Exhibit 10.09
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (the “Agreement”) is entered into by and between
Lynnette Dillen (“you” or “your”) and Innovus Pharmaceuticals, Inc., a Nevada
corporation (the “Company”).  This Agreement has an effective date of January
21, 2015 (the “Effective Date”).
 
In consideration of the mutual covenants and promises made in this Agreement,
you and the Company agree as follows:
 
1.           Position and Responsibilities.
 
You started with the Company as Executive Vice President and Chief Executive
Officer on February 6, 2014 (“Start Date”).  At that time, you entered into an
employment agreement, dated that date (the “Prior Agreement”).  As of the
Effective Date, the Employment Agreement shall be null and void and shall be
replaced by this Agreement.
 
As of the Effective Date, you will continue to be employed by the Company as the
Company’s CFO.  As CFO, you shall report directly to the Company’s Chief
Executive Officer (the “CEO”). Your office will be located at the Company’s
headquarters at 9171 Towne Centre Drive, Suite 440, San Diego, CA 92122.
 
Nothing herein shall preclude you from (i) serving, with the prior written
consent of the Company as a member of the board of directors or advisory boards
(or their equivalents in the case of a non-corporate entity) of non-competing
businesses and charitable organizations, (ii) engaging in charitable activities
and community affairs, and (iii) managing your personal investments and
affairs.  The Company hereby acknowledges your ownership of (or relationship
with) the entities identified in Exhibit A and consents to such ownership or
relationship for so long as such entities continue to be a non-competing
business with the Company.
 
2.           Term. Your employment with the Company is at-will and either you or
the Company may terminate your employment at any time and for any reason, with
or without Cause/Good Reason (as each are defined below), in each case subject
to the terms and provisions of this Agreement.  Unless terminated earlier, this
Agreement will extend through the fifth anniversary of the Start Date
(“Expiration Date”); provided, however, on such fourth anniversary of the Start
Date (and on each subsequent anniversary thereafter) the Expiration Date will
automatically be extended by an additional year unless either party has provided
written notice to the other party at least 90 days before the applicable
anniversary that such party will not agree to so extend the Agreement.
 
3.           Salary, Bonus, Equity Incentives, Benefits and Indemnification. For
avoidance of doubt, the Company’s Board of Directors (the “Board”) may delegate
its authority and responsibilities under this Section 3 to a committee of
members of the Board.
 
(a)           Base Salary.  Commencing on the Effective Date, you will be paid
an annual base salary of $200,000.00 (the “Base Salary”) for your services as
CFO, payable in the time and manner that the Company customarily pays its
employees provided that you will receive pro-rata payments of Base Salary at
least once each calendar month (subject to the going concern exception described
below).  Six months after the Start Date, your Base Salary will be increased to
$250,000 and it will continue at this rate until changed by the Board, however
will be not less than 5% COLA. Your Base Salary shall also be reviewed
periodically by the Board and may be increased (but not decreased) by the Board.
 
(b)           Bonuses.  You will be eligible to participate in any bonus
programs as set forth by the Board.  In addition, during each Company fiscal
year you will be eligible to earn an annual cash bonus based on performance
objectives reasonably established by the Board and after considering input from
you and which will be communicated in writing to you within the first 75 days of
the applicable fiscal year.  Your annual target cash bonus amount will be equal
to 30% of your then annual Base Salary rate (with such rate determined as of the
day after the applicable anniversary of the Start Date for such fiscal
year).  The actual amount of the annual bonus paid to you, if any, shall be
determined by the Board in its sole discretion and may be more or less than the
target amount.  If your employment ends during any given fiscal year for any
reason and whether or not you execute the Mutual Release described in Section
6(d), you will be paid a pro-rata amount of the target bonus determined by the
percentage of time you were employed during the fiscal year.  If your employment
ends for any reason after the completion of a fiscal year but before the payment
of the annual bonus and whether or not you execute the Mutual Release described
in Section 6(d), you shall remain eligible to receive the full bonus amount
based on achievement of the applicable performance objectives. The performance
objectives will be objective in nature and determined on an annual basis in
writing.  In all cases, any such bonus shall be paid to you during the first two
and a half months of the fiscal year that follows the applicable performance
fiscal year.  Upon the Company’s successful listing on NASDAQ, you will be paid
a one-time $100,000 bonus and, subject to approval by the Board, the Company
will grant you a one-time restricted stock unit grant covering 100,000 shares of
the Company’s common stock. In addition, you will receive a one-time $100,000
bonus upon the completion of $4 million in financing.
 
