Exhibit 10.1

 

Execution Copy

 

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May ___,
2020, by and among INVO Bioscience, Inc., a Nevada corporation (the “Company”),
and the subscribers identified on the signature page hereto (each a “Subscriber”
and collectively “Subscribers”).

 

WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “1933 Act”).

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Subscribers, as
provided herein, and the Subscribers, in the aggregate, shall purchase up to
Three Million Five Hundred Thousand Dollars ($3,500,000) (the “Purchase Price”)
of principal amount of secured convertible promissory notes of the Company
(“Note” or “Notes”) which notes are convertible into shares (“Conversion
Shares”) of the Company’s common stock, par value $0.0001 per share (“Common
Stock”) pursuant to the terms and conditions set forth in the Notes with an
initial conversion price of $0.18, the form of which is annexed hereto as
Exhibit A, and unit purchase options (the “Purchase Options”), in the form
annexed hereto as Exhibit B, to purchase units (“Units”) with each Unit
consisting of (A) shares of the Company’s common stock, par value $0.001 per
share (the “Unit Shares”) and (B) warrants (“Warrants”), in the form annexed
hereto as Exhibit C, to purchase shares of Common Stock (“Warrant Shares”). The
Notes, the Conversion Shares, the Purchase Options, Units, the Unit Shares, the
Warrants, and the Warrant Shares are collectively referred to herein as the
“Securities.”

 

WHEREAS, to secure payment for the Notes, concurrent with the Closing Date, the
Company will grant Subscribers a security interest in certain assets pursuant to
a security agreement substantially in the form attached hereto as Exhibit D (the
“Security Agreement”).

 

WHEREAS, the Company engaged Tribal Capital Markets, LLC (“Tribal”) as placement
agent for the transactions contemplated by this Agreement and agreed to pay
Tribal fees for those investors who invest hereunder per the efforts of Tribal
as follows: (i) a cash fee equal to 8% of the proceeds invested under this
Agreement (the “Cash Fee”), payable at the time of closing of subscriptions
under this Agreement and (ii) a warrant to purchase 8% of the proceeds invested
under this Agreement at an exercise price of $0.18 (i.e. if $3,000,000 is
invested hereunder, then Tribal would receive a 5-year warrant to purchase
240,000 shares of Common Stock (the “Tribal Warrant”) at an exercise price of
$0.18 per share, with the form of warrant being the same as the Warrants set
forth above.

 

NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Subscribers hereby agree as
follows:

 

1.     Conditions To Closing. Subject to the satisfaction or waiver of the terms
and conditions of this Agreement, on the Closing Date (as defined in Section 2),
each Subscriber shall purchase, and the Company shall sell to each Subscriber, a
Note in the principal amount designated on the signature page hereto. The
aggregate amount of the Notes to be purchased by the Subscribers

 

 

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on the Closing Date shall, in the aggregate, be equal to the Purchase Price.
Notwithstanding anything to the contrary contained herein, the parties agree
that $25,000 , representing legal fees of the Subscribers for this Agreement and
the transactions related thereto, shall be deducted from the Purchase Price to
be paid by the Subscribers to the Company on the Closing Date.

 

2.     Closing Date. The “Closing Date” shall be the date that subscriber funds
representing the amount due the Company from the Purchase Price of the offer and
sale of the Notes and Purchase Options is transmitted by cash, cancellation of
indebtedness, wire transfer or check, subject to collection to the escrow
account as directed by the Company. Each Subscriber understands and acknowledges
that this subscription is part of a proposed placement by the Company of up to
$3,500,000 of Notes, which offering is being made on a “best efforts” basis (the
“Offering”). During the Offering, funds will be held in an escrow account
established by the Company and released at the discretion of the Company from
time to time. If a subscription is not accepted, whether in whole or in part,
the subscription funds held therein will be returned to the Subscriber without
interest or deduction. The consummation of the transactions contemplated herein
for all Closings shall take place at the offices of Dentons US, LLP, 601 S.
Figueroa Street, Suite 2500, Los Angeles, California 90017, upon the
satisfaction of all conditions to Closing set forth in this Agreement.

 

3.     Purchase Options.     On the Closing Date, the Company will issue and
deliver a Purchase Option to each Subscriber. The number of Purchase Options
issuable to a Subscriber will be equal to the principal amount of the Note
subscribed for by Subscriber multiplied by 2.78 and each Purchase Option will be
exercisable for Units consisting of: (A) one share of Common Stock and (B) a
Warrant to purchase one share of Common Stock. The Exercise Price to acquire a
Purchase Option will be $0.25 and the exercise price for a Warrant will be
$0.30.

 

4.     Subscriber’s Representations and Warranties. Each Subscriber hereby
represents and warrants to and agrees with the Company only as to such
Subscriber the following:

 

(a)     Organization and Standing of the Subscribers. If the Subscriber is an
entity, such Subscriber is a corporation, limited liability company,
partnership, or other entity duly incorporated or organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization.

 

(b)     Authorization and Power. Each Subscriber has the requisite power and
authority to enter into and perform this Agreement and the Security Agreement
and to purchase the Notes and Purchase Options being sold to it hereunder. The
execution, delivery and performance of this Agreement and the Security Agreement
by such Subscriber and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate or
partnership action, and no further consent or authorization of such Subscriber
or its Board of Directors, stockholders, partners, members, as the case may be,
is required. This Agreement has been duly authorized, executed, and delivered by
such Subscriber and constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Subscriber enforceable against
the Subscriber in accordance with the terms thereof, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity.

 

(c)     No Conflicts. The execution, delivery and performance of this Agreement
and the consummation by such Subscriber of the transactions contemplated hereby
or relating hereto do not and will not (i) result in a violation of such
Subscriber’s charter documents or

 

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bylaws or other organizational documents or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument or
obligation to which such Subscriber is a party or by which its properties or
assets are bound, or result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency applicable to
such Subscriber or its properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate, have a material
adverse effect on such Subscriber). Such Subscriber is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or to purchase the Notes or acquire
the Warrants in accordance with the terms hereof, provided that for purposes of
the representation made in this sentence, such Subscriber is assuming and
relying upon the accuracy of the relevant representations and agreements of the
Company herein.

 

(d)     Information on Company. The Subscriber has been furnished with or has
had access at the EDGAR Website of the Commission to the Company’s Form 10-K for
the year ended December 31, 2019 and all reports, schedules, forms, statements
and other documents required to be filed by it with the Commission pursuant to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the “1934 Act”)(all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements, notes and schedules thereto
and documents incorporated by reference therein being hereinafter referred to as
the “Reports”). In addition, the Subscriber has received in writing from the
Company such other information concerning its operations, financial condition
and other matters as the Subscriber has requested in writing (such other
information is collectively, the “Other Written Information”), and considered
all factors the Subscriber deems material in deciding on the advisability of
investing in the Securities.

