EXHIBIT 10.4

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER.

 

INNOVUS PHARMACEUTICALS, INC.

 

AMENDED AND RESTATED

 

8% CONVERTIBLE DEBENTURE

 

$70,000 La Jolla, CA   Dated as of: November 11, 2013

 

The undersigned, Innovus Pharmaceuticals, Inc., a Nevada corporation ("Issuer"),
hereby promises to pay Henry Esber, Ph.D. ("Debenture Holder") or his assigns,
at the address of 38 Angell Brook Drive, West Boylston, MA 01583, on the
Maturity Date (as hereinafter defined), Seventy Thousand Dollars ($70,000),
unless this Amended and Restated 8% Convertible Debenture ("Debenture") is
earlier converted in accordance with Section 1.2 or Section 1.3, and interest
shall accrue hereon from the date hereof and be payable as provided herein,
unless earlier converted in accordance with Section 1.2 or Section 1.3 hereof or
earlier repaid in accordance with Section 1.4 hereof. This Amended and Restated
8% Convertible Debenture replaces the 8% Convertible Debenture, dated January
15, 2013 between the Issuer and Debenture Holder.

 

1.          Terms of the Debenture.

 

1.1 Interest; Interest Rate; Repayment.

 

(a) This Debenture shall bear interest at the rate of eight (8%) percent (the
“Interest Rate”) per annum based on a 365-day year. Interest shall be payable on
the Maturity Date.

 

(b) The principal outstanding hereunder shall be either (a) if a PIPE Financing
(as hereinafter defined) occurs before July 1, 2016, automatically converted
into securities of the Issuer at the price of such PIPE Financing on the date of
closing of the PIPE Financing, subject to any other rights described in Section
1.2 or (b) if the PIPE financing does not occur by July 1, 2016, then
automatically converted into the common stock (“Common Stock”) of the Issuer at
eighty percent (80%) of the closing price of the Issuer’s common stock on the
date of signing of this Amended and Restate 8% Convertible Debenture, subject to
any other rights described in Section 1.3 (such earlier date being the “Maturity
Date”). “PIPE Financing” shall mean the private placement of equity, equity
equivalent, convertible debt or debt financing in which Issuer receives gross
proceeds, in one or more transactions, of at least Four Million Dollars
($4,000,000).

 

(c) The principal amount and interest thereon shall not be prepaid in whole or
in part by the Issuer.

 

(d) All monetary payments to be made by Issuer hereunder shall be made in lawful
money of the United States by check or wire transfer of immediately available
funds.

 

(e) If all or a portion of the principal amount of this Debenture or any
interest payable thereon shall not be repaid when due, whether on the Maturity
Date, by acceleration or otherwise, such overdue amounts shall bear interest at
a rate per annum that is five percent (5%) above the Interest Rate (i.e., 13%)
from the date of such non-payment until such amount is paid in full (as well
after as before judgment).

 

1.2 Automatic Conversion Upon PIPE Financing. Upon the PIPE Financing, the
Convertible Amount, as defined below, shall be converted automatically into
securities to be issued by Issuer in the PIPE Financing at the same terms as the
investors in the PIPE Financing (the “PIPE Securities”). The “Convertible
Amount” means the principal amount of the Debenture plus eight percent (8%) per
annum simple interest, based on a 365-day year, with such interest accruing for
the period commencing on January 15, 2012 and ending on the date of conversion.
No fractional PIPE Securities shall be issued upon conversion. In lieu of any
fractional PIPE Securities to which the Debenture Holder would otherwise be
entitled, Issuer shall pay cash in an amount equal to such amount of Debenture
not converted.

 

1.3 Automatic Conversion on July 1, 2016. If the PIPE Financing described in
Section 1.2 above does not occur prior to July 1, 2016, then on that date, the
Convertible Amount shall be converted automatically into Common Stock of the
Issuer at the Conversion Price, as defined below. The “Conversion Price” means
an amount equal to the closing price of the Issuer’s Common Stock trading on
either the OTC Bulletin Board or on any other exchange on the date of signing of
this Amended and Restated 8% Convertible Debenture, multiplied by 80%. No
fractional Common Stock shall be issued upon conversion. In lieu of any
fractional Common Stock to which the Debenture Holder would otherwise be
entitled, Issuer shall pay cash in an amount equal to such amount of Debenture
not converted.

 

 

 

  

1.4           Conversion Procedures. Upon conversion of this Debenture as
provided in Section 1.2 and Section 1.3 hereof, the Debenture Holder shall
surrender this Debenture, appropriately endorsed, to Issuer at Issuer’s
principal office, accompanied by written notice to Issuer setting forth the name
or names (with address(es)) in which the PIPE Securities or the Common Stock of
the Issuer, as applicable, issuable upon such conversion shall be issued and
registered on the books of Issuer. This Debenture shall be marked cancelled on
the books of Issuer as of the date of the PIPE Financing or July 1, 2016,
whichever comes first, whether or not surrendered.

 

1.5           Other Assurances. Issuer shall not, by amendment of its Articles
of Incorporation or By-laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by Issuer, but shall at all
times in good faith assist in the carrying out of all the provisions of this
Debenture and in taking of all such actions as may be necessary or appropriate
in order to protect the rights of the Debenture Holder herein against
impairment.