 
 

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(c)           Compensatory Equity.  On February 4, 2014, the Company granted you
Restricted Stock Units (“RSU”) covering 600,000 shares of the Company’s common
stock (the “RSU Grant”).  200,000 shares of the RSU Grant became vested six (6)
months after grant.  Subject to your continued Service, the remaining 400,000
shares have partially vested, and shall continue to vest, in eight pro-rata
equal installments on a quarterly basis over the following two years with the
first such installment occurring on November 6, 2014. The vested portion of the
RSU Grants shall be settled with a like number of Company common shares on the
earlier of (i) your Termination Date, (ii) a Change in Control of the Company
(as defined below), or (iii) the seventh anniversary of the Start Date or (iv)
your election to receive 25% of the vested RSU’s on your two year anniversary,
25% of the vested RSU’s on your three year anniversary, 25% of the vested RSU’s
on your four year anniversary, remaining RSU’s on your fifth year
anniversary.    The Company warrants and represents that it has filed with the
Securities and Exchange Commission an effective registration statement covering
the RSU Grant and its underlying shares.
 
For purposes of this Agreement, the RSU Grant and any other Company compensatory
equity grants issued to you shall be collectively referred to herein as
“Compensatory Equity”.  To the extent you receive any stock options, stock
appreciation rights or similar derivative securities, you shall be entitled to
exercise the vested portion of such awards according to the applicable plan in
place In connection with any award of Compensatory Equity (including the RSU
Grant), you shall be permitted at your election to satisfy the applicable
exercise price and/or tax withholding obligations via share withholding with the
shares that are surrendered to the Company valued at their then fair market
value as of the applicable vesting or settlement date(s).
 
You shall be eligible for additional grants of Compensatory Equity in order to
ensure that you have competitive equity compensation.  All grants of
Compensatory Equity shall be issued pursuant to: (i) a Board-approved employee
stock incentive plan (the “Plan”) and (ii) an effective registration statement
filed (and maintained) by the Company with the Securities and Exchange
Commission in accordance with the Securities Act of 1933, as amended.
 
Additionally, all outstanding unvested Compensatory Equity awards shall fully
vest and become exercisable (to the extent exercise is required) upon a Change
in Control occurring during your Service (as defined below).   You may also
elect to establish a trading plan for Company securities in accordance with Rule
10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).  For purposes of this Agreement and your Compensatory Equity, “Service”
shall mean service by you as an employee, director and/or consultant of the
Company (or any subsidiary or parent or affiliated entity of the Company).
 
(d)           Benefits.  Commencing with the Effective Date, you will be
entitled to participate, on no less favorable terms provided to any other
Company officer, in all Company employee benefit plans and programs at the time
or thereafter made available to Company senior executive officers including,
without limitation, any savings or profit sharing plans, deferred compensation
plans, stock option incentive plans, group life insurance, accidental death and
dismemberment insurance, hospitalization, surgical, major medical and dental
coverage, vacation, sick leave (including salary continuation arrangements),
long-term disability, holidays and other employee benefit programs sponsored by
the Company.  As soon as practicable, , the Company will also provide you with
life insurance coverage for the benefit of your heirs with a face amount of not
less than two times your Base Salary that is currently in effect.
 
Notwithstanding the foregoing, commencing with the Start Date and thereafter on
each anniversary of the Effective Date, you shall incrementally accrue 30 days
of paid vacation time.  Such accrued vacation time will not be subject to any
maximum accrual limits and any unused portion shall be paid to you in cash on
your last day of employment with the Company applying your then annual Base
Salary rate.  Moreover, when you travel on Company business, you shall be
entitled to fly in first class on international flights and on business class
for domestic flights.  Additionally, the Company shall pay for you to maintain
club memberships with American Airlines, United Airlines and Delta and other
major airline clubs commencing on the Effective Date and continuing through the
second anniversary of your Termination Date.
 
 
 

