Document:

EXHIBIT 10.2

  
 EXHIBIT 10.2
 

 DEBENTURE
 

 NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION REQUIREMENTS THEREOF OR EXEMPTION THEREFROM. 
 

 $________
 

 REJUVEL BIO-SCIENCES, INC.
 

 CONVERTIBLE DEBENTURE DUE ____________, 2018 
 

 Date of Issuance:  ________, 2015 
 

 FOR VALUE RECEIVED, REJUVEL BIO-SCIENCES, INC., a corporation organized and existing under the laws of the State of Florida (the “Company”), hereby promises to pay to ________________________, having its address at ________________________, or its assigns (the “Holder” and together with the other holders of Debentures issued pursuant to the Securities Purchase Agreement (as defined below), the “Holders”), the principal sum of ___________________ and 00/100 Dollars ($__________) (the “Principal Amount”) on ________, 2018 (the “Maturity Date”) [THIRD ANNIVERSARY OF DATE OF ISSUANCE].  The Company has the option to redeem this Debenture prior to the Maturity Date pursuant to Section 2(b).  All unpaid principal due and payable on the Maturity Date shall be paid in the form of Common Stock of the Company, par value $0.001 per share (“Common Stock”) pursuant to Section 3.  The Holder has the option to cause any outstanding principal and accrued interest, if any, on this Debenture to be converted into Common Stock at any time prior to the Redemption Date (as defined below) or the Maturity Date pursuant to Section 2(a).
 

 This Debenture is the Debenture referred to in the Securities Purchase Agreement (the “Securities Purchase Agreement”) dated July __, 2015, between the Company and the Holder.  Capitalized terms used but not defined herein shall have the meanings set forth in the Securities Purchase Agreement.  This Debenture is subject to the provisions of the Securities Purchase Agreement and further is subject to the following additional provisions:
 

 1.
 This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act and other applicable state and foreign securities laws.  The Holder may transfer or assign this Debenture (or any part thereof) without the prior consent of the Company, and the Company shall cooperate with any such transfer.  In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other Person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign securities laws or is exempt from the registration requirements of the Securities Act. Prior to due presentment for transfer of this Debenture to 
 

 
 which the Company has consented, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Company's books and records of outstanding debt securities and obligations (“Debenture Register”) as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
 

 2.
 Conversion at Holder’s Option; Redemption at Company’s Option.
 

 a.
 From and after the date which is Ninety One (91) days after the Date of Issuance set forth above, the Holder shall be entitled to, at any time or from time to time, convert the Conversion Amount into shares of Common Stock, at a conversion price for each share of Common Stock (the “Conversion Price”) equal to Sixty percent (60%) of the lowest closing bid price (as reported by Bloomberg LP) of Common Stock for the twenty (20) trading days immediately preceding the date of conversion of the Debentures (subject to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar events).  The Company shall issue irrevocable instructions to its transfer agent regarding conversions.  Notwithstanding the foregoing, the Holder shall not be entitled to convert any part of this Debenture as to which the Company has previously issued to the Holder a Redemption Notice in accordance with Section 2(b).  The Conversion Price will be adjusted as provided in Section 6.  For purposes of this Debenture, the following terms have the meanings indicated below:
 (i)
 “Conversion Amount” shall mean the sum of (A) all or any portion of the outstanding principal amount of this Debenture, as designated by the Holder upon exercise of its right of conversion plus (B) any interest, pursuant to Section 10 or otherwise, that has accrued on the portion of the principal amount that has been designated for payment pursuant to (A).
 

 (ii)
 “Market Price of the Common Stock” means (x) the closing bid price of the Common Stock for the period indicated in the relevant provision hereof (unless a different relevant period is specified in the relevant provision), as reported by Bloomberg, LP or, if not so reported, as reported on the OTCQB, OTCQX or OTC Pink or (y) if the Common Stock is listed on a stock exchange, the closing price on such exchange, as reported by Bloomberg LP.
 

 (iii)
 “Trading Day” shall mean any day on which the New York Stock Exchange is open for business.
 