 

(e)     Information on Subscriber. The Subscriber is, and will be at the time of
the conversion of the Notes and exercise of the Warrants, an “accredited
investor”, as such term is defined in Regulation D promulgated by the Commission
under the 1933 Act, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The Subscriber is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate.

 

(f)     Purchase of Notes and Purchase Options. Subscriber further represents
the address set forth in the Confidential Purchaser Questionnaire is his/her
principal residence (or, if Subscriber is a company, partnership or other
entity, the address of its principal place of business); that Subscriber is
purchasing the Securities for Subscriber’s own account and not, in whole or in
part, for the account of any other person; Subscriber is purchasing the
Securities for investment and not with a view to resale or distribution; and
Subscriber has not formed any entity for the purpose of purchasing the
Securities.

 

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(g)     Compliance with Securities Act. The Subscriber understands and agrees
that the Securities have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a transaction
that does not require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of Subscriber contained herein),
and that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration.

 

(h)     Note Legend. The Note shall bear the following or similar legend:

 

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO [THE COMPANY] THAT SUCH
REGISTRATION IS NOT REQUIRED.”

 

(i)     Purchase Options Legend. The Purchase Options shall bear the following
or similar legend:

 

“THIS PURCHASE OPTIONS AND THE COMMON SHARES AND WARRANTS ISSUABLE UPON EXERCISE
OF THIS PURCHASE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS PURCHASE OPTION AND AND THE COMMON SHARES AND WARRANTS
ISSUABLE UPON EXERCISE OF THIS PURCHASE OPTION MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS PURCHASE OPTION UNDER SAID ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO [THE COMPANY]
THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(j)     Warrants Legend. The Warrants shall bear the following or similar legend

 

“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO [THE COMPANY]
THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

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(k)     Conversion Shares, Unit Shares and Warrant Shares Legend. The Conversion
Shares, Unit Shares and Warrant Shares shall bear the following legend:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO [THE COMPANY] THAT SUCH
REGISTRATION IS NOT REQUIRED.”

 

(l)     Communication of Offer. The offer to sell the Securities was directly
communicated to the Subscriber by the Company. At no time was the Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.

 

(m)     No Governmental Review. Each Subscriber understands that no United
States federal or state agency or any other governmental or state agency has
passed on or made recommendations or endorsement of the Securities or the
suitability of the investment in the Securities, nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.

 

(n)     Correctness of Representations. Each Subscriber represents as to such
Subscriber that the foregoing representations and warranties in this Agreement
and the Confidential Purchaser Questionnaire are true and correct as of the date
hereof and, unless a Subscriber otherwise notifies the Company prior to each
Closing Date, shall be true and correct as of each Closing Date.

 

(o)     Review of Documents. Subscriber has carefully read this Agreement, the
other Transaction Documents, and the Reports, and Subscriber has accurately
completed the Confidential Purchaser Questionnaire which accompanies this
Agreement.

 

(p)     Completion of Questionnaire. The Confidential Purchaser Questionnaire
has been completed, signed and delivered to the Company by the Subscriber and
is, as of the date hereof, true, complete, and correct in all respects.

 

5.     Company Representations and Warranties. The Company represents and
warrants to and agrees with each Subscriber the following, except as set forth
in the Reports (but (i)without giving effect to any amendment thereof filed
with, or furnished to the Commission on or after the date hereof and (ii)
excluding any disclosures contained under the heading “Risk Factors” and any
disclosure of risks included in any “forward-looking statements” disclaimer or
in any other section to the extent they are forward-looking statements or
cautionary, predictive or forward-looking in nature) and as otherwise qualified
in the Transaction Documents or the Disclosure Schedules to this Agreement:

 

(a)     Due Incorporation. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to own its properties and to
carry on its business as disclosed in the

 

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Reports. The Company is duly qualified as a foreign corporation to do business
and is in good standing in each jurisdiction where the nature of the business
conducted or property owned by it makes such qualification necessary, other than
those jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For purpose of this Agreement, a “Material Adverse Effect” shall
mean a material adverse effect on the financial condition, results of
operations, properties or business of the Company taken as a whole.

 

(b)     Authority; Enforceability. This Agreement, the Notes, the Purchase
Options, the Security Agreement, the Warrant, the Registration Rights Agreement
(as defined herein) and any other agreements delivered together with this
Agreement or in connection herewith (collectively “Transaction Documents”) have
been duly authorized, executed and delivered by the Company and are valid and
binding agreements enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The Company has full corporate
power and authority necessary to enter into and deliver the Transaction
Documents and to perform its obligations thereunder, including, without
limitation, the issuance of the Notes and the reservation for issuance and
issuance of the Conversion Shares issuable upon conversion of the Notes, the
reservation for issuance and issuance of the Unit Shares issuable pursuant to
the terms of the Purchase Options and the issuance of the Warrants and the
reservation for issuance and issuance of the Warrant Shares issuable upon
exercise of the Warrants.

 

(c)     Capitalization. The Company is authorized to issue (i) 100,000,000
shares of Common Stock of which, as of the date of this Agreement, 157,774,336
shares were issued and outstanding and 28,091,926 shares are reserved for
issuance pursuant to securities (other than the Notes, the Purchase Options and
the Warrants) exercisable or exchangeable for, or convertible into, shares of
Common Stock, and (ii) 10,000,000 shares of preferred stock, par value $0.0001
per share, of which, as of the date of this Agreement, no shares were issued and
outstanding. All outstanding shares of Common Stock have been duly authorized
and validly issued, and are fully paid, nonassessable, and free of any
preemptive rights. (i) None of the Company’s capital stock is subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company; (ii) except as disclosed in Schedule
5(c)(iii), there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
capital stock of the Company, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any capital
stock of the Company; (iii) except as disclosed in Schedule 5(c)(iii), there are
no outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or by which the Company is or may become bound; (iv) there are no
financing statements securing obligations in any amounts filed in connection
with the Company; (v) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of their securities under the
1933 Act; (vi) there are no outstanding securities or instruments of the Company
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to redeem a security of the Company; (vii) there are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) the Company does not have
any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement; and (ix) the Company does not have any liabilities or
obligations required

 

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to be disclosed in the Reports which are not so disclosed in the Reports, other
than those incurred in the ordinary course of the Company’s business and which,
individually or in the aggregate, do not or could not have a Material Adverse
Effect.

 

(d)     Consents. No consent, approval, authorization, or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company,
or any of its Affiliates, any Principal Market, or the Company’s stockholders is
required for the execution by the Company of the Transaction Documents and
compliance and performance by the Company of its obligations under the
Transaction Documents, including, without limitation, the issuance and sale of
the Securities. The Company is not in violation of the requirements of the
Principal Market and has no knowledge of any facts or circumstances which could
reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future.