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(e)           Indemnification.  In the event that you are made a party or
threatened to be made a party to any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (a “Proceeding”), by reason of your
employment with, or serving as an officer or director of, the Company, the
Company shall indemnify and hold you harmless, and defend you to the fullest
extent authorized by the laws of the state in which the Company is incorporated,
as the same exist and may hereafter be amended, against any and all claims,
demands, suits, judgments, assessments, and settlements (collectively the
“Claims”), including all expenses incurred or suffered by you in connection
therewith and such indemnification shall continue as to you even after you are
no longer providing Service, and shall inure to the benefit of your heirs,
executors, and administrators. The Company shall have the right to undertake,
with counsel or other representatives of its own choosing, the defense or
settlement of any Claims. In the event that the Company shall fail to notify
you, within ten days of its receipt of your written notice, that the Company has
elected to undertake such defense or settlement, or if at any time the Company
shall otherwise fail to diligently defend or pursue settlement of such Claims,
then you shall have the right to undertake the defense, compromise, or
settlement of such Claims, in which event the Company shall hold you harmless
from any legal fees incurred by you for your counsel. Neither you nor the
Company shall settle any Claims without the prior written consent of the other,
which consent shall not be unreasonably withheld or delayed. Regardless of which
party is conducting the defense of any such Claims, the other party, with
counsel or other representatives of its own choosing and at its sole cost and
expense, shall have the right to consult with the party conducting the defense
of such Claims and its counsel or other representatives concerning such Claims
and you and the respective counsel or other representatives shall cooperate with
respect to such Claims. The party conducting the defense of any such Claims and
its counsel shall in any case keep the other party and its counsel (if any)
fully informed as to the status of such Claims and any matters relating thereto.
You and the Company shall provide to the other such records, books, documents,
and other materials as shall reasonably be necessary for each to conduct or
evaluate the defense of any Claims, and will generally cooperate with respect to
any matters relating thereto. This Section 3(d) shall remain in effect after
this Agreement is terminated, regardless of the reasons for such termination.
The indemnification provided to you pursuant to this Section 3(d) shall not
supersede or reduce any indemnification provided to you under any separate
agreement, or the By-Laws of the Company; in this regard, it is intended that
this Agreement shall expand and extend your rights to receive
indemnification.  The Company shall maintain a directors and officers liability
insurance policy (including coverage through the sixth anniversary of cessation
of all of your services to the Company) covering you in your capacity as an
officer and director of the Company and any Company affiliate.
 
4.           Expense Reimbursement. You will be promptly reimbursed for all
reasonable business expenses (including, but without limitation, travel
expenses) upon the properly completed submission of requisite forms and receipts
to the Company.
 
5.           Change in Control
 
(a)            Definition.  For purposes of this Agreement, “Change in Control”
shall mean a “change in control event” as defined under Treasury Regulation
Section 1.409A-3(i)(5)) as in effect on the Effective Date or any change in
control definition provided by the Plan.
 
(a)           Code Section 280G.  In the event that it is determined that any
payment or distribution of any type to or for your benefit made by the Company,
by any of its affiliates, by any person who acquires ownership or effective
control or ownership of a substantial portion of the Company’s assets (within
the meaning of Section 280G of the Code or by any affiliate of such person,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (the “Total Payments”), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest or
penalties, are collectively referred to as the “Excise Tax”), then such payments
or distributions or benefits shall be payable either:
 
(i)           in full; or
 
(ii)           as to the maximum value of such lesser amount which would result
in no portion of such payments or distributions or benefits being subject to the
Excise Tax.
 
You shall receive the greater, on an after-tax basis, of (i) or (ii) above.
 
 
 

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If the Total Payments must be reduced as provided in the previous paragraph, the
reduction shall occur in the following order: (1) reduction of cash payments for
which the full amount is treated as a "parachute payment" (as defined under Code
Section 280G and its regulations); (2) cancellation of accelerated vesting (or,
if necessary, payment) of cash awards for which the full amount in not treated
as a parachute payment; (3) reduction of any continued employee benefits and (4)
cancellation of any accelerated vesting of equity awards.  In selecting the
equity awards (if any) for which vesting will be reduced under clause (4) of the
preceding sentence, awards shall be selected in a manner that maximizes the
after-tax aggregate amount of reduced Total Payments provided to you, provided
that if (and only if) necessary in order to avoid the imposition of an
additional tax under Section 409A of the Code, awards instead shall be selected
in the reverse order of the date of grant.  For the avoidance of doubt, for
purposes of measuring an equity compensation award's value to you when
performing the determinations under the preceding paragraph, such award's value
shall equal the then aggregate fair market value of the vested shares underlying
the award less any aggregate exercise price less applicable taxes.  Also, if two
or more equity awards are granted on the same date, each award will be reduced
on a pro-rata basis.
 
All mathematical determinations and all determinations of whether any of the
Total Payments are parachute payments that are required to be made under this
Section 5(b), shall be made by a nationally recognized independent audit firm
selected by the Company (the “Accountants”), who shall provide their
determination, together with detailed supporting calculations regarding the
amount of any relevant matters, both to the Company and to you.  Unless you
consent in writing, the Accountants may not be an audit firm that is then
providing services in any capacity to the person or entity that is acquiring the
Company.  Such determinations shall be made by the Accountants using reasonable
good faith interpretations of the Code.  As expressly permitted by Treasury
Regulations section 1.280G-1 Q/A-32, with respect to performing any present
value calculations that are required in connection with this Section 5(b), you
and the Company each affirmatively elect to utilize the Applicable Federal Rates
("AFR") that are in effect as of the Effective Date and the Accountants shall
therefore use such AFRs in their determinations and calculations.  If the
Accountants determine that no excise tax under Section 4999 of the Code is
payable with respect to a Total Payment, it shall furnish the Company and you
with an opinion reasonably acceptable to you that no such excise tax under
Section 4999 of the Code will be imposed with respect to such Total
Payments.  The Company shall pay the fees and costs of the Accountants which are
incurred in connection with this Section 5(b).
 
