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Exhibit 10.1
 
 
MARKETING AGREEMENT
 
THIS MARKETING AGREEMENT (the “Agreement”), is entered into as of May 14, 2014
(the “Effective Date”) by and between:
 
(1)  
Boston Therapeutics, Inc., a company incorporated under the laws of the State of
Delaware, USA, with offices at 1750 Elm Street, Suite 103, Manchester, NH 03101,
USA (“BTI”); and

 
(2)  
Benchworks SD LLC., with offices at 1512 Spruce St, Philadelphia, PA, 19102, USA
(“BSD”)

 
BTI and BSD are each referred to herein by name or, individually, as a “Party”
or, collectively, as the “Parties”.
 
WHEREAS:
 
A.
BTI is a biopharmaceutical company engaged in the manufacture, marketing and
sale of dietary supplements and potential drug agents developed from complex
carbohydrate chemistry.

 
B.
BSD is a commercialization company engaged in the marketing, promotion, offering
for distribution and sale of pharmaceutical and health care products.

 
C.
BTI wishes to have  BSD act as the exclusive commission sales agent and
exclusive  representative of the Products to market, promote and offer for
distribution and sale the Product in the Field and in the Territory (as such
terms are defined in Section 1 below), as set forth in further detail in this
Agreement.

 
D.
BSD wishes to undertake the marketing, promotion, offering for distribution and
sale of the Product in the Field in the Territory on the terms and subject to
the conditions contained herein.

 
NOW, THEREFORE, THE PARTIES HERETO AGREE:
 
1. DEFINITION(S).  IN THIS AGREEMENT INCLUDING THE RECITALS, EXCEPT WHERE THE
CONTEXT OTHERWISE REQUIRES, THE WORDS AND EXPRESSIONS SPECIFIED BELOW SHALL HAVE
THE MEANINGS ATTRIBUTED TO THEM BELOW:
 

“Affiliate”
means, with respect to either Party, any person or entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with such Party, for so long as such control exists.
 
“Control”
 
means:
 
(a)           direct or indirect ownership of fifty percent (50%) or more (or,
if less than fifty percent (50%), the maximum ownership interest permitted by
applicable law) of the stock or shares having the right to vote for the election
of directors of such corporate entity, or
 
(b)           the possession, directly or indirectly, of the power to direct, or
cause the direction of, the management or policies of such entity, whether
through the ownership of voting securities, by contract or otherwise;
 

 
 
 
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“Agreement”
means this Agreement, the recitals set forth in the preamble herein, and all
schedules attached hereto, as well as all amendments, additions, restatements or
modifications made hereto and thereto and all other documents incorporated
herein or therein by reference, all of which are hereby made an integral part of
and will be read as if included within the text of this Marketing Agreement;
 
“BTI Patents”
means, subject to the limitations described at the end of this definition, all:
 
(a)   All patents and patent applications of any kind anywhere in the world, as
more particularly identified in Exhibit 1,  owned or controlled by BTI during
the Term or which are acquired by or developed for BTI by a Third Party during
the Term (together with all divisions, continuations, patents of addition,
substitutions, registrations, re-issues, re-examinations or extensions of the
foregoing) and, for purposes of this Agreement, are necessary to sell, offer for
sale, import or export the Product;
 
(b)   All patent applications that may hereafter be filed by or on behalf of BTI
which either are based on or claim priority from any of the foregoing patents
and applications; and
 
(c)   All patents which may be granted pursuant to any of the foregoing patent
applications.
 
For purposes of and as used in this Agreement, the term “BTI Patents” is limited
solely to claimed subject matter that is directed to, and covers the Product
SUGARDOWN® and, for the avoidance of doubt, the right, if any, granted by the
Company to BSD under this Agreement to use any of the BTI Patents is further
limited to BSD’s use of BTI Patents solely for the purpose of performing its
obligations hereunder, and for no other purpose.
 
“Business Day(s)”
means a day (other than a Saturday or a Sunday) on which licensed banks are
generally open for business in the city of New York; all references to “days” in
this Agreement shall mean and be interpreted as Business Days;
 

 
 
 
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“Competing Product(s)”
means an OTC dietary and/or food supplement for moderating post-meal blood
glucose;
 
“Confidential Information”
subject to the limiting language of Section 10.4, means any and all information,
documentation or knowledge in any form, relating to the business and assets of
BTI, not generally known to the public, disclosed to, or which may be obtained
directly  or indirectly by BSD from BTI, including, without limitation,
information relating to BTI’s present and contemplated Product and services;
product designs; inventions, improvements; standards, specifications, systems,
methods and operating procedures; techniques and modes of manufacturing,
compounding or preparing Product, formulations and recipes; merchandising,
marketing plans and strategies; tests and reports; profits, costs, pricing,
product sourcing and sales policies and strategies; buying habits and
preferences of present customers of BTI as well as prospective and potential
customers, their names and addresses; trade secrets, know-how, data, research
and development; patent, trademark, copyright, industrial design and all other
intellectual property and proprietary rights and shall also include the terms of
this Agreement;
 
“Effective Date”
means the date of this Agreement as set forth above;
 
“Field”
means any lawful use of the Product marketed as a dietary supplement, food
additive or over-the-counter (that is, non-prescription) drug to help manage
blood sugar or to provide other  benefits as described in and consistent with
the Structure and Function claims for the Product previously filed with the FDA,
a copy of which is attached as Exhibit 3 (the “Structure and Function Claims”);
 
“Intellectual Property Rights”
 
Means (subject to the limitations described at the end of this definition, and
except as otherwise provided herein), all:
 
(a)   inventions (whether patentable or unpatentable and whether or not reduced
to practice), all improvements thereto, and all patents, patent applications,
and patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations relating
thereto;
 
(b)   trademarks, service marks, trade dress, logos, trade names, and corporate
names, and all goodwill associated therewith, together with all translations,
adaptations, derivations, and combinations, applications, registrations, and
renewals relating thereto;
 
(c)   copyrightable works, all copyrights, and all applications, registrations,
and renewals relating thereto;
 
(d)   trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals);
 
(e)   computer software (including all data and related documentation),
 
(f)    advertising and promotional materials;
 
(g)   other proprietary rights, domain names, email addresses, telephone
numbers, social media identifications and tags; and
 
(h)   copies and tangible embodiments of the foregoing (in whatever form or
medium).
 
For purposes of and as used in this Agreement, the term Intellectual Property is
limited solely to claimed subject matter that is directed to, and covers the
Product SUGARDOWN® and, for avoidance of doubt, any right to Intellectual
Property Rights granted by Company to BSD under this Agreement is further
limited to BSD’s use of such Intellectual Property Rights solely to perform its
obligations hereunder, and for no other purpose;
 

 
 
 
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“Net Sales”
means the gross revenues of BTI from the sale of Product by BTI to any buyer in
the Territory and Field, exclusive of reasonable shipping and handling costs,
less (a) $5.00 per Unit sold, (b)  trade, quantity or cash discounts and
rebates, and other allowances and credits, and (c) amounts repaid or credited to
customers on account of documented returns or rejections;
 
“Product(s)”
means a non-prescription polysaccharide-derived, stabilized and purified product
for human use for diabetes, pre-diabetes and blood sugar management, and more
particularly known under its trade name as “SUGARDOWN®”, including all material
enhancements, improvements, supplements and modifications thereto; the term
“Product” shall also mean any non-prescription product in which BTI has any
direct or indirect financial interest which product competes with or is a
substitute for the “SUGARDOWN®” product as defined herein.
 
“Term”
means the Term of this Agreement as set forth in Section 15 comprising the Term
and any extensions thereof;
 
“Territory”
means, subject to the terms of Section 2.1(b)(i):
 
(a)   as to the marketing, sale and use of the consumer product labeled
“SUGARDOWN®”,  the Territory shall be North America.
 
(b)   as to the marketing, sale and use of the product as an ingredient in
another product (for example, as an ingredient in yogurt or a beverage), the
Territory shall be global;
 
(c)   as to marketing and sales made through the Website, for any purpose or in
any form or format, consistent with and limited to the “Field” and “Product”,
the Territory shall be North America plus any territories not yet assigned to
marketing partners by BTI.
 

 
 
 
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“Third Party”
means any person or entity other than BTI, BSD or their respective Affiliates;
 
“BTI Trademark”
means the trademarks, service marks, trade names, logotypes, commercial symbols,
insignias and designs pertaining thereto,  whether or not registered, as more
particularly listed in Exhibit 3 which are owned or controlled and used by BTI,
including, without limitation, the trademark “SUGARDOWN®”, U.S. Registration No.
3955414, in each case as any of the same are adopted in the manufacture, sale,
marketing, promotion, distribution and advertising of the Product;
 
“Unit”
means the gross volume of  the number of tablets of Product sold in any
measuring period divided by 60 or the bulk quantity of ingredients equivalent to
that which would constitute 60 tablets, divided by 60. (By way of explanation
and not limitation, 60 is the currently used number of standard size and
strength tablets per retail container, used herein as the “Unit” standard for
calculation of sales and volume.  The change in the number of tablets contained
in a retail container shall not change this calculation of a “Unit”).