 Conversion shall be effectuated by delivering by facsimile or other delivery to the Transfer Agent of the completed form of conversion notice attached hereto as Annex A, executed by the Holder of the Debenture evidencing such Holder's intention to convert this Debenture or a specified portion hereof.  No fractional shares of Common Stock or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.  The date on which notice of conversion is given (the “Conversion Date”) shall be deemed to be the date on which the Transfer Agent receives by fax or by email or by mail the conversion notice (“Notice of Conversion”), substantially in the form annexed hereto as Annex A, duly executed, to the Transfer Agent.  Delivery of the Notice of Conversion shall be accepted by the Transfer Agent by email at ________________________ (or such other contact email as may be designated by the Transfer Agent). Certificates representing Common Stock upon conversion must be delivered within two (2) business days 
 

 

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 from the date of delivery of the Notice of Conversion.  For the avoidance of doubt, delivery of Common Stock issued upon conversion by DWAC shall constitute delivery for purposes hereof. 
 

 Notwithstanding the foregoing, unless the Holder delivers to the Company written notice at least sixty-one (61) days prior to the effective date of such notice that the provisions of this paragraph (the “Limitation on Ownership”) shall not apply to such Holder, in no event shall a holder of Debentures have the right to convert Debentures into, nor shall the Company issue to such Holder, shares of Common Stock to the extent that such conversion would result in the Holder and its affiliates together beneficially owning more than 4.99% of the then issued and outstanding shares of Common Stock.  For purposes hereof, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation 13D-G under the Exchange Act.
 

 b.
 So long as no Event of Default (as defined in Section 10) shall have occurred and be continuing, the Company may at its option call for redemption all or part of the Debentures, with the exception of any portion thereof which is the subject of a previously-delivered Notice of Conversion, prior to the Maturity Date, as follows:
 

 (i)
 The Debentures called for redemption shall be redeemable, upon not more  than two (2) days written notice, for an amount (the “Redemption Price”) equal to: (i) if the Redemption Date (as defined below) is ninety (90) days or less from the date of issuance of this Debenture, one hundred percent (100%) of the sum of the Principal Amount so redeemed plus accrued interest (if any); (ii) if the Redemption Date is greater than or equal to ninety one (91) days from the date of issuance of this Debenture and less than or equal to one hundred twenty (120) days from the date of issuance of this Debenture, One Hundred Ten percent (110%) of the sum of the Principal Amount so redeemed plus accrued interest (if any); (iii) if the Redemption Date is greater than or equal to one hundred twenty one (121) days from the date of issuance of this Debenture and less than or equal to one hundred fifty (150) days from the date of issuance of this Debenture, One Hundred Twenty percent (120%) of the sum of the Principal Amount so redeemed plus accrued interest (if any); (iv) if the Redemption Date is greater than or equal to one hundred fifty one (151) days from the date of issuance of this Debenture and less than or equal to one hundred eighty (180) days from the date of issuance of this Debenture, One Hundred Twenty Five percent (125%) of the sum of the Principal Amount so redeemed plus accrued interest (if any); and (v) if the Redemption Date is greater than or equal to one hundred eighty one (181) days from the date of issuance of this Debenture, one hundred thirty percent (130%) of the sum of the Principal Amount so redeemed plus accrued interest (if any).  The date upon which the Debentures are redeemed and paid shall be referred to as the “Redemption Date” (and, in the case of multiple redemptions of less than the entire outstanding Principal Amount, each such date shall be a Redemption Date with respect to the corresponding redemption).
 

 (ii)
 If fewer than all outstanding Debentures are to be redeemed and are held by different investors, then all Debentures shall be partially redeemed on a pro rata basis.
 

 (iii)
 Prior to the Redemption Date, the Company shall deposit into escrow an amount sufficient for the payment of the aggregate Redemption Price of the Debentures being called for redemption and shall make such funds available on and after the Redemption Date for payment to the Holders who present their Debentures and otherwise comply with the Company’s instructions contained in the Redemption Notice (as defined below).
 

 

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 (iv)
 On the Redemption Date, the Company shall cause the Holders whose Debentures have been presented for redemption to be issued payment of the Redemption Price.  In the case of a partial redemption, the Company shall also issue new Debentures to the Holders for the principal amount remaining outstanding after the Redemption Date promptly after the Holders’ presentation of the Debentures called for redemption.
 

 (v)
 To effect a redemption the Company shall provide a written notice to the Holder(s) not more than two (2) days prior to the Redemption Date (the “Redemption Notice”), setting forth the following:
 

 1.
 the Redemption Date;
 

 2.
 the Redemption Price;
 

 3.
 the aggregate principal amount of the Debentures being called for redemption; 
 

 4.
 a statement instructing the Holders to surrender their Debentures for redemption and payment of the Redemption Price, including the name and address of the Company or, if applicable, the paying agent of the Company, where Debentures are to be surrendered for redemption;
 

 5.
 a statement advising the Holders that the Debentures (or, in the case of a partial redemption, that portion of the Principal Amount being called for redemption) as of the Redemption Date will cease to be convertible into Common Stock as of the Redemption Date; and
 

 6.
 in the case of a partial redemption, a statement advising the Holders that after the Redemption Date a substitute Debenture will be issued by the Company after deduction the portion thereof called for redemption, at no cost to the Holder, if the Holder so requests.
 