6.           Consequences of Termination of Employment. For purposes of this
Agreement, your last day of employment with the Company is the “Termination
Date”.  Upon termination of your employment for any reason, you shall receive
payment or benefits from the Company covering the following: (i) all unpaid
salary and unpaid vacation accrued through the Termination Date, (ii) any
payments/benefits to which you are entitled under the express terms of any
applicable Company employee benefit plan, (iii) any unreimbursed valid business
expenses for which you have submitted properly documented reimbursement requests
and (iv) your then outstanding Compensatory Equity as governed by their
applicable (collectively, (i) through (v) are the “Accrued Pay”).
 
After termination of your employment for any reason and whether or not the
Mutual Release described in Section 6(d) is executed by you, the Company shall
pay the entire premiums for your Company group medical, dental and vision
insurance coverage for you and your dependents for 6 months after the
Termination Date with coverage no less favorable than as of immediately before
your Termination Date (the “Continuing Health Coverage”).  If it becomes
unreasonable for the Company to continue to pay for this Continuing Health
Coverage for you (or imposes adverse tax consequences on you) because of changes
in applicable law then the Company shall make the premium payments to you on an
after-tax basis.
 
You will also be paid all other post-employment payments and benefits as
provided in this Agreement including without limitation any unpaid bonus amounts
described in Section 3(b), which will be paid over six months.  Within no later
than 90 days after the later of your Termination Date or the date that you are
not considered to be a ten percent shareholder under Section 16 of the Exchange
Act, you shall no longer be considered a Company affiliate and the Company shall
use commercially reasonable efforts to facilitate the timely removal of any
restrictive legends on any shares of Company common stock then held by you.
 
 
 

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(a)           For Cause.  For purposes of this Agreement, your employment may be
terminated by the Company for “Cause” as a result of the occurrence of one or
more of the following:
 
(i)           Your commission of fraud or other unlawful conduct in your
performance of duties for the Company;
 
(ii)           Your conviction of, or a plea of “guilty” or “no contest" to, a
felony under the laws of the United States or any state thereof, if such felony
either is work-related or materially impairs your ability to perform services
for the Company; or
 
(iii)           Your willful material breach of this Agreement that causes
material harm to the Company For purposes of the foregoing, no act, or failure
to act, on your part shall be considered “willful” unless done, or omitted to be
done, by you other than in good faith, and without reasonable belief that your
action or omission was in furtherance of the interests of the Company.  The
foregoing shall is an exclusive list of the acts or omissions that shall be
considered “Cause” for the termination of your employment by the Company.  The
Board shall provide you with 30 days advance written notice specifically
detailing the basis (and factual circumstances) for the termination of your
employment for Cause.  During the 30 day period after you have received such
notice, you shall have an opportunity to cure or remedy such alleged Cause
events and to present your case to the full Board (with the assistance of your
own counsel).  A termination shall be deemed for Cause only if, following such
30 day period, at least 75% of the group consisting of the members of the Board
vote affirmatively that your termination is for Cause.  You shall continue to
receive all of the compensation and benefits provided by this Agreement during
the 30 day cure/remedy period.
 
(b)           Without Cause or for Good Reason or Death or Disability.  The
Company may terminate your employment without Cause or for Disability at any
time with thirty days advance written notice or you may resign your employment
for Good Reason (as defined below in Section 6(b)(iii)) or your employment may
also be terminated due to your death or by you due to your Disability (each of
the foregoing, a “Qualifying Termination”).  Any notice of termination by the
Company that is not covered by Section 6(a) must specify whether it was a
termination without Cause or due to your Disability.  Without your prior written
consent, once the Company has provided you with such a notice of termination
under this Section 6(b) then it may not rescind such notice nor may it modify
the terms of your severance benefits described in this Agreement. For purposes
of this Agreement, “Disability” is defined to occur when you are unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months.  If your employment is terminated due to a
Qualifying Termination, then you will receive the following benefits subject to
your timely compliance with Section 6(d) and further provided that no payments
for such Qualifying Termination shall be made until on or after the date of a
“separation from service” within the meaning of Code Section 409A:
 
(i)           The Company shall provide you with a cash payment equal to nine
(9) months of your then annual Base Salary and your annual target bonus amount
(the “Severance Payment”). The Severance Payment shall be paid to you in nine
(9) equal installments after the effective date of the Mutual Release described
in Section 6(d).
 
