Exhibit 10.1
 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of September
22, 2011, between BioZone Pharmaceuticals, Inc., a Nevada corporation (the
“Company”), and [Name] (including its respective successors and assigns, the
“Purchaser”).
 
WHEREAS, within one hundred twenty (120) days from the Closing Date (as defined
below) of the transactions contemplated by this Agreement, the Company intends
to close a private placement of its common stock, par value $0.001 per share
(the “Common Stock”), or other securities (the “PIPE Securities”) yielding gross
proceeds to the Company of at least eight million Dollars ($8,000,000) (the
“PIPE Offering,” and the price at which such PIPE Securities are sold is
referred to herein as the “PIPE Share Price”);
 
WHEREAS, in anticipation of the PIPE Offering, and subject to the terms and
conditions set forth in this Agreement and pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”), the Company desires
to issue and sell to the Purchaser, and the Purchaser desires, severally and not
jointly, to purchase from the Company, (i) a convertible promissory note, in the
form attached hereto as Exhibit A (the “Note”), which Note shall be convertible,
at Purchaser’s sole option, into the PIPE Securities at a price per share or
unit, as the case may be, equal to 70% of the PIPE Share Price, in accordance
with the terms of the Note, and (ii) a warrant, in the form attached hereto as
Exhibit B (the “Warrant,” and, with the Note and the securities into which each
are convertible or exercisable, as applicable, the “Securities”), to purchase
PIPE Securities on the terms described therein, in the amount set forth next to
the name of the Purchaser on its signature page hereto (the “Purchase Price”),
which amount is five hundred thousand Dollars ($500,000) (the “Loan Amount”);
 
WHEREAS, there shall be certain registration rights as to the Securities
pursuant to the terms of a registration rights Agreement in the form attached
hereto as Exhibit C (the “Registration Rights Agreement”; this Agreement, the
Note, the Warrant, the Registration Rights Agreement, and any exhibits and
schedules thereto, the “Transaction Documents”);
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
 
1.           Purchase and Sale of the Securities.
 
(a)           Closing.  On the Closing Date (as defined below), upon the terms
and subject to the conditions set forth herein:
 
(i)           the Company hereby agrees to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Company, (i) a Note and (ii) a
Warrant, in consideration of the Purchase Price set forth on the Purchaser’s
signature page hereto. For purposes of this Agreement, “Closing Date” means the
date on which all of the Transaction Documents (as defined herein) have been
executed and delivered by the parties thereto, and all conditions precedent to
(i) Purchaser’s obligations to pay the Purchase Price and (ii) the Company’s
obligation to deliver the Securities, in each case, have been satisfied or
waived; and
 
(ii)           the Company shall deliver to the Purchaser the Transaction
Documents. The Company and the Purchaser shall each deliver to the other items
set forth in Section 1(b) deliverable at the closing (the “Closing”). Upon
waiver or satisfaction of the covenants and conditions set forth in Sections
1(b) and 1(c), the Closing shall occur at such location within the United States
as the parties shall mutually agree.
 
 
 

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(b)           Deliverables.
 
(i)           On or prior to the Closing Date, the Company shall deliver or
cause to be delivered to the Purchaser the following:
 
 
A.
this Agreement, duly executed by the Company;

 
 
B.
a Note, duly executed by the Company, in the Purchase Price set forth on such
Purchaser’s signature page;

 
 
C.
a Warrant, duly executed by the Company, to purchase a number of PIPE Securities
equal to the principal amount of the Note, divided by the lower of (A) $1.50 and
(B) the PIPE Share Price, and exercisable for five (5) years from the Closing
Date at an exercise price per share equal to the lower of (A) $1.80 and (B) 120%
of the PIPE Share Price; and

 
 
D.
the Registration Rights Agreement, duly executed by the Company.

 
(ii)           On or prior to the Closing Date, the Purchaser shall deliver or
cause to be delivered to the Company the following:
 
 
A.
This Agreement, duly executed by such Purchaser; and

 
 
B.
the Registration Rights Agreement, duly executed by such Purchaser.

 
2.           Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser as follows:
 
(a)           Subsidiaries. The Company’s Subsidiaries as of the date hereof are
listed on Schedule 1.  Except as set forth on Schedule 1, the Company owns,
directly or indirectly, 100% of each Subsidiary, and all of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued, fully
paid and non-assessable and free of preemptive and similar rights to purchase
securities. Neither the Company nor the Subsidiaries are subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence.
 
