exh10_1.htm







Exhibit 10.1



 


SECURITIES PURCHASE AGREEMENT







THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 13, 2015, is entered into by and among Boston Therapeutics, Inc., a Delaware corporation (the “Company”), and JDF Capital, Inc. (the “Purchaser”).  The Company and the Purchaser are sometimes referred to herein as a “party” and collectively as the “parties”.


 







W I T N E S S E T H:


 







WHEREAS, the Company and the Purchaser are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, by Rule 506 under Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”), and/or Section 4(a)(2) of the 1933 Act; and







WHEREAS, the Purchaser wishes to purchase the Company’s 10% OID Convertible Promissory Note accruing 10% interest (the “Note”) in the original principal amount of $220,000, subject to and upon the terms and conditions of this Agreement and acceptance of this Agreement by the Company, on the terms and conditions referred to herein.







NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:







1.           AGREEMENT TO PURCHASE; PURCHASE PRICE.







a.           Purchase.







(i)           Subject to the terms and conditions of this Agreement, the Note, and the other documents executed in conjunction with the purchase of the Note (collectively the “Transaction Documents”), the Purchaser hereby agrees to purchase the Note for an aggregate purchase price of $200,000 (the “Purchase Amount”).  The First Advance Amount (as defined herein) shall be funded and issuable upon the signing of this Agreement or at such later date mutually agreed upon the by parties (the “First Closing Date”).  The Second Advance Amount (as defined herein) shall be funded and issuable on the 60th day following the First Closing Date (the “Second Closing Date”); provided, however, if at any time during the period beginning as of the First Closing Date and ending on the trading day immediately preceding the Second Closing Date, the closing price of the Company’s common stock reported by the Company’s Principal Trading Market is less than 50% of the closing price of the Company’s common stock as reported by the Company’s Principal Trading Market on the First Closing Date (as adjusted for combinations, consolidations, subdivisions, stock splits, or other reclassifications) the Purchaser may, in the Purchaser’s sole and absolute discretion, determine not to fund all or any portion of the Second Advance Amount.  The Company will, at all times, reserve a number of shares of Common Stock that shall not be less than 300% of the number of shares of Common Stock sufficient to effect conversion of the Note and all accrued interest thereon.


 





 


1


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  











(ii)           The Note referred to herein shall be in the form of Annex I to this Agreement.







(iii)           The purchase of the Note by the Purchaser and the other transactions contemplated hereby are sometimes referred to herein and in the other Transaction Documents as the purchase and sale of the Securities (as defined below), and are referred to collectively as the “Transactions”.







(iv)           The Purchaser shall deliver the First Advance Amount to counsel for the Purchaser, which shall be held in escrow until authorized for release to the Company by written instruction of the Purchaser.  The First Advance Amount shall be promptly returned to the Purchaser if not authorized for release by the Purchaser on the First Closing Date.  Subject to the conditions set forth in Section 1(a)(i) above, the Purchaser shall deliver the Second Advance Amount, at the discretion of the Purchaser, to the Company directly or to counsel for the Purchaser to be held in escrow until authorized for release to the Company by the Purchaser on the Second Closing Date.







b.           Certain Definitions.  As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:







“Affiliate” means, with respect to a specific Person referred to in the relevant provision, another Person who or which controls or is controlled by or is under common control with such specified Person.







“Common Stock” means the Company’s common stock, $0.001 par value.







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


“First Advance Amount” means the funding, pursuant to the terms of the Note, of one-half of the principal amount of the Note in the amount of $100,000.







“First Closing Date” means the date of the closing of the issuance of the Note and the funding of the First Advance Amount.







 “Holder” means the Person holding the relevant Securities at the relevant time.







“Last Audited Date” means December 31, 2014.







“Material Adverse Effect” means an event or combination of events, which individually or in the aggregate, would reasonably be expected to (i) adversely affect the legality, validity or enforceability of the Securities or any of the Transaction Documents, (ii) have or result in a material adverse effect on the results of operations, assets, prospects, or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, (iii) adversely impair the Company’s ability to perform fully on a timely basis its obligations under any of the Transaction Documents or the Transactions contemplated thereby, or (iv) materially and adversely affect the value of the rights granted to the Purchaser in the Transaction Documents.







 “Person” means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.



 





 


2


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  






 




“Principal Trading Market” means the Over the Counter Bulletin Board, the OTCQB, OTC Pink or such other market on which the Common Stock is principally traded at the relevant time.