(ii)           The Company shall provide the Continuing Health Coverage (or
coverage no less favorable to you than the Continuing Health Coverage) for 6
months after the Termination Date.  If it becomes unreasonable for the Company
to continue to pay for this Continuing Health Coverage for you (or it imposes
adverse tax consequences on you) because of changes in applicable law then the
Company shall make the premium payments to you on an after-tax
basis.  Additionally, all outstanding unvested Compensatory Equity awards shall
fully vest and become exercisable (to the extent exercise is required) as of
your Termination Date.
 
 
 

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(iii)           For purposes of this Agreement, you may resign your employment
from the Company for “Good Reason” within one year after the date that any one
of the following events described in subparts (1) through (5) (any one of which
will constitute “Good Reason”) has first occurred without your written
consent.  Your resignation for Good Reason will only be effective if the Company
has not cured or remedied the Good Reason event within 30 days after its receipt
of your written notice of the Good Reason event.  Such notice of your intention
to resign for Good Reason must be provided to the Company within 90 days of the
initial existence of a Good Reason event.  This “Good Reason” definition and
process is intended to comply with the safe harbor provided under Treasury
Regulation Section 1.409A-1(n)(2)(ii) and shall be interpreted accordingly.
 
 
(1)
You have incurred a material diminution in your responsibilities, duties or
authority  or you are no longer the CFO of the Company (or if the Company has a
parent entity, then you must be its CFO of the Company’s ultimate parent
entity));

 
 
(2)
Your workplace has been relocated to a new location that is more than 100 miles
away from your work location that is specified in Section 1;

 
 
(3)
Any  reduction of your Base Salary or target bonus amount;

 
 
(4)
The Company provides notice of its intent to not extend the Expiration Date of
this Agreement as provided in Section 2; or

 
 
(5)
The Company has materially breached any provision of this Agreement including
without limitation the failure to timely pay you the compensation or benefits
owed to you under this Agreement.

 
You shall not be required to mitigate the amount of any payment or benefit
contemplated by this Section 6(b), nor shall any such payment or benefit be
reduced by any earnings or benefits that you may receive from any other
source.  If any cash payments that are owed to you under this Agreement are not
paid to you within fifteen days of their due date, then the Company will
additionally owe you interest on such late payments, payable on a monthly basis
while any overdue amount is still outstanding, with interest accruing at the
then prevailing statutory rate, compounded daily.
 
(c)           Voluntary Termination.  In the event you voluntarily terminate
your employment with the Company without Good Reason and not due to Disability,
you will not be entitled to the Severance Payment but will receive your Accrued
Pay plus the other post-termination payments that are not predicated on a
Qualifying Termination.  You agree to provide the Company with at least 30 days
advance written notice of your intention to resign without Good Reason.
 
(d)           Mutual Release of Claims.  Subject to the next sentence, as a
condition to receiving (and continuing to receive) the payments and benefits
provided in Section 6(b), you must within not later than forty-five (45) days
after your Termination Date, execute (and not revoke) and deliver to the Company
a Mutual Release Of All Claims And Covenant Not To Sue agreement (the “Mutual
Release”) in the form attached as Exhibit B hereto.  However, this requirement
for you to provide an executed Mutual Release shall not be applicable if your
employment was terminated due to your death or Disability.  The Company shall
have the obligation to prepare and execute said Mutual Release and tender such
Company-executed Mutual Release to you on or before your Termination Date.
 
7.           Proprietary Information and Inventions Agreement; Confidentiality.
You will be required, as a condition of your employment with the Company, to
execute the Company’s form of proprietary information and inventions agreement
(“Confidentiality Agreement”).
 
 
 

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8.           Assignability; Binding Nature. Commencing on the Effective Date,
this Agreement will be binding upon you and the Company and the parties’
respective successors, heirs, and assigns.  This Agreement may not be assigned
by you except that your rights to compensation and benefits hereunder, subject
to the limitations of this Agreement, may be transferred by will or operation of
law.  No rights or obligations of the Company under this Agreement may be
assigned or transferred except in the event of a merger or consolidation in
which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company provided that the assignee
or transferee is the successor to all or substantially all of the assets of the
Company and expressly in writing assumes the Company’s obligations under this
Agreement.  The Company will require any such purchaser, successor or assignee
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
purchase, succession or assignment had taken place.  Your rights and obligations
under this Agreement shall not be transferable by you by assignment or otherwise
provided, however, that if you die, all amounts then payable to you hereunder
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there be no such designee, to your estate.
 