(b)           Organization and Qualification. Each of the Company and each
Subsidiary is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, and has
the requisite power and authority to own and use its properties and assets and
to carry on its business as currently conducted and contemplated to be
conducted. Each of the Company and each Subsidiary is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not have or
reasonably be expected to result in a material adverse effect on the business,
condition (financial or otherwise), operations, prospects or property of the
Company or a Subsidiary, taken as a whole (“Material Adverse Effect”), and no
proceeding has been initiated in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.
 
(c)           Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, the board of directors or the Company’s stockholders in connection
therewith. Each Transaction Document to which it is a party has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except: (i) as may be limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
 
 
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(d)           No Conflicts. The execution, delivery and performance by the
Company of the Transaction Documents, the issuance and sale of the Securities,
and the consummation by it of the transactions contemplated hereby and thereby
to which it is a party do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or the Subsidiary is a
party or by which any property or asset of the Company or the Subsidiary is
bound or affected, or (iii) conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect.
 
(e)           Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than the filing of Form D with the Securities and
Exchange Commission (the “Commission”) and such filings as are required to be
made under applicable state securities laws (the “Required Approvals”).
 
(f)           Issuance of the Securities. Each of the Note and the Warrant are
duly authorized and, when issued and paid for in accordance with the terms of
the applicable Transaction Documents, will be duly and validly issued, fully
paid and non-assessable, and free and clear of all liens other than restrictions
on transfer provided for in the Transaction Documents.  The shares of Common
Stock issuable upon conversion of the Note have been duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and non-assessable, free and clear
of all Liens other than restrictions on transfer provided for in the Transaction
Documents.  The shares of Common Stock issuable upon exercise of the Warrant
have been duly authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully paid
and non-assessable, free and clear of all liens other than restrictions on
transfer provided for in the Transaction Documents. The Company has reserved
from its duly authorized capital stock such number of securities for issuance of
upon conversion or exercise of the Note and Warrant, as applicable, as well as
any securities issuable in the PIPE Offering.
 
(g)           Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the issuance of the Securities or (ii) could, if
there were an unfavorable decision, have or reasonably be expected to result in
a Material Adverse Effect. Neither the Company nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company.
 
 
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(h)           Regulatory Permits. Each of the Company and each Subsidiary
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as currently conducted or as contemplated to be
conducted, except where the failure to possess such permits could not reasonably
be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
 
(i)           SEC Reports; Financial Statements.  The Company has filed all
reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the “SEC Reports”) on a timely basis or has timely filed a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension.  As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The financial
statements of the Company included in the SEC Reports comply in all material
respects with the rules and regulations of the Commission with respect thereto
as in effect at the time of filing.  Such financial statements have been
prepared in accordance with U.S. GAAP, except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by U.S. GAAP, and
fairly present in all material respects the financial position of the Company as
of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
 
(j)           Private Placement. Assuming the accuracy of Purchaser’s
representations and warranties set forth herein, no registration under the
Securities Act is required for the offer and sale of the Securities by the
Company to Purchaser as contemplated hereby.
 
(k)           No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has offered or sold any of the Securities by any form
of general solicitation or general advertising. The Company has offered the
Securities for sale only to Purchaser.
 
(l)           Acknowledgment Regarding Purchaser’s Purchase of Securities. The
Company acknowledges and agrees that Purchaser is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by Purchaser or any of
its representatives or agents in connection with the Transaction Documents and
the transactions contemplated thereby is merely incidental to the Purchaser’s
purchase of the Securities. The Company further represents to the Purchaser that
the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
 
(m)           Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s or any Subsidiary’s employees is a member of a
union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any Subsidiary is a party to a
collective bargaining agreement, and the Company and each Subsidiary believe
that their relationships with their employees are good. No executive officer, to
the knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant in favor of any third party,
and the continued employment of each such executive officer does not subject the
Company or any Subsidiary to any liability with respect to any of the foregoing
matters. The Company and each Subsidiary are in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and
hours, except where the failure to be in compliance could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
 
 
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(n)           Compliance. Neither the Company nor any Subsidiary: (i) is in
violation of any order of any court, arbitrator or governmental body or (ii) is
or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws applicable to its business, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect.
 
