EXHIBIT 10.5

 

Subscription Agreement

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER
RESTRICTIONS ON THE TRANSFERABILITY OF THE SECURITIES DESCRIBED HEREIN.

 

THE PURCHASE OF THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE
CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE
INVESTMENT.

 

This Subscription Agreement (this “Subscription Agreement”) is entered into as
of June 12, 2013, by and among Innovus Pharmaceuticals, Inc., a Nevada
corporation (the “Company”), and the investors on the signature page hereof
(each, an “Investor,” and together, the “Investors”).

 

WHEREAS, the Company is offering up to 416,841 shares of its common stock (the
“Securities”) in a private placement pursuant to the terms of this Subscription
Agreement; and

 

WHEREAS, the Investors understand that the offering is being made without
registration of the Securities under the Securities Act of 1933, as amended (the
“Securities Act”), or any securities law of any state of the United States or of
any other jurisdiction, and is being made only to “accredited investors” (as
defined in Rule 501 of Regulation D under the Securities Act).

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto intending to be legally bound, hereby
agree as follows:

 

1.                   Subscription. Subject to the terms of this Subscription
Agreement, the Company agrees to sell, and the Investors agree to purchase, the
number of Securities set forth in Appendix A hereto for the aggregate purchase
price set forth in Appendix A, which is payable as described in Section 4
hereof. The Investors acknowledges that the Securities will be subject to
restrictions on transfer as set forth in this Subscription Agreement.

 

2.                   Issuance of Securities. The Securities will be issued to
the Investors at the Closing referred to in Section 3 hereof. Notwithstanding
anything in this Subscription Agreement to the contrary, the Company shall have
no obligation to issue any of the Securities to any person who is a resident of
a jurisdiction in which the issuance of Securities to such person would
constitute a violation of the securities, “blue sky” or other similar laws of
such jurisdiction (collectively referred to as the “State Securities Laws”).

 

3.                   The Closing. The closing of the purchase and sale of the
Securities (the “Closing”) shall take place at the offices of the Company on
June 21, 2013, or at such other time and place as the Company may designate by
notice to the Investors.

 

4.                   Payment for Securities. Payment for the Securities shall be
received by the Company from such Investor by cashier’s check, wire transfer of
immediately available funds or other means approved by the Company at or prior
to the Closing, in the amount as set forth in Appendix A hereto. The Company
shall deliver certificates representing the Securities to such Investor at the
Closing bearing an appropriate legend referring to the fact that the Securities
were sold in reliance upon an exemption from registration under the Securities
Act.

 

5.                   Representations and Warranties of the Company. As of the
Closing, the Company represents and warrants that:

 

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(a)                 The Company is duly formed and validly existing under the
laws of Nevada, with full power and authority to conduct its business as it is
currently being conducted and to own its assets; and has secured any other
authorizations, approvals, permits and orders required by law for the conduct by
the Company of its business as it is currently being conducted.

 

(b)                 The Securities have been duly authorized and, when issued,
delivered and paid for in the manner set forth in this Subscription Agreement,
will be validly issued, fully paid and nonassessable.

 

6.                   Representations and Warranties of the Undersigned. Each
Investor hereby represents and warrants to and covenants with the Company that:

 

(a)                 General.

 

(i)                   Such Investor has all requisite authority (and in the case
of an individual, the capacity) to purchase the Securities, enter into this
Subscription Agreement and to perform all the obligations required to be
performed by such Investor hereunder, and such purchase will not contravene any
law, rule or regulation binding on such Investor or any investment guideline or
restriction applicable to such Investor.

 

(ii)                 Such Investor is a resident of the state set forth on the
signature page hereto and is not acquiring the Securities as a nominee or agent
or otherwise for any other person.

 

(iii)                Such Investor will comply with all applicable laws and
regulations in effect in any jurisdiction in which such Investor purchases or
sells Securities and obtain any consent, approval or permission required for
such purchases or sales under the laws and regulations of any jurisdiction to
which such Investor is subject or in which such Investor makes such purchases or
sales, and the Company shall have no responsibility therefor.

 

(b)                 Information Concerning the Company.

 

(i)                   Such Investor understands and accepts that the purchase of
the Securities involves various risks, including the risks outlined in the
Company’s filings with the U.S. Securities and Exchange Commission, and in this
Subscription Agreement. Such Investor represents that it is able to bear any
loss associated with an investment in the Securities.