2. MARKETING GRANT
 
2.1. BTI hereby grants to BSD the exclusive right to promote, market, and offer
to sell and distribute the Product in the Field in the Territory, and BSD hereby
accepts from BTI the exclusive right to promote, market and offer to sell in the
Field in the Territory and agrees to act in that capacity, upon and subject to
all terms and conditions set forth in this Agreement.  BTI shall not, directly
or indirectly, sell Product in the Field in the Territory except to buyers
identified to it by BSD and subject to the terms and conditions of this
Agreement.  The Steering Committee shall have the authority to set list pricing
for Product for each customer or geographic market provided:
 
(a) Initially the direct to consumer pricing for “SUGARDOWN®”  trademarked
product in tablet form through Website sales shall be $39.99 per Unit plus
reasonable shipping and handling;
 
 
 
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(b) Such initial pricing as provided in 2.1(a) shall be subject to change to
such price as determined by the Steering Committee (as described in Section 4
below) in its judgment to be best suited for the circumstances of the
marketplace and in light of costs of production and other relevant factors.
 
(c) BSD shall be the exclusive operator of the Website or Websites (the
“Website”) providing technical information, marketing and sales materials and
direct sales to the trade, commercial users and to consumers and utilizing the
“SUGARDOWN” trademark.   BTI shall own the Website and the domain.
 
2.2. Subject to the terms of this Agreement, the rights provided to BSD under
Section 2.1 above shall be an exclusive, paid-up license under the BTI Patents
and Trademarks to promote, market, and offer to sell and distribute the Product
in the Field in the Territory.
 
2.3. (a) BSD acknowledges and agrees that the rights granted pursuant to this
Agreement are limited to the Field and the Territory and confer no rights upon
BSD with respect to the promotion, marketing, offers to sell and sale and
distribute of the Product outside the Field and outside the Territory, and
nothing in this Agreement shall restrict BTI from selling Product to any other
Third Party and outside the Territory or Field.
 
       (b) The terms “Territory” and “Field” as defined in Section 1 shall be
amended and redefined upon BSD achieving sales totalling not less than $5.8
million in the first 20 months of this Agreement, as follows: (i) the term
“Field” shall be amended and defined to mean any lawful use of the Product
marketed as a dietary supplement, food additive or over-the counter (that is,
non-prescription) drug to help manage blood sugar, body weight or to provide
other benefits as described in and consistent with the Structure and Function
claims for the Product filed with the FDA, a copy of which is attached as
Exhibit 3 (the Structure and Function Claims) or as is otherwise determined to
be appropriate by the Steering Committee.” (ii) In the event sales of  $5.8
million are not achieved in the first 20 months of this Agreement, the
definitions for the terms “Territory” and “Field” shall remain as provided in
Section 1 without reference to Section 2.3(b)(i).
 
2.4. (a)  Except for website related promotion, BSD covenants and agrees that it
will not, either directly or indirectly, including through any subagents,
promote, market, advertise, solicit orders for, offer to sell or sell and/or
distribute any Product outside the Field and/or outside the Territory.  BSD
further covenants and agrees that it will not promote, market, offer to sell or
sell and/or distribute such Product to any Third Party within the Territory if
BSD knows or has any reason to believe that such Product will be resold by such
Third Party, either directly or indirectly, outside the Field and/or
Territory.  If BSD becomes aware that any Third Party to whom BSD sells any
Product is marketing, distributing, offering to sell or selling, or is planning
to distribute, market and/or offer to sell or sell, the Product outside the
Field and/or Territory, BSD shall promptly notify BTI and BTI shall immediately
cease to supply such Third Party with Product.
 
       (b) BTI covenants and agrees that it will not promote, market, offer to
sell or sell and/or distribute such Product to any Third Party outside the
Territory if BTI knows or has any reason to believe that such Product will be
resold by such Third Party, either directly or indirectly, within the Field
and/or Territory.  If BSD becomes aware that any Third Party is marketing,
distributing, offering to sell or selling, or is planning to distribute, market
and/or offer to sell or sell, the Product within the Field and/or Territory, BSD
shall promptly notify BTI and BTI shall immediately cease to supply such Third
Party with Product.
 
 
 
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2.5. BSD and its subagents covenant and agree that it will not market any
competing product of any Third Party except as otherwise may be agreed to by the
Parties.
 
2.6. Upon BTI’s request, BSD agrees to provide BTI a list of all manufacturers
(and products) represented by BSD.
 
2.7. Upon BTI’s request, BSD agrees to provide BTI a list of the different
distribution channels in which Product is being marketed and distributed or
intended to be marketed and distributed by BSD, and the names of all subagents
engaged by BSD.
 
2.8. BTI covenants and agrees that all inquiries with respect to any orders
received, either directly or indirectly, by BTI for Product in the Field and in
the Territory shall be identified and credited to BSD during the Term of the
Agreement. BSD covenants and agrees that all inquiries with respect to any
orders for Product received, directly or indirectly, by BSD for Product from
outside the Field and/or Territory shall be referred to BTI.
 
2.9. In the event that during the Term BTI has developed or acquired, or
develops or acquires, rights in any non-prescription product that competes with
the Product in the Field, and provided BSD has satisfactorily completed all
Milestones (defined below) and is not in material breach of this Agreement, BSD
shall have the exclusive right to promote, market and offer to sell and
distribute such Competing Product in the Territory (the “Rights”) under the
terms and conditions of this Agreement.
 
3. AVAILABILITY AND FORECASTS
 
3.1. Product Availability.  BTI will use commercially reasonable efforts to
deliver the Product in the quantities and at the dates needed to satisfy the
demand for Products, provided, however, that BTI: (a) has, at such time,
sufficient manufacturing capacity; (b) reserves the right to allocate the
Product equitably among its customers in the event of a shortage of any Product;
and (c) shall not be liable to BSD for any delay or failure in delivery unless
BTI is at fault for such delay or failure, including but not limited to failure
to satisfy forecasts as provided by BSD pursuant to this Agreement. Liability
will take the form of crediting to monthly commissions and to Milestones the
value of all sales cancelled after failure to deliver in two weeks after receipt
of order or, if applicable, requested delivery date. This only applies if the
order volume is within BSD forecasts.
 
3.2. Forecasts; Purchase Requirements.
 
(a) Commencing at least one (1) month prior to the BSD marketing launch and
continuing for twelve (12) months thereafter, BSD shall deliver to BTI on a
monthly basis prior to the end of each calendar month a rolling three (3) month
detailed forecast of BSD’s quantity requirements for the Product for each
calendar month during the three (3) calendar months commencing with the second
calendar month beginning after the date of such forecast.  For example, prior to
the last day of November, BSD shall deliver to BTI a monthly forecast for each
of January, February and March.
 
 
 
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(b) Commencing one (1) month prior to the one (1) year anniversary of the BSD
marketing launch, and continuing every three (3) calendar months thereafter
during the Term, BSD shall deliver to BTI prior to the end of each such three
(3) month period a rolling twelve (12) month detailed forecast of BSD’s quantity
requirements for the Product for each calendar month during the twelve (12)
month period commencing with the second calendar month beginning after the date
of such forecast. For example, prior to the last day of November, BSD would
deliver to BTI a monthly forecast for twelve (12) months starting with January.
 
(c) BSD’s forecasts shall reflect its good faith expectations of Customer
demand.
 
(d) BTI Inventory.  BTI shall maintain a reasonable inventory of Product
adequate to serve the Customer base developed by BSD in the Territory, which in
any event shall be a minimum of three (3) months' requirements of Product as
specified by BSD’s forecasts.
 
3.3. Limited Warranty; Exclusive Remedy; Disclaimer.
 
(a) BTI warrants to BSD that each Unit of Product will: (i) through the
applicable expiration date set forth on the Product label, conform to the
specifications then in effect, provided that BSD complies with the Product
label, specifications and applicable instructions relating to the handling,
storage and use of the Product; (ii) be manufactured in accordance with all
applicable laws and regulations in effect at the time of manufacture; (iii) when
shipped  to customer by BTI, be free of defects in
materials  and  workmanship;  (iv) when shipped by BTI,
be  conveyed  with  good  title,  free of  any material  liens  or encumbrances;
and (v) when shipped by BTI, not be adulterated or misbranded. Further BTI
warrants and will provide BSD proof of adequate product liability insurance for
the agreed annual sales milestones and name BSD as an insured party.
 
(b) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, BTI DOES NOT MAKE
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, ARISING BY LAW, OUT OF
ANY COURSE OF DEALING OR PERFORMANCE, CUSTOM, INDUSTRY STANDARD OR OTHERWISE, AS
TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY PRODUCT PROVIDED
UNDER THIS AGREEMENT, OR THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OF ANY PRODUCT PROVIDED UNDER THIS AGREEMENT, ALL OF WHICH ARE HEREBY EXPRESSLY
DISCLAIMED.
 