 

(e)     No Violation or Conflict. Assuming the representations and warranties of
the Subscribers in Section 4 are true and correct, except as set forth in
Schedule 5(e), neither the issuance and sale of the Securities nor the
performance of the Company’s obligations under this Agreement and the
Transaction Documents will violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute a default in any
material respect) of a material nature under (A) the articles or certificate of
incorporation, charter or bylaws of the Company or (B) to the Company’s
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates.

 

(f)     The Securities. The Securities upon issuance:

 

(i)     are, or will be, free and clear of any preemptive or similar rights,
security interests, liens, claims or other encumbrances, other than restrictions
upon transfer under the 1933 Act and any applicable state securities laws;

 

(ii)     have been, or will be, duly and validly authorized, and upon either
conversion of the Notes, the Conversion Shares, exercise of the Units, the Unit
Shares and the Warrants and exercise of the Warrants, the Warrant Shares will be
duly and validly issued, fully paid and nonassessable, and, if (A) registered
pursuant to the 1933 Act, (B) prospectus delivery requirements have been
complied with, and (C) resold pursuant to an effective registration statement,
will be free trading and unrestricted;

 

(iii)     will not have been issued or sold in violation of any preemptive or
other similar rights of the holders of any securities of the Company;

 

(iv)     will not subject the holders thereof to personal liability by reason of
being such holders provided Subscriber’s representations herein are true and
accurate and Subscribers take no actions or fail to take any actions required
for their purchase of the Securities to be in compliance with all applicable
laws and regulations; and

 

(v)     will not result in a violation of Section 5 under the 1933 Act, provided
Subscriber’s representations herein are true and accurate and Subscribers take
no actions or fail to take any actions required by Subscriber for Subscriber’s
purchase of the Securities to be in compliance with all applicable laws and
regulations.

 

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As of the Closing, the Company shall have reserved from its duly authorized
capital stock not less than (i) 100% of the maximum number of Conversion Shares
initially issuable upon conversion of the Notes (assuming for purposes hereof
that the Notes are convertible at the initial Conversion Price (as defined in
the Notes) and without taking into account any limitations on the conversion of
the Notes set forth in the Notes), (ii) 100% of the maximum number of Unit
Shares issuable pursuant to the terms of the Purchase Option without taking into
account any limitations on the issuance of securities set forth in the Notes and
(iii) 100% of the maximum number of Warrant Shares initially issuable upon
exercise of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth therein).

 

(g)     Litigation. Except as set forth in the Reports, there is no pending or,
to the best knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company, or any of its Affiliates that would affect
the execution by the Company or the performance by the Company of its
obligations under the Transaction Documents. Except as disclosed in the Reports,
there is no pending or, to the best knowledge of the Company, basis for or
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates which litigation if adversely determined would have a
Material Adverse Effect.

 

(h)     Information Concerning Company. During the two (2) years prior to the
date hereof, the Company has timely filed all Reports required to be filed by it
with the Commission pursuant to the reporting requirements of the 1934 Act. The
Company has delivered to the Subscribers or their respective representatives
true, correct and complete copies of each of the Reports not available on the
EDGAR system. The Reports contain all the information required to be disclosed
therein as of their respective dates. As of their respective dates, the
financial statements of the Company included in the Reports complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto as in
effect as of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). Since the last day of the
fiscal year of the most recent audited financial statements included in the
Reports (“Latest Financial Date”), and except as modified in the Reports or
Other Written Information or in the Schedules hereto, there has been no Material
Adverse Event relating to the Company’s business, financial condition or affairs
not disclosed in the Reports. The Reports do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances when made. No other information provided by or on behalf of the
Company to any of the Subscribers which is not included in the Reports
(including, without limitation, information referred to in Section 4(d) of this
Agreement) contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein not
misleading, in the light of the circumstance under which they are or were made.

 

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(i)     Defaults. The Company is not in violation of its articles of
incorporation or bylaws. Except as disclosed on Schedule 5(i), the Company is
(i) not in default under or in violation of any other material agreement or
instrument to which it is a party or by which it or any of its properties are
bound or affected, which default or violation would have a Material Adverse
Effect, (ii) not in default with respect to any order of any court, arbitrator
or governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) not in violation of any statute, rule
or regulation of any governmental authority which violation would have a
Material Adverse Effect.

 

(j)     No General Solicitation. Neither the Company, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

 

(k)     Absence of Certain Changes. Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K except as disclosed in the
Reports filed subsequent to such Form 10-K, there has been no material adverse
change and no material adverse development in the business, assets, liabilities,
properties, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company taken as a whole. Since the Latest
Financial Date, except as disclosed in the Reports filed subsequent to such Form
10-K, the Company has not (i) declared or paid any dividends, (ii) sold any
assets, individually or in the aggregate, outside of the ordinary course of
business or (iii) made any material capital expenditures, individually or in the
aggregate, outside the ordinary course of business. The Company has not taken
any steps to seek protection pursuant to any law or statute relating to
bankruptcy, insolvency, reorganization, receivership, liquidation or winding up,
nor does the Company have any knowledge or reason to believe that any of its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The
Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will not be Insolvent
(as defined below). For purposes of this Section 5(k), “Insolvent” means, with
respect to the Company, (i) the present fair saleable value of the Company’s
assets is less than the amount required to pay the Company’s total Indebtedness
(as defined below), (ii) the Company is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured or (iii) the Company intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature.
The Company has not engaged in any business or in any transaction, and is not
about to engage in any business or in any transaction, for which the Company’s
remaining assets constitute unreasonably small capital.

 

(l)     Intellectual Property. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights necessary or required for use in
connection with their respective businesses as described in the Reports and
which the failure to so have could have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”). None of, and the Company has not received a
notice (written or otherwise) that any of, the Intellectual Property Rights has
expired, terminated or been abandoned, or is expected to expire or terminate or
be abandoned, within two (2) years from the date of this Agreement. The Company
has not received, since the Latest Financial Date, a written notice of a claim
or otherwise has any knowledge that the Intellectual Property Rights violate or
infringe upon the rights of any Person, except as could not have or reasonably
be expected to not have a Material

 

9

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Adverse Effect. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has no knowledge of any facts that would preclude it
from having valid license rights or clear title to the Intellectual Property
Rights. The Company has no knowledge that it lacks or will be unable to obtain
any rights or licenses to use all Intellectual Property Rights that are
necessary to conduct its business.

 

(m)     Transactions With Affiliates and Employees. 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 (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, providing for the borrowing of money from or lending of
money to 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, stockholder, member or partner, in each case in
excess of $120,000 other than for (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.

 

(n)     No Integrated Offering. Assuming the accuracy of the Subscribers’
representations and warranties set forth herein, neither the Company nor any
Person acting on its behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to be integrated
with prior offerings by the Company for purposes of any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

 

(o)     No Undisclosed Events, Liabilities, Developments or Circumstances.
Except as disclosed in the Reports, no event, liability, development or
circumstance has occurred or exists, or is reasonably expected to exist or occur
with respect to the Company or any of its businesses, properties, liabilities,
prospects, operations (including results thereof) or condition (financial or
otherwise), that (i) would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the Commission relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly announced, (ii) could have a material
adverse effect on any Subscriber’s investment hereunder or (iii) could have a
Material Adverse Effect.

