustee.  “Trustee” means the independent corporate
trustee or trustees that at the relevant time has or have been appointed to act
as Trustee of the Trust.

 

Unforeseeable
Emergency. 
“Unforeseeable Emergency” means an unanticipated emergency that is
caused by an event beyond the Participant’s or Beneficiary’s control resulting
in a severe financial hardship that cannot be satisfied through other
means.  The existence of an
Unforeseeable Emergency will be determined by the Administrator in its sole
discretion.

 

Valuation
Date.  “Valuation
Date” means the last day of each calendar month on which the New York Stock
Exchange is open for regular business and any interim dates selected by the
Administrator.

 

ARTICLE 8.

ADMINISTRATION

 

8.1.                            Administrator.  The general administration of the Plan and
the duty to carry out its provisions is vested in the Company.  The Company may delegate such duty or any
portion thereof to a named person or persons and may from time to time revoke
such authority and delegate it to another person or persons.

 

20

 

8.2.                            Plan
Rules.  The Administrator has
the discretionary power and authority to make such Plan Rules as the
Administrator determines to be consistent with the terms, and necessary or
advisable in connection with the administration of the Plan and to modify or
rescind any such Plan Rules.

 

8.3.                            Administrator’s
Discretion.  The Administrator
has the discretionary power and authority to make all determinations necessary
for administration of the Plan, except those determinations that the Plan
requires others to make, and to construe, interpret, apply and enforce the
provisions of the Plan and Plan Rules whenever necessary to carry out its
intent and purpose and to facilitate its administration, including, without
limitation, the discretionary power and authority to remedy ambiguities,
inconsistencies, omissions and erroneous benefit calculations.  In the exercise of its discretionary power
and authority, the Administrator will treat all similarly situated persons
uniformly.

 

8.4.                            Specialist’s
Assistance.  The Administrator
may retain such actuarial, accounting, legal, clerical and other services as
may reasonably be required in the administration of the Plan, and may pay
reasonable compensation for such services. 
All costs of administering the Plan will be paid by the Participating
Employers.

 

8.5.                            Indemnification.  The Participating Employers jointly and
severally agree to indemnify and hold harmless, to the extent permitted by law,
each director, officer, and employee of any Affiliates against any and all
liabilities, losses, costs and expenses (including legal fees) of every kind
and nature that may be imposed on, incurred by, or asserted against such person
at any time by reason of such person’s services in connection with the Plan,
but only if such person did not act dishonestly or in bad faith or in willful
violation of the law or regulations under which such liability, loss, cost or
expense arises.  The Participating
Employers have the right, but not the obligation, to select counsel and control
the defense and settlement of any action for which a person may be entitled to
indemnification under this provision.

 

8.6.                            Benefit
Claim Procedure.

 

(a)                                  The
Administrator will notify a Participant in writing, within 90 days of the
Participant’s written application for benefits, of the Participant’s
eligibility or noneligibility for benefits under the Plan.  If the Administrator determines that a
Participant is not eligible for benefits or full benefits, the notice will:

 

(i)                                     state
the specific reasons for the denial of any benefits;

 

(ii)                                  provide
a specific reference to the provision of the Plan on which the denial is based;

 

(iii)                               provide
a description of any additional information or material necessary for the
claimant to perfect the claim, and a description of why it is needed;

 

(iv)                              state
that the claimant will be provided, on request and free of charge, reasonable
access to, and copies of, all documents, records, and other information
relevant to the claim;

 

21

 

(v)                                 state
the claimant’s right to bring a civil action under ERISA Section 502(a)
following a continued denial of a claim after appeal review; and

 

(vi)                              provide
an explanation of the Plan’s claims review procedure and other appropriate
information as to the steps to be taken if the Participant wishes to have the
claim reviewed.  If the Administrator
determines that there are special circumstances requiring additional time to
make a decision, the Administrator will notify the Participant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional 90-day period.