(c) BSD SHALL NOT MAKE OR GIVE, OR PERMIT TO BE MADE OR GIVEN BY ANYONE SUBJECT
TO ITS AUTHORITY, ANY REPRESENTATION, WARRANTY, GUARANTY OR ASSURANCE TO ANY
PERSON WHOMSOEVER RESPECTING ANY PRODUCT, OR THE QUALITY, EFFICACY, SAFETY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OF ANY
PRODUCT, WITHOUT THE PRIOR WRITTEN CONSENT OF BTI; PROVIDED, HOWEVER, THAT BSD
MAY, CONFIRM TO THIRD PARTIES THE INFORMATION SET FORTH IN THE PRODUCT LABEL.
 
 
 
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4. STEERING COMMITTEE
 
The Parties shall establish and maintain a steering committee (the “Steering
Committee”) consisting of equal representation from both BSD and BTI. The
Steering Committee shall consist of one senior executive and one other
representative from each Party. The Steering Committee shall review the
marketing and promotional efforts undertaken, and BSD shall be responsible for
all costs associated therewith.  The initial members of the Steering Committee
shall be:
 
For BSD:
 
 
Name: Thomas Moore & Thad Bench
 
Title: Managing Directors, Benchworks SD, LLC
 
For BTI:
 
 
Name: Ed Shea & Ken Tassey
Title: VP Business Development; President
 

 
(a) Membership.  Each Party may replace any or all of its representatives on the
Steering Committee at any time upon prior written notice to the other
Party.  Any member of the Steering Committee may designate a substitute to
temporarily attend and perform the functions of that member at any meeting of
the Steering Committee.  Each Party may, in its discretion, invite non-member
representatives of such Party to attend meetings of the Steering Committee. The
Steering Committee shall be co-chaired by a representative of each of Party. The
Steering Committee may form and utilize sub-committees as mutually agreed by the
members of the Steering Committee.
 
(b) Meetings.  The Steering Committee will meet quarterly, or more frequently as
the Parties deem appropriate or as reasonably requested by either Party, on such
dates, and at such places and times as the Parties shall agree.  The Steering
Committee leaders will establish an ongoing communication protocol to review
progress as mutually agreed. Meetings of the Steering Committee that are held in
person shall alternate between the offices of the Parties, or such other place
as the Parties may agree.  The members of the Steering Committee also may
convene or be polled or consulted from time to time by means of
telecommunications, video conferences, electronic mail or correspondence, as
deemed necessary or appropriate.  The chairpersons of the Steering Committee
shall prepare an agenda for each meeting of the Steering Committee and provide
the agenda to each member prior to the meeting.
 
(c) Decisions.  The Steering Committee will review and discuss in good faith,
the marketing and promotional efforts suggested by the Parties.  As part of this
process, BSD shall consider BTI’s comments, modifications and suggested changes
to the marketing and promotional efforts in good faith, provided, however, that
(i) BSD shall have final decision making authority with respect to the marketing
and promotional efforts, strategy and tactics for the  Product, and (ii) BSD’s
authority with respect to marketing and promotion of Product shall not include
the authority to assert or suggest claims or properties for the Product that are
inconsistent with the Structure and Function Claims.  BSD and BTI agree to work
collaboratively to ensure that a mutually agreeable regulatory review process is
implemented prior to release of product promotional material.  The Steering
Committee will also discuss all list pricing and trademark related decisions,
which will be made based on mutual agreement.  Further, under the leadership of
the Steering Committee, BSD and BTI will work together to identify the most
efficient manufacturing source. Notwithstanding the foregoing, this Section 4
shall in no event be deemed to require either Party to take any action that it
is not otherwise required to take under this Agreement or refrain from taking
any action that it is permitted to take under this Agreement.
 
 
 
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(d) Secretary.  The chairpersons of the Steering Committee shall appoint a
secretary of the Steering Committee, and such secretary shall serve for such
term as designated by the chairpersons.  The secretary of the Steering Committee
shall prepare written minutes of all of the Steering Committee’s meetings in
reasonable detail and distribute the minutes to all members of the Steering
Committee within ten (10) days after each meeting.
 
(e) Duration.  The Steering Committee shall exist for the duration of the Term,
unless the Parties mutually agree in writing to terminate the Steering Committee
earlier.
 
5. MARKETING AND COMMERCIALIZATION
 
5.1. Commercialization Activities.  BSD shall market and promote the Product in
an effort to generate sales.  BSD, in its discretion, may utilize its full
complement of promotional resources including sales representatives, call center
services and non-personal promotion, in connection with its marketing and
promotional efforts hereunder.
 
5.2. Subagents.  BSD shall inform BTI in writing of, and BTI shall have the
right to approve, which shall not be unreasonably withheld, any subagents
proposed to be appointed by BSD in respect to the distribution and sale of
Product in the Territory.  Any such appointment shall be made in writing and
only in the name and for the account of BSD, and shall terminate upon the
expiration, non-renewal, or termination of this Agreement for any reason;
provided, however, that:
 
(a) BSD shall not undertake to grant to any subagent any rights greater than
those which are granted by BTI to BSD under this Agreement;
 
(b) In order to protect the goodwill of BTI and the Product in the Territory,
BSD shall secure the agreement of each and every subagent that it shall assume
the same obligations as have been assumed by BSD under this Agreement; and
 
(c) BSD shall defend, indemnify and hold BTI harmless against any claim, loss,
liability or expense (including attorney’s fees and court costs) arising, during
the term of the Agreement, out of or based upon (i) any act or omission of any
subagent, or (ii) any claim made by any subagent against BTI.
 
5.3. Marketing Plan. Subject to the limiting provisions of Section 4(c), as
relates to marketing and promotion, which shall occur in BSD’s sole discretion,
BTI and BSD will work together to establish a marketing plan for the Product
(the ‘‘Marketing Plan’’).  Without limiting the scope of the Marketing Plan, the
Parties agree that the Marketing Plan shall include a market development program
that will include lead generation, consumer awareness/education, and trade-show
presence and sales coordination.
 
5.4. As soon as possible, but in no case less than thirty (30) days prior to the
launch  BSD  will provide to BTI a proposed detailed draft of the Marketing Plan
.  BSD shall use its best reasonable efforts to perform its obligations under
and in compliance with such Marketing Plan, including without limitation meeting
and satisfying any Milestones (as defined below) thereunder.
 
 
 
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5.5. Marketing Materials.  In the promotion, advertising and marketing of the
Product, BSD shall develop sales and promotional literature using the
Promotional Materials (defined below) provided to BSD by BTI pursuant to Section
5.6.  BSD shall have the right to prepare other product descriptions and other
promotional and marketing materials relating to the Product; provided however,
that (a) all costs and expenses incurred by BSD in the preparation and
distribution of such product descriptions and other promotional and marketing
materials shall be the responsibility of BSD; and (b) all such product
descriptions and other promotional and marketing materials shall not be released
by BSD until approved in writing by BTI, such approval not to be unreasonably
withheld. BSD shall submit samples of the final copy for all product
descriptions and other promotional and marketing materials it proposes to use in
respect of the Product for BTI’s approval within thirty (30) days prior to the
first date of anticipated use of such materials. BTI shall use commercially
reasonable efforts to respond to any such request for approval within a five
(five) day period. If no written response is given by BTI denying such request
within the aforesaid term, then BTI’s approval shall be deemed granted.
 
5.6. Product Literature.  BTI will share with BSD samples of product
descriptions, sales aids and advertising and promotional materials developed and
used by BTI, its other distributors or licensees (collectively “Promotional
Materials”) in respect of the Product as soon as practicable. BSD shall bear all
costs of reproducing and/or adapting such Promotional Materials for use within
the Territory, and shall not use any adaptations of such Promotional Materials
without BTI’s prior written approval. BSD agrees to share samples of its
Promotional Materials with BTI. BTI warrants that the claims in its promotional
materials are materially correct.
 
5.7. Rights to Creative/Promotional Materials.  Notwithstanding any other
provision hereof, all promotional materials, literature, artwork and designs,
trademarks, logos, inventions or other creative materials of any description,
created or authored by BSD or as to which BSD commissioned the creation, shall
be and remain the exclusive property of BSD whether or not patented, patentable,
copyrighted, registered as a trademark or otherwise subject to any federal or
state procedure relating to ownership of the same. For the avoidance of doubt,
nothing herein shall be deemed a grant by or transfer of ownership from BTI to
BSD of a license or other right to use or exploit any BTI Intellectual Property
Rights except as specifically contemplated in this Agreement.
 
5.8. Clinical Research. BSD may propose additional clinical research to support
enhanced marketing claims for Products. BSD will work with BTI to make any study
generally supportive of the efficacy of the technology. If BTI agrees with the
study protocol, clinical expenses will be shared 50/50%. Ownership of the
research will be shared.
 
6. MINIMUM ANNUAL PERFORMANCE MILESTONES
 
6.1. In order to retain the exclusive rights granted hereunder, BSD agrees to
meet the following Minimum Net Sales for each of the following calendar years
(collectively, “Milestones”) to be achieved during the Term.
 