 

(p)     Foreign Corrupt Practices. Neither the Company nor, to the knowledge of
the Company, any director, officer, agent, employee or other Person acting on
behalf of the Company has, in the course of its actions for, or on behalf of,
the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.

 

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(q)     Sarbanes-Oxley Act. The Company is in material compliance with all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as
of the date hereof, and all applicable rules and regulations promulgated by the
Commission thereunder that are effective as of the date hereof.

 

(r)     Indebtedness and Other Contracts. The Company (i) except as disclosed on
Schedule 5(r), does not have any outstanding Indebtedness (as defined below),
(ii) is not a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract,
agreement or instrument could reasonably be expected to result in a Material
Adverse Effect, (iii) is not in violation of any term of, or in default under,
any contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iv) is not a party to any contract, agreement
or instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, claim, lien, tax, right of first
refusal, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; and (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any indebtedness, lease, dividend or
other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto.

 

6.     Registration Rights Granted to Subscriber.  If the Company determines to
register any of its securities, either for its own account or the account of a
security holder or holders, other than (i) a registration relating solely to
employee benefit plans on Form S-8 (or any successor form) or (ii) a
registration relating solely to a Commission Rule 145 transaction on Form S-4
(or any successor form), the Company will include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, the Conversion Shares underlying the Notes, the
Unit Shares underlying the Purchase Options and the Warrant Shares

 

11

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underlying the Warrants delivered pursuant to this Agreement, subject to any
reductions required due to the Commission’s interpretation of Rule 415 of the
1933 Act, in accordance with the terms of that certain Registration Rights
Agreement entered into between the Company and the Subscribers (the
“Registration Rights Agreement”).

 

 

7.     Regulation D Offering. The offer and issuance of the Securities to the
Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder. The Company will
provide, at the Company’s expense, such other legal opinions in the future as
are reasonably necessary for the issuance and resale of the Common Stock
issuable upon conversion of the Notes and exercise of the Warrants pursuant to
an effective registration statement.

 

8.     Covenants.

 

(a)     Reporting Status. Until the date on which the Subscribers shall have
sold all of the Securities (the “Reporting Period”), the Company shall timely
file all reports required to be filed with the Commission pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would no longer require or otherwise permit such
termination.

 

(b)     Reservation of Shares. So long as any Notes, Purchase Options or
Warrants remain outstanding, the Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less
than (i) 100% of the maximum number of Conversion Shares initially issuable upon
conversion of the Notes (assuming for purposes hereof that the Notes are
convertible at the initial Conversion Price (as defined in the Notes) and
without taking into account any limitations on the conversion of the Notes set
forth in the Notes), (ii) 100% of the maximum number of Unit Shares issuable
pursuant to the terms of the Purchase Options and (iii) 100% of the maximum
number of Warrant Shares initially issuable upon exercise of the Warrants
(without taking into account any limitations on the exercise of the Warrants set
forth therein).

 

(c)     Other Notes or Indebtedness; Variable Securities. So long as any Notes
remain outstanding, the Company will not issue any Notes (other than to the
Subscribers as contemplated hereby) or incur any Indebtedness senior to or pari
passu to the Notes, and the Company shall not issue any other securities that
would cause a breach or default under the Notes, without the prior written
consent of the holders of a majority of the Notes held by the Subscribers on the
Closing Date (‘Requisite Holders”). So long as any Notes remain outstanding, the
Company shall be prohibited from effecting or entering into an agreement to
effect any Subsequent Equity Financing involving a Variable Rate Transaction
without the prior written consent of the Requisite Holders. “Variable Rate
Transaction” means a transaction in which the Company (i) issues or sells any
Convertible Securities either (A) at a conversion, exercise or exchange rate or
other price that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the initial issuance
of such Convertible Securities, or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the initial
issuance of such Convertible Securities or upon the occurrence of specified or
contingent events directly or indirectly related to the business of the Company
or the market for the Common Stock, other than pursuant to a customary “weighted
average” anti-dilution provision or (ii) enters into any agreement (including,
without

 

12

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limitation, an equity line of credit or an “at-the-market” offering) whereby the
Company may sell securities at a future determined price (other than standard
and customary “preemptive” or “participation” rights). Each Subscriber shall be
entitled to obtain injunctive relief against the Company to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.

 

9.     Patriot Act Compliance. (Terms used in this section are defined in
paragraph (d) below.)

 

To induce the Company to accept the undersigned’s investment, the undersigned
hereby makes the following representations, warranties and covenants to the
Company:

 

(a)     The undersigned represents and warrants that no holder of any beneficial
interest in the undersigned’s equity securities of the Company (each a
“Beneficial Interest Holder”) and, no Related Person (in the case the
undersigned is an entity) is or will be:

 

(1)     A person or entity whose name appears on the list of specially
designated nationals and blocked persons maintained by the Office of Foreign
Asset Control from time to time;

 

(2)     A Foreign Shell Bank; or

 

(3)     A person or entity resident in or whose subscription funds are
transferred from or through an account in a Non-Cooperative Jurisdiction.

 

(b)     The undersigned represents that the bank or other financial institution
(the “Wiring Institution”) from which the undersigned’s funds will be wired is
located in a FATF Country.

 

(c)     The undersigned represents that:

 

(1)     Neither it, any Beneficial Interest Holder nor any Related Person (in
the case of the undersigned is an entity) is a Senior Foreign Political Figure,
any member of a Senior Foreign Political Figure’s Immediate Family or any Close
Associate of a Senior Foreign Political Figure;

 

(2)     Neither it, any Beneficial Interest Holder nor any Related Person (in
the case the undersigned is an entity) is resident in, or organized or chartered
under the laws of, a jurisdiction designated by the Secretary of the Treasury
under Section 311 or 312 of the USA PATRIOT Act as warranting special measures
due to money laundering concerns; and

 

(3)     Its investment funds do not originate from, nor will they be routed
through, an account maintained at a Foreign Shell Bank, an “offshore bank,” or a
bank organized or chartered under the laws of a Non-Cooperative Jurisdiction.

 

(d)     Definitions:

 

Close Associate: With respect to a Senior Foreign Political Figure, a person who
is widely and publicly known internationally to maintain an unusually close
relationship with the Senior Foreign Political Figure, and includes a person who
is in a position to conduct substantial domestic and international financial
transactions on behalf of the Senior Foreign Political Figure.

 

13

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FATF: The Financial Action Task Force on Money Laundering.