9.           Governing Law; Arbitration.  This Agreement will be deemed a
contract made under, and for all purposes shall be construed in accordance with,
the laws of California, without regard to its conflicts of law provisions.
 
Except as may be permitted below on this section 9, the parties agree that any
dispute between the parties arising out of or relating to the negotiation,
execution or performance of this Agreement shall be settled by expedited binding
arbitration in accordance with the Employment Arbitration Rules and Mediation
Procedures of the American Arbitration Association.  The location for the
arbitration shall be San Diego, California.  The arbitration award shall be made
within sixty (60) days of the filing of the notice of intention to arbitrate
(demand), and the arbitrator(s) shall agree to comply with this schedule before
accepting appointment.  Any award made by such arbitrator(s) shall be final,
binding and conclusive on the parties for all purposes, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.  The parties each agree that the arbitration provisions of
this Agreement shall provide each party with its exclusive remedy, and each
party expressly waives any right it might have to seek redress in any other
forum, except as otherwise expressly provided in this Agreement.  By electing
arbitration as the means for final settlement of all claims, the parties hereby
waive their respective rights to, and agree not to, sue each other in any action
in a Federal, State or local court with respect to such claims, but may seek to
enforce in court an arbitration award rendered pursuant to this Agreement.  The
parties specifically agree to waive their respective rights to a trial by jury,
and further agree that no demand, request or motion will be made for trial by
jury.  In the event that either party brings an action under Section 9 to
enforce or effect its rights under or relating to this Agreement (a
“Proceeding”), the prevailing party shall be entitled to recover its costs and
expenses, including the costs of mediation, arbitration, litigation, court fees,
and reasonable attorneys’ fees incurred in connection with such an action.  The
Company shall pay for all arbitration-specific costs, including but not
limited  to the arbitration filing fee.
 
If you are determined by the arbitrator to be the prevailing party in any
Proceeding where the Company was found to have materially breached this
Agreement, then, in addition to being awarded your costs and expenses, you shall
be entitled to: (i) interest on any late payments, calculated at a rate equal to
the statutory rate, compounded daily, and (ii) the acceleration of payment for
all remaining payments owed to you, so that the unpaid balance (including
accrued interest) shall be paid in a single lump sum within ten business days of
the issuance of the arbitrator’s award. You may also be awarded any economic
damages arising from the Company’s breach, as may be determined in the
arbitrator in the Proceeding.
 
In addition to the remedies set forth above, the parties hereby agree that they
shall be entitled to enforce their rights under this Agreement
specifically.  All such rights and remedies shall be cumulative and
non-exclusive, and may be exercised singularly or concurrently. The parties
agree that irreparable harm would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached.  Each party agrees that, in the event of any breach or
threatened breach by any other party of any covenant or obligation contained in
this Agreement, the non-breaching party shall be entitled to seek and obtain:
(i) a decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (ii) an injunction restraining
such breach or threatened breach.
 
 
 

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10.           Taxes. All compensation paid  by the Company hereunder to you or
your estate or beneficiaries will be subject to tax withholding pursuant to any
applicable laws or regulations.  This Agreement and its payments are intended to
be exempt from or comply with the requirements of Code Section 409A and the
Company shall use its best efforts to ensure that there are no violations of
Code Section 409A.  If any taxes under Code Section 409A are imposed on you,
then the Company shall within thirty days of the determination that there would
be an imposition of such taxes provide you with a payment that will cover the
costs of any Code Section 409A taxes, excise taxes, penalties and interest along
with any taxes imposed on such payment so that you will on an after-tax basis
(applying the then highest aggregate marginal tax rates) be no worse off than if
no Code Section 409A taxes, excise taxes, penalties or interest had been
imposed.  Notwithstanding any provision in the Agreement to the contrary, if
upon your “separation from service” within the meaning of Code Section 409A, you
are then a “specified employee” (as defined in Code Section 409A), then to the
extent necessary to comply with Code Section 409A and avoid the imposition of
taxes under Code Section 409A, the Company shall defer payment of “nonqualified
deferred compensation” subject to Code Section 409A payable as a result of and
within six (6) months following such “separation from service” under this
Agreement until the earlier of (i) the first business day of the seventh month
following your “separation from service,” or (ii) ten (10) days after the
Company receives notification of your death.   Additionally, the reimbursement
of expenses or in-kind benefits provided pursuant to this Agreement shall be
subject to the following conditions: (1) the expenses eligible for reimbursement
or in-kind benefits in one taxable year shall not affect the expenses eligible
for reimbursement or in-kind benefits in any other taxable year; (2) the
reimbursement of eligible expenses or in-kind benefits shall be made promptly,
subject to the Company’s applicable policies, but in no event later than the end
of the year after the year in which such expense was incurred; and (3) the right
to reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit.  The provisions of this Section 10 shall survive
any termination of this Agreement or your employment.
 