 
 
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Agreement Year
Minimum
Net Sales
Completion Date
 
2014
 
$800,000
 
December 31, 2014
 
1
 
$5,000,000
 
December 31, 2015
 
2
 
$15,000,000
 
December 31, 2016
 
3
 
$35,000,000
 
December 31, 2017

 
6.2. For 2014 only, the parties agree that, in the event that Minimum Net Sales
of less than $800,000 are achieved, proof of marketing and research out of
pocket expenditures of $450,000 will be sufficient to maintain exclusivity to
December 31, 2015.
 
Agreement Year
Minimum
Net Sales
Completion Date
 
2014
 
$800,000
 
December 31, 2014
 
1
 
$5,000,000
 
December 31, 2015
 
2
 
$15,000,000
 
December 31, 2016
 
3
 
$35,000,000
 
December 31, 2017

 
 
The Parties agree to evaluate and update the Milestones at least once per
quarter during the Term of this Agreement, provided that the initial Milestones
shall remain firm and binding on the parties unless otherwise agreed to in
writing. All updates and revisions of the Milestones that are mutually agreed to
in writing by the Parties shall be deemed to be amendments to this Agreement and
shall therefore be deemed to be part of and incorporated into this Agreement.
 
6.3. In the event that BTI meets all of BSD’s Product requirements but BSD fails
to complete Milestones by the applicable completion dates for any calendar year
of this Agreement (defined as commencing with calendar 2014 and the calendar
years thereafter), BTI, in its sole discretion, may (a) convert the exclusive
marketing rights granted under this Agreement with respect to the Product to
nonexclusive rights, (b) terminate this Agreement or (c) waive the requirements
of this Section 6 for the respective contract year.
 
 
 
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7. FEES AND REVENUE SHARING
 
(a) BTI will provide to BSD on a monthly basis by the 5th business day of the
following month an accounting of the previous month sales and pay BSD
within five (5) business days after receiving the gross revenues from the
previous month an amount per Unit of Product sold in each month through the
applicable year in accordance with the following schedule:
 
Cumulative Net Sales
Per Calendar Year
Monthly Commission Payment to BSD  on Net Sales
$0-$10 million Net Sales,
65%, plus
Next $10-$25 million Net Sales,
60%, plus
Next $25-$40 million Net Sales,
55%, plus
That amount exceeding $40 million Net Sales
50%

 
 
For example, in the event BSD attains $27 million in Net Sales in a calendar
year, BSD would earn 65% of the first $10 million, 60% on the next $15 million
and 55% of the balance of $2 million.
 
The Parties further agree that, in calculating the fees for Net Sales
exceeding $40 million Net Sales, the actual manufacturing cost per 60 tablets
and packaging will be used in place of the $5 used for amounts under $40
million.
 
Taxes.  All amounts payable to either Party under this Agreement are exclusive
of any income, sales, use, property, ad valorem, value added or other taxes,
levies, imposts, duties, charges or withholdings of any nature, arising out of
any transaction contemplated by this Agreement. Each party shall pay its own
taxes.
 
For sales taxes on Product Sales, BTI will manage sales tax payments and
indemnify BSD for Product Sales Tax liabilities incurred.

 
8. RESPONSIBILITIES OF THE PARTIES
 
8.1. Obligations of BTI. Except as otherwise provided herein, BTI shall, at its
own expense:  (a) manufacture and support the Product scientifically through
ongoing clinical studies; (b) comply with all regulatory matters concerning the
Product; (c) manage prompt and timely shipping and billing for the Product to
those buyers identified to it by BSD; and (d) contemporaneously with receipt by
BTI, provide copies to BSD of all communications of any nature, or form, whether
as written in hard copy or electronic correspondence from consumers, regulatory
agencies, trade customers, or others, or by voice, and irrespective of whether
such correspondence is laudatory, negative or legally significant to BTI or BSD;
BSD and BTI will, as the nature of such correspondence requires, discuss
appropriate handling of the same.  As the successful relationship between BTI
and its customers is the principal goal of BSD, BTI agrees it shall not
undertake and communicate with any customer without the knowledge, permission
and participation of BSD.
 
 
 
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8.2. Obligations of BSD
 
(a) Reasonable Efforts.  BSD shall use its best commercially reasonable efforts
to market, promote, offer to distribute and sell the Product within the
Territory at its own expense, including without limitation, professional sales
calls on target audiences, advertising the Product in appropriate media and
participating in trade shows, conferences, expositions, and promotional
seminars, all with due consideration for the local marketing environment in the
Territory.  BSD shall conduct its marketing activities in a lawful manner with
the highest standards of promotional practices, fair trade, fair competition,
and business ethics, and shall cause its employees and subagents to do the same.
 
(b) Non-Compete.  BSD and its sub agents shall not, directly or indirectly,
promote, market, offer to sell or sell or distribute any Competing Product in
the Territory or elsewhere during the term of the agreement.  BSD  hereby
further covenants and agrees that during the Term of this Agreement, and for a
period of six (6) months following the termination or expiration of
this Agreement, it shall not, for whatever reason, either individually or in
partnership or jointly or in conjunction with any Third Party as principal,
agent, employee, shareholder, owner, investor, partner or in any other manner
whatsoever, directly or indirectly, carry on or be engaged in or be concerned
with or interested in, or advise, lend money to, guarantee the debts or
obligations of or permit its name or any part thereof to be used or employed by
any Third Party engaged in or concerned with or interested in, the business of
manufacturing, developing, producing, marketing, distributing, supplying or
selling, for wholesale or retail, any Competing Products within the Territory.
 
           In addition to any other obligations set forth herein, BSD shall:
 
(c) provide to BTI ongoing market evaluations for Product and use its best
efforts to develop and enhance the BTI name and brand image in order to increase
market awareness and sales of such Product within the Territory;
 
(d) supply BTI with records of all contacts made with present and prospective
Customers in the Territory, including the nature of such contacts;
 
(e) comply with and cause any subagents, or other Third Parties appointed by it
to comply with all applicable laws, rules, regulations and/or guidelines in the
Territory relating to the use, storage, handling, transportation, marketing,
promotion, distribution, sale, transfer and/or disposal of the Product, as well
as with the terms and conditions of this Agreement;
 
(f) reserved;
 
(g) identify with BTI all regulatory requirements applicable to the marketing
claims and other statements included in sales material and advertisements,
determine the methods available to satisfy those requirements and propose for
the review of BTI the steps to be taken in complying with such regulations. To
the extent compliance with regulations requires investment of cash, time and
effort to that end, BSD shall identify those requirements and the anticipated
costs, for review by BTI.  If BTI and BSD agree to pursue such steps in
complying with regulatory requirements, the parties shall equally share such
costs;
 
 
 
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(h) maintain its awareness of market changes and shall, where it believes it to
be appropriate, suggest steps to be taken by BTI or BTI and BSD together to
capitalize on such changes, including, for example, research into particular
issues of interest to consumers, methods of consuming the Product, flavors and
colors of the Product, and other benefits that the Product may elicit from
users, etc.;
 
(i) be the exclusive sales representative of BTI regarding the Product in
dealing with BTI’s trade customers located in the Territory and in the Field ;
 
(j) attend trade meetings and make personal presentations to prospective trade
customers explaining the benefits and opportunities of reselling “SUGARDOWN®”;
 
(k) as to commercial (that is, not consumer retail end user) accounts, develop
marketing material and presentations directed to establishing demand for the
Product as an ingredient (with or without the use of the trademark
“SUGARDOWN®”),  in products manufactured by particular commercial customers;
 
(l) It is assumed individual commercial accounts may have their own needs and
objectives necessitating tailoring the presentation and the product to the
idiosyncrasies of that company, its production requirements and its target
markets.  BSD is to market the product to the target company, igniting
appreciation of the commercial potential “SUGARDOWN®”,  embodies and obtain from
the target company information regarding its needs as to volume and other
elements; and
 
(m) Communicate with BTI regarding the potential for such commercial accounts
and the needs of such customers as they become known to BSD
 
8.3. Use of Trademark.  In connection with the foregoing, BSD covenants and
agrees as follows:
 
(a) except as otherwise provided in the definition of “Field” and “Territory” in
Paragraph 1, to market, promote, offer to sell and sell the Product only under
the Trademark, and not under any other trademark or logo of any other Third
Party, except if the Product is combined with another trademarked product, in
which case, both Trademarks can be displayed;
 
(b) to obtain from BTI written approval for all Product-related advertising,
sale and all other promotional materials and to comply with all instructions
issued by BTI relating to the form and manner in which the Trademark shall be
used and upon notice from BTI, immediately discontinue, any practice relating to
the use of the Trademark which, in BTI’s reasonable opinion, would or might
adversely affect the rights or interests of BTI in such Trademark;
 
 
 