 

(ii)                 Such Investor confirms that it is not relying on any
communication (written or oral) of the Company or any of its affiliates, as
investment advice or as a recommendation to purchase the Securities. It is
understood that information and explanations related to the terms and conditions
of the Securities provided by the Company or any of its affiliates shall not be
considered investment advice or a recommendation to purchase the Securities, and
that neither the Company nor any of its affiliates is acting or has acted as an
advisor to such Investor in deciding to invest in the Securities. Such Investor
acknowledges that neither the Company nor any of its affiliates has made any
representation regarding the proper characterization of the Securities for
purposes of determining such Investor’s authority to invest in the Securities.

 

(iii)                Such Investor is familiar with the business and financial
condition and operations of the Company. Such Investor has had access to such
information concerning the Company and the Securities as it deems necessary to
enable it to make an informed investment decision concerning the purchase of the
Securities.

 

(iv)               Such Investor understands that, unless such Investor notifies
the Company in writing to the contrary at or before the Closing, each of such
Investor’s representations and warranties contained in this Subscription
Agreement will be deemed to have been reaffirmed and confirmed as of the
Closing, taking into account all information received by such Investor.

 

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(v)                 Such Investor acknowledges that the Company has the right in
its sole and absolute discretion to abandon this private placement at any time
prior to the completion of the offering. This Subscription Agreement shall
thereafter have no force or effect and the Company shall return the previously
paid subscription price of the Securities, without interest thereon, to such
Investor.

 

(vi)               Such Investor understands that no federal or state agency has
passed upon the merits or risks of an investment in the Securities or made any
finding or determination concerning the fairness or advisability of this
investment.

 

(c)                 Non-reliance.

 

(i)                   Such Investor represents that it is not relying on (and
will not at any time rely on) any communication (written or oral) of the
Company, as investment advice or as a recommendation to purchase the Securities.

 

(ii)                 Such Investor confirms that the Company has not (A) given
any guarantee or representation as to the potential success, return, effect or
benefit (either legal, regulatory, tax, financial, accounting or otherwise) an
of investment in the Securities or (B) made any representation to such Investor
regarding the legality of an investment in the Securities under applicable legal
investment or similar laws or regulations. In deciding to purchase the
Securities, such Investor is not relying on the advice or recommendations of the
Company and such Investor has made its own independent decision that the
investment in the Securities is suitable and appropriate for such Investor.

 

(d)                 Status of Undersigned.

 

(i)                   Such Investor has such knowledge, skill and experience in
business, financial and investment matters that such Investor is capable of
evaluating the merits and risks of an investment in the Securities. With the
assistance of such Investor’s own professional advisors, to the extent that such
Investor has deemed appropriate, such Investor has made its own legal, tax,
accounting and financial evaluation of the merits and risks of an investment in
the Securities and the consequences of this Subscription Agreement. Such
Investor has considered the suitability of the Securities as an investment in
light of its own circumstances and financial condition and such Investor is able
to bear the risks associated with an investment in the Securities and its
authority to invest in the Securities.

 

(ii)                 Such Investor is an “accredited investor” as defined in
Rule 501(a) under the Securities Act. Such Investor agrees to furnish any
additional information requested by the Company or any of its affiliates to
assure compliance with applicable U.S. federal and state securities laws in
connection with the purchase and sale of the Securities.

 

(e)                 Restrictions on Transfer or Sale of Securities.

 

(i)                   Such Investor is acquiring the Securities solely for such
Investor’s own beneficial account, for investment purposes, and not with a view
to, or for resale in connection with, any distribution of the Securities. Such
Investor understands that the Securities have not been registered under the
Securities Act or any State Securities Laws by reason of specific exemptions
under the provisions thereof which depend in part upon the investment intent of
such Investor and of the other representations made by such Investor in this
Subscription Agreement. Such Investor understands that the Company is relying
upon the representations and agreements contained in this Subscription Agreement
(and any supplemental information) for the purpose of determining whether this
transaction meets the requirements for such exemptions.