“Purchase Amount means $200,000.







“Purchaser Control Person” means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Purchaser pursuant to Rule 405 under the 1933 Act or Section 20 of the Exchange Act.







“Registrable Securities” means the Common Stock into which the Note can be converted.







“Second Advance Amount” means the funding, in accordance with the terms of the Note and this Agreement, of the balance of the principal amount of the Note in the amount of $100,000.







“Second Closing Date” means the funding of the Second Advance Amount.







“Securities” means the Note and any shares of Common Stock of the Company that may be issued to the Purchaser in connection with the conversion of the principal amount of the Note and interest accrued thereon and any other agreements between the parties.







“Shares” means the shares of Common Stock representing any or all of the Common Stock underlying the Note.







 “Subsidiary” means any subsidiary of the Company.


“Trading Day” means any day during which the Principal Trading Market shall be open for business.







“Transfer Agent” means, at any time, the transfer agent for the Company’s Common Stock.







“Transaction Documents” means this Purchase Agreement, the Note and includes all ancillary documents referred to in those agreements.







c.           Form of Payment; Delivery of Note.


 


(i)           The Purchaser shall pay the Purchase Amount by delivering immediately available good funds in United States Dollars to the Company in an amount equal to the First Advance Amount on the First Closing Date and, subject to the conditions set forth in Section 1(a)(i) of this Agreement, in an amount equal to the Second Advance Amount on the Second Closing Date.







(ii)           On the First Closing Date, the Company shall deliver the Note, duly executed on behalf of the Company, to the Purchaser.







(iii)           By signing this Agreement, each of the Purchaser and the Company agrees to all of the terms and conditions of the Transaction Documents, all of the provisions of which are incorporated herein by this reference as if set forth in full.







d.           Method of Payment.  Payment of the Purchase Amount shall be made by wire transfer of funds to:



 





 


3


Purchaser Initial: ______


 


Company Initial: ____   _ 


 







 











 













BANK:                               CITIZENS BANK


ADDRESS:                      1188 CENTRE COURT


           NEWTON, MA  02459







ABA#                                011500120


SWIFT CODE:                CTZIUS33












BENEFICIARY:              BOSTON THERAPEUTICS, INC.


                                          1750 ELM STREET, SUITE 103


                                          MANCHESTER, NH  03104







ACCOUNT#:                  131561-803-3







2.           PURCHASER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO


              INFORMATION; INDEPENDENT INVESTIGATION.


 


The Purchaser represents and warrants to, and covenants and agrees with, the Company as follows:


 


a.           Without limiting Purchaser’s right to sell the Securities pursuant to an effective registration statement or otherwise in compliance with the 1933 Act, the Purchaser is purchasing the Securities for its own account for investment only and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof.







b.           The Purchaser is (i) an “accredited investor” as that term is defined in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of Rule 501(a)(3), (ii) experienced in making investments of the kind described in this Agreement and the other Transaction Documents, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its Affiliates or selling agents), to protect its own interests in connection with the Transactions described in this Agreement, and the related documents, and to evaluate the merits and risks of an investment in the Securities, and (iv) able to afford the entire loss of its investment in the Securities.


 







c.           All subsequent offers and sales of the Securities by the Purchaser shall be made pursuant to registration of the relevant Securities under the 1933 Act or pursuant to an exemption from registration.







d.           The Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the 1933 Act and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities.



 





 


4


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  






 




e.           The Purchaser and its advisors, if any, have been furnished with or have been given access to all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Purchaser, including those set forth on any annex attached hereto.  The Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management and have received complete and satisfactory answers to any such  inquiries.  Without limiting the generality of the foregoing, the Purchaser has also had the opportunity to obtain and to review the Company’s filings on EDGAR (collectively, the “Company’s SEC Documents”).







f.           The Purchaser understands that its investment in the Securities involves a high degree of risk.







g.           The Purchaser hereby represents that, in connection with its purchase of the Securities, it has not relied on any statement or representation by the Company or any of its officers, directors and employees or any of their respective attorneys or agents, except as specifically set forth herein.







h.           The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities.







i.           This Agreement and the other Transaction Documents to which the Purchaser is a party, and the Transactions contemplated thereby, have been duly and validly authorized, executed and delivered on behalf of the Purchaser and are valid and binding agreements of the Purchaser enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally.