 Notwithstanding the foregoing, in the event the Company issues a Redemption Notice but fails to fund the redemption on the Redemption Date, then such Redemption Notice shall be null and void, and (i) the Holder(s) shall be entitled to convert the Debentures previously the subject of the Redemption Notice, and (ii) the Company may not redeem such Debentures for at least thirty (30) days following the intended Redemption Date that was voided, and the Company shall be required to pay to the Holder(s) or fund into escrow the Redemption Price simultaneously with the issuance of a Redemption Notice in connection with any subsequent redemption pursued by the Company.
 

 3.
 Unless demand has otherwise been made by the Holder in writing for payment in cash as provided hereunder, and so long as no Event of Default shall exist (whether or not notice thereof has been delivered by the Holder to the Company), any Debentures not previously 
 

 

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 tendered to the Company for conversion as of the Maturity Date shall be deemed to have been surrendered for conversion, without further action of any kind by the Company or any of its agents, employees or representatives, as of the Maturity Date at the Conversion Price applicable on the Maturity Date (“Mandatory Conversion”).
 

 4.
 No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional to convert this Debenture into Common Stock, at the time, place, and rate herein prescribed.  This Debenture is a direct obligation of the Company.
 

 5.
 If the Company (a) merges or consolidates with another corporation or business entity and the Company is not the surviving entity or (b) sells or transfers all or substantially all of its assets to another Person and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a condition of such merger, consolidation, sale or transfer, the Company and any such successor, purchaser or transferee will agree that this Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable.  In the event of any (i) proposed merger or consolidation where the Company is not the surviving entity or (ii) sale or transfer of all or substantially all of the assets of the Company (in either such case, a “Sale”), the Holder shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice of such Sale from the Company.
 

 6.
 If, at any time while any portion of this Debenture remains outstanding, the Company effectuates a stock split or reverse stock split of its Common Stock or issues a dividend on its Common Stock consisting of shares of Common Stock or otherwise recapitalizes its Common Stock, the Conversion Price shall be equitably adjusted to reflect such action.  By way of illustration, and not in limitation, of the foregoing (i) if the Company effectuates a 2:1 split of its Common Stock, thereafter, with respect to any conversion for which the Company issues the shares after the record date of such split, the Conversion Price shall be deemed to be one-half of what it had been calculated to be immediately prior to such split; (ii) if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter, with respect to any conversion for which the Company issues the shares after the record date of such reverse split, the Conversion Price shall be deemed to be the amount of such Conversion Price calculated immediately prior to the record date multiplied by 10; and (iii) if the Company declares a stock dividend of one share of Common Stock for every 10 shares outstanding, thereafter, with respect to any conversion for which the Company issues the shares after the record date of such dividend, the Conversion Price shall be deemed to be the amount of such Conversion Price calculated immediately prior to such record date multiplied by a fraction, of which the numerator is the number of shares for which a dividend share will be issued and the denominator is such number of shares plus the dividend share(s) issuable or issued thereon.
 

 7.
 All payments contemplated hereby to be made “in cash” shall be made by wire transfer of immediately available funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  All payments 
 

 

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 of cash and each delivery of shares of Common Stock issuable to the Holder as contemplated hereby shall be made to the Holder to an account designated by the Holder to the Company and if the Holder has not designated any such accounts at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time; except that the Holder may designate, by notice to the Company, a different delivery address for any one or more specific payments or deliveries.
 

 8.
 The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the Shares of Common Stock issuable upon conversion thereof except in compliance with the terms of the Securities Purchase Agreement and under circumstances which will not result in a violation of the Securities Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities.
 

 9.
 This Debenture shall be governed by and construed in accordance with the laws of the State of Nevada. Each of the parties consents to the exclusive jurisdiction and venue of the state and/or federal courts located in Miami-Dade County, Florida in connection with any dispute arising under this Agreement.  This provision is intended to be a “mandatory” forum selection clause and governed by and interpreted consistent with Florida law. Each of the parties hereby consents to the exclusive jurisdiction and venue of any state or federal court having its situs in said county, and each waives any objection based on forum non conveniens.  To the extent determined by such court, the Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by the Holder in enforcement of or protection of any of its rights under this Debenture or the Securities Purchase Agreement.
 