(o)           Environmental Matters.  The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, permits, approvals, judgments,
orders and decrees applicable to it or any of its properties, Leased Real
Properties, assets, operations and businesses relating to environmental
protection, and health and safety (collectively “Environmental Laws”) including,
without limitation, Environmental Laws relating to air, surface water and
groundwater, land and the generation, storage, use, handling, transportation,
treatment, release, threatened release, remediation, exposure to or disposal of
Hazardous Wastes, Hazardous Materials and Hazardous Substances (as such terms
are defined in any applicable Environmental Law), as well as oil, petroleum,
petroleum products, asbestos or any substance containing asbestos, and
polychlorinated biphenyls (collectively “Hazardous Materials”), (ii)  the
Company has obtained and fully complied with and is currently in full compliance
with all environmental permits and other environmental approvals necessary for
the conduct of its business and the operation of its properties, and has
reported to the appropriate governmental or regulatory authorities, to the
extent required by all Environmental Laws, all past and present sites owned and
operated by the Company where Hazardous Materials have been treated, stored,
disposed of or otherwise handled, (iii) to the knowledge of the Company, there
is not nor has there been any condition, event, circumstance, practice,
activity, incident which could reasonably be expected to give rise to any common
law liability or liability pursuant to any Environmental Laws or otherwise form
the basis of any claim, demand or litigation against the Company; (iv) there are
no claims, demand, suits, judicial or administrative actions, governmental
investigators or legal proceedings pending or, to the knowledge of the Company,
threatened against the Company relating in any way to any Environmental laws,
nor has the Company received notice of any violation of, or any claim alleging
liability under, any Environmental Laws, (v) there have been no releases or
threats of releases (as these terms are defined in Environmental Laws) of any
Hazardous Materials at, from, in or on any property previously or currently
owned or operated by the Company, except as permitted by Environmental Laws, and
(vi) there is no on-site or off-site location to which the Company has
transported or disposed of Hazardous Materials or arranged for the
transportation of Hazardous Materials which is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could reasonably be expected to lead to any claim against the Company for any
clean-up cost, remedial work, damage to natural resources, property damage or
personal injury, including, but not limited to, any claim under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act, the Hazardous Materials
Transportation Act or comparable state or local statutes or regulations, except
as would not have a Material Adverse Effect.
 
(p)           Title to Assets. Except as disclosed in Schedule 2, the Company
and each Subsidiary have good and marketable title in all personal property
owned by them that is material to the business of the Company and each
Subsidiary, in each case, free and clear of all liens, except for liens that do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
each Subsidiary and liens for the payment of federal, state, foreign or other
taxes, the payment of which is neither delinquent nor subject to penalties
(“Permitted Liens”). Any real property and facilities held under lease by the
Company and each Subsidiary are held by them under valid, subsisting and
enforceable leases with which the Company and each Subsidiary are in
compliance.  Neither the Company nor any Subsidiary owns any real property.
 
 
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(q)           Intellectual Property. The Company and each Subsidiary own all
right, title and interest in, or possesses adequate and enforceable rights to
use, all patents, patent applications, trademarks, trade names, service marks,
copyrights, rights, licenses, franchises, trade secrets, confidential
information, processes, formulations, software and source and object codes
necessary for the conduct of their businesses (collectively, the “Intangibles”).
To the best of the Company’s knowledge, neither the Company nor any Subsidiary
has infringed upon the rights of others with respect to the Intangibles and
neither the Company nor any Subsidiary have received notice that they have or
may have infringed or are infringing upon the rights of others with respect to
the Intangibles, or any notice of conflict with the asserted rights of others
with respect to the Intangibles that could, individually or in the aggregate, or
could reasonably be expected to have, have a Material Adverse Effect.
 
(r)           Insurance. The Company and each Subsidiary are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and each Subsidiary are engaged. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.
 
(s)           Transactions With Affiliates and Employees. Except as disclosed in
the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company, is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $20,000, other than for: (i) payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred in the ordinary course of business on behalf of the Company and (iii)
other employee benefits, including stock option agreements, under any stock
option plan of the Company.
 
(t)           Certain Fees. No brokerage or finder’s fees or commissions are or
will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other person with respect to
the transactions contemplated by the Transaction Documents. Purchaser shall have
no obligation with respect to any fees or with respect to any claims made by or
on behalf of other persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents.
 
