Exhibit 10.24

AMENDED AND RESTATED

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

$3,750,000

Keego Harbor, Michigan

 

April 15, 2013

FOR VALUE RECEIVED, HEALTH ENHANCEMENT PRODUCTS, INC., a Nevada corporation
(“Borrower”), whose address is  7 West Square Lake Road, Bloomfield Hills, MI
49302 , promises to pay to the order of HEP INVESTMENTS LLC, a Michigan limited
liability company (“Lender”), whose address is 2804 Orchard Lake Road, Suite
205, Keego Harbor, Michigan 48320, or at such other place as Lender may
designate in writing, in lawful money of the United States of America, the
principal sum of up to Three Million Seven Hundred Fifty Thousand Dollars
($3,750,000.00), or such lesser sum as shall have been advanced by Lender to
Borrower under the loan agreement hereinafter described, together with interest
as provided herein, in accordance with the terms of this Amended and Restated
Senior Secured Convertible Promissory Note (this “Note”).  

In accordance with the terms of that certain Loan Agreement, dated December 1,
2011, by and between Lender and Borrower (as amended, the “Loan Agreement”),
Lender has loaned Borrower Two Million Dollars ($2,000,000.00) and may loan
additional amounts to Borrower.  All advances made hereunder shall be charged to
a loan account in Borrower's name on Lender's books, and Lender shall debit to
such account the amount of each advance made to, and credit to such account the
amount of each repayment made by Borrower.  From time to time but not less than
quarterly, Lender shall furnish Borrower a statement of Borrower's loan account,
which statement shall be deemed to be correct, accepted by, and binding upon
Borrower, unless Lender receives a written statement of exceptions from Borrower
within ten (10) days after such statement has been furnished. Terms used herein
and not otherwise defined herein shall have the meanings assigned to such terms
in the Loan Agreement.   

1.

Payment.  The unpaid principal balance of this Note shall bear interest computed
upon the basis of a year of 360 days for the actual number of days elapsed in a
month at a rate of eleven percent (11%) per annum (the “Effective Rate”). Upon
the occurrence and during the continuance of an Event of Default (as defined
below), the unpaid principal balance of this Note shall bear interest, computed
upon the basis of a year of 360 days for the actual number of days elapsed in a
month, at a rate equal to the lesser of five percent (5%) over the Effective
Rate or the highest rate allowed by applicable law.  The indebtedness
represented by this Note shall be paid to Lender in an installment of interest
only on the first anniversary of the date of this Note, and, if not sooner
converted in accordance with the terms of this Note, the entire unpaid principal
balance of this Note, together with all accrued and unpaid interest, shall be
immediately due and payable in full with respect to each tranche of $250,000 (a
“Tranche”) listed in Exhibit 1 within 24 months of the full funding of such
Tranche(with respect to each Tranche, a  “Due Date”).  

2.

Pre-payment Premium.  Borrower may prepay the principal balance of this Note, in
whole or in part, plus all accrued interest then outstanding upon sixty (60)
days prior written notice to Lender; provided, however, there shall be a
pre-payment premium of five (5%) percent of each amount prepaid at any time
during the term of this Note.

3.

Use of Proceeds.  The funds advanced pursuant to this Note shall be used by
Borrower for working capital purposes in accordance with the operating budget of
Borrower attached to the Loan Agreement as Exhibit B.

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4.

Conversion Right and Funding Provisions.  

(a)

At Lender’s option, at any time prior to the repayment in full of this Note,
increments of Two Hundred Fifty Thousand Dollars ($250,000.00) of the
outstanding indebtedness of this Note (including all accrued and unpaid
interest) may be converted into shares of common stock of Borrower (“Shares”) at
the lesser of $0.12 per share or a 25% discount to the then current ten day
average trading price of Shares on the Over the Counter Securities Market (the
“Conversion Price”); provided, however, that the Conversion Price and funding
shall be as follows:

(i)

The remainder of the $2,000,000.00 (the original Loan amount prior to this
Amended and Restated Note) must be funded within seven (7) days of the execution
of this Note

(ii)

The $1,000,000.00 tranche (tranche between the first $2,000,000.00 and the
$3,000,000.00), must be funded within thirty (30) days of the execution of this
Note,

(iii)

The final $750,000.00 tranche (tranche between the first $3,000,000.00 and the
$3,750,000.00), (plus accrued and unpaid interest) of this $3.75 million Note,
must be funded within ninety (90) days of the execution of this Note at a
Conversion Price of $0.22 per share.

(iv)

To the extent that the remainder of the $2,000,000.00 (the original Loan amount
prior to this Amended and Restated Note) is not funded within seven (7) days of
the execution of this Note is not funded (as detailed in 4.(a)(i)) then the
difference in the funding amount shall be added to the amount detailed in
4.(a)(iii) at a Conversion Price of $.22 per share.