3.           COMPANY REPRESENTATIONS AND WARRANTIES.  The Company represents and warrants to the Purchaser as of the date hereof and as of the First Closing Date and the Second Closing Date.


 


a.           Rights of Others Affecting the Transactions.  There are no preemptive rights of any shareholder of the Company, as such, to acquire the Note or any shares of the Company’s Common Stock that may be issued to the Purchaser in connection with any other agreements between the parties, in the event such shares are issued.







b.           Status.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power to own its properties and to carry on its business as now being conducted.  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 or result in a Material Adverse Effect.  The Company has registered its stock and is obligated to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act, as amended.  The Common Stock is, or immediately following the First Closing Date will be, quoted on the Principal Trading Market.  The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for such quotation on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation.



 





 


5


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  






 




c.           Authorized Shares.







(i)           The authorized capital stock of the Company consists of 200,000,000 shares of Common Stock, $0.001 par value and 5,000,000 shares of Preferred Stock, $0.001 par value.







(ii)           The Company has sufficient authorized and unissued shares of Common Stock as may be necessary for the Purchaser to convert the principal amount of the Note and all interest accrued thereon and any other costs or fees that may be paid with the Company’s Common Stock pursuant to the terms of the Note.


 


d.           Transaction Documents and Stock.  This Agreement and each of the other Transaction Documents, and the Transactions contemplated thereby, have been duly and validly authorized by the Company, this Agreement has been duly executed and delivered by the Company and this Agreement is, and the Note and each of the other Transaction Documents, when executed and delivered by the Company, will be, valid and binding agreements of the Company enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors’ rights generally.







e.           Non-contravention.  The execution and delivery of this Agreement and each of the other Transaction Documents by the Company, the issuance of the Securities, and the consummation by the Company of the other Transactions contemplated by this Agreement, the Note and the other Transaction Documents do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the articles of incorporation or by-laws of the Company, each as currently in effect, (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock except as herein set forth, or (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse Effect.







f.           Approvals.  No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the shareholders of the Company is required to be obtained by the Company for the issuance and sale of the Securities to the Purchaser as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained.







g.           Filings.  None of the Company’s SEC Documents contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein in light of the circumstances under which they were made, not misleading.







h.           Absence of Certain Changes.  Since the Last Audited Date, there has been no material adverse change and no Material Adverse Effect, except as disclosed in the Company’s SEC Documents.  Since the Last Audited Date, except as provided in the Company’s SEC Documents, the Company has not (i) incurred or become subject to any material liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business consistent with past practices; (ii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (iii) declared or made any payment or distribution of cash or other property to shareholders with respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or transferred any other tangible assets, or canceled any debts owed to the Company by any third party or claims of the Company against any third party, except in the ordinary course of business consistent with past practices; (v) waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of existing business; (vi) made any increases in employee compensation, except in the ordinary course of business consistent with past practices; or (vii) experienced any material problems with labor or management in connection with the terms and conditions of their employment.



 





 


6


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  
















i.           Full Disclosure.  To the best of the Company’s knowledge, there is no fact known to the Company (other than general economic conditions known to the public generally or as disclosed in the Company’s SEC Documents) that has not been disclosed in writing to the Purchaser that would reasonably be expected to have or result in a Material Adverse Effect.







j.           Absence of Litigation.  There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any governmental authority or nongovernmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, any of the Transaction Documents.  The Company is not aware of any valid basis for any such claim that (either individually or in the aggregate with all other such events and circumstances) could reasonably be expected to have a Material Adverse Effect.  There are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to which the Company is a party or by which it or any of its properties is bound, that involve the transaction contemplated herein or that, alone or in the aggregate, could reasonably be expect to have a Material Adverse Effect.







k.           Absence of Events of Default.  Except as set forth in the Company’s SEC Documents, (i) neither the Company nor any of its subsidiaries is in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material indenture, mortgage, deed of trust or other material agreement to which it is a party or by which its property is bound, and (ii) no Event of Default (or its equivalent term), as defined in the respective agreement to which the Company or its Subsidiary is a party, and no event which, with the giving of notice or the passage of time or both, would become an Event of Default (or its equivalent term) (as so defined in such agreement), has occurred and is continuing, which would have a Material Adverse Effect.