 

FATF Country: A country that is a member of FATF. As of September 1, 2003, the
countries which are members of FATF are: Argentina; Australia; Austria; Belgium;
Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong; Iceland;
Ireland; Italy; Japan; Luxembourg; Mexico; Kingdom of the Netherlands; New
Zealand; Norway; Portugal; Singapore; South Africa; Spain; Sweden; Switzerland;
Turkey; United Kingdom and United States. For a current list of FATF members see
http://www1.oecd.org/fatf/Members_en.htm.

 

Foreign Bank: An organization which (i) is organized under the laws of a country
outside the United States; (ii) engages in the business of banking; (iii) is
recognized as a bank by the bank supervisory or monetary authority of the
country of its organization or principal banking operations; (iv) receives
deposits to a substantial extent in the regular course of its business; and (v)
has the power to accept demand deposits, but does not include the U.S. branches
or agencies of a foreign bank.

 

Foreign Shell Bank: A Foreign Bank without a Physical Presence in any country,
but does not include a Regulated Affiliate.

 

Government Entity: Any government or any state, department or other political
subdivision thereof, or any governmental body, agency, authority or
instrumentality in any jurisdiction exercising executive, legislative,
regulatory or administrative functions of or pertaining to government.

 

Immediate Family: With respect to a Senior Foreign Political Figure, typically
includes the political figure’s parents, siblings, spouse, children and in-laws.

 

Non-Cooperative Jurisdiction: Any foreign country or territory that has been
designated as non-cooperative with international anti-money laundering
principles or procedures by an intergovernmental group or organization, such as
FATF, of which the United States is a member and with which designation the
United States representative to the group or organization continues to concur.
See http://www1.oecd.org/fatf/NCCT_en.htm for FATF’s list of non-cooperative
countries and territories.

 

Physical Presence: A place of business maintained by a Foreign Bank and is
located at a fixed address, other than solely a post office box or an electronic
address, in a country in which the Foreign Bank is authorized to conduct banking
activities, at which location the Foreign Bank: (a) employs one or more
individuals on a full-time basis; (b) maintains operating records related to its
banking activities; and (c) is subject to inspection by the banking authority
that licensed the Foreign Bank to conduct banking activities.

 

Publicly Traded Company: An entity whose securities are listed on a recognized
securities exchange or quoted on an automated quotation system in the U.S. or
country other than a Non-Cooperative Jurisdiction or a wholly-owned subsidiary
of such an entity.

 

Qualified Plan: A tax qualified pension or retirement plan in which at least 100
employees participate that is maintained by an employer organized in the U.S. or
is a U.S. Government Entity.

 

14

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Regulated Affiliate: A Foreign Shell Bank that: (a) is an affiliate of a
depository institution, credit union or Foreign Bank that maintains a Physical
Presence in the U.S. or a foreign country, as applicable; and (b) is subject to
supervision by a banking authority in the country regulating such affiliated
depository institution, credit union or Foreign Bank.

 

Related Person: With respect to any entity, any interest holder, director,
senior officer, trustee, beneficiary or grantor of such entity; provided that in
the case of an entity that is a Publicly Traded Company or a Qualified Plan, the
term “Related Person” shall exclude any interest holder holding less than 5% of
any class of securities of such Publicly Traded Company and beneficiaries of
such Qualified Plan.

 

Senior Foreign Political Figure: A senior official in the executive,
legislative, administrative, military or judicial branches of a non-U.S.
government (whether elected or not), a senior official of a major non-U.S.
political party, or a senior executive of a non-U.S. government-owned
corporation. In addition, a Senior Foreign Political Figure includes any
corporation, business or other entity that has been formed by, or for the
benefit of, a Senior Foreign Political Figure.

 

USA PATRIOT Act: The Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001
(Pub. L. No. 107-56).

 

10.     Miscellaneous.

 

(a)     Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable overnight air courier service with charges prepaid,
or (iv) transmitted by hand delivery or email, addressed as set forth below or
to such other address as such party shall have specified most recently by
written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
email, with accurate confirmation generated by the transmitting email machine,
at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be: (i) if to the Company, to: INVO Bioscience, Inc., 5582 Broadcast
Court, Sarasota, Florida 34240, Attn: Steve Shum, email:
steveshum@invobioscience.com, with a copy by email only to: Dentons US LLP, 601
S. Figueroa Street, Suite 2500, Los Angeles, California 90017, Attn: Greg
Carney, Esq., email: greg.carney@dentons.com, and (ii) if to the Subscriber, to:
the one or more addresses and email addresses indicated on the signature pages
hereto.

 

(b)     Preemptive Rights. So long as 15% of the Notes issued to Subscribers on
the Closing Date remain outstanding, if the Company offers to sell Covered
Securities (as defined below) in a public or private offering of Covered
Securities solely for cash (a “Qualified Offering”), each Subscriber shall be
afforded the opportunity to acquire from the Company, for the same price and on
the same terms as such Covered Securities are offered, in the aggregate up to
the amount of Covered Securities required to enable it to maintain its
Subscriber Percentage Interest. “Subscriber

 

15

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Percentage Interest” means, as of any date of determination, the percentage
equal to (A) the aggregate number of shares of Common Stock beneficially owned
by the Subscriber as of the date of determination divided by (B) the total
number of outstanding shares of Common Stock as of such date. “Covered
Securities” means Common Stock and any rights, options or warrants to purchase
or securities convertible into or exercisable or exchangeable for Common Stock,
other than securities that are issuances to employees, including new employees,
or directors of, or consultants or advisors to, the Company or any of its
subsidiaries pursuant to (i) an Approved Stock Plan (as defined below), provided
that (1) all such issuances (taking into account the shares of Common Stock
issuable upon exercise of such options) after the date hereof pursuant to this
clause do not, in the aggregate, exceed more than 25% of the Common Stock issued
and outstanding immediately prior to the date hereof and (2) the exercise price
of any such options is not lowered, none of such options are amended to increase
the number of shares issuable thereunder and none of the terms or conditions of
any such options are otherwise materially changed in any manner that adversely
affects any of the Subscribers, provided that such issuances are approved by the
Board of Directors; (ii) shares of Common Stock or Convertible Securities issued
or issuable to banks, service providers, or equipment lessors pursuant to a
non-convertible debt financing or equipment leasing transaction approved by the
Board provided that the primary purpose of such issuance is not to raise
capital; and (iii) shares of Common Stock or Convertible Securities issued or
issuable in connection with strategic alliances, acquisitions, mergers, joint
ventures, strategic partnerships and licenses provided that the primary purpose
of such issuance is not to raise capital (each an “Excluded Issuance”).
“Approved Stock Plan” means any employee benefit plan which has been approved by
the board of directors of the Company prior to or subsequent to the date hereof
pursuant to which shares of Common Stock and standard options to purchase Common
Stock may be issued to any employee, officer or director for services provided
to the Company in their capacity as such. Prior to making any Qualified Offering
of Covered Securities, the Company shall give the Subscriber written notice at
the address shown on each Subscriber’s signature page hereto of its intention to
make such an offering, describing, to the extent then known, the anticipated
amount of securities, and other material terms then known to the Company upon
which the Company proposes to offer the same (such notice, a “Qualified Offering
Notice”). The Subscriber shall then have 10 days after receipt of the Qualified
Offering Notice (the “Offer Period”) to notify the Company in writing that it
intends to exercise such preemptive right and as to the amount of Covered
Securities the Subscriber desires to purchase, up to the maximum amount
calculated pursuant to this Section 9(b) (the “Designated Securities”). Such
notice constitutes a non-binding indication of interest of the Subscriber to
purchase the amount of Designated Securities specified by the Subscriber (or a
proportionately lesser amount if the amount of Covered Securities to be offered
in such Qualified Offering is subsequently reduced) at the price (or range of
prices) established in the Qualified Offering and other terms set forth in the
Company’s notice to it. Any failure to respond or to confirm the Subscriber’s
interest in purchasing any Covered Securities to which it is entitled under this
Section 9(b) during the Offer Period constitutes a waiver of its preemptive
rights in respect of such offering or as to the Covered Securities as to which
no interest in purchasing is received, as applicable. The sale of the Covered
Securities in the Qualified Offering, including any Designated Securities, shall
be closed not later than 120 days after the end of the Offer Period. The Covered
Securities to be sold to other investors in such Qualified Offering shall be
sold at a price not less than, and upon terms no more favorable to such other
investors than, those specified in the Qualified Offering Notice. If the Company
does not consummate the sale of Covered Securities to other investors within
such 120-day period, the right provided hereunder shall be revived and such
securities shall not be offered unless first reoffered to the Subscribers in
accordance herewith. Notwithstanding anything to the contrary set forth herein
and unless otherwise agreed by the Subscriber, by not later than the end of such
120-day period, the Company shall either confirm in writing to the Subscriber
that the Qualified Offering has been