(v)

 To the extent that the $1,000,000.00 tranche (as detailed in 4.(a)(ii)) is not
funded within twenty (20) days of the execution of this Note, the difference in
the funding amount shall be added to the amount detailed in 4.(a)(iii) at a
Conversion Price of $.22 per share

(vi)

The Conversion Price of the funding levels detailed in 4.(a)(iii), taking into
consideration 4.(a)(iv) and 4.(a)(v), shall be the lesser of $0.22 per share or
a 25% discount to the then-current ten day average trading price of Shares on
the Over the Counter Securities Market.  No fractional Shares shall be issued
upon any conversion of this Note, and if the conversion of this Note results in
a fractional Share, in lieu of such fractional Share, Borrower shall pay cash
equal to such fraction multiplied by the Conversion Price.

(vii)

The Conversion Price of the funding levels detailed in 4.(a)(iii), taking into
consideration 4.(a)(iv) and 4.(a)(v), after the ninety (90) day period as
detailed in 4.(a)(iii), shall be the 25% discount to the then current ten day
average trading price of Shares on the Over the Counter Securities Market.  No
fractional Shares shall be issued upon any conversion of this Note, and if the
conversion of this Note results in a fractional Share, in lieu of such
fractional Share, Borrower shall pay cash equal to such fraction multiplied by
the Conversion Price.

(b)

Upon conversion of this Note as provided herein, (i) the portion of this Note so
converted shall be deemed cancelled and shall be converted into the Shares as
specified above; (ii) Lender, by acceptance of this Note, agrees to deliver the
executed original of this Note to Borrower within ten (10) days of the
conversion of the entire outstanding indebtedness of this Note and to execute
all governing documents of Borrower and such other agreements as are necessary
to document the issuance of the Shares and to comply with applicable securities
laws; and (iii) as soon as practicable after Borrower’s receipt of the documents
referenced above, Borrower shall issue and deliver to Lender stock certificates
evidencing the Shares.  

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5.

Default.  Each of the following constitutes an “Event of Default” under this
Note:

(a)

Borrower’s failure to pay the outstanding indebtedness of this Note within ten
(10) days of the date on which such payment is due hereunder, whether at
maturity or otherwise;

(b)

Borrower’s breach of or failure to perform or observe any covenant, condition or
agreement contained in this Note, the Loan Agreement or the Security Agreement
(defined below), which breach or failure continues unremedied for a period of
thirty (30) calendar days after receipt by Borrower of written notice specifying
the nature of the default. Notwithstanding the foregoing, Borrower shall not be
in default under this subsection (b) with respect to any non-monetary breach
that can be cured by the performance of affirmative acts if Borrower promptly
commences the performance of said affirmative acts and diligently prosecutes the
same to completion within a period of forty-five (45) calendar days after
receipt by Borrower of written notice specifying the nature of the default;

(c)

Borrower files a voluntary petition in bankruptcy;

(d)

Borrower makes a general assignment for the benefit of its creditors or
Borrower’s creditors file against Borrower any involuntary petition under any
bankruptcy or insolvency law that is not dismissed within ninety (90) days after
it is filed; or

(e)

Any court appoints a receiver to take possession of substantially all of
Borrower’s assets and such receivership is not terminated within ninety (90)
days after its appointment.

Upon the occurrence and during the continuance of an Event of Default, at the
election of Lender, the entire unpaid principal balance of this Note, together
with all accrued and unpaid interest, shall be immediately due and payable in
full.

6.

Security.  This Note is secured by all of the assets of Borrower pursuant to
that certain Security Agreement, dated as of December 1, 2011 (the “Security
Agreement”).

7.

Waivers.  Borrower and all endorsees, sureties and guarantors hereof hereby
jointly and severally waive presentment for payment, demand, notice of
non-payment, notice of protest or protest of this Note, and Lender diligence in
collection or bringing suit, and do hereby consent to any and all extensions of
time, renewals, waivers or modifications as may be granted by Lender with
respect to payment or any other provisions of this Note.  The liability of
Borrower under this Note shall be absolute and unconditional, without regard to
the liability of any other party.  

8.

Usury. Notwithstanding anything herein to the contrary, in no event shall
Borrower be required to pay a rate of interest in excess of the Maximum Rate.
 The term “Maximum Rate” shall mean the maximum non-usurious rate of interest
that Lender is allowed to contract for, charge, take, reserve or receive under
the applicable laws of any applicable state or of the United States of America
(whichever from time to time permits the highest rate for the use, forbearance
or detention of money) after taking into account, to the extent required by
applicable law, any and all relevant payments or charges hereunder, or under any
other document or instrument executed and delivered in connection therewith and
the indebtedness evidenced hereby.  