11.           Entire Agreement. Except as otherwise specifically provided in
this Agreement, this Agreement contains all the legally binding understandings
and agreements between you and the Company pertaining to the subject matter of
this Agreement and supersedes all such agreements, whether oral or in writing,
previously entered into between the parties. In the event of any conflict in
terms between this Agreement and any other agreement executed by and between you
and the Company or any Company plan or policy, the terms of this Agreement shall
prevail and govern.
 
12.           No Offset or Mitigation. No severance or other payments or
benefits made to you under this Agreement may be offset by the Company or by any
other party.  You shall have no duty of mitigation with respect to any severance
or other payments or benefits made to you under this Agreement.
 
13.           Notice. Any notice that the Company is required to or may desire
to give you shall be given by personal delivery, recognized overnight courier
service, email, telecopy or registered or certified mail, return receipt
requested, addressed to you at your address of record with the Company, or at
such other place as you may from time to time designate in writing.  Any notice
that you are required or may desire to give to the Company hereunder shall be
given by personal delivery, recognized overnight courier service, email,
telecopy or by registered or certified mail, return receipt requested, addressed
to the Company’s General Counsel at its principal office, or at such other
office as the Company may from time to time designate in writing.  The date of
actual delivery of any notice under this Section 13 shall be deemed to be the
date of delivery thereof.
 
14.           Waiver; Severability. No provision of this Agreement may be
amended or waived unless such amendment or waiver is agreed to by you and the
Company in a writing that specifically references this Section 14.  No waiver by
you or the Company of the breach of any condition or provision of this Agreement
will be deemed a waiver of a similar or dissimilar provision or condition at the
same or any prior or subsequent time.  Except as expressly provided herein to
the contrary, failure or delay on the part of either party hereto to enforce any
right, power, or privilege hereunder will not be deemed to constitute a waiver
thereof.  In the event any portion of this Agreement is determined to be invalid
or unenforceable for any reason, the remaining portions shall be unaffected
thereby and will remain in full force and effect to the fullest extent permitted
by law.
 
 
 

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15.           Voluntary Agreement, Nondisparagement. Each party represents that
it has the power and authority to enter into this Agreement.  Each party
acknowledges that it has been advised to review this Agreement with its own
legal counsel and other advisors of its choosing and that prior to entering into
this Agreement, each has had the opportunity to review this Agreement with its
attorney and other advisors and have not asked (or relied upon) the other party
or other party’s counsel to represent it in this matter.  Each party further
represents that each has carefully read and understands the scope and effect of
the provisions of this Agreement and that each is fully aware of the legal and
binding effect of this Agreement.  This Agreement is executed voluntarily by
each party and without any duress or undue influence on the part or behalf of
the other party.  The Company agrees that the Board and its executive officers
will not make (or direct the Company or any of its affiliates, employees or
agents to make) any written or oral communications that could reasonably be
considered to be disparaging of you (or your family members) in any respect
including, but not limited to, your personal performance, abilities or
reputation.
 
 
 

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Please acknowledge your acceptance and understanding of this Agreement by
signing and returning it to the undersigned.  A copy of this signed Agreement
will be sent to you for your records.
 

 
ACKNOWLEDGED AND AGREED:
         
INNOVUS PHARMACEUTICALS, INC.
LYNNETTE DILLEN
 
 
/s/ Bassam Damaj /s/ Lynnette Dillen
BY:       Bassam Damaj, Ph.D.
 
TITLE:  President and CEO
 

 
 

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EXHIBIT A
 

 

 
 

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EXHIBIT B
 
MUTUAL RELEASE OF ALL CLAIMS AND COVENANT NOT TO SUE PURSUANT
 
TO AGREEMENT
 
1.           PARTIES.  The parties to this Agreement and Release are Lynnette
Dillen (“Executive”) and Innovus Pharmaceuticals, Inc., a Nevada corporation,
(the “Company”).
 
2.           RECITALS.  This Release is made with reference to the following
facts:
 
Executive and Company are parties to an Employment Agreement dated February 4,
2014.  That Employment Agreement provides that the Executive must execute a
mutual general release and covenant not to sue within not later than forty-five
(45) days after Executive’s Termination Date (as defined in the Employment
Agreement) in order for Executive to receive the severance payment and benefits
under the Employment Agreement.  This Release is the mutual general release and
covenant not to sue required by the Employment Agreement.
 