 

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abandoned or shall publicly disclose its intention to issue the Covered
Securities in the Qualified Offering, in either case in such a manner that the
Subscriber will not be in possession of any material, non-public information
thereafter. If the Subscriber exercises its preemptive right provided in this
Section 9(b) with respect to a Qualified Offering that is an underwritten public
offering or an offering made to qualified institutional buyers (as such term is
defined in the Commission’s Rule 144A under the 1933 Act) for resale pursuant to
Rule 144A under the 1933 Act (a “Rule 144A offering”), a private placement or
other offering, whether not registered under the 1933 Act, the Company shall
offer and sell the Subscriber, if any such offering is consummated, the
Designated Securities (as adjusted, upward to reflect the actual size of such
offering when priced but not in excess of each Subscriber’s Subscriber
Percentage Interest) at the same price as the Covered Securities are offered to
third persons (not including the underwriters or the initial purchasers in a
Rule 144A offering that is being reoffered by the initial purchasers) in such
offering and shall provide written notice of such price upon the determination
of such price.

 

(c)     Entire Agreement; Assignment. This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by both parties. Neither the Company nor the Subscribers
have relied on any representations not contained or referred to in this
Agreement and the documents delivered herewith. No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscribers.

 

(d)      Counterparts/Execution. This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by electronic signature and delivered by electronic mail
transmission.

 

(e)     Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada without regard to
conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the civil or state courts of Nevada or in the federal
courts located in Clark County. The parties and the individuals executing this
Agreement and other agreements referred to herein or delivered in connection
herewith on behalf of the Company agree to submit to the jurisdiction of such
courts and waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

 

(f)     Specific Enforcement, Consent to Jurisdiction. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek one or more
preliminary and final injunctions to prevent or cure breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which any of them may be entitled
by law or equity. Subject to Section 9(e) hereof, each of the

 

17

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Company, Subscriber and any signatory hereto in his personal capacity hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction in Nevada of such
court, that the suit, action or proceeding is brought in an inconvenient forum
or that the venue of the suit, action or proceeding is improper. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.

 

(g)     Equal Treatment of Subscribers. The Company hereby represents, warrants
and covenants that, as of the Closing Date and from and after the Closing Date,
none of the terms offered to any other persons or entities (“Persons”) with
respect to any similar transactions as the transactions contemplated hereunder
is or will be more favorable to such other Person than those of the Subscriber
under the Transaction Documents. No consideration (including any modification of
any Transaction Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of such Transaction
Documents unless the same consideration is also offered to all of the parties to
such Transaction Documents. Further, the Company shall not make any payment of
principal or interest on the Notes in amounts which are disproportionate to the
respective principal amounts outstanding on the Notes at any applicable time.
For clarification purposes, this provision constitutes a separate right granted
to each Subscriber by the Company and negotiated separately by each Subscriber,
and is intended for the Company to treat the Subscribers as a class and shall
not in any way be construed as the Subscribers acting in concert or as a group
with respect to the purchase, disposition or voting of Securities or otherwise.

 

(h)     Independent Nature of Subscribers.     The Company acknowledges that the
obligations of each Subscriber under the Transaction Documents are several and
not joint with the obligations of any other Subscriber, and no Subscriber shall
be responsible in any way for the performance of the obligations of any other
Subscriber under the Transaction Documents. The Company acknowledges that each
Subscriber has represented that the decision of each Subscriber to purchase
Securities has been made by such Subscriber independently of any other
Subscriber and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions.  The Company acknowledges that
nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto shall be deemed to constitute the
Subscribers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Subscribers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents.  The Company acknowledges that each
Subscriber shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of the Transaction
Documents, and it shall not be necessary for any other Subscriber to be joined
as an additional party in any proceeding for such purpose.  The Company
acknowledges that it has elected to provide all Subscribers with the same terms
and Transaction Documents for the convenience of the Company and not because
Company was required or requested to do so by the Subscribers.  The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Subscribers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated thereby.

 

(i)     Potential Conflict of Interest. EMPLOYEES, REPRESENTATIVES AND/OR
AFFILIATES OF TRIBAL CAPITAL MARKETS, LLC (PLACEMENT AGENT FOR

 

18

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THE OFFERING) INTEND TO INVEST IN THE OFFERING, WHICH MAY REPRESENT A CONFLICT
OF INTEREST.

 

 

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

 

 

 

19

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Signature Page for Individuals:

 

IN WITNESS WHEREOF, Subscriber has caused this Securities Purchase Agreement to
be executed as of the date indicated below.