In the event Lender ever receives, as interest, any amount in excess of the
Maximum Rate, such amount as would be excessive interest shall be deemed a
partial prepayment of principal, and, if the principal hereof is paid in full,
any remaining excess shall be returned to Borrower.  In determining whether or
not the interest paid or payable, under any specified contingency, exceeds the
Maximum Rate, Borrower and Lender shall, to the maximum extent permitted by law,
(a) characterize any non-principal payment as an expense, fee, or premium rather
than as interest; (b) exclude voluntary prepayments and the effects thereof; and
(c) amortize, prorate, allocate and spread the total amount of interest through
the entire contemplated term of such indebtedness until payment in full of the
principal (including the period of any extension or renewal thereof) so that the
interest on account of such indebtedness shall not exceed the Maximum Rate.

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9.

Miscellaneous.

(a)

All modifications, consents, amendments or waivers of any provision of any this
Note shall be effective only if in writing and signed by Lender and then shall
be effective only in the specific instance and for the limited purpose for which
given.  

(b)

All communications provided in this Note shall be personally delivered or
mailed, postage prepaid, by registered or certified mail, return receipt
requested, to the addresses set forth at the beginning of this Note or such
other addresses as Borrower or Lender may indicate by written notice.

(c)

The headings used in this Note are for convenience of reference only and shall
not in any way affect the meaning or interpretation of this Note.

(d)

This Note shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns; provided, however, that neither
party may, without the prior written consent of the other party, assign any
rights, powers, duties or obligations under this Note.  

(e)

This Note shall be construed and enforced in accordance with the laws of the
State of Michigan. All actions arising out of or relating to this Note shall be
heard and determined exclusively by any state or federal court with jurisdiction
in the Eastern District of the State of Michigan. Consistent with the preceding
sentence, the parties hereto hereby irrevocably waive, and agree not to assert
by way of motion, defense, or otherwise, in any such action, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that the action
is brought in an inconvenient forum, that the venue of the action is improper,
or that this Note or the transactions contemplated by this Note may not be
enforced in or by any of the above-named courts.

(f)

This Note is intended to amend and restate, and is not intended to be in
substitution for or a novation of, that certain Senior Secured Convertible
Promissory Note, dated December 1, 2011, executed and delivered by Borrower in
favor of Lender in the original principal amount of $2,000,000.00 (the “Original
Note”).  This Note shall continue to be secured by the security instruments and
UCC statements executed and filed with the Original Note, and otherwise as set
forth in the loan documentation executed in connection with the Original Note.

[Signature on the following page]

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IN WITNESS WHEREOF, the undersigned has duly executed this Amended and Restated
Senior Secured Convertible Promissory Note as of the day and year first written
above.

BORROWER:

HEALTH ENHANCEMENT PRODUCTS, INC.

By: /s/ Andrew Dahl                                              

Print Name: Andrew Dahl                                     

Its: President                                                          

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EXHIBIT 1

Date Invested

Tranche #

Amount

24 Month Due Date

December 2, 2011

1

$  250,000.00

December 2, 2013

 

 

 

 

December 2, 2011

2

250,000.00

December 2, 2013

 

 

 

 

December 2, 2011

 

100,000.00

 

March 12, 2012

 

100,000.00

 

April 4, 2012

 

50,000.00

 

 

3

250,000.00

April 4, 2014

 

 

 

 

April 4, 2012

 

25,000.00

 

May 3, 2012

 

70,000.00

 

May 8, 2012

 

155,000.00

 

 

4

250,000.00

May 8, 2014

 

 

 

 

May 8, 2012

 

25,000.00

 

August 13, 2012

 

25,000.00

 

August 20, 2012

 

7,000.00

 

August 29, 2012

 

9,000.00

 

October 15, 2012

 

20,592.00

 

October 30, 2012

 

100,000.00

 

March 18, 2013

 

63,408.00

 

 

5

250,000.00

March 18, 2015

 

 

 

 

March 18, 2013

6

250,000.00

March 18, 2015

 

 

 

 

March 18, 2013

 

146,592.00

 

March 25, 2013

 

88,000.00

 

April 5, 2013

 

6,187.50

 

April 10, 2013

 

9,220.50

 

 

7

250,000.00

April 10, 2015

 

 

 

 

April 10, 2013

 

42,779.50

 

 

 

 

 

Total Invested as of April 12, 2013:

 

$1,792,779.50

 

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FIRST AMENDMENT TO LOAN AGREEMENT

This First Amendment to Loan Agreement (“Amendment”) is made and entered into as
of April 15, 2013 by and between HEP INVESTMENTS LLC, a Michigan limited
liability company (“Lender”), and HEALTH ENHANCEMENT PRODUCTS, INC., a Nevada
corporation (“Borrower”).

R E C I T A L S

A.  