 10.
 The following shall constitute an “Event of Default”:
 

 a.
 The Company fails in the payment of principal or interest (to the extent that interest is imposed under this Section 10) on this Debenture as required to be paid in cash hereunder, and payment shall not have been made for a period of five (5) business days following the payment due date; 
 

 b.
 Any of the representations or warranties made by the Company herein, in the Securities Purchase Agreement between the Company and the Buyer therein, or in any certificate or financial or other written statements heretofore or hereafter furnished by the Company to in connection with the execution and delivery of this Debenture, the Securities Purchase Agreement shall be false or misleading (including without limitation by way of the misstatement of a material fact or the omission of a material fact) in any material respect at the time made (as to which no cure period shall apply);
 

 c.
 The Company fails to remain listed on the OTCQB or a more senior stock exchange any time from the date hereof to the Maturity Date for a period in excess of five (5) trading days; 
 

 d.
 The Company (i) fails to timely file required SEC reports when due, becomes, is deemed to be or asserts that it is a “shell company” at any time for purposes of the 1933 Act, and Rule 144 promulgated thereunder or otherwise takes any action, or refrains from taking any action, the result of which makes Rule 144 under the 1933 unavailable to the Buyer 
 

 

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 for the sale of their Securities, (ii) fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, (iii) fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture and such transfer is otherwise lawful or (iv) fails to remove any restrictive legend or to cause its Transfer Agent to transfer any certificate or any shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture or the Securities Purchase Agreement and such legend removal is otherwise lawful (no cure period shall apply in the case of clauses (i) through (iv) above, inclusive);  
 

 e.
 The Company shall fail to perform or observe, in any material respect (i) any other covenant, term, provision, condition, agreement or obligation of the Debenture, provided that, other than in the case of such failure under Section 5 hereof, as to which no cure period shall apply, such failure shall continue uncured for a period of thirty (30) days after written notice from the holder of such failure, or (ii) any covenant, term, provision, condition, agreement or obligation of the Company under the Securities Purchase Agreement and such failure shall continue uncured for a period of either (a) three (3) days after the occurrence of the Company’s failure under Section 4(d), (e) (except as described in Section 10(c) hereof, as to which Section 10(c) hereof shall control), (f), (g) or (h) of the Securities Purchase Agreement, or (b) thirty (30) days after the occurrence of the Company’s failure under any other provision of the Securities Purchase Agreement; 
 

 f.
 The Company shall (1) admit in writing its inability to pay its debts generally as they mature; (2) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (3) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business;
 

 g.
 A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; 
 

 h.
 Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within sixty (60) days thereafter; 
 

 i.
 Any money judgment, writ or warrant of attachment, or similar process (including an arbitral determination), in excess of Fifty Thousand and 00/100 Dollars ($50,000) in the aggregate shall be entered or filed against the Company or any of its properties or other assets; 
 

 j.
 The occurrence of an event of default under the terms of any indebtedness of the Company or any subsidiary (including but not limited to any Subsidiary) of the Company in the aggregate amount of Fifty Thousand and 00/100 Dollars ($50,000) or more which is not waived by the creditors under such indebtedness (as to which no cure period shall apply); 
 

 

 

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 k.
 Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; 
 

 l.
 The issuance of an order, ruling, finding or similar adverse determination by the Securities and Exchange Commission, the Secretary of State of the State of Florida, the National Association of Securities Dealers, Inc. or any other securities regulatory body (whether in the United States, Canada or elsewhere) having proper jurisdiction that the Company and/or any of its past or present directors or officers have committed a material violation of applicable securities laws or regulations; 
 

 m.
 The Company shall have its Common Stock suspended or delisted from a national securities exchange or an electronic quotation service such as the OTCQB, OTCQX for a period in excess of five (5) trading days; 
 

 n.
 Any of the following shall occur and be continuing:  (i) a breach or default under (a) any agreement identified by the Company in its SEC Filings as a material agreement or (b) any note or other form of indebtedness in favor of the Company (collectively, the “Material Agreements”), irrespective of whether such breach or default was waived, and (ii) any other event, circumstance or combination thereof shall have occurred which, singly or when taken as a whole, results in a Material Adverse Effect; 
 

 o.
 The determination in good faith by the Holder that a material adverse change has occurred in the financial condition or operations of the Company or any of its subsidiaries which change could have a Material Adverse Effect on the prospect for the Company to fully and punctually realize the full benefits conferred on the Holder by this Agreement, or the prospect of repayment of all Obligations; or
 

 p.
 The determination in good faith by Holder that the prospect for payment or performance of any of the Obligations is impaired for any reason.
 