(u)           Investment Company.  The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
 
(v)           Tax Returns. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary have filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.
 
 
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(w)           Foreign Corrupt Practices. None of the Company, any Subsidiary or,
to the knowledge of the Company, any agent or other person acting on behalf of
the Company or any Subsidiary, has: (i) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii)
failed to disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in violation
of law or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
 
(x)           No Disagreements with Accountants or Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company which could affect the Company’s ability to
perform any of its obligations under any of the Transaction Documents.
 
(y)           OFAC. None of the Company, any Subsidiary or, to the knowledge of
the Company, any director, officer, agent, employee or affiliate of the Company
is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not, directly or indirectly, use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any Subsidiary, joint
venture partner or other person, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by OFAC.
 
(z)           Full Disclosure. All of the disclosure furnished by or on behalf
of the Company to Purchaser regarding the Company, its business and the
transactions contemplated hereby is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
 
3.           Representations and Warranties of Purchaser. Each Purchaser,
severally and not jointly, represents and warrants to the Company, only with
respect to itself, as follows:
 
(a)           Purchaser is an “accredited investor” as defined by Rule 501 under
the Securities Act. Purchaser is capable of evaluating the merits and risks of
its investment in the Securities and has the ability and capacity to protect its
interests.
 
(b)           Purchaser understands that the Securities have not been
registered. Purchaser understands that the Securities will not be registered
under the Securities Act in reliance upon an exemption in reliance on Section
4(2) of the Securities Act.
 
(c)           Purchaser acknowledges that Purchaser has such knowledge and
experience in financial and business matters that Purchaser is capable of
evaluating the merits and risks of an investment in the Securities and of making
an informed investment decision with respect thereto.
 
(d)           Purchaser is purchasing the Securities for investment purposes and
not with a view to distribution or resale, nor with the intention of selling,
transferring or otherwise disposing of all or any part thereof for any
particular price, or at any particular time, or upon the happening of any
particular event or circumstance, except selling, transferring, or disposing the
Securities in compliance with all applicable provisions of the Securities Act,
the rules and regulations promulgated by the Commission thereunder, and
applicable state securities laws; and that an investment in the Securities is
not a liquid investment.
 
(e)           Purchaser has all requisite legal and other power and authority to
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement. This Agreement constitutes a valid and
legally binding obligation of Purchaser, enforceable in accordance with its
terms, except: (i) as may be limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
 
 
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(f)           There are no actions, suits, proceedings or investigations pending
against Purchaser or Purchaser’s assets before any court or governmental agency
(nor, to Purchaser’s knowledge, is there any threat thereof) which would impair
in any way Purchaser’s ability to enter into and fully perform Purchaser’s
commitments and obligations under this Agreement or the transactions
contemplated hereby.
 
(g)           The execution, delivery and performance of and compliance with
this Agreement and the issuance of the Securities to Purchaser will not result
in any violation of, or conflict with, or constitute a default under, any of
Purchaser’s articles of incorporation or by-laws, or equivalent limited
liability company, trust or partnership documents, if applicable, or any
agreement to which Purchaser is a party or by which it is bound, nor result in
the creation of any mortgage, pledge, lien, encumbrance or charge against any of
the assets or properties of Purchaser or the Securities purchased by Purchaser.
 
(h)           Purchaser is aware that the Securities will be (unless registered
by the Company), when issued, “restricted securities” as that term is defined in
Rule 144 of the general rules and regulations under the Securities Act, and may
not be offered, sold or transferred except pursuant to an effective registration
statement or an exemption from registration under the Securities Act.
 
(i)           Purchaser understands that the Securities shall bear the following
legend or one substantially similar thereto, which Purchaser has read and
understands:
 
NEITHER THIS SECURITY NOR ANY SECURITY INTO WHICH IT MAY BE CONVERTED HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY SECURITY INTO
WHICH IT MAY BE CONVERTED MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF AT ANY TIME IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
 
(j)           Any sales, transfers, or other dispositions of the Securities by
Purchaser, if any, will be made in compliance with the Securities Act and all
applicable rules and regulations promulgated thereunder.
 
(k)           Purchaser further represents that the address of Purchaser set
forth on the signature page is its principal place of business; that Purchaser
is purchasing the Securities for Purchaser’s own account and not, in whole or in
part, for the account of any other person; and that Purchaser has not formed any
entity, and is not an entity formed, for the purpose of purchasing the
Securities.
 