15

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(c) to conduct business in a manner that reflects favorably at all times on the
Product and reputation of BTI in order to develop, promote and maintain same
with Customers and to protect and preserve the goodwill and image of BTI and the
Product;
 
(d) not to use or permit any entity controlled by it or affiliated with it to
use the Trademark or any other trademarks or trade names or trade dress of BTI
or any trademarks, trade dress, words, names, symbols, or designs which could
reasonably be expected to be considered confusingly similar thereto, as part of
such entity’s corporate or trading name or style or on any of its products;
 
(e) not to infringe BTI’s rights in and to the Trademark and not to dispute,
contest, attack or impair the validity or ownership of the Trademark or do any
act which tends to impair the validity of the Trademark or the title of BTI to
any Trademark, trade names, copyrights and registrations used in connection with
the Product, nor to effect any applications or registrations thereof without the
express written consent of BTI, and not to take any action to the detriment of
BTI’s interest therein or which would or could dilute the value of the goodwill
attaching to the Trademark;
 
(f) to impose similar conditions on any Affiliates, subagents and those set
forth in this Section 8.4 and to take such action as BTI may require at any time
in respect to the use by any Third Party’s unauthorized use of the Trademark;
and
 
(g) upon termination of this Agreement for any reason whatsoever, shall
immediately discontinue all use of the Trademark and trade names, and shall
return to BTI all price lists, catalogs, sales literature, advertising and
promotional literature and all other materials relating to the Product or
Confidential Information in its possession and over which it has control.
 
9. REPORTING OBLIGATIONS
 
9.1. Record Keeping.  At all times during the Term of this Agreement, BSD and
BTI shall maintain at their principal places of business full, complete and
accurate books of accounts and records with regard to its activities under this
Agreement. BSD and BTI shall retain such records for a period of not less than
three (3) years after the date they are created.  Upon reasonable notice, BTI
shall permit BSD or its representative’s access during normal business hours to
any premises of BTI in order that BSD, at its own expense, may inspect, copy and
audit BTI’s books related to the Product for the sole purpose of verifying
compliance by BTI with its obligations under this Agreement.  In connection with
such verification, BSD may request, and BTI shall promptly prepare and provide
to BSD, a reconciliation of any differences between gross revenues and Net Sales
generated and/or recorded from sale of the Product.  In the event it is
determined that the records of BTI indicate that the amount payable under this
Agreement is more than that actually paid to BSD, BTI shall pay such difference
to BSD within five (5) business days; if the underpayment is five percent
(5%) or more of the amount determined to have been payable, BTI shall also
promptly pay BSD’s reasonable, and prior agreed-upon costs of such inspection or
audit.
 
 
 
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9.2. Reports. (a)  BSD shall provide BTI with quarterly operation reports of
BSD’s activities to market, promote, offer to distribute and sell the Product in
the Territory, and shall provide to BTI copies of all such reports received by
BSD from its subagents.
 
(b) BTI shall provide BSD quarterly with a report certified as correct by its
Chief Financial Officer which shall be due within thirty (30) days after the end
of the period to which it relates. Each report shall include:
 
(i) a quarterly accounting of Product sold, identifying the purchasers and
number of Units sold to each; and
 
(ii) a quarterly accounting of gross revenues and Net Sales of the Product.
 
9.3. Annual Statements.  BSD shall provide BTI with annual statements within
thirty (30) days after the end of each calendar year showing a summary of all
promotional activities undertaken by BSD with respect to the Product during the
preceding calendar year.
 
10. CONFIDENTIAL INFORMATION
 
10.1. Non-Disclosure and Non-Use Obligations.  During the Term of this
Agreement, BTI will disclose certain Confidential Information to BSD to permit
BSD to perform its obligations under this Agreement. BSD shall refrain from
using or exploiting any and all Confidential Information for any purposes or
activities other than those expressly authorized in this Agreement. BSD agrees
that such Confidential Information shall be kept secret by BSD during the Term
of this Agreement.  BSD shall disclose Confidential Information only to its
employees, agents, representatives, or subagents solely on a “need to know”
basis and such employees, agents, representatives, or subagents are bound by
written obligations of confidentiality and restrictions on use that cover the
Confidential Information and are at least as stringent as those set forth in
this Agreement. Any material BTI intends to be treated as confidential shall be
so marked at the time it is provided or within 5 business days thereafter.
 
10.2. Confidentiality Agreements. BSD shall cause its directors, officers and
employees and the directors, officers and employees of, respectively, BSD’s
agents, representatives, subagents or who will receive Confidential Information
pursuant to Section 10.1 to enter into a Confidentiality Agreement in a form
approved by BTI.  BSD shall, at its own expense undertake the enforcement of any
such Confidentiality Agreement in the event of any breach thereof.
Notwithstanding any such Confidentiality Agreement, by any of BSD’s
representatives and subagents, BSD acknowledges that it shall be fully
responsible and liable to BTI for any and all damages and costs (including legal
fees) suffered or incurred by it as a consequence of any breach by any of BSD’s
agents, representatives and subagents, and/or any Third Parties given access to
the Confidential Information, of the restrictions of non-use and non-disclosure
herein.
 
10.3. Ownership of BTI’s Materials.  All files, lists, records, documents,
drawings, specifications and records, whether in written or electronic form,
which incorporate or refer to all or a portion of BTI’s Confidential Information
shall remain the sole property of BTI. Such materials shall be promptly returned
upon the earlier to occur of: (a) BTI’s reasonable request, or (b) in accordance
with Section 16.2 of this Agreement upon termination of this Agreement.
 
10.4. Exceptions.  Confidential Information does not include information that:
(a) is in the public domain prior to disclosure by BTI; (b) becomes part of the
public domain during the Term by any means other than breach of this Agreement
by BSD; (c) is already known to BSD at the time of disclosure and is free of any
obligations of confidentiality, as evidenced by competent evidence; or (d) is
obtained by BSD , free of any obligations of confidentiality from a Third Party
who has a lawful right to disclose it or (e) is developed by BSD in the course
of its professional activities independent of any confidential information
provided to it by BTI.
 
 
 
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10.5. Disclosure Required by Law.  Notwithstanding any other provision in this
Agreement, disclosure of proprietary and Confidential Information is permitted
to the extent it is required to comply with an order or requirement of a court,
administrative agency or other governmental body, provided that BSD gives BTI
prompt notice of any such order or requirement and cooperates with BTI to
determine whether to take legally available steps to resist or narrow such
disclosure, and that BSD takes all reasonable and lawful actions to obtain
confidential treatment for such disclosure.
 
10.6. Survival of Obligations.  The obligations of non-use and non-disclosure of
Confidential Information shall survive termination or expiration of this
Agreement and continue for a period of two (2) years thereafter.
 
11. INTELLECTUAL PROPERTY RIGHTS
 
11.1. Acknowledgment.  BSD acknowledges BTI’s exclusive right, title and
interest in and to all Intellectual Property Rights pertaining to the Product.
BSD shall not at any time during or after the Term of this Agreement take any
act or step impairing and or adversely affecting the Intellectual Property
Rights.
 
11.2. Notices, Trademarks and Name.  BSD shall have the exclusive right to use
the Trademark in the Territory with respect to the development of channels of
distribution and sale of Products. BSD shall not market the Product under any
name, sign or logo other than the Trademark. BSD may use the Trademark solely in
connection with the distribution of the Product and in accordance with BTI’s
reasonable instructions and quality control standards. BSD acknowledges and
agrees that it shall not have any rights in respect of the Trademark except to
the extent expressly granted in this Agreement, and that all use of the
Trademark in the Territory and all goodwill in the Trademark shall inure to the
benefit of BTI.
 
11.3. Third Party Claims. BSD shall promptly notify BTI of any claims or
objections that BSD’s use of the Intellectual Property Rights in connection with
the marketing, offers to sell and sales of the Product may or will infringe the
copyrights, patents, trademarks or other proprietary rights of a Third Party
(“Third Party Claim”). If BSD is served with a legal action or otherwise forced
to respond in a legal proceeding due to a Third Party Claim, BSD shall (a)
promptly assign the defense of such Third Party Claim to BTI; and (b) cooperate
with BTI providing all reasonable assistance, at BTI’s expense, in connection
with the defense of any such Third Party claim or objection, whether in the
courts, before administrative agencies, or otherwise.  BTI will defend and
indemnify BSD for any third party claims that will infringe the copyrights,
patents, trademarks or other proprietary rights of a third
party.  Notwithstanding the foregoing, if any Third Party Claim is based
upon,  or would not have been brought but for the combination of BSD marketing
and/or other materials with the sales effort relating to the Product, then BSD
shall fund the defense of such Third Party Claim.
 
 
 
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11.4. Infringement of BTI Patents and Intellectual Property Rights.  BSD shall
promptly notify BTI of any infringement or suspected infringement of BTI Patents
and any other Intellectual Property Rights of BTI in the Territory relating to
the Product of which it becomes aware, and provide BTI with any available
evidence of such infringement or suspected infringement.
 