 Then, or at any time thereafter, the Company shall immediately give written notice of the occurrence of such Event of Default to the Holders of all Debentures then outstanding, and in each and every such case, unless such Event of Default shall have been waived in writing by a majority in interest of the Holders of the Debentures (which waiver shall not be deemed to be a waiver of any subsequent default), then at the option of a majority in interest of the Holders and in the discretion of a majority in interest of the Holders, (i) pursue remedies against the Company in accordance with the Holder’s rights in under applicable law, (ii) the interest rate applicable to the Debentures shall be increased to the lesser of eighteen percent (18%) per annum and the maximum interest rate allowable under applicable law, and (iii) the Holder may at its option and discretion declare this Debenture, together with all accrued and unpaid interest thereon, in an amount equal to one hundred forty percent (140%) of the Principal Amount plus accrued and unpaid interest (the “Acceleration Amount”), to be immediately due and payable, without presentment, demand, protest or notice of any kinds, all of which are hereby expressly waived, anything herein or in any note or other instruments 
 

 

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 contained to the contrary notwithstanding.  At its option, a Holder may elect to convert the Debenture pursuant to Section 2 notwithstanding the prior declaration of a default and acceleration, in the sole discretion of such Holder.  A majority in interest of the Holders may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law.  Notwithstanding the foregoing, in the case of a default under Section 10(c), the Holder of the Debenture sought to be converted, transferred or de-legended, as the case may be, acting singly, shall have the sole and absolute discretion to increase the applicable interest rate on the Debentures held by such Holder and/or to declare the Debenture(s) held by such Holder to be immediately due and payable.  The Company expressly acknowledges and agrees that the Acceleration Amount as so increased in the event of a default is reasonable and appropriate due to the inability to define the financial hardship that the Company’s default would impose on the Holders.
 

 11.
 Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof.
 

 12.
 This Debenture may be amended only by the written consent of the parties hereto. Notwithstanding the foregoing, the principal amount of this Debenture shall automatically be reduced by any and all Conversion Amounts (to the extent that the same relate to principal hereof).  In the absence of manifest error, the outstanding principal amount of the Debenture on the Company’s book and records shall be the correct amount.
 

 13.
 No waivers or consents in regard to any provision of this Debenture may be given other than by an instrument in writing signed by the Holder.
 

 [Signature Page Follows]
 

 

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 IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by an officer thereunto duly authorized as of the date of issuance set forth above.
 

 	
	 REJUVEL BIO-SCENCES, INC.
 

 

	 By:   ______________________________________

	 Name:  Charles J. Scimeca
 Title:    President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 [Signature Page to Convertible Debenture]
 

 

 

 10Exhibit 10.1

 

 

Executive Salary Protection Agreement

 

This Executive Salary Protection Agreement (“Agreement”) is made this 24th day of July, 2015, by and between Rob Osterbauer (“Executive”) and Heritage Oaks Bank (“Bank”) with respect to the following:

 

Recitals

 

WHEREAS, the Bank and Executive (each, the “Party,” and together, the “Parties”) are parties to a Salary Protection Agreement dated on or about April 8, 2014 (the “Prior Agreement”);

 

WHEREAS, the Parties desire to terminate the Prior Agreement and enter into a new agreement as provided herein;

 

WHEREAS, Executive currently serves as the Bank’s Executive Vice President / Chief Agriculture and Commercial Officer without benefit of an employment contract; and

 

WHEREAS, The Board of Directors of the Bank has deemed it appropriate for Executive to be granted certain protections in the event of job loss related to a merger or acquisition of the Bank and/or its holding company, Heritage Oaks Bancorp (“the Company”);

 

NOW, THEREFORE, Bank and Executive agree as follows:

 

 

Agreement

 

1.            For good and valuable consideration, receipt of which is hereby acknowledged, Bank undertakes to provide Executive with the salary protection benefits (“the Benefit”) set forth herein, upon the terms and conditions also set forth below.

 

2.            Upon satisfaction of the conditions set forth herein, Executive shall be entitled to a Benefit in the following aggregate amount, to be paid in a lump sum on the forty-fifth (45th) day following the Termination Date, subject to the Waiver and Release Agreement having become effective as described in Paragraph 8 hereof: one and one-half times, (a) Executive’s base annual salary at the rate in effect for Executive immediately prior to the occurrence of the applicable event set forth in Paragraph 7 hereof, plus (b) Executive’s cash bonus earned for the calendar year ended immediately prior to the occurrence of such event.