(l)           Purchaser represents and warrants that no finder, broker, agent,
financial advisor or other intermediary, nor any purchaser representative or any
broker-dealer acting as a broker, is entitled to any compensation in connection
with the transactions contemplated by this Agreement.
 
4.           Other Agreements.
 
(a)           Certain Covenants of the Company.  Until such time as the Loan
Amount or any accrued fees or interest remain unpaid or outstanding, the Company
shall comply and operate in accordance with all of the following covenants and
agreements:
 
(i)           Payment of Obligations.  The Company will timely pay and discharge
all of its material obligations and liabilities, including, without limitation,
tax liabilities, except where the same may be contested in good faith by
appropriate proceedings.
 
 
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(ii)           Conduct of Business and Maintenance.  The Company will continue
to engage in business of the same general type as now conducted by it and to
preserve, renew and keep in full force and effect, its corporate existence and
its assets, rights, privileges and franchises to the extent necessary or
desirable in the normal conduct of business or to preserve the Collateral.  The
Company shall conduct its business in a manner so that it will not become
subject to the Investment Company Act of 1940, as amended.
 
(iii)           Compliance with Laws.  The Company will comply in all material
respects with all applicable laws, ordinances, rules, regulations, decisions,
orders and requirements of governmental authorities.
 
(iv)           Notice of Legal Matters.  The Company shall notify Purchaser
promptly after the Company shall obtain knowledge of any written notice of any
legal or arbitral proceedings, and of all proceedings by or before any
governmental authority, and each material development in respect of such legal
or other proceeding affecting the Company, except proceedings which, if
adversely determined, would not reasonably be likely to have a Material Adverse
Effect.
 
(v)           Books and Records; Inspection and Audit Rights.  The Company will
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities.  The Company will permit any representatives designated by
Purchaser, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
business, assets, affairs, finances, prospects, and condition with its officers
and independent accountants, all at such reasonable times during normal business
hours and as often as reasonably requested.  Promptly upon Purchaser’s written
request therefor, the Company shall deliver to Purchaser such documents and
other evidence of the existence, good standing, foreign qualification and
financial condition of the Company as Purchaser shall request from time to time.
 
(vi)           Change of Control.  The Company shall not (i) merge or
consolidate with or into any person, (ii) sell, assign, lease, license or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter acquired)
to any person, or (iii) issue or sell securities of the Company (whether in one
transaction or in a series of transactions) such that the shareholders of the
Company as of the date of this Agreement hold or will hold less than a majority
of the outstanding (on a fully-diluted basis) equity securities or voting power
of the Company (“Change of Control”).
 
(vii)           Transactions with Affiliates.  The Company shall not enter into
any transaction, including, without limitation, the purchase, sale, or exchange
of property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
business and upon fair and reasonable terms no less favorable to the Company
than it would obtain in a comparable arm's-length transaction with a person not
an Affiliate.  “Affiliate” means, as applied to any person, (a) any other person
directly or indirectly controlling, controlled by or under common control with,
that person, (b) any other person that owns or controls (i) 10% or more of any
class of equity securities of that person or any of its Affiliates or (ii) 10%
or more of any class of equity securities (including any equity securities
issuable upon the exercise of any option or convertible security) of that person
or any of its Affiliates, or (c) any director, partner, officer, manager, agent,
employee or relative of such person.  For the purposes of this definition,
“control” (including with correlative meanings, the terms “controlling,”
“controlled by,” and “under common control with”), as applied to any person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that person, whether through
ownership of voting securities or by contract or otherwise.
 
 
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(b)           Notice of Other Material Events.  Until such time as the Loan
Amount or any accrued fees or interest remain unpaid or outstanding, the Company
shall provide notice of the following:
 
(i)           The Company shall furnish to Purchaser prompt (but in no event
more than two (2) business days after the relevant occurrence) written notice of
the occurrence of any Event of Default or any other event or circumstance that
results in, or could reasonably be expected to result in, a Material Adverse
Effect.
 
(ii)           The Company shall furnish to Purchaser written notice of the
following not less than thirty (30) days prior to the occurrence thereof:  (A)
any change of the Company’s corporate name or of any trade name used to identify
it in the conduct of its business or in the ownership of its properties, (B) any
change of the state in which the Company is organized or conducts business, (C)
any change of the Company’s principal place of business, or (D) any change of
the Company’s identity or corporate structure.
 