 

 

$______________________(Amount of Note)

 

Purchase Price

 

____________________________________

___________________________________

Print or Type Name

Print or Type Name (Joint-owner)

____________________________________

___________________________________

Signature

Signature (Joint-owner)

___________________________________

__________________________________

Date

Date (Joint-owner)

____________________________________

___________________________________

IRS Taxpayer Identification Number

IRS Taxpayer Identification Number (Joint-owner)

___________________________________

____________________________________

Address

Address (Joint-owner)

___________________________________

____________________________________

Telephone Number

Telephone Number

___________________________________

____________________________________

Fax Number

Fax Number

___________________________________

____________________________________

E-mail Address

E-mail Address

 

Type of Ownership

 

☐⁭     Individual

☐⁭     Tenants in common

☐⁭     Joint tenants with right of survivorship

☐⁭     Community property (check only if resident of community property state)

☐⁭     Other (please specify:____________________)

  

 

20

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Wiring Instructions:

 

Bank Name: 

ABA:  

SWIFT:

Tel Number:

Address:

Acct #:

Acct. Name:

Reference: INVO Secured Note Financing

 

21

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Partnerships, Corporations or Other Entities:

 

IN WITNESS WHEREOF, Subscriber has caused this Securities Purchase Agreement to
be executed as of the date indicated below.

 

 

$ ______________________ (Amount of Note)

   Purchase Price                    

_____________________________________________________________________________

Print or Type Name of Entity

______________________________________________________________________________

Address

 

______________________________

Telephone Number

 

______________________________

Fax Number

 

______________________________

Email Address

 

 

____________________________________     ____________________________________

Taxpayer I.D. No. (if applicable)                        Date

 

 

By:
____________________________________     ____________________________________

Signature: Name:                                                        Print or
Type Name and Indicate

                  Title:                                                       
  Title or Position with Entity          

 

 

____________________________________           
 ____________________________________

Signature (other authorized signatory)                        Print or Type Name
and Indicate

                                                                               
     Title or Position with Entity          

 

Type of Ownership

 

☐⁭     Corporation

☐⁭     Limited Liability Company

⁭☐     Partnership

☐⁭     Trust

⁭☐     Other (please specify:____________________)

 

 

22

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All subscriptions from partnerships, corporations, trusts or limited liability
companies must be accompanied by resolutions of the appropriate corporate
authority (board of directors, trustee or managing partner or members, as
applicable) and trust documents evidencing the authorization and power to make
the subscription.

 

Wiring Instructions:

 

Wiring Instructions:

 

Bank Name: 

ABA:  

SWIFT:

Tel Number:

Address:

Acct #:

Acct. Name:

Reference: INVO Secured Note Financing

 

23

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ACCEPTANCE BY INVO BIOSCIENCE, INC.

 

 

IN WITNESS WHEREOF, the Company has caused this Securities Purchase Agreement to
be executed, and the foregoing subscription accepted, as of the date indicated
below.

 

 

INVO Bioscience, Inc.

 

 

 

By: _________________________________

Name: _____________________________

Title: _______________________________

 

 

 

Date: _______________________, 2020

 

 

 

24

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SECTION A

 

CONFIDENTIAL PURCHASER QUESTIONNAIRE

 

Please review, sign on page 32, and return to: 

 

INVO Bioscience, Inc.

5582 Broadcast Court

Sarasota, Florida 34240

Email: steveshum@invobioscience.com

Attention: Chief Executive Officer

 

 

CONFIDENTIAL PURCHASER QUESTIONNAIRE

 

THIS QUESTIONNAIRE WILL BE USED IN CONNECTION WITH THE UNDERSIGNED’S EXPRESSED
INTEREST IN A PROPOSED INVESTMENT IN INVO BIOSCIENCE, INC. (THE “COMPANY”).

 

THE COMPANY SHALL HAVE THE RIGHT TO FULLY RELY ON THE REPRESENTATIONS AND
WARRANTIES CONTAINED HEREIN UNTIL SUCH TIME AS THE UNDERSIGNED HAS FURNISHED AN
AMENDED CONFIDENTIAL PURCHASER QUESTIONNAIRE.

 

THIS QUESTIONNAIRE MUST BE ANSWERED FULLY AND RETURNED TO THE COMPANY

 

THE INFORMATION SUPPLIED IN THIS QUESTIONNAIRE WILL BE HELD IN STRICT
CONFIDENCE. NO INFORMATION WILL BE DISCLOSED EXCEPT TO THE EXTENT THAT SUCH
DISCLOSURE IS REQUIRED BY LAW OR REGULATION, OTHERWISE DEMANDED BY PROPER LEGAL
PROCESS OR IN LITIGATION INVOLVING THE COMPANY AND ITS CONTROLLING PERSONS.

 

 

(1)

By initialing one of the categories below, the Subscriber represents and
warrants that the Subscriber comes within the category so initialed. The
Subscriber agrees to furnish any additional information which the Company deems
necessary in order to verify the answers set forth below. The Subscriber must
initial AT LEAST ONE CATEGORY BELOW.

 

     (i)                The undersigned has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of an investment in the Units and protecting the undersigned’s own
interests in this transaction, and does not desire to utilize the services of
any other person in connection with evaluating such merits and risks.

 

     (ii)                The undersigned intends to use or has used the services
of a purchaser representative acceptable to the Company (“Purchaser
Representative”) in connection with evaluating the merits and risks of an
investment in the Securities. The undersigned hereby acknowledges the following
named person(s) to be the undersigned’s Purchaser Representative in connection
with evaluating the merits and risks of an investment in the Units (a properly
filled out Purchaser Representative Questionnaire must be provided with this
document):

 

The advisor’s name, address, and occupation are as follows:

 

                                                                               
                                                                 

 

                                                                               
                                                                 

 

25

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(2)

By initialing one of the categories below, the Subscriber represents and
warrants that the Subscriber comes within the category so initialed and has
truthfully set forth the factual basis or reason the Subscriber comes within
that category. All information in response to this paragraph will be kept
strictly confidential. The Subscriber agrees to furnish any additional
information which the Company deems necessary in order to verify the answers set
forth below. The Subscriber is not required to initial any Category below, but
should do so if the Subscriber falls within such Category.

 

Category I                          The Subscriber is a director or executive
officer of the Company.

 

Category II                         The Subscriber is an individual (not a
partnership, corporation, etc.) whose individual net worth, or joint net worth
with the Subscriber’s spouse, presently exceeds $1,000,000, excluding the value
of the primary residence of the Subscriber.

 

Explanation. In calculation of net worth, the Subscriber may include equity in
personal property and real estate (other than the primary residence of the
Subscriber), including the Subscriber’s cash, short term investments, stocks,
securities. Equity in personal property and real estate should be based on the
fair market value of such property less debt secured by such property.

 

Category III                         The Subscriber is an individual (not a
partnership, corporation, etc.) who had an individual income in excess of
$200,000 in each of the two most recent years, or joint income with the
Subscriber’s spouse in excess of $300,000 in each of the two most recent years,
and has a reasonable expectation of reaching the same income level in the
current year.

 

Category IV                         The undersigned is (i) a bank, as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended (the “Act”); (ii) a
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary
capacity; (iii) an insurance company as defined in Section 2(13) of the Act;
(iv) an investment company registered under the Investment Company Act of 1940
or a business development company as defined in Section 2(a)(48) of that Act;
(v) a Small Business Investment Company (SBIC) licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; or (vi) a plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000.

