EXHIBIT 10.2(a)

 

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.

 

8% CONVERTIBLE DEBENTURE

 

$____________ Sierra Madre, CA       Dated as of:  __, 2012

 

In consideration of the receipt of $_________, the undersigned, Innovus
Pharmaceuticals, Inc., a Nevada corporation (“Issuer”), hereby promises to pay,
dated as of ______, 2012, by and between Issuer and ____________ (“Debenture
Holder”), at the address of ____________________________________________ on the
Maturity Date (as hereinafter defined), the principal amount of __________
($_______) Dollars, unless this debenture (“Debenture”) is earlier converted in
accordance with Section 1.2 or Section 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 3 hereof or earlier repaid in accordance
with Section 1.4 hereof.

 

This Debenture is one of a series of secured convertible debentures of like
tenor and ranking (collectively, the “Debentures”) made by the Issuer in favor
of certain investors dated of even date herewith.

 

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 360-day year. Interest shall be payable on
the Maturity Date.

 

(b) The principal outstanding hereunder shall be payable in cash on the earlier
of (i) 12 months from the date of the Debenture, or (ii) the date of closing of
the PIPE Financing (as hereinafter defined) (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 Company.

 

(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 Elective Conversion. Upon the PIPE Financing, the principal amount of the
Debenture and interest accrued through the date of conversion can be converted,
at the option of the Debenture Holder, 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”). 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 Conversion Procedures. Upon conversion of this Debenture as provided in
Section 1.2 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 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, whether or not
surrendered.

 

1.4 Payment Rights Upon Merger, Consolidation, Etc. If, at any time, prior to
the Maturity Date, Issuer proposes to consolidate with, or merge into, another
corporation or entity, or to effect any sale or conveyance to another
corporation or other entity of all or substantially all of the assets of Issuer,
or effect any other corporate reorganization, in which the stockholders of
Issuer immediately prior to such consolidation, merger, reorganization or sale
would own capital stock of the entity surviving such merger, consolidation,
reorganization or sale representing less than fifty (50%) percent of the
combined voting power of the outstanding securities of such successor or
combined entity immediately after such consolidation, merger, reorganization or
sale (a “Liquidation Event”), then Issuer shall provide the Debenture Holder
with at least ten (10) days’ prior written notice of any such proposed action,
and the Debenture Holder will, at its option, have the right to demand immediate
payment of all amounts due and owing under this Debenture. The Debenture Holder
will give Issuer written notice of such demand within five (5) days after
receiving notice of the Liquidation Event. All amounts (including all accrued
and unpaid interest) due and owing under this Debenture shall be paid by Issuer
to the Debenture Holder within five (5) days from the date of such written
notice by the Debenture Holder via wire transfer(s) of immediately available
funds, in accordance with written instructions provided to Issuer by the
Debenture Holder.

 

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. Conversion.

 

3.1 Optional Conversion. If the PIPE Financing has not closed on or prior to the
date that is 12 months from the date of this Debenture, in addition to any and
all other amounts due and payable hereunder, the Debenture Holder shall be
entitled, at its option, to deliver to the Issuer a notice of conversion (a
“Notice of Default Conversion”) in the form attached hereto as Exhibit A,
specifying therein that the entire principal amount of the Debenture, plus all
accrued interest, is to be converted and the date on which such conversion is to
be effected (a “Default Conversion Date”). If the Debenture Holder elects to
convert this Debenture into shares of Common Stock (a “Default Conversion”),
then the number of shares of Common Stock issuable upon such conversion shall be
at a price of $0.05 (five cents) per share of Common Stock. For example, a
Debenture of $10,000 would be converted into 200,000 shares of Common Stock..

 

3.2 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 Default 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.

c/o FasTrack Pharmaceuticals, Inc.

80 W. Sierra Madre Blvd., #392

Sierra Madre, CA 91024

Attn: Vivian Liu

Facsimile: (626) 604-3399

 

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

 

Wallace T. Boyack, Esq.

2290 East 4500 South, Suite 130

Salt Lake City, UT 84117

Facsimile: (801) 278-3820

 

If to Debenture Holder at its address as furnished on the face of this
Debenture.

 

 

 

 

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.

 

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:      Name:
Title:

 

 

 

 

EXHIBIT “A”

 

NOTICE OF DEFAULT CONVERSION

 

(To be executed by the Holder in order to convert the Debenture)

 

TO:  

 

The undersigned hereby irrevocably elects to convert the principal amount of the
above Debenture, as well as all accrued but unpaid interest on such converted
principal amount as of the date hereof, into the Holder’s Pro Rata Portion of
the Fully Diluted Shares Outstanding.

 

Conversion Date:       Signature:       Name:       Address:       Please issue
the securities in the following name and to the following address:       Issue
to:       Authorized Signature:       Name:       Title:       Phone Number:  

 

 

 

 

Schedule of Debenture Holders

 

This schedule is being provided pursuant to Item 601 of Regulation S-K.

 

Name of Holder           Original Principal Amount               (in U.S.
dollars)                   Wallace T. Boyack           $74,667   Vivian Lui    
      $50,000   Unrelated Party           $20,000   Henry Esber, PhD.          
$13,000   Unrelated Party           $12,000   Ziad Mirza           $5,000