l.           No Undisclosed Liabilities or Events.  To the best of the Company’s knowledge, the Company has no liabilities or obligations other than those disclosed in the Transaction Documents or the Company’s SEC Documents or those incurred in the ordinary course of the Company’s business since the Last Audited Date, or which individually or in the aggregate, do not or would not have a Material Adverse Effect.  No event or circumstances has occurred or exists with respect to the Company or its properties, business, operations, condition (financial or otherwise), or results of operations, which, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed.  There are no proposals currently under consideration or currently anticipated to be under consideration by the Board of Directors or the executive officers of the Company which proposal would (x) change the articles or certificate of incorporation or other charter document or by-laws of the Company, each as currently in effect, with or without shareholder approval, which change would reduce or otherwise adversely affect the rights and powers of the shareholders of the Common Stock or (y) materially or substantially change the business, assets or capital of the Company, including its interests in subsidiaries.



 





 


7


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  
















m.           No Integrated Offering.  Neither the Company nor any of its Affiliates nor any Person acting on its or their behalf has, directly or indirectly, at any time since August 31, 2014, made any offer or sales of any security or solicited any offers to buy any security under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale of the Securities as contemplated hereby.







n.           Dilution. Any shares of the Company’s Common Stock issued to the Purchaser in connection with any agreements between the parties hereto, in the event such shares are issued may have a dilutive effect on the ownership interests of the other shareholders (and Persons having the right to become shareholders) of the Company.  The Company’s executive officers and directors have studied and fully understand the nature of the Securities being sold hereby and recognize that they have such a potential dilutive effect.  The board of directors of the Company has concluded, in its good faith business judgment, that such issuance is in the best interests of the Company.







o.           Confirmation.  The Company confirms that all statements of the Company contained herein shall survive acceptance of this Agreement by the Purchaser.  The Company agrees that, if any events occur or circumstances exist prior to the First Closing Date or the Second Closing Date or the release of the First Advance Amount or, if funded, the Second Advance Amount, to the Company which would make any of the Company’s representations, warranties, agreements or other information set forth herein materially untrue or materially inaccurate as of such date, the Company shall immediately notify the Purchaser (directly or through its counsel, if any) in writing prior to such date of such fact, specifying which representation, warranty or covenant is affected and the reasons therefor.







p.           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the Transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the Transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith.  Each  Transaction Document has been (or upon  delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.







q.           SEC Reports; Financial Statements.  The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto (except that unaudited financial statements may not contain all of the footnotes required by GAAP), and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.



 





 


8


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  
















r.           Sarbanes-Oxley; Internal Accounting Controls.  The Company is and will continue to be in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the First Closing Date and the Second Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the Exchange Act is being prepared.  The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of the date prior to the filing date of the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no significant changes in the Company’s internal controls (as such term is defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal controls.







s.           Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.







t.           No Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers.  By making this representation the Company does not, in any manner, waive the attorney/client privilege or the confidentiality of the communications between the Company and its lawyers.



 





 


9


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  
















u.           No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d) under the 1933 Act (a “Disqualification Event”).  The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Issuer has complied, to the extent applicable, with its disclosure obligations under Rule 506(e).







v.           Shell Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1).







 


4.           CERTAIN COVENANTS AND ACKNOWLEDGMENTS.







a.           Transfer Restrictions.  The  Purchaser acknowledges that (1) the Securities have not been registered under the provisions of the 1933 Act and that the Securities may not be transferred unless (A) subsequently registered thereunder or (B) the Purchaser shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (2) any sale of the Securities made in reliance on Rule 144 promulgated under the 1933 Act (“Rule 144”) may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Securities under circumstances in which the seller, or the Person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (3) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or to comply with the terms and conditions of any exemption thereunder.







b.           Restrictive Legend.  The Purchaser acknowledges and agrees that the certificates and other instruments representing any of the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities):







“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”







c.           Filings.  The Company undertakes and agrees to make all necessary filings in connection with the sale of the Securities to the Purchaser under any United States laws and regulations applicable to the Company, or by any domestic securities exchange or trading market, and to provide a copy thereof to the Purchaser promptly after such filing.