12. REPRESENTATIONS AND WARRANTIES
 
12.1. General.  Each Party represents and warrants to the other that, as of the
Effective Date:
 
(a) it is duly organized, validly existing and in
good  standing  under  the  laws  of  the jurisdiction of its incorporation, and
it has full corporate power and authority to enter into this Agreement and to
carry out the provisions hereof;
 
(b) it is duly authorized to execute and deliver this Agreement and to perform
its obligations hereunder, and the authorized representative executing this
Agreement on its behalf has been duly authorized to do so by all requisite
corporate action; and
 
(c) this Agreement is legally binding upon it and enforceable in accordance with
its terms, and the execution, delivery and performance of this Agreement does
not conflict with any agreement, instrument or understanding, oral or written,
to which it is a party or by which it may be bound, nor violate any material
applicable law.
 
12.2. BTI Warranties.  BTI represents and warrants to BSD that, as of the
Effective Date:
 
(a) To the best of BTI’s knowledge, the sale and offer for sale of the Product
does not infringe the proprietary rights of any Third Party in the Territory,
and no court proceedings or any other procedure for infringement of patent,
copyright, trademark, trade secret or any other property rights have been
threatened or brought against BTI with respect to the Product, nor is BTI aware
of any basis for such a claim and if it should become it shall promptly notify
BSD and provide reasonable details.
 
(b) the Product supplied hereunder shall conform to the Product specifications
therefor, as published by BTI from time to time and complies with all applicable
federal and state regulations; and
 
(c) the execution, delivery and performance of this Agreement by BTI does not
and will not conflict with or result in a breach of any agreement, instrument or
understanding, oral or written, to which BTI is a Party or by which BTI may be
bound, nor violate any law or regulation of any court or governmental authority
having jurisdiction over BTI.
 
(d) Any data or claims relating to the Product, the use or effect of the Product
shall be materially correct.
 
12.3. BSD Warranties. BSD represents and warrants to BTI that, as of the
Effective Date, the execution, delivery and performance of this Agreement by BSD
does not and will not conflict with or result in a breach of any agreement,
instrument or understanding, oral or written, to which BSD is a Party or by
which BSD may be bound, nor violate any law or regulation of any court or
governmental authority having jurisdiction over BSD.
 
 
 
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12.4. DISCLAIMER. TO THE FULL EXTENT PERMITTED BY LAW, APART FROM ITS WARRANTIES
AND INDEMNITY, BTI MAKES NO ADDITIONAL REPRESENTATIONS OR WARRANTIES AND HEREBY
DISCLAIMS ALL WARRANTIES, REPRESENTATIONS, AND LIABILITIES, WHETHER EXPRESS OR
IMPLIED, ARISING FROM CONTRACT OR TORT EXCEPT FRAUD), IMPOSED BY STATUTE OR
OTHERWISE, RELATING TO THE PRODUCT AND/OR ANY PATENTS OR TECHNOLOGY USED OR
INCLUDED IN THE PRODUCT, INCLUDING ANY WARRANTIES AS TO MERCHANTABILITY, FITNESS
FOR A PARTICULAR  PURPOSE, CORRESPONDENCE WITH DESCRIPTION, OR NON-INFRINGEMENT.
 
13. INDEMNIFICATION AND INSURANCE
 
13.1. Intellectual Property Indemnification by BTI.
 
(a) BTI agrees to indemnify, defend and hold harmless BSD from and against Third
Party claims or suits alleging that any Product purchased by BSD hereunder, or
sale thereof by BSD consistent with the Product label, instructions and
specifications, infringes any United States patent. BTI agrees to pay all costs
and judgments awarded or settlements entered into by BTI on such claims. BSD
shall: (i) notify BTI promptly in writing of such claim, (ii) grant BTI sole
control over the defense and settlement thereof (provided that BSD may retain
its own counsel and participate in the defense of such claim at its own expense
but may not enter into a settlement affecting BTI without BTI’s prior written
consent and (iii) reasonably cooperate with BTI in the defense of any claim. The
foregoing indemnity obligation will not extend to any claims of infringement
arising out of or related to (iv) a modification of a Product by anyone other
than BTI; (v) a combination of the Product with any Third Party product, where
such combination is the cause of such infringement; or (vi) the sale of the
Product other than in accordance with instructions provided by BTI to BSD from
time to time.  BSD may retain its own counsel in connection with a matter BTI is
obligated to defend  under this Section 13.1(a), at BTI’s expense and with BTI’s
prior approval (not to be unreasonably withheld), if the counsel retained by BTI
for such matter notifies BTI and BSD that it is unable to represent BSD due to a
conflict of interest.
 
(b) In the event the Product is held by a court of competent jurisdiction to
infringe, BTI may, at its sole option and expense, elect to:  (i) modify the
Product so that it is non-infringing; (ii) replace the Product with a
non-infringing product which is of like quality and functionally equivalent;
(iii) obtain a license for BSD to continue to sell the Product as provided
hereunder; or if none of (i), (ii), or (iii) is commercially reasonable, then
(iv) terminate this Agreement upon written notice to BSD ; provided, however, if
BTI terminates this Agreement pursuant to this subsection (iv), BTI shall
purchase from BSD all marketing materials purchased by BSD remaining in BSD ’s
inventory.
 
 
 
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13.2. Additional Indemnification.
 
(a) By BTI.  BTI shall indemnify, defend, and hold harmless BSD , its respective
trustees, officers, directors, employees, members subagents and sub-distributors
(“BSD  Indemnitees”) from and against any actual or alleged Third Party claims,
actions or proceedings (collectively, “Claims”) seeking compensation for injury
to person or property to the extent that such injury arises or is alleged to
have arisen by the act or forbearance to act by BTI or at the direction or
sufferance of any of BTI’s Indemnitees as defined in Section 13.2(b): (i)
negligent actions or omissions, or willful misconduct and/or breach of this
Agreement, (ii) failure to follow any applicable federal, state or local laws,
regulations and guidelines; or (iii) product liability claims alleging defects
in the Product, except to the extent such injury results from the negligent
actions or omissions, or willful misconduct by any BSD Indemnitee.
 
(b) By BSD.  BSD shall indemnify, defend, and hold harmless BTI, its respective
trustees, officers, directors, employees, agents and contractors  (collectively,
the “BTI Indemnitees”) from and against any and all actual and alleged Claims to
the extent that such Claim arises out of any act or forbearance to act by BSD or
at the direction or sufferance of any of BSD  Indemnitees as defined in Section
13.2(a): (i) negligent actions or omissions, or willful misconduct; (iii)
failure to follow any applicable federal, state or local laws, regulations and
guidelines; or (iv) failure to follow the written instructions or
recommendations provided by or on behalf of BTI to the BSD Indemnitees.
 
13.3. Conditions of Indemnity.  The Party claiming a right of indemnification or
defense under this Agreement shall provide the Indemnifying Party prompt notice
(in all events within twenty (20) days) of knowledge of any such Claim,
including a copy thereof, served upon it, and shall cooperate fully with the
Indemnifying Party and its legal representatives in the investigation of any
such Claim, at the Indemnifying Party’s expense.  The Indemnifying Party shall
have the right to exercise sole control over the defense and settlement of any
such Claim, including the sole right to select defense counsel and to direct the
defense or settlement of any such Claim; provided that the Indemnifying Party
shall not enter into any settlement or admit fault or liability on the
Indemnified Party’s behalf without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld.  The Indemnified Party
shall have the right to select and to obtain representation by separate legal
counsel.  If the Indemnified Party exercises such right, all costs and expenses
incurred by the Indemnified Party for such separate legal counsel shall be borne
by the Indemnified Party except in the event counsel for the Indemnifying Party
determines that a conflict prevents such counsel from representing the
Indemnified Party in which case the costs of separate legal counsel shall be
borne by the Indemnifying Party. The Indemnifying Party shall be relieved of any
indemnification obligation hereunder if any Party seeking indemnification
either:  (i) fails to follow the procedures set forth herein; (ii) except where
a conflict requires the Indemnified Party to have retained separate counsel,
compromises or settles any Claim without the Indemnifying Party’s prior written
approval; or (iii) except where a conflict requires the Indemnified Party to
have retained separate counsel, makes any admission or takes any other action
with respect to any such Claim that, in the Indemnifying Party’s reasonable
judgment, is prejudicial to the defense of such Claim, without the Indemnifying
Party’s prior written approval.
 
13.4. Insurance.  Each Party warrants that it shall maintain a policy or program
of insurance in compliance with applicable federal, state and local laws and
which is of an amount adequate to cover their respective obligations under this
Agreement. A Party shall provide a certificate of insurance and any other
associated documentation evidencing such coverage upon written request by the
other Party.
 
 
 
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14. LIMITATIONS OF LIABILITY
 
14.1. LIMITATION. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
ANY  INDIRECT, SPECIAL,
INCIDENTAL  OR  CONSEQUENTIAL  DAMAGES  IN  CONNECTION  WITH THIS  AGREEMENT,
INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, REGARDLESS OF THE
THEORY OF LIABILITY, EVEN IF SUCH PARTY HAS BEEN PREVIOUSLY ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE OCCURRING.
 