 

2.          Events of Default. If any of the following events (each, an “Event
of Default”) shall occur and be continuing:

 

(i)          Issuer shall fail to pay any amount payable under this Debenture,
including but limited to installments of interest and/or principal, within three
(3) business days after such payment becomes due (at the Maturity Date, an
Interest Payment Date or other date) in accordance with the terms hereof;

 

(ii)         Issuer shall fail to pay when due (following the expiration of
applicable notice and cure periods), whether upon acceleration, prepayment
obligation or otherwise, any indebtedness for money due, individually or in the
aggregate, involving an amount in excess of $50,000;

 

(iii)        Any representation, warranty, covenant or agreement made by Issuer
that this Debenture was incorrect in any material respect on or as of the date
made;

 

(iv)        Issuer shall default, in any material respect, in the observance or
performance of any other agreement contained in this Debenture or any other
agreement or instrument contemplated by this Debenture, and such default shall
continue unremedied for a period of fifteen (15) days after written notice to
Issuer of such default;

 

(v)         (a) Issuer shall commence any case, proceeding or other action (x)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (y) seeking appointment or a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or Issuer shall make a general
assignment for the benefit of its creditors; or (b) there shall be commenced
against Issuer any case, proceeding or other action of a nature referred to in
clause (a) above that (A) results in the entry of an order for relief of any
such adjudication of appointment or (B) remains undismissed, undischarged or
unbonded for a period of ninety (90) days; or (c) there shall be commenced
against Issuer any case, proceeding other action seeking issuance of a warrant
of attachment, execution, distrait or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within ninety (90) days from the entry thereof; or (d) Issuer
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in any of the acts set forth in clauses (a), (b) or (c)
above; or (e) Issuer shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due then, and in any
such event, (x) if such event is an Event of Default specified in subsection (v)
above of this Section 2, automatically this Debenture (with all accrued and
unpaid interest thereon) and all other amounts owing under this Debenture shall
immediately become due and payable, and (y) if such event is any other Event of
Default, the Debenture Holder may, by written notice to Issuer, declare this
Debenture (with all accrued and unpaid interest thereon) and all other amounts
owing under this Debenture to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Except as expressly provided above in
this Section 2, presentation, demand, protest and all other notices of any kind
are hereby expressly waived by Issuer.

 

3. Reservation of Stock.

 

3.1          Reservation of Common Stock. The Issuer covenants that it will at
all times reserve and keep available out of its authorized and unissued shares
of Common Stock solely for the purpose of issuance upon conversion of the
Debenture, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder, not less than such number of shares of
the Common Stock as shall be issuable upon the conversion of the outstanding
principal amount of the Debenture. The Issuer covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid and nonassessable.

 

4. Miscellaneous.

 

4.1          Interest Rate. Any interest payable hereunder that is in excess of
the maximum interest rate permitted under applicable law shall be reduced to the
maximum interest rate permitted under such applicable law.

 

 

 

  

4.2           Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given when delivered by hand or by
facsimile transmission, when telexed, or upon receipt when mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):

 

If to Issuer:

 

Innovus Pharmaceuticals, Inc.

4275 Executive Square, Suite 200

La Jolla, CA 92037

Attn: Bassam Damaj

Facsimile: (858) 964-2301

 

With a copy (which copy shall not constitute notice) to:

 

Innovus Pharmaceuticals, Inc.

4275 Executive Square, Suite 200

La Jolla, CA 92037

Attn: Legal Department

Facsimile: (858) 964-2301

 

If to Debenture Holder:

 

Henry Esber, Ph.D.

38 Angell Brook Drive

West Boylston, MA 01583

Fax: 774-261-8054

 

4.3           Further Indebtedness. No indebtedness of the Issuer is senior to
this Debenture in right of payment, whether with respect to interest, damages or
upon liquidation or dissolution or otherwise. Without the Debenture Holder’s
consent, the Issuer will not, directly or indirectly, enter into, create, incur,
assume or suffer to exist any indebtedness of any kind, on or with respect to
any of its property or assets now owned or hereafter acquired or any interest
therein or any income or profits there from that is senior or paripassu in any
respect to the obligations of the Issuer under this Debenture.

 

4.4           Entire Agreement; Exercise of Rights.

 

(a) This Debenture embodies the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof. No amendment of any
provision of this Debenture shall be effective unless it is in writing and
signed by each of the parties; and no waiver of any provision of this Debenture,
nor consent to any departure by either party from it, shall be effective unless
it is in writing and signed by the affected party, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

(b) No failure on the part of a party to exercise, and no delay in exercising,
any right under this Debenture, or any agreement contemplated hereby, shall
operate as a waiver hereof by such party, nor shall any single or partial
exercise of any right under this Debenture, or any agreement contemplated
hereby, preclude any other or further exercise thereof or the exercise of any
other right.

 

4.5           Governing Law. This Debenture shall be governed by and construed
in accordance with the laws of the State of California applicable to agreements
made and to be performed entirely within such state, without regards to its
conflicts of law provisions.

 

4.6           Transferability. This Debenture shall not be transferable in any
manner without the express written consent of Issuer, which consent may not be
unreasonably withheld.

 

*********************

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Debenture on the date
first above written.

 

INNOVUS PHARMACEUTICALS, INC.

 

  By: /s/ Bassam Damaj     Name: Bassam Damaj, Ph.D.     Title: President &
Chief Executive Officer

 

DEBENTURE HOLDER

 

  By: /s/ Henry Esber     Henry Esber, Ph.D.