(iii)           Each notice delivered under this Section shall be accompanied by
a statement of the Company setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
 
(c)           Further Assurances.  At any time or from time to time after the
execution hereof, the Company will promptly execute, deliver, verify,
acknowledge, record and/or file any and all further documents and instruments
(including financing statements and continuation statements), and promptly take
any and all such other and further actions, as Purchaser may request in order to
evidence or more fully effectuate the transactions and security arrangements
contemplated hereby and to otherwise carry out the terms hereof.
 
(d)           Reservation of Shares. The Company shall at all times reserve and
keep available out of its authorized and unissued capital stock, solely for the
purpose of providing for the exercise of the conversion rights provided for
under the Note and Warrant, such number of shares of Common Stock and other
securities as may be issued in the PIPE Offering, as shall, from time to time,
be sufficient for issuance upon conversion of such Note and Warrant in full.
 
5.           Events of Default.
 
(a)           Each of the following events, individually, shall constitute an
“Event of Default:”
 
(i)           the Company shall fail to pay any Loan Amount when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
 
(ii)           the Company shall fail to pay any accrued but unpaid interest
when and as the same shall become due and payable;
 
(iii)           the Company shall fail to pay any fee or any other amount
payable under any of the Transaction Documents, when and as the same shall
become due and payable;
 
(iv)           any representation or warranty made by or on behalf of the
Company in or in connection with any Transaction Document, or in any report,
certificate or other document furnished pursuant to or in connection with any
Transaction Document, shall prove to have been incorrect in any material respect
when made or deemed made or shall be breached;
 
(v)           the Company shall fail to observe or perform any covenant,
condition or agreement contained in any Transaction Document (other than those
specified in clause (i), (ii), (iii), or (iv) of this Section 6 and such failure
shall continue unremedied for a period of ten (10) days after notice thereof
from Purchaser to the Company;
 
 
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(vi)           an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Company or its debts, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for ninety (90) days or an
order or decree approving or ordering any of the foregoing shall be entered;
 
(vii)           the Company shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (vi) of this Section 6, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Company or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
 
(viii)           the Company shall be unable, admit in writing its inability, or
fail generally, to pay its debts as they become due;
 
(ix)           one or more final judgments for the payment of money in an
aggregate amount in excess of $25,000 shall be rendered against the Company and
the same shall remain undischarged for a period of twenty (20) consecutive days
during which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets of the
Company to enforce any such judgment;
 
(x)           any event, transaction, action or omission of or involving the
Company shall occur which Purchaser reasonably believes will result in a
Material Adverse Effect;
 
(xi)           any of this Agreement or the Note shall cease to be, or shall be
asserted by the Company or other obligor thereunder not to be, in full force and
effect; or
 
(xii)           a Change of Control shall occur
 
(b)           Remedies.  Notwithstanding anything to the contrary in any
Transaction Document, upon the occurrence of an Event of Default, and in every
such event (other than an event with respect to the Company described in clauses
(vi), (vii) or (viii) of Section 6, at any time during the continuance of such
event, Purchaser may, at its sole election, by notice to the Company, declare
the Loan Amount then outstanding to be due and payable in whole (or in part, in
which case any Loan Amount not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the outstanding Loan Amount so
declared to be due and payable, together with all fees and other payment
obligations of the Company accrued but unpaid under the Transaction Documents,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Company, and
in case of any event with respect to the Company described in clauses (vi),
(vii) or (viii) of Section 6, the Loan Amount then outstanding, together with
all fees and other payment obligations of the Company accrued but unpaid under
the Transaction Documents, shall automatically become due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company.
 