 

(ii)                 Such Investor understands that the Securities are
“restricted securities” under applicable federal securities laws and that the
Securities Act and the rules of the U.S. Securities and Exchange Commission (the
“Commission”) provide in substance that such Investor may dispose of the
Securities only pursuant to an effective registration statement under the
Securities Act or an exemption therefrom, and such Investor understands that the
Company has no obligation or intention to register any of the Securities, or to
take action so as to permit sales pursuant to the Securities Act (including Rule
144 thereunder). Accordingly, such Investor understands that under the
Commission’s rules, such Investor may dispose of the Securities principally only
in “private placements” which are exempt from registration under the Securities
Act, in which event the transferee will acquire “restricted securities” subject
to the same limitations as in the hands of such Investor. Consequently, such
Investor understands that such Investor must bear the economic risks of the
investment in the Securities for an indefinite period of time.

 

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(iii)                Such Investor agrees: (A) that such Investor will not sell,
assign, pledge, give, transfer or otherwise dispose of the Securities or any
interest therein, or make any offer or attempt to do any of the foregoing,
except pursuant to a registration of the Securities under the Securities Act and
all applicable State Securities Laws, or in a transaction which is exempt from
the registration provisions of the Securities Act and all applicable State
Securities Laws; (B) that the certificates representing the Securities will bear
a legend making reference to the foregoing restrictions; and (C) that the
Company and it affiliates shall not be required to give effect to any purported
transfer of such Securities except upon compliance with the foregoing
restrictions.

 

(iv)               Such Investor acknowledges that neither the Company nor any
other person offered to sell the Securities to it by means of any form of
general solicitation or advertising, including but not limited to: (A) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
(B) any seminar or meeting whose attendees were invited by any general
solicitation or general advertising.

 

7.                   Conditions to Obligations of the Investors and the Company.
The obligations of each Investor to purchase and pay for the Securities
specified in Appendix A and of the Company to sell the Securities are subject to
the satisfaction at or prior to the Closing of the following conditions
precedent: the representations and warranties of the Company contained in
Section 5 hereof and of such Investor contained in Section 6 hereof shall be
true and correct as of the Closing in all respects with the same effect as
though such representations and warranties had been made as of the Closing.

 

8.                   Legend. The certificates representing the Securities sold
pursuant to this Subscription Agreement will be imprinted with a legend in
substantially the following form:

 

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER
JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND
SUCH OTHER APPLICABLE LAWS.”

 

9.                   Waiver, Amendment. Neither this Subscription Agreement nor
any provisions hereof shall be modified, changed, discharged or terminated
except by an instrument in writing, signed by the party against whom any waiver,
change, discharge or termination is sought.

 

10.                Assignability. Neither this Subscription Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by either the Company or any Investor without the prior
written consent of the other party.

 

11.                Governing Law. This Subscription Agreement shall be governed
by and construed in accordance with the laws of the State of California.

 

12.                Section and Other Headings. The section and other headings
contained in this Subscription Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Subscription Agreement.

 

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13.                Counterparts. This Subscription Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which together shall be deemed to be one
and the same agreement.

 

14.                Binding Effect. The provisions of this Subscription Agreement
shall be binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.

 

15.                Survival. All representations, warranties and covenants
contained in this Subscription Agreement shall survive the Closing.

 

16.                Notification of Changes. Each Investor hereby covenants and
agrees to notify the Company upon the occurrence of any event prior to the
Closing which would cause any representation, warranty, or covenant of such
Investor contained in this Subscription Agreement to be false or incorrect.

 

17.                Severability. If any term or provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction.

 

IN WITNESS WHEREOF, the parties have executed this Subscription Agreement as of
the date first set forth above.

 

INVESTOR:       By     Name:       State/Country of Domicile or Formation:  
California, USA  

Aggregate Subscription Amount:

  US$92,845.70   Registered name to which the offered shares should be issued:  

 

INVESTOR:       By     Name:       State/Country of Domicile or Formation:  
California, USA   Aggregate Subscription Amount:   US$41,793.94  

Registered name to which the offered shares should be issued:

 

 

  INNOVUS PHARMACEUTICALS, INC.             By /s/ Morgan Brown     Name: Morgan
Brown     Title: Executive Vice President & CFO  

 

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APPENDIX A

 

Consideration To Be Delivered

 

Securities to Be Acquired Aggregate Purchase Price to be Paid     287,448 shares
of common stock $ 92,845.70     129,393 shares of common stock $ 41,793.94    
Purchase Price to be Paid per Share       $ 0.3230 per share  

 

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