15. TERM, EXTENSION AND TERMINATION
 
15.1. Term. The Term of this Agreement shall commence on the Effective Date and
continue for a period of one (1) year   subject to the terms for termination and
extension detailed with this Section 15.
 
15.2. Term Extensions.
 
Within, but not before, six (6) months prior to the expiration of this Agreement
and any extension as provided herein, the Parties agree to discuss the terms and
conditions for extending the Term of the Agreement. Except by mutual agreement
by the Parties, the Term of the Agreement shall be extended to not less than
that as indicated based upon the achievements of BSD as provided in Section
15.3(c) below
 
15.3. Termination by BTI.
 
(a) BTI may terminate this Agreement, at its sole discretion by giving BSD 90
(ninety) days’ written notice of termination, effective on the date such notice
is received, in the event that:
 
(i) BSD breaches any of its material obligations under this Agreement and fails
to cure such breach within sixty (60) days of receiving a written notice from
BTI specifying such breach;
 
(ii) BSD takes any act or step without authorization from BTI that impairs or
adversely affects BTI’s Intellectual Property Rights and/or Confidential
Information;
 
(iii) BSD enters into insolvency or bankruptcy or is unable to pay its debts as
they fall due, or a trustee or receiver or the equivalent is appointed to BSD,
or proceedings are instituted against BSD in the Territory relating to
dissolution, liquidation, winding up, bankruptcy, insolvency or the relief of
creditors, if such proceedings are not terminated or discharged within thirty
(30) days;
 
(iv) any event of Force Majeure, as defined in Section 17.12 hereof, occurs and
prevents BSD from performing its obligations under this Agreement for a period
of ninety (90) days or more, provided there is no commercially reasonable
alternative;
 
(b) Except as provided in Paragraph 15.3(c), beginning 12 months after the
contract becomes effective, BTI may terminate this Agreement and the exclusive
arrangement set forth therein, without cause, by providing BSD with ninety (90)
days prior written notice.
 
 
 
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(c)    (i) BSD’s contract shall be extended an additional 12 months upon
attaining the Milestones in Minimum Net Sales as provided in Section 6 in any
calendar year where the Minimum Net Sales goal has been attained.
 
(ii) In addition to the extension provided annually in Section 15.3(c)(i),BSD’s
Agreement shall be extended annually an additional period as provided below in
each instance where:
 
(A) BSD has exceeded the applicable Minimum Net Sales Goal as provided in
Section 6 by 50%, then the Agreement shall be extended by an additional 6
months; and/or
 
(B) BSD has obtained written agreement for widespread sales distribution into a
major retailer such as GNC, Walgreen's, CVS, Walmart, Kroger, etc. then the
Agreement shall be extended by an additional 12 months; and/or
 
(C) BSD has obtained written agreement for widespread sales distribution to
commercial users of Product in the production of new forms of Product, such as
nutritional and non-nutritional beverages, foods, food supplements and food
additives or ingredients, then the Agreement shall be extended by an additional
12 months.
 
(iii) In each calendar year in which any of the objectives provided in Section
15.3(c)(ii)(A),(B) or (C) are attained the relevant extensions of the Agreement
shall be added together to determine to total extension of the Agreement
achieved that year.  For example, if in any year BSD exceeds the Minimum Net
Sales Goal by 50% and succeeds in obtaining written agreement for widespread
sales distribution into a major retailer the Agreement would be extended by 30
months (meeting the minimum sales = 12 month extension + attaining 50% over
minimum sales volume = 6 month extension + distribution into major retailer = 12
month extension totaling extension of 30 months).  Similarly, in any year where
BSD succeeds in obtaining written agreements for widespread purchase and
distribution by two major retailers, the Agreement would be extended by 24
months.
 
15.4. Termination By Benchworks SD, LLC.
 
(a) BSD may terminate this Agreement, at its sole discretion by giving BTI
Ninety (90) days written notice of termination, effective on the date such
notice is received, in the event that:
 
(i) BTI breaches any of its material obligations under this Agreement, and fails
to cure such breach within sixty (60) days of receiving a written notice from
BSD specifying such breach;
 
(ii) any event of Force Majeure, as defined in Section 17.12 hereof, occurs and
prevents BTI of BSD from performing its obligations under this Agreement for a
period of ninety (90) days or more, provided there is no commercially reasonable
alternative;
 
 
 
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(iii) any law or regulation is enacted within the Territory which would
substantially impair or restrict:
 
(A) BTI’s right, title or interest in the Product, Intellectual Property Rights
and/or Confidential Information; or
 
(B) BSD’s right to market the Product in accordance with this Agreement.
 
(b) BSD may terminate this Agreement and the exclusive arrangement set forth
therein, without cause, by providing BTI with ninety (90) days prior written
notice.
 
16. RIGHTS AND OBLIGATIONS UPON TERMINATION
 
16.1. Cessation of Rights.  Upon expiration or termination (collectively, the
“Termination”) of this Agreement for any reason whatsoever as provided herein
all rights and obligations of the Parties hereunder shall cease, except as
provided otherwise in this Agreement; provided, however, that Termination of
this Agreement shall not relieve the Parties hereto of any obligations accrued
prior to said Termination. Upon Termination by BTI pursuant to Section 15.3, BSD
shall immediately cease to use any advertising or promotional materials relating
to the Product and discontinue any previously authorized use of the BTI
Intellectual Property Rights and Confidential Information and shall cease all
conduct that might cause any Third Party to believe that BSD markets the Product
or is otherwise connected with BTI.
 
16.2. Return of Materials and Customer Lists.  Upon Termination, BSD shall
promptly return to BTI its designee, and shall cause its subagents and employees
to return or deliver, all sales materials, Confidential Information in written,
recorded or other tangible form and other items in BSD’s possession, which BTI
has furnished or supplied to BSD.
 
16.3. Survival.  Upon the expiration or termination of this Agreement for any
reason, except as otherwise expressly provided in this Agreement,  (a) BTI’s
obligation to pay to BSD  its share of revenues pursuant to Section 7(a) shall
continue and survive through the period covered by all extensions to this
Agreement for sales to those buyers of Products sourced by BSD pursuant
hereto  with respect to any and all Net Sales, whether such Net Sales occur
prior to or after such expiration or termination; and (b) all other rights and
obligations of the Parties hereunder shall automatically terminate, except that
the obligation of BTI to pay all amounts owed to BSD under Sections 3 and 7 and
the rights and obligations of the Parties under Sections 3.3, 5.2(c), 5.7, 7,
8.4(g), 10, 11.3, 12, 13, 14,  15, 16 and 17 of this Agreement shall survive any
such expiration or termination for a period of 12 months or, in the case of
payments pursuant to Sections 7 and in any extension of this Agreement as
provided in Section 15.3(c), the date such obligation would expire per the terms
of the Agreement.
 
17. MISCELLANEOUS
 
17.1. Independent Contractors.  For the purposes of this Agreement, each of BTI
and BSD shall be deemed to be an independent contractor, and not a partner,
agent or employee of the other Party. Neither BTI nor BSD shall have authority
to make any statements, representations or commitments of any kind, or to take
any action which is binding on the other Party, except as may be authorized by
the other Party in writing.
 
 
 
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17.2. No Implied Licenses.  Each Party agrees that no rights or licenses are
granted to the other Party, by implication or otherwise, except to the extent
expressly set forth in this Agreement.
 
17.3. Waiver.  No waiver of any term, provision or condition of this Agreement
in any one or more instances will be deemed to be or construed as a further or
continuing waiver of any other term, provision or condition of this
Agreement.  Any such waiver, extension or amendment must be evidenced by an
instrument in writing executed by an officer authorized to execute waivers,
extensions or amendments.
 
17.4. Entire Agreement.  This Agreement, together with any Exhibits attached
hereto, constitutes the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior oral or written agreements
between the Parties with respect to such subject matter.
 
17.5. Reserved.
 
17.6. No Modification.  This Agreement may be changed, modified, amended or
supplemented only by a writing signed by authorized representatives of both
Parties.
 
17.7. Severability; Reformation.  Each provision in this Agreement is
independent and severable from the others, and no provision will be rendered
unenforceable because any other provision may be invalid or unenforceable in
whole or in part.  If the scope of any restrictive provision in this Agreement
is too broad to permit enforcement to its full extent, then such restriction
will be reformed to the maximum extent permitted by law.
 
17.8. Further Assurances.  Each Party agrees to do such acts and execute such
further documents as may be necessary or desirable to enable the performance of
and to fulfill the provisions and intent of this Agreement.
 
17.9. Successors And Assigns; Assignment.  The terms of this Agreement shall
apply to, be binding upon and inure to the benefit of the Parties hereto and
their respective successors and permitted assigns. Neither Party may assign this
Agreement or its rights or obligations hereunder, directly or by operation of
law, without the prior written consent of the other Party; provided, however,
that either party may, without the written consent of the other, assign this
Agreement and its rights and delegate its obligations hereunder to Affiliates,
or in connection with the transfer or sale of all or substantially all of its
assets or business related to this Agreement, or in the event of its merger,
consolidation, change in control or similar transaction. Any permitted assignee
shall assume all obligations of the assigning Party under this Agreement. Any
purported assignment or attempted assignment in violation of this Section 17.9
shall be null and void.
 