3.           EXECUTIVE’S PROMISES.  In consideration for the promises and
payments contained in the Employment Agreement, each party agrees as follows:
 
3.1           Executive hereby covenants not to sue and also waives, releases
and forever discharges Company, its parent company, divisions, subsidiaries,
officers, directors, agents, employees, stockholders, affiliates and successors
from any and all claims, causes of action, damages or costs of any type
Executive may have against Company or its current and former parent company,
divisions, subsidiaries, officers, directors, employees, agents, stockholders,
successors or affiliates (the “Released Parties”), and the Released Parties
similarly covenant not to sue and also waive, release and forever discharge
Executive from any and all claims, causes of action, damages or costs of any
type that the Released Parties may have against Executive, including without
limitation those arising out of or relating to Executive’s employment with
Company, or Executive’s separation of employment.  This waiver and release
includes, but is not limited to, claims, causes of action, damages or costs
arising under or in relation to Company’s employee handbook and personnel
policies, or any oral or written representations or statements made by officers,
directors, employees or agents of Company, or under any state or federal law
regulating wages, hours, compensation or employment, or any claim for breach of
contract or breach of the implied covenant of good faith and fair dealing, or
any claim for stock, stock options, warrants, or phantom stock or equity of any
kind or any claim for wrongful termination, or any discrimination claim on the
basis of race, sex, sexual orientation, gender, age, religion, marital status,
national origin, physical or mental disability, medical condition, or any claim
arising under the federal Age Discrimination in Employment Act, the Equal Pay
Act, the California Family Rights Act, the Pregnancy Discrimination Act, the
Family Medical Leave Act, the California Labor Code, the California Wage Orders,
Title VII of the Civil Rights Act, the Fair Employment and Housing Act, the
California Labor Code Private Attorneys General Act of 2004, the California Wage
Orders, and Business and Professions Code Section 17200, et seq.
 
Notwithstanding the foregoing, with respect to Executive’s release, this Release
does not release (a) claims that cannot be released as a matter of
law,  (b) claims arising after the effective date of this Release including
those under the Employment Agreement, (c) claims to enforce any of Executive’s
rights to post-termination benefits provided by the Employment Agreement, (d)
claims for indemnification or coverage under a directors and officers liability
insurance policy as provided in the Employment Agreement or under any other
contract or under applicable law, (e) claims to enforce any of Executive’s
vested benefits under any employee benefit plan of the Company including without
limitation his Compensatory Equity (as defined in the Employment Agreement), (f)
Executive’s right to file a charge, testify, assist, or cooperate with the EEOC
or to file a claim under the Fair Labor Standards Act, or (g) Executive’s rights
arising solely as a shareholder of the Company.
 
3.2           The waiver and release set forth in paragraph 3.1 applies to
claims of which either party does not currently have knowledge and each party
specifically waives the benefit of the provisions of Section 1542 of the Civil
Code of the State of California which reads as follows:  “A general release does
not extend to claims which the creditor does not know or suspect to exist in his
or her favor at the time of executing the release, which if known by him or her
must have materially affected his or her settlement with the debtor.”
 
 
 

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4.           CONSULTATION, REVIEW, AND REVOCATION.  In accordance with the Age
Discrimination in Employment Act of 1967 (“ADEA”) as amended by the Older
Workers Benefit Protection Act, Executive is advised to consult with an attorney
before signing this Release.  Executive is given a period of 45 days in which to
consider whether to enter into this Release.  Executive does not have to utilize
the entire 45 day period before signing this Release, and may waive this
right.  If Executive does enter into this Release, Executive may revoke the
Release within 7 days after the execution of the Release.  Any revocation must
be in writing and must be received by the Company no later than midnight of the
seventh day after execution by Executive.  The Release is not effective or
enforceable until after this 7-day period has passed without revocation.
 
5.           MISCELLANEOUS.
 
5.1           This Release shall be deemed to have been executed and delivered
within the State of California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by,
the laws of the State of California.
 
5.2           This Release is the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions.  This Release may
be amended only by an agreement in a writing signed by the parties.
 
5.3           This Release is binding upon and shall inure to the benefit of the
parties hereof, their respective agents, employees, representatives, officers,
directors, divisions, subsidiaries, affiliates, parent company, assigns, heirs,
partners, successors in interest and stockholders, including any successor
company of the Company.
 
5.4           Each party agrees that it has read this Release and has had the
opportunity to ask questions, seek counsel and time to consider the terms of the
Release.  Each party has entered into this Release freely and voluntarily.
 
5.5           The parties agree that any dispute or controversy arising from or
related to this Release shall be decided by final and binding arbitration as
provided in the Employment Agreement.
 

 
LYNNETTE DILLEN (“Executive”)
_______________________________
 
Date:___________________________
INNOVUS PHARMACEUTICALS INC. (“Company”)
By:           ___________________________________
Its:           ___________________________________
Date:           ___________________________________