 

 

26

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Category V                         The undersigned is an (i) employee benefit
plan within the meaning of the Employee Retirement Income Security Act of 1974
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such act, which is either a bank, savings and loan association,
insurance company, or registered investment advisor, (ii) an employee benefit
plan with total assets in excess of $5,000,000, or (iii) a self-directed
employee benefit plan (including a self-directed individual retirement account
or IRA, Keough or SEP plan) with investment decisions made solely by persons
that are accredited investors (describe entity).

 

 

Category VI                        The undersigned is a private business
development company as defined in section 202(a) (22) of the Investment Advisors
Act of 1940 (describe entity).

 

 

Category VII                         The undersigned is either a corporation,
limited liability company, partnership, Massachusetts business trust, or
non-profit organization within the meaning of Section 501(c)(3) of the Internal
Revenue Code, in each case not formed for the specific purpose of acquiring the
Securities and with total assets in excess of $5,000,000. (describe entity).

 

 

Category VIII                        The undersigned is a trust with total
assets in excess of $5,000,000, not formed for the specific purpose of acquiring
the Securities, where the purchase is directed by a “sophisticated investor” as
defined in Regulation 506(b)(2)(ii) under the Act. (Must also answer Question 5
below).

 

Category IX                        The undersigned is an entity (other than a
trust) in which all of the equity owners are “accredited investors” within one
or more of the above categories. If relying upon this category alone, each
equity owner must complete a separate copy of this Purchaser. Questionnaire.
(describe entity below)

 

 

27

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The undersigned agrees that the undersigned will notify the Company at any time
in the event that the representations and warranties in this Purchaser
Questionnaire shall cease to be true, accurate and complete.

 

(2)     Suitability (please answer each question)

 

 

(a)

For an individual, please describe your current employment, including the
company by which you are employed and its principal business:

 

 

(b)

For an individual, please describe any college or graduate degrees held by you:

 

(c)     For all subscribers, please list types of prior investments:

 

 

(d)

For all subscribers, please state whether you have participated in other private
placements before:

 

YES

   

NO

 

 

 

(e)

If your answer to question (d) above was “YES”, please indicate frequency of
such prior participation in private placements of:

 

 

Public
Companies

Private
Companies

Frequently

   

Occasionally

   

Never

   

 

 

(f)

For individuals, do you expect your current level of income to significantly
decrease in the foreseeable future?

 

YES

   

NO

 

 

 

(g)

For trust, corporate, partnership and other institutional subscribers, do you
expect your total assets to significantly decrease in the foreseeable future?

 

YES

   

NO

 

 

28

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(h)

For all subscribers, do you have any other investments or contingent liabilities
which you reasonably anticipate could cause you to need sudden cash requirements
in excess of cash readily available to you?

 

YES

   

NO

 

 

 

(i)

For all subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the Securities for which you seek to
purchase?

 

YES

   

NO

 

 

 

(j)

For all subscribers, do you understand that there is no guarantee of financial
return on this investment and that you run the risk of losing your entire
investment?

 

YES

   

NO

 

 

(3)     Manner in which title is to be held: (circle one)

 

(a)     Individual Ownership

(b)     Community Property

(c)     Joint Tenant with Right of Survivorship (both parties must sign)

(d)     Partnership

(e)     Tenants in Common

(f)     Limited Liability Company

(g)     Corporation

(h)     Trust

(i)     Other

 

(4)     FINRA Affiliation.

 

Are you affiliated or associated with an FINRA member firm (please check one):

 

YES

   

NO

 

 

If Yes, please describe:

 

_________________________________________________________

_________________________________________________________

_________________________________________________________

 

*If subscriber is a Registered Representative with an FINRA member firm, have
the following acknowledgment signed by the appropriate party:

 

29

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

 

 

The undersigned FINRA member firm acknowledges receipt of the notice required by
the FINRA Conduct Rules.

 

_________________________________

Name of FINRA Member Firm

 

 

By: ______________________________

Authorized Officer

 

Date: ____________________________

 

(5)     For Trust Subscribers

 

A. Certain trusts generally may not qualify as accredited investors except under
special circumstances. Therefore, if you intend to hold securities in whole or
in part through a trust, please answer each of the following questions.

 

Is the trustee of the trust a national or state bank that is acting in its
fiduciary capacity in making the investment on behalf of the trust?

 

                    Yes ☐                             No ☐     

 

B. If the trust is a revocable trust, please complete Question 1 below. If the
trust is an irrevocable trust, please complete Question 2 below.

 

1.     REVOCABLE TRUSTS

 

Can the trust be amended or revoked at any time by its grantors:

 

Yes ☐                             No ☐

 

If yes, please answer the following questions relating to each grantor (please
add sheets if necessary):

 

Grantor Name: _________________________

 

Net worth of grantor (including spouse, if applicable), including home, home
furnishings and automobiles exceeds $1,000,000?

 

Yes ☐                             No ☐

 

OR

 

30

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Income (exclusive of any income attributable to spouse) was in excess of
$200,000 for the prior two taxable years and is reasonably expected to be in
excess of $200,000 for the current taxable year?

 

Yes ☐                             No ☐

OR

 

Income (including income attributable to spouse) was in excess of $300,000 for
the prior two taxable years and is reasonably expected to be in excess of
$300,000 for the current taxable year?

 

Yes ☐                             No ☐

 

2.     IRREVOCABLE TRUSTS

 

If the trust is an irrevocable trust, please answer the following questions:

 

Please provide the name of each trustee:

 

Trustee Name: ________________________________________

 

Trustee Name: ________________________________________

 

Does the trust have assets greater than $5 million?

 

Yes ☐                             No ☐

Indicate how often you invest in:

 

Marketable Securities

 

Often ☐     Occasionally ☐     Seldom ☐     Never ☐

 

Restricted Securities

 

Often ☐     Occasionally ☐     Seldom ☐     Never ☐

 

Venture Capital Companies

 

Often ☐     Occasionally ☐     Seldom ☐     Never ☐

 

This completes the questions applicable to Trust Investors. Please sign below.

 

31

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The undersigned has been informed of the significance of the foregoing
representations and answers contained in this Confidential Purchaser
Questionnaire and such representations and answers have been provided with the
understanding that the Company, will rely on them.

 

 

 Individual

Date:     ________________________

_______________________________

Name of Individual

(Please type or print)

 

_______________________________ 

Signature of Individual

 

_______________________________

Name of Joint Owner

(Please type or print)

 

 

_______________________________

Signature (Joint Owner)

 

 

Partnership, Corporation or

Other Entity

 

Date:     ________________________

______________________________

Print or Type Entity Name

 

 

By: _______________________

Name:

Title:

  ________________________________

Signature (other authorized signatory, if any)

 

32