 





 


10


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  








 




d.           Reporting Status.  So long as the Purchaser beneficially owns any of the Securities, the Company shall file all reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, shall take all reasonable action under its control to ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144(c)(2) of the 1933 Act, is publicly available, and shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination.  The Company will take all reasonable action under its control to maintain the continued listing and quotation and trading of its Common Stock on the Principal Trading Market or a listing on the NASDAQ Capital Market and, to the extent applicable to it, will comply in all material respects with the Company’s reporting, filing and other obligations under the by-laws or rules of the Principal Trading Market and/or the Financial Industry Regulatory Authority, as the case may be, applicable to it for so long as the Purchaser beneficially owns any of the Securities.







e.           Use of Proceeds.  The Company will use the proceeds received hereunder (excluding amounts paid by the Company for legal fees in connection with the sale of the Securities and as the original issue discount) for working capital.







f.           Publicity, Filings, Releases, Etc.  Each of the parties agrees that it will not disseminate any information relating to the Transaction Documents or the Transactions contemplated thereby, including issuing any press releases, holding any press conferences or other forums, or filing any reports (collectively, “Publicity”), without giving the other party reasonable advance notice and an opportunity to comment on the contents thereof.  Neither party will include in any such Publicity any statement or statements or other material to which the other party reasonably objects, unless in the reasonable opinion of counsel to the party proposing such statement, such statement is legally required to be included.  In furtherance of the foregoing, the Company will provide to the Purchaser drafts of the applicable text of the first filing of a Current Report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K intended to be made with the SEC which refers to the Transaction Documents or the Transactions contemplated thereby as soon as practicable (but at least 2 Trading Days before such filing will be made) will not include in such filing any statement or statements or other material to which the other party reasonably objects, unless in the reasonable opinion of counsel to the party proposing such statement, such statement is legally required to be included.  Notwithstanding the foregoing, each of the parties hereby consents to the inclusion of the text of the Transaction Documents in filings made with the SEC as well as any descriptive text accompanying or as a part of such filing which is accurate and reasonably determined by the Company’s counsel to be legally required.  Notwithstanding, but subject to, the foregoing provisions of this Section 4f, the Company will, after the First Closing Date and the Second Closing Date, as applicable, promptly file a Current Report on Form 8-K or, if appropriate, a quarterly or annual report on the appropriate form, referring to the Transactions contemplated by the Transaction Documents.


 


5.           TRANSFER AGENT INSTRUCTIONS.


 


a.           The Company warrants that, with respect to the Securities, other than the stop transfer instructions to give effect to Section 4a hereof, it will give its transfer agent no instructions inconsistent with instructions to issue Common Stock to the Holder as contemplated in the Note.  Nothing in this Section shall affect in any way the Purchaser’s obligations and agreement to comply with all applicable securities laws upon resale of the Securities.  If the Purchaser provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by the Purchaser of any of the Securities in accordance with clause (1)(B) of Section 4a of this Agreement is not required under the 1933 Act, the Company shall (except as provided in clause (2) of Section 4a of this Agreement) permit the transfer or reissue of the Shares represented by one or more certificates for Common Stock without legend (or where applicable, by electronic registration) in such name and in such denominations as specified by the Purchaser.



 





 


11


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  
















b.           The Company will authorize the Transfer Agent to give information relating to the Company directly to the Holder or the Holder’s representatives upon the request of the Holder or any such representative, to the extent such information relates to (i) the status of the shares of Common Stock issued or claimed to be issued to the Holder in connection with a Notice of Conversion in accordance with the terms of the Note, or (ii) the aggregate number of outstanding shares of Common Stock of all shareholders (as a group, and not individually) as of a current or other specified date.  At the request of the Holder, the Company will provide the Holder with a copy of the authorization so given to the Transfer Agent.


 







6.           CLOSING DATES.







a.           The First Closing Date and, if the Second Advance Amount is funded, the Second Closing Date, as applicable, shall occur after each of the conditions contemplated by Sections 7 and 8 hereof shall have either been satisfied or been waived by the party in whose favor such conditions run.







b.           The First Closing Date and, if the Second Advance Amount is funded, the Second Closing Date shall occur at the offices of the Purchaser or by electronic communications and shall take place no later than 3:00 p.m. Eastern time on such day or such other time as is mutually agreed upon by the Company and the Purchaser.







7.           CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.


 







The Purchaser understands that the Company’s obligation to sell the Note to the Purchaser pursuant to this Agreement is conditioned upon:







a.           The execution and delivery of this Agreement by the Purchaser on the First Closing Date;







b.           Delivery by the Purchaser to the Company of good funds in the amount of the First Advance Amount and, if funded, the Second Advance Amount, as applicable, in accordance with the Note and this Agreement;







c.           The accuracy on the First Closing Date and the Second Closing Date of the representations and warranties of the Purchaser contained in this Agreement, each as if made on such date, and the performance by the Purchaser on or before such date of all covenants and agreements of the Purchaser required to be performed on or before such date; and







d.           There shall not be in effect any law, rule or regulation prohibiting or restricting the Transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained.







