EXHIBIT 10.1

 

CITIUS PHARMACEUTICALS, INC.

FUTURE ADVANCE CONVERTIBLE PROMISSORY NOTE

 

FOR AMOUNTS ADVANCED AS SHOWN
ON EXHIBIT A ATTACHED HERETO

May 10, 2017

 

THIS FUTURE ADVANCE CONVERTIBLE PROMISSORY NOTE (the “Note”) is executed
this 10th day of May 2017, by Citius Pharmaceuticals, Inc., a Nevada corporation
(the “Company”) and Leonard Mazur (the “Holder”).

 

1. Instrument. The Company, for value received, hereby promises to pay to the
order of Holder in lawful money of the United States of America at the address
for notices to Holder set forth below, the principal amount of as may be or has
been advanced from time to time by Holder as shown on Exhibit A attached hereto,
with interest from the date of each advance on the unpaid balance until paid.
The “Note Balance” means at any particular time the then outstanding principal
balance on this Note.

 

2. Advances. Advances under this Note shall be subject to the following terms
and conditions:

 

(a) draws may be made upon request by the Company with at least two (2) days
advance notice to Holder;

 

(b) in its sole and absolute discretion, Holder may refuse to make any advance
hereunder;

 

(c) all advances, at the time made, shall be noted on Exhibit A of this Note and
shall be signed by an authorized officer of the Company; and

 

(d) no advances will be made if the outstanding principal and accrued interest
hereunder exceeds One Million Five Hundred Thousand Dollars ($1,500,000) at the
time a request is made by the Company.

 

3. Interest. The Company shall pay interest (calculated on the basis of a
360-day year of twelve 30-day months) on such principal amount or the portion
thereof from time to time outstanding hereunder at a rate of “Prime Rate”, as
published in the Wall Street Journal on the last day of each month plus 1%; but
in no event shall the interest exceed the maximum rate of nonusurious interest
permitted by law to be paid by the Holder (and to the extent permitted by law,
interest on any overdue principal or interest thereon).

 

4. Maturity. For purposes of this Note, “Maturity Date” shall mean the earlier
to occur of December 31, 2017 or an optional conversion pursuant to Section 5.
Notwithstanding the foregoing, the Company shall have the right to prepay at any
time, and from time to time, without premium or penalty all or any portion of
the principal due hereunder.

 

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5. Optional Conversion.

 

5.1 If not sooner repaid or converted as set forth below, the Note Balance, as
of the close of business on the day immediately preceding the date of the
closing of the issuance and sale of the Company’s common stock pursuant to a
registered public offering (a “Qualified Financing”), may be converted, at the
option of the Holder, into that number of shares of the Company’s common stock
as are issued in such Qualified Financing equal to the number of shares of
capital stock calculated by dividing (i) the Note Balance by (ii) an amount
equal to seventy-five percent (75%) of the price per share or other unit of
common stock sold in such Qualified Financing, and otherwise on the same terms
as the security issued in the Qualified Financing.

 

5.2 Effect of Conversion. Upon conversion of this Note pursuant to this Section
5, the applicable amount of the Note Balance shall be converted upon receipt by
the Company of written notice from the Holder; provided, however, that the
Company shall not be obligated to issue certificates evidencing the shares of
the securities issuable upon such conversion unless such Note is either
delivered to the Company or its transfer agent, or the Holder notifies the
Company or its transfer agent that such Note has been lost, stolen or destroyed
and executes an agreement satisfactory to the Company to indemnify it from any
loss incurred by it in connection with such Note. The Company shall, as soon as
practicable after such delivery, or such agreement and indemnification, issue
and deliver at such office to Holder, a certificate or certificates for the
securities to which the Holder shall be entitled and a check payable to the
Holder in the amount of any cash amounts payable as the result of a conversion
into fractional shares of the securities, as determined by the Board of
Directors of the Company. The person or persons entitled to receive securities
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such securities on such date. Any conversion effected in
accordance with this Section 5 shall be binding upon the Holder hereof.

 

6. Attorneys’ Fees. If the indebtedness represented by this Note or any part
thereof is collected in bankruptcy, receivership or other judicial proceedings
or if this Note is placed in the hands of attorneys for collection after
default, the Company agrees to pay reasonable attorneys’ fees and costs incurred
by Holder.

 

7. Notices. Any notice required or permitted under this Note shall be given in
writing and shall be deemed effectively given upon personal delivery or three
business days following deposit with the United States Post Office, by
registered or certified mail, return receipt requested, postage prepaid, or sent
by confirmed delivery via overnight courier (e.g., FedEx., etc.) addressed to
the address of the receiving party set forth on the signature page hereto, or at
such other address as the recipient shall have furnished in writing in
accordance with this Section 7.