17.10. No Third Party Beneficiaries.  Nothing herein, expressed or implied, is
intended to or shall be construed to confer upon or give to any person or entity
other than BTI and BSD and their successors or permitted assigns any rights or
remedies under or by reason of this Agreement.
 
17.11. Foreign Corrupt Practices Act And Export Controls.  Each Party agrees to
comply with the United States Foreign Corrupt Practices Act and all applicable
export laws, restrictions and regulations of any United States or foreign agency
or authority and not to export or re-export, or allow the export or re-export
of, any product, technology or information it obtains or learns pursuant to this
Agreement in violation of any such laws, restrictions or regulations.
 
 
 
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17.12. Force Majeure.  Neither Party shall be liable to the other Party for any
delay or omission in the performance of any obligation under this Agreement,
other than the obligation to pay monies, where the delay or omission is due to
any cause or condition beyond the reasonable control of the Party obliged to
perform, including, but not limited to, strikes or other labor difficulties,
acts of God, acts of government (in particular with respect to the refusal to
issue necessary import or export licenses), war, riots, embargoes, or inability
to obtain supplies (“Force Majeure”). If Force Majeure prevents or delays the
performance by a Party of any obligation under this Agreement, then the Party
claiming Force Majeure shall promptly notify the other Party thereof in writing.
 
17.13. Notices. Unless otherwise specifically provided, all notices required or
permitted by this Agreement shall be in writing and in English, effective upon
receipt, and may be delivered personally, or may be sent by facsimile,
commercial express courier, or first class air mail, postage prepaid, addressed
as follows:
 
If to Benchworks SD, LLC:
 
Benchworks SD, LLC
1512 Spruce St.
Philadelphia, PA 19102
Attn:  Thomas A Moore #2701
 
Tel:(617) 331-4872
Fax: (215) 627-2205
 
If to BTI:
 
Boston Therapeutics, Inc.
1750 Elm Street
Manchester, New Hampshire 03104
Attn:  Anthony Squeglia, CFO
 
Tel.:  (603)-935-9799
Fax:  (603)-685-4784

 
17.14. Headings.  The headings used in this Agreement are for the convenience of
the reader; the headings do not constitute or form a part of this Agreement, and
shall not be used in the interpretation or meaning of the terms and conditions
hereof.
 
17.15. Construction.  This Agreement shall not be construed against the Party
preparing it but shall be construed as if both Parties jointly prepared it.
 
17.16. Remedies. Subject to Section 14, and the limitation on liabilities
therein expressed, nothing in this Agreement shall be construed to impair or
restrict either Party’s right to judicial remedies.  Each Party agrees that a
Party’s infringement of the Intellectual Property Rights and/or disclosure of
the Confidential Information of the other Party may result in irreparable and
continuing damage to such other Party, for which there may be no adequate remedy
at law, and agrees that in the event of such breach or threatened breach, such
other Party may be entitled to injunctive relief or other equitable remedies
from a court of competent jurisdiction, which remedy shall be cumulative and in
addition to all other available remedies hereunder, at law or in equity except
as may otherwise restricted by the terms of this agreement..
 
 
 
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17.17. Governing Law.  This Agreement is governed by, and shall be construed in
accordance with, the laws of the State of Delaware, without reference to its
conflict of laws rules.
 
17.18. Dispute Resolution.
 
(a) The Parties recognize that disputes as to certain matters may from time to
time arise during the Term which relate to a Party’s rights and/or obligations
hereunder.  It is the objective of the Parties to establish procedures to
facilitate the resolution of disputes arising out of or relating to this
Agreement in an expedient manner by mutual cooperation and without resort to
litigation. To accomplish this objective, the Parties agree to follow the
procedures set forth in this Section 17.18(a) if and when a dispute arises out
of or relates to this Agreement, including, without limitation, any disputes
regarding whether a material breach occurred for purposes of Sections 15.3 and
15.4 or disputes among the members of the Steering Committee which the Steering
Committee is unable to resolve. In the event of disputes between the Parties
arising out of or relating to this Agreement, a Party seeking to resolve such
dispute will, by written notice to the other Party, have such dispute referred
to their respective executive officers or their successors, for attempted
resolution by good faith negotiations within fifteen (15) days after such notice
is received.
 
(b) In the event the executive officers are not able to resolve such dispute,
either Party may, at any time after the fifteen (15) day period, invoke the
provisions of Section 17.18(b).
 
(c) Following settlement efforts pursuant to Section 17.18(a), except as
otherwise expressly provided in this Agreement, any dispute arising out of or
relating to this Agreement shall be finally settled by arbitration under the
then current commercial arbitration rules of the Judicial Arbitration and
Mediation Services in accordance with the terms set forth in this Section
17.18(b). The place of arbitration of any dispute shall be Wilmington, Delaware.
Such arbitration shall be conducted by one arbitrator mutually acceptable to the
Parties; provided, however, that if the dispute to be arbitrated involves
termination of this agreement or a sum in excess of $2,000,000 either party can
demand that the matter be heard by three (3) arbitrators whose decision shall be
determined by a majority. The arbitrator shall be a person with relevant
experience with respect to the subject matter of this Agreement. The Parties
shall instruct such arbitrator to render a determination of any such dispute
within four (4) months after the appointment of the arbitrator. Any award
rendered by the arbitrator shall be final and binding upon the Parties. Judgment
upon any award rendered may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award and
an order of enforcement, as the case may be.  Each Party shall pay its own
expenses of arbitration, and the expenses of the arbitrator shall be equally
shared between the Parties unless the arbitrator assesses,  as part of his/her
award, all or any part of the arbitration expenses of one Party (including
reasonable attorneys’ fees) against the other Party. This Section 17.18(b) shall
not prohibit a Party from seeking injunctive or other equitable relief from a
court of competent jurisdiction pursuant to Section 17.16.
 
Each Party shall continue to perform its obligations under this Agreement during
the period in which any good faith dispute is being resolved in accordance with
the dispute resolution provisions of this Section 17.18.
 
 
 
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17.19. Counterpart Signatures.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of the
Agreement, and all of which, when taken together, shall be deemed to constitute
one and the same Agreement.  Signatures to this Agreement transmitted by fax, by
electronic mail in “portable document format” (“.pdf”), or by any other
electronic means intended to preserve the original graphic and pictorial
appearance of the Agreement, shall have the same effect as physical delivery of
the paper document bearing the original signature.
 
17.20. Basis of the Bargain.  EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY
DISCLAIMERS AND LIABILITY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL BARGAINED
FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT AND
REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH PARTY UNDER THIS
AGREEMENT AND THE DECISION BY EACH PARTY TO ENTER INTO THIS AGREEMENT.
 
 
 
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IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their duly authorized representatives as of the Effective Date.
 
BOSTON THERAPEUTICS, INC.
BENCHWORKS SD, LLC
 
 
 
 
By: _______________________________
 
 
 
 
By: _______________________________
Name: David Platt, Ph.D.
Name:  Thomas Moore
Name:   Thad Bench
Title:  CEO
Title: Managing Directors, Benchworks SD, LLC
 
Date:
 
Date:

 
 
 
 
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EXHIBIT 1
 
BTI PATENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT 2
 
BTI TRADEMARKS
 

 

 
 
 
 

 

 
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EXHIBIT 3
 
STRUCTURE AND FUNCTION CLAIMS
 
 
 
Claims supplied for FDA review in 2010
 
SUGARDOWN™ chewable tablets and SUGARDOWN™ Succulents
 
Structure/Function Claims to be made on product label and labeling material
 
1. “Mannans support normal blood sugar levels.”
 
2. “Mannans found in SUGARDOWN™ helps support normal blood sugar levels.”
 
3. “SUGARDOWN™ can support normal blood sugar levels.”
 
4. “SUGARDOWN™ helps weight management by helping you feel full longer.”
 
5. “SUGARDOWN™ can be an important part of your overall good health.”
 
6. “SUGARDOWN™ can help promote intestinal health.”
 
7. “SUGARDOWN™ can help maintain beneficial intestinal flora and regularity.”
 
8. “SUGARDOWN™ can support colon health.”
 
9. “Mannans promote a healthy digestive system.”
 
10. “Mannans found in SUGARDOWN™ promote a healthy digestive system.”
 
11. “SUGARDOWN™ promotes a healthy digestive system.”
 
12. “Mannans provide prebiotic nutrients that support growth of beneficial
bacteria.”
 
13. “Mannans found in SUGARDOWN™ provide prebiotic nutrients that support growth
of beneficial bacteria.”
 
14. “SUGARDOWN™ provides prebiotic nutrients that support growth of beneficial
bacteria.”
 
 
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