 

(b)                                 If
a Participant is determined by the Administrator not to be eligible for
benefits or if the Participant believes that he or she or she is entitled to
greater or different benefits, the Participant will be provided the opportunity
to have his or her claim reviewed by the Administrator by filing a petition for
review with the Administrator within 60 days after the Participant receives the
notice issued by the Administrator.  The
petition must state the specific reasons the Participant believes he or she or
she is entitled to benefits or greater or different benefits.  Within 60 days after the Administrator
receives the petition, the Administrator will give the Participant (and his or
her counsel, if any) an opportunity to present his or her position to the
Administrator in writing, and the Participant (or his or her counsel) may
review the pertinent documents, and the Administrator will notify the
Participant of its decision in writing within such 60-day period, stating
specifically the basis of the decision written in a manner calculated to be
understood by the Participant and the specific provisions of the Plan on which
the decision is based.  If because of
special circumstances requiring additional time to make a decision, the 60-day period
is not sufficient, the decision may be deferred for up to another 60-day period
at the election of the Administrator, but notice of this deferral must be given
to the Participant.

 

(c)                                  The
same procedure applies to the Beneficiary of a deceased Participant.

 

(d)                                 A
claimant must exhaust the procedure described in this section before pursuing
the claim in any other proceeding.

 

8.7.                            Disputes.

 

(a)                                  In
the case of a dispute between a Qualified Employee Participant or his or her
Beneficiary and a Participating Employer, the Administrator or other person
relating to or arising from the Plan, the United States District Court for the
District of Illinois is a proper venue for any action initiated by or against
the Participating Employer, Administrator or other person and such court will
have personal jurisdiction over any Participant or Beneficiary named in the
action.

 

(b)                                 Regardless
of where an action relating to or arising from the participation in the Plan by
a Qualified Employee is pending, the law as stated and applied by the United
States Court of Appeals for the Seventh Circuit or the United States

 

22

 

District Court for
the District of Illinois will apply to and control all actions relating to the
Plan brought against the Plan, a Participating Employer, the Administrator or
any other person or against any such Participant or his or her Beneficiary.

 

(c)                                  No
civil action arising out of or relating to this Plan may be commenced by a
Participant or Beneficiary more than two (2) years after the Participant or
Beneficiary had knowledge (or should have had knowledge) of the facts or
circumstances that give rise to, or form the basis for, such action.

 

ARTICLE 9.

MISCELLANEOUS

 

9.1.                            Withholdings
and Offsets.  The Participating
Employers and the Trustee retain the right to withhold from any compensation,
deferral and/or benefit payment pursuant to the Plan, any and all income,
employment, excise and other tax as the Participating Employers or Trustee
deems necessary and the Participating Employers may offset against amounts then
payable to a Participant or Beneficiary under the Plan any amounts then owing
to the Participating Employers by such Participant or Beneficiary.

 

9.2.                            Other
Benefits.  Neither amounts
deferred nor amounts paid pursuant to the Plan constitute salary or
compensation for the purpose of computing benefits under any other benefit
plan, practice, policy or procedure of a Participating Employer unless
otherwise expressly provided thereunder.

 

9.3.                            No
Warranties Regarding Tax Treatment. 
The Participating Employers make no warranties regarding the tax
treatment to any person of any deferrals or payments made pursuant to the Plan
and each Participant will hold the Administrator and the Participating
Employers and their officers, directors, employees, agents and advisors
harmless from any liability resulting from any tax position taken in good faith
in connection with the Plan.

 

9.4.                            No
Rights to Continued Service Created. 
Neither the establishment of nor participation in the Plan gives any individual
the right to continued employment with the Company or service on the Company’s
board of directors or limits the right of the Participating Employer to
discharge, transfer, demote, modify terms and conditions of employment or
service on the Company’s board of directors or otherwise deal with any
individual without regard to the effect which such action might have on him or
her with respect to the Plan.

 

9.5.                            Special
Provisions.  Special provisions
of the Plan applicable only to certain Participants may be set forth on an
exhibit to the Plan adopted in the same manner as an amendment to the
Plan.  In the event of a conflict
between the terms of the exhibit and the terms of the Plan, the exhibit
controls.  Except as otherwise expressly
provided in the exhibit, the generally applicable terms of the Plan control all
matters not covered by the exhibit.

 

9.6.                            Successors.  Except as otherwise expressly provided in
the Plan, all obligations of the Participating Employers under the Plan are
binding on any successor to the Participating

 

23

 

Employer whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise of all or substantially all of the business
and/or assets of the Participating Employer.

 

24

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