8.           CONDITIONS TO THE PURCHASER’S OBLIGATION TO FUND THE FIRST ADVANCE


AMOUNT AND THE SECOND ADVANCE AMOUNT.



 





 


12


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  








 




The Company understands that the Purchaser’s obligation to fund the First Advance Amount and, if funded, the Second Advance Amount and its acceptance of any Shares of the Company’s Common Stock that may be issued in connection with the Note is conditioned upon:







a.           The execution by the Company and the delivery to the Purchaser of this Agreement and the Note on the First Closing Date;







b.           The execution by the Company and the delivery to the Transfer Agent of an instruction letter in the form of Annex II hereto.







c.           The accuracy in all material respects on the First Closing Date and the Second Closing Date of the representations and warranties of the Company contained in this Agreement, each as if made on such date, and the performance by the Company on or before such date of all covenants and agreements of the Company required to be performed on or before such date;







d.           The Company must be current with all required Exchange Act filings.







e.           There shall not be in effect any law, rule or regulation prohibiting or restricting the Transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained; and







f.           From and after the date hereof to and including both the First Closing Date and the Second Closing Date, each of the following conditions will remain in effect: (i) the trading of the Common Stock shall not have been suspended by the SEC or on the Principal Trading Market; (ii) trading in securities generally on the Principal Trading Market shall not have been suspended or limited; (iii) no minimum prices shall been established for securities traded on the Principal Trading Market; and (iv) there shall not have been any Material Adverse Effect in regards to the Company.


 


9.           ADDITIONAL INVESTMENT RIGHT.







The Company agrees that for a period of 12 months from the First Closing Date, if the Company undertakes to raise funds through the issuance of any form or type of convertible promissory note or convertible debenture, the Purchaser shall have the right (but not the obligation) to require the Company to issue to the Purchaser one or more additional convertible promissory notes or debentures, the aggregate principal amount of which will not exceed $500,000, on terms and conditions as near as possible to the terms and conditions included in the Transaction Documents.







10.           INDEMNIFICATION AND REIMBURSEMENT.







a.           (i)  The Company agrees to indemnify and hold harmless the Purchaser and its officers, directors, employees, and agents, and each Purchaser Control Person from and against any losses, claims, damages, liabilities or expenses incurred (collectively, “Damages”), joint or several, and any action in respect thereof to which the Purchaser, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and any such Purchaser Control Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Company contained in this Agreement, as such Damages are incurred, except to the extent such Damages result primarily from Purchaser’s failure to perform any covenant or agreement contained in this Agreement or the Purchaser’s or its officer’s, director’s, employee’s, agent’s or Purchaser Control Person’s negligence, recklessness or bad faith in performing its obligations under this Agreement.



 





 


13


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  






 









(ii)  The Company hereby agrees that, if the Purchaser, other than by reason of its negligence, illegal or willful misconduct (in each case, as determined by a non- appealable judgment to such effect), (x) becomes involved in any capacity in any action, proceeding or investigation brought by any shareholder of the Company, in connection with or as a result of the consummation of the Transactions contemplated by this Agreement or the other Transaction Documents, or if the Purchaser is impleaded in any such action, proceeding or investigation by any Person, or (y) becomes involved in any capacity in any action, proceeding or investigation brought by the SEC, any self-regulatory organization or other body having jurisdiction, against or involving the Company or in connection with or as a result of the consummation of the Transactions contemplated by this Agreement or the other Transaction Documents, or (z) is impleaded in any such action, proceeding or investigation by any Person, then in any such case, the Company shall indemnify, defend and hold harmless the Purchaser from and against and in respect of all losses, claims, liabilities, damages or expenses resulting from, imposed upon or incurred by the Purchaser, directly or indirectly, and reimburse such Purchaser for its reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith, as such expenses are incurred.  The indemnification and reimbursement obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any Affiliates of the Purchaser who are actually named in such action, proceeding or investigation, and partners, directors, agents, employees and Purchaser Control Persons (if any), as the case may be, of the Purchaser and any such Affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the Purchaser, any such Affiliate and any such Person.  The Company also agrees that neither the Purchaser nor any such Affiliate, partner, director, agent, employee or Purchaser Control Person shall have any liability to the Company or any Person asserting claims on behalf of or in right of the Company in connection with or as a result of the consummation of this Agreement or the other Transaction Documents, except as may be expressly and specifically provided in or contemplated by this Agreement.