 
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6.           Indemnification by the Company.  The Company shall indemnify each
of Purchaser and its officers, directors, shareholders, members, partners,
employees, agents and Affiliates in respect of, and hold each of them harmless
from and against, any and all Losses (as defined below, and whether or not
involving any person not a party to this Agreement) suffered, incurred or
sustained by any of them or to which any of them becomes subject resulting from,
arising out of or relating to (a) any material misrepresentation on the part of
the Company, (b) a breach by the Company of any of the representations and
warranties contained herein, or (c) any non-fulfillment of or failure to perform
any covenant or agreement on the part of the Company contained in this Agreement
or in any of the Transaction Documents (including any certificates delivered in
connection herewith or therewith).  If and to the extent that the
indemnification hereunder is finally determined by a court of competent
jurisdiction to be unenforceable, the Company shall make the maximum
contribution to the payment and satisfaction of the indemnified Losses as shall
be permissible under applicable laws.  “Losses” means any and all damages,
fines, fees, taxes, penalties, deficiencies, diminution in value of investment,
losses and expenses, including interest, reasonable expenses of investigation,
court costs, reasonable fees and expenses of attorneys, accountants and other
experts or other expenses of litigation or other proceedings or of any claim,
default or assessment (including, without limitation, fees and expenses of
attorneys, incurred in connection with (i) the investigation or defense of any
claim made by a person not a party hereto and (ii) asserting or disputing any
rights under this Agreement against any party hereto or otherwise).
 
7.           Miscellaneous.
 
(a)           The Company agrees not to transfer or assign this Agreement or any
of the Company’s rights or obligations herein and Purchaser agrees that the
transfer or assignment of the Securities acquired pursuant hereto shall be made
only in accordance with all applicable laws.
 
(b)           This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns. The
Transaction Documents constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended or waived only by a
written instrument signed by all parties.
 
(c)           Any notice or other document required or permitted to be given or
delivered to the parties hereto shall be in writing and sent: (i) by fax, if the
sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified
mail, with return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid), to the following addresses:
 

 
(i)
If to the Company, at:

 
BioZone Pharmaceuticals, Inc.
550 Sylvan Avenue, Suite 101
Englewood Cliffs, NJ 07632
Attention: Elliot Maza, CEO and CFO
Tel:  (201) 608-5101
Fax:  (201) 608-5103
 

 
(ii)
If to a Purchaser, to the address set forth on its signature page hereto.

 
(d)           No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed by all parties
hereto. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.
 
(e)           This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York, as such laws are
applied by the New York courts to contracts solely performed within its borders,
except with respect to the conflicts of law provisions thereof.
 
 
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(f)           Any legal suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby shall be instituted
exclusively in New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York. The parties hereto
hereby: (i) waive any objection which they may now have or hereafter have to the
venue of any such suit, action or proceeding, and (ii) irrevocably consent to
the jurisdiction of the New York Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding. The parties further agree to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law.
 
(g)           If any provision of this Agreement is held to be invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provisions hereof.
 
(h)           The Company understands and agrees that money damages may not be a
sufficient remedy for any breach of this Agreement by the Company, and that
Purchaser shall be entitled to equitable relief, including an injunction and
specific performance, as a remedy for any such breach, without the necessity of
establishing irreparable harm or posting a bond therefor. Such remedies shall
not be deemed to be the exclusive remedies for a breach by the Company of this
Agreement, but shall be in addition to all other remedies available at law or
equity to Purchaser.
 
(i)           All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, singular or plural, as identity of
the person or persons may require.
 
(j)           This Agreement may be executed in counterparts and by facsimile,
each of which shall be deemed an original, but all of which, taken together,
shall constitute one and the same instrument.
 
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
 
 
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Company Signature Page
 
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 

 
BIOZONE PHARMACEUTICALS, INC.
         
 
By: 
/s/ Elliot Maza
   
Name: 
Elliot Maza
   
Title:
Chief Executive Officer
         

 
 
 

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Purchaser Signature Page
 
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 

 
By: 
       
Name: 
Title: 
           
Purchase Price: $500,000
           
Address for Notice:
         

 
 
 

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Schedule 1
 
LIST OF SUBSIDIARIES
 
BioZone Laboratories, Inc.
 
EquaChem LLC
 
Equalon Pharma LLC
 
BetaZone Laboratories, LLC (45% owned)
 
 
 

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Schedule 2
 
TITLE TO ASSETS
 
 
 
1.
The Company has pledged the stock of its subsidiaries to purchasers of
convertible preferred notes as described in the Company’s SEC Reports.

 
 
 

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Exhibit A
 
FORM OF CONVERTIBLE PROMISSORY NOTE
 
 
 

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Exhibit B
 
FORM OF WARRANT
 
 
 

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Exhibit C
 
FORM OF REGISTRATION RIGHTS AGREEMENT