Borrower and Lender entered into a Loan Agreement, dated as of December 1, 2011
(as the same may be amended, modified or restated from time to time, the “Loan
Agreement”) whereby Lender made a loan to Borrower evidenced by a Senior Secured
Convertible Promissory Note, dated as of December 1, 2011, made by Borrower in
favor of Lender (the “Note”).  

  

B.  

Borrower and Lender desire to make certain changes to the Loan Agreement upon
the terms and conditions hereinafter set forth, including the consent of the
Guarantors to such amendment endorsed hereon.

NOW THEREFORE, in consideration of the covenants and agreements of the parties,
Borrower and Lender, with the consent and agreement of the Guarantors, agree as
follows:

1.  

Capitalized Terms.  Capitalized terms used but not otherwise defined in this
Amendment shall have the meanings given to such terms in the Loan Agreement.

2.  

Continued Effect.  Except as specifically modified or amended by the terms of
this Amendment, all other terms and provisions of the Loan Agreement, the Note
and all other Loan Documents (as defined in the Loan Agreement) shall continue
in full force and effect.  By execution of this Amendment, Borrower and each
undersigned Guarantor (collectively, the “Guarantors”) hereby reaffirms, assumes
and binds itself to all of the obligations, duties, rights, covenants, terms and
conditions that are contained in the Loan Agreement, the Note and the other Loan
Documents.  The execution, delivery and performance by Borrower and each
Guarantor of this Amendment are within such party’s powers and have been duly
authorized by all necessary corporate action.

3.

Amendments. Sections 1 and 2 of the Loan Agreement are hereby deleted in their
entirety and replaced with the following:

“1.

Loan.  Lender agrees to make a loan to Borrower in the amount of up to
$3,750,000 (the “Loan”) in accordance with the terms of that certain Amended and
Restated Senior Secured Convertible Promissory Note attached hereto as Exhibit A
(the “Note”).  

2.

Funding Timing.  Lender hereby agrees to fund the proceeds of the Note as
follows:

(a)

Lender will fund the remainder of the $2,000,000.00 (the original Loan amount
prior to this Amendment) of the Loan within seven (7) days of the execution and
delivery of this Amendment and the Note.  After giving effect to such additional
advance, Lender will have funded $2 million under the Loan.

(b)

In the event that Borrower requires additional financing, Borrower shall so
notify Lender and advise Lender of the intended use of proceeds of such
financing.  Lender shall have the right, but not the obligation, to advance such
amount under the Loan (but in no event more than an additional $1.75 million in
the aggregate) within twenty (20) days after request therefor.  If Lender
refuses to fund such amount or fails to do so within such 20-day period,
Borrower shall have the right to seek such financing from a third-party on terms
and conditions no more favorable to the lender than those set forth in the Loan
and Lender will be deemed to have waived the covenants set forth in Section 9(c)
and (d) of the Loan Agreement with respect to such financing.”

  

4.

Confirmation of Warrant.  Borrower acknowledges and agrees that: (a) after
giving effect to the transactions contemplated by this Amendment, Lender will
have advanced $2 million under the Note; (b) that certain Warrant to Purchase
Common Shares, dated December 1, 2011, made by Borrower in favor of Lender (the
“Warrant”) required that Lender advance $2 million under the Note in order for
the Warrant to be exercisable; and (c) the Warrant is immediately exercisable by
Lender and shall remain exercisable until the Expiration Date (as defined in the
Warrant).

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5.  

Guarantors Consent.  The Guarantors hereby consent to this Amendment and
acknowledge and agree that their Guaranties remain in full force and effect in
accordance with their respective terms and that the Guarantors have no defenses,
setoff of counterclaims with respect thereto.

    

6.  

Counterparts.  This Amendment may be executed in one or more counterparts, each
of which shall constitute an original, and all of which together shall
constitute one and the same instrument.  Copies (whether photostatic, facsimile
or otherwise) of this Amendment may be made and relied upon to the same extent
as an original.

[Signatures on next page]

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IN WITNESS WHEREOF, Lender, Borrower and Guarantors have executed this First
Amendment to Loan Agreement as of the date first written above.

BORROWER:

HEALTH ENHANCEMENT PRODUCTS, INC., a Nevada corporation

By: /s/ Andrew Dahl                                  

Name: Andrew Dahl                                 

Title: President                                          

LENDER:

HEP INVESTMENTS LLC, a Michigan limited liability company

By: /s/ Laith Yaldoo                                   

Laith Yaldoo, Manager

ACKNOWLEDGED AND AGREED BY THE UNDERSIGNED GUARANTORS:

HEALTH ENHANCEMENT CORPORATION, a Nevada corporation

By: /s/ Philip M. Rice II                      

Name: Philip M. Rice II                      

Title: Chief Financial Officer              

HEPI PHARMACEUTICALS, INC., a Delaware corporation

By: /s/ Andrew Dahl                           

Name: Andrew Dahl                           

Title: President                                    

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