 


b.           All claims for indemnification by any Indemnified Party (as defined below) under this Section shall be asserted and resolved as follows:


 


(i)           In the event any claim or demand in respect of which any Person claiming indemnification under any provision of this Section (an “Indemnified Party”) might seek indemnity under paragraph a of this Section is asserted against or sought to be collected from such Indemnified Party by a Person other than a party hereto or an Affiliate thereof (a “Third Party Claim”), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party’s claim for indemnification that is being asserted under any provision of this Section against any Person (the “Indemnifying Party”), together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a “Claim Notice”) with reasonable promptness to the Indemnifying Party.  If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party’s ability to defend has been prejudiced by such failure of the Indemnified Party.  The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending 30 calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the “Dispute Period”) whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under this Section and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim. The following provisions shall also apply.



 





 


14


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  













(x)          If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this paragraph b of this Section, then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full pursuant to paragraph a of  this Section).  The Indemnifying Party shall have full control of  such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party’s delivery of the notice referred to in the first sentence of this subparagraph (x), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest.  The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this subparagraph (x), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation.  Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under paragraph a of this Section with respect to such Third Party Claim.


 


(y)          If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to paragraph b of this Section, or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party (with the consent of the Indemnifying Party, which consent will not be unreasonably withheld).  The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting.  Notwithstanding the foregoing provisions of this subparagraph (y), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in subparagraph (z) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party’s defense pursuant to this subparagraph (y) or of the Indemnifying Party’s participation therein at the Indemnified Party’s request, and the Indemnified Party shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation.  The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this subparagraph (y), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.



 





 


15


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  






 









(z)          If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under paragraph a of this Section or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the Indemnifying Party under paragraph a of this Section and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand.  If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within 30 days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.


 


(ii)           In the event any Indemnified Party should have a claim under paragraph a of this Section against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under paragraph a of this Section specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an “Indemnity Notice”) with reasonable promptness to the Indemnifying Party.  The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party’s rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby.  If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under paragraph a of this Section and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand.  If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that it the dispute is not resolved within 30 days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.



 





 


16


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  













c.           The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party may be subject to.


 


11.           JURY TRIAL WAIVER.  The Company and the Purchaser hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other in respect of any matter arising out or in connection with the Transaction Documents.







12.           REGISTRATION RIGHTS







a.           Should the Company determine to file with the SEC a registration statement under the 1933 Act (other than on Form S-4 or Form S-8 or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other bona fide employee benefit plans or equity securities to be issued solely in connection with a bona fide firm underwritten public offering of the Company’s securities) relating to an offering which includes common stock underlying securities issued by the Company that are exercisable or convertible into shares of the Company’s common stock, which offering is for its own account or the account of others, the Company shall send to the Purchaser written notice of such determination and, if within 20 days after such notice, the Purchaser shall so request in writing, the Company shall include in such registration statement all or any part of the Registrable Securities such Purchaser requests to be registered.  Notwithstanding any other provision of this Agreement, the Company may withdraw any registration statement referred to in this Section 12a without incurring any liability to the Purchaser.  Furthermore, notwithstanding any other provision of this Agreement, the Purchaser shall have no registration rights with respect to any registration statement of the Company that was initially filed prior to the First Closing Date.







b.           In the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to the registration statement filed by the Company as constituting an offering of securities by, or on behalf of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Purchaser and others participating therein without being named therein as an “underwriter,” then the Company shall reduce the number of shares to be included in such Registration Statement by the Purchaser and all others until such time as the Staff and the SEC shall permit the registration statement to become effective.  In making such reduction, the Company shall reduce the number of securities to be included by the Purchaser and all others on a pro rata basis (based upon the number of securities to be included in the registration statement).







c.           The Company shall:







(i)           use commercially reasonable efforts to cause the registration statement to be declared effective by the SEC as soon as possible, but in any event not later than the fifth trading day following the date on which the Company is notified by the SEC that the registration statement will not be reviewed or is no longer subject to further review and comment;