 

8. Defaults and Remedies.

 

8.1 Events of Default. An “Event of Default” shall occur hereunder:

 

(i) if the Company shall default in the payment of the principal of this Note,
when and as the same shall become due and payable and after written demand for
payment thereof has been made and such amount remains unpaid for 10 business
days after the date of such notice; or

 

(ii) if the Company shall default in the payment of any return on capital due
under this Note, when and as the same shall become due and payable and after
written demand for payment thereof has been made and such amount remains unpaid
for 10 business days after the date of such notice; or

 

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(iii) if the Company shall default in the due observance or performance of any
covenant, representation, warranty, condition or agreement on the part of the
Company to be observed or performed pursuant to the terms hereof, and such
default is not remedied or waived within the time periods permitted therein, or
if no cure period is provided therein, within 30 calendar days after the Company
receives written notice of such default; or

 

(iv) if the Company shall default in the payment of any debt or liability of the
Company other than this Note, or default in the performance of any contract or
agreement to which the Company is a party, when and as the same shall become due
and payable, if a payment, or when the performance related to any contract or
agreement shall become due; or

 

(v) if the Company shall commence any proceeding in bankruptcy or for
dissolution, liquidation, winding-up, composition or other relief under state or
federal bankruptcy laws; or

 

(vi) if such proceedings are commenced against the Company, or a receiver or
trustee is appointed for the Company or a substantial part of its property, and
such proceeding or appointment is not dismissed or discharged within 120
calendar days after its commencement.

 

8.2 Acceleration. If an Event of Default occurs under Section 8.1(iv),(v) or
(vi), then the outstanding principal of and accrued and unpaid return on capital
on this Note shall automatically become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are expressly
waived. If any other Event of Default occurs and is continuing, the Holder, by
written notice to the Company, may declare the outstanding principal of and
accrued and unpaid return on capital on this Note to be due and payable
immediately. Upon any such declaration of acceleration, such principal and
return on capital shall become immediately due and payable and the Holder shall
be entitled to exercise all of its rights and remedies hereunder whether at law
or in equity. The failure of the Holder to declare the Note due and payable
shall not be a waiver of their right to do so, and the Holder shall retain the
right to declare this Note due and payable unless the Holder shall execute a
written waiver.

 

9. No Dilution or Impairment. The Company will not, by amendment of its Articles
of Incorporation or Bylaws, each as amended to date, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Note against dilution or other impairment.

 

10. Waiver of Notice of Presentment. The Company hereby waives presentment,
demand for performance, notice of non‑performance, protest, notice of protest
and notice of dishonor. No delay on the part of Holder in exercising any right
hereunder shall operate as a waiver of such right or any other right.

 

11. Non-Waiver. The failure of the Holder to enforce or exercise any right or
remedy provided in this Note or at law or in equity upon any default or breach
shall not be construed as waiving the rights to enforce or exercise such or any
other right or remedy at any later date. No exercise of the rights and powers
granted in or held pursuant to this Note by the Holder, and no delays or
omissions in the exercise of such rights and powers shall be held to exhaust the
same or be construed as a waiver thereof, and every such right and power may be
exercised at any time and from time to time.

 

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12. Governing Law. This Note is being delivered in and shall be construed in
accordance with the laws of the State of New Jersey, without regard to its
conflicts of laws or choice of law provisions.

 

13. No Stockholder Rights. Unless and until Holder exercises his rights
hereunder to convert this Note to shares of Common Stock, nothing contained in
this Note shall be construed as conferring upon the Holder or any other person
the right to vote or to consent or to receive notice as a stockholder of the
Company.

 

14. Amendment. Any term of this Note may be amended, and any provision hereof
waived, with the written consent of the Company and the Holder.

 

15. Most Favored Nation. If, while this Note is outstanding, the Company issues
other indebtedness of the Company convertible, exchangeable or exercisable into
capital stock of the Company with terms that are different than the terms herein
(“Other Debt”), then the Company will provide the Holder with written notice
thereof, together with a copy off all other documentation relating to such Other
Debt. The Company will provide such notice to Holder promptly following the
issuance of such Other Debt. In the event Holder determines that the terms of
the Other Debt are preferable to the terms of this Note, Holder will notify the
Company in writing within five (5) days following Holder’s receipt of such
notice from the Company. Promptly after receipt of such written notice from
Holder, but in any event within thirty (30) days, the Company will amend and
restate this Note to be substantially identical to a promissory note evidencing
the Other Debt, excluding the Note Balance and accrued interest.

 

[Signature page follows.]

 

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This CONVERTIBLE PROMISSORY NOTE is deemed ISSUED as of the date first above
written.

 

 

  CITIUS PHARMACEUTICALS, INC.           By: /s/ Myron Holubiak

 

 

Myron Holubiak, CEO  

 

 

 

ACKNOWLEDGED AND AGREED:

 

HOLDER

     

By:

/s/ Leonard Mazur

Name:

Leonard Mazur   Address: 32 Arden Road, Mountain Lakes, NJ 07046  

 

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EXHIBIT A

 

SCHEDULE OF ADVANCES

 

Date of Advance

 

Amount Advanced

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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