Document:

ctxr_ex101.htm

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

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

 

 

	
6ctxr_ex102.htm

EXHIBIT 10.2

 

CONVERSION AGREEMENT

 

This Conversion Agreement (this “Agreement”) is effective as of May 10, 2017 (the “Effective Date”) by and between Citius Pharmaceuticals, Inc., a Nevada corporation (the “Company”), and Leonard Mazur (the “Lender”).

 

BACKGROUND

 

A. The Company has issued multiple demand promissory notes in the amounts and on the dates set forth in greater detail on Exhibit A attached hereto (each a “Loan” and together, the “Loans”)

 

B. The Company and Lender desire to consolidate the Loans and to consolidate, amend and restate the preexisting demand promissory notes to extend the maturity date in exchange for the issuance of an option to Lender to convert the principal amount of the Loan into shares of the Company’s common stock.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and representations set forth below, the Company and Lender agree as follows:

 

1. Conversion of the Loans; Issuance of Amended and Restated Promissory Note. Effective as of the Effective Date and pursuant to the terms hereof, (a) the Lender hereby consolidates all principal and accrued but unpaid interest under the Loans pursuant to the amended and restated promissory note (the “Note”) attached hereto as Exhibit B, and (b) the Company hereby agrees to issue such Note to the Lender. The Company and the Lender agree that, as of the Effective Date, the Loans shall be consolidated into one loan evidenced by the Note. Upon receipt of such Note, the notes evidencing the preexisting Loans shall be deemed to have been cancelled. Lender agrees to execute and deliver such other documents and agreements as are reasonably requested by the Company in connection with the transactions hereunder.

 

2. Lender Representations. Lender represents, warrants and covenants as follows:

 

(a) Lender has the requisite power and authority to enter into this Agreement, to receive the Note hereunder, and to carry out and perform its obligations under the terms of this Agreement, and Lender has not assigned, transferred or otherwise encumbered in any way whatsoever the Loans (or any portion thereof) or any documents related thereto.

 

(b) This Agreement has been duly authorized, executed and delivered by Lender, and, upon due execution and delivery by the Company, this Agreement will be the valid and binding obligation of the Lender.

 

(c) The Lender is receiving the Note for Lender’s own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Note in violation of the Securities Act of 1933, as amended (the “Securities Act”), or any rule or regulation under the Securities Act.

 
	 
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(d) Lender understands and agrees that the Company shall continue to have other outstanding indebtedness on and after the date hereof, and Lender has had such opportunity as Lender deems adequate to obtain from representatives of the Company such information as is necessary to permit such Lender to evaluate the merits and risks of Lender’s investment in the Company.

 

(e) Lender is an “accredited investor” as such term is defined in Rule 501 promulgated under the Securities Act, and Lender has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Note and to make an informed investment decision with respect to such purchase.

 

(f) Lender acknowledges that the Company has encouraged the Lender to consult its own adviser to determine the tax consequences of entering into this Conversion Agreement and receiving the Note at this time.

 

3. Company Representations. The Company represents, warrants, and covenants as follows:

 

(a) The Company is a corporation duly incorporated, and is validly existing and authorized to exercise all its corporate powers, rights and privileges in the State of Nevada.

 

(b) The Company has the requisite power and authority to enter into this Agreement, to issue the Note and to carry out and perform its obligations under the terms of this Agreement.

 

(c) This Agreement has been duly authorized, executed and delivered by the Company, and, upon due execution and delivery by Lender, this Agreement will be a valid and binding obligation of the Company.

 

4. Taxes. Lender has reviewed with his own tax advisers the federal, state, local and foreign tax consequences of the transactions contemplated by this Agreement. Lender is relying solely on such advisers and not on any statements or representations of the Company or any of its agents. Lender understands that he (and not the Company) shall be responsible for Lender’s own tax liability that may arise as a result of the transactions contemplated by this Agreement. 

 

5. Miscellaneous.

 

(a) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

 

(b) Binding Effect and Obligation. This Agreement shall be binding upon and inure to the benefit of the Company and to each Lender and their respective heirs, executors, administrators, legal representatives, successors and assigns.

 
	 
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(c) Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other parties hereto at the address set forth in the Company’s books and records, or at such other address or addresses as the parties shall designate to each other. 

 

(d) Entire Agreement; Governing Law. This Agreement (including the exhibits attached hereto) constitutes the entire agreement between the Company and Lender with respect to the subject matter hereof and supersedes in their entirety all prior undertakings and agreements of the Company and Lender with respect to the subject matter hereof. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without regard to the choice of law provisions thereof.

 

(e) Amendment. This Agreement may be amended or modified by, and only by, a written instrument executed by both the Company and Lender.

 

(f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

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

 

 

	 	
COMPANY:

 

CITIUS PHARMACEUTICALS, INC.
	
	 	 	 	 
	 	By:	/s/ Myron Holubiak	
	
 
	
Name:
	Myron Holubiak	 
	 	Title:	President and CEO	 
	 	 	 	 
	
 
	
LENDER:
	
 

	
 
	
 
	
 
	
 

	
 
	/s/ Leonard Mazur	
 

	
 
	
Leonard Mazur
	
 

 
	 
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