(ii)           use commercially reasonable efforts to prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith (the “Prospectus”) as may be necessary to keep the registration statement continuously current, effective and free from any material misstatement or omission to state a material fact for a period not exceeding, with respect to the Registrable Securities, from the date it is first declared effective until the earlier of (A) the date on which the Purchaser may sell all Registrable Securities then held by the Purchaser pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (B) the public sale of all of the Registrable Securities;



 





 


17


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  
















(iii)           furnish to the Purchaser with respect to the Registrable Securities such number of copies of the registration statement, Prospectuses and preliminary Prospectuses in conformity with the requirements of the 1933 Act and such other documents as the Purchaser may reasonably request in writing, in order to facilitate the public sale or other disposition of all or any of the Registrable Securities by the Purchaser; provided, however, that the obligation of the Company to deliver copies of Prospectuses or preliminary Prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the 1933 Act and of such other securities or blue sky laws as may be applicable in connection with any use of such Prospectuses or Preliminary Prospectuses;







(iv)           file documents required of the Company for blue sky clearance in states specified in writing by the Purchaser and use its commercially reasonable efforts to maintain such blue sky qualifications during the period the Company is required to maintain the effectiveness of the Registration Statement pursuant to Section 12c.(ii); provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;







(v)           bear all expenses in connection with the preparation and filing of the registration statement (other than any underwriting discounts or commissions, brokers’ fees and similar selling expenses, and any other fees or expenses incurred by the Purchaser, including attorneys’ fees); and







(vi)           advise the Purchaser in writing promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the SEC delaying or suspending the effectiveness of the registration statement or of the initiation or threat of any proceeding for that purpose; and it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.







13.           GOVERNING LAW:  MISCELLANEOUS.







a.           (i)   This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.  Each of the parties consents to the exclusive jurisdiction of the federal courts in New York County in the State of New York as in connection with any dispute arising under this Agreement or any of the other Transaction Documents and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper.  To the extent determined by such court, the Company shall reimburse the Purchaser for any reasonable legal fees and disbursements incurred by the Purchaser in enforcement of or protection of any of its rights under any of the Transaction Documents.  Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.








 





 


18


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  








 




(ii)           The Company and the Purchaser acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and the other Transaction Documents and to enforce specifically the terms and provisions hereof and thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.


 







b.           Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.







c.           This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.







d.           All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.







e.           A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.


f.           This Agreement may be signed in one or more counterparts, each of which shall be deemed an original.







g.           The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.







h.           If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.







i.           This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof.







j.           This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.







14.           NOTICES.  Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of


 


(a)           the date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission,


 


(b)           the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or


 


(c)           the third Trading Day after mailing by domestic or international express courier, with delivery costs and fees prepaid,








 





 


19


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  


















in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by 10 days’ advance written notice similarly given to each of the other parties hereto):


 







COMPANY:                      Boston Therapeutics, Inc.


1750 Elm Street, Suite 103


Manchester, New Hampshire 03104


Attn: David Platt


Telephone No.: (603) 935-9799


Facsimile No.: (603) 685-4784


 







PURCHASER:                     JDF CAPITAL INC.


                                                96 Village Center Drive


                                               Freehold, New Jersey 07728


                                               Attn: John Fierro


                                               Telephone No.: (718) 290-4058


                                               Facsimile No.: (800) 319-6863







15.           SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  The Company’s and the Purchaser’s representations and warranties herein shall survive the execution and delivery of this Agreement and the delivery of the Note and the payment of the Purchase Amount, and shall inure to the benefit of the Purchaser and the Company and their respective successors and assigns.


 


[Balance of page intentionally left blank]







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



 





 


20


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  






 


 




IN WITNESS WHEREOF, this Agreement has been duly executed by the Purchaser and the Company as of the date set first above written.












JDF CAPITAL INC.


 







 







 







By:    ________________________                                        


Name:  John Fierro


Title:            President


 

















BOSTON THERAPEUTICS, INC.






















By:     ___________________________________                                                            


(Signature of Authorized Person)


 







David Platt, Chief Executive Officer


Printed Name and Title







 


 



 





 


21


Purchaser Initial: ______


 


Company Initial: ____   _   


 







  











  






 


 


ANNEX I






 


FORM OF NOTE







 







 


 




  





  











  






 


 


ANNEX II


 


 


INSTRUCTION LETTER TO TRANSFER AGENT