 

3.            The Benefit shall be earned, and payment made, if and only if, Executive’s employment with the Bank and the Company terminates for one or more of the reasons set forth in Paragraph 5 hereof within three (3) months prior to, or within twelve (12) months following, a change in control event as defined in this Agreement. The first day of the first month following Executive’s termination of employment for such reason or reasons is referred to herein as the “Termination Date.”

 

 

4.            If the Executive is entitled to the Benefit and timely and properly elects continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”), in addition to the Benefit, the Bank shall reimburse the Executive for the difference between the monthly COBRA premium paid by the Executive for himself and his dependents and the monthly premium amount paid by similarly situated active executives. Such reimbursement shall be paid to the Executive on the fifteenth (15th) day of the month immediately following the month in which the Executive timely remits the premium payment and submits proof thereof in any form reasonably requested by the Bank. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the twelve-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer.

 

5.            For purposes of this Agreement, “termination” means the termination of Executive’s employment with the Bank and the Company as a result of the occurrence of any one or more of the following without Executive’s written consent, but specifically excludes any termination for Cause, as defined below:

 

a.    The termination of Executive’s employment by the Bank without Cause;

 

b.    a reduction of more than 15% in the Executive’s base salary other than a general reduction in base salary that affects all similarly situated employees in substantially the same proportions;

 

c.    a reduction of more than 15% in the Executive’s annual bonus opportunity other than a general reduction in annual bonus that affects all similarly situated employees in substantially the same proportions;

 

d.    a relocation of the Executive’s principal place of employment which increases the Executive’s commute to work by more than thirty-five (35) miles, except for required travel on Bank business to an extent substantially consistent with the Executive’s business travel obligations as of the date of relocation;

 

e.    the Bank’s failure to obtain an agreement from any successor to the Bank to assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform if no succession had taken place, except where such assumption occurs by operation of law;

 

f.     a material adverse change in the duties assigned to Employee.

 

6.            For purposes of this Agreement, “Cause” shall mean:

 

a.    the Executive’s willful failure to perform his duties (other than any such failure resulting from incapacity due to physical or mental illness);

 

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b.    the Executive’s engagement in dishonesty, illegal conduct or gross misconduct;

 

c.    Embezzlement, misappropriation or fraud by the Executive, whether or not related to the Executive’s employment with the Bank;

 

d.    the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude;

 

e.    the Executive’s violation of a material policy of the Bank or the Company;

 

f.     the Executive’s willful unauthorized disclosure of Confidential Information;

 

g.    any failure by the Executive to comply with the Bank’s or Company’s written policies or rules.

 

7.            For purposes of this Agreement, “change in control event” means the occurrence of any of the following:

 

a.    one person (or more than one person acting as a group) acquires ownership of stock of the Bank or the Company that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation; provided that, a Change in Control shall not occur if any person (or more than one person acting as a group) owns more than 50% of the total fair market value or total voting power of the Company’s stock and acquires additional stock;

 

b.    one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) ownership of the Bank or the Company’s stock possessing 30% or more of the total voting power of the stock of such corporation;

 

c.    a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or

 

d.    the sale of all or substantially all of the Bank’s or Company’s assets.

 

Notwithstanding the foregoing, such an occurrence shall constitute a “change in control event” only if the occurrence is a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” (as such terms are defined for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”)) of the Bank or the Company.

 

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8.            A pre-condition to Executive’s right to receive the Benefit shall be Executive’s execution, delivery and non-revocation, and expiration of any revocation period, of a Waiver and Release Agreement in the form attached hereto as Exhibit “A” to the Bank, or its successor-in-interest, all occurring within 30 days of the date of Executive’s termination.  Additionally, if Executive breaches this Agreement at any time that Bank, or Bank’s successor in interest, is making payments to Executive pursuant to Sections 2, 3 or 4, then, in addition to any other rights Bank, or its successor in interest, may have at law or equity, the obligation to make any further payments to Executive will be terminated effective as of the date of Executive’s breach.

 

9.            As partial consideration for this Agreement, Executive agrees to refrain, for a period of twelve months following the date of termination of employment, from disclosure of confidential or proprietary information of the Bank, Company, or any customer of the Bank to any person who is not expressly authorized to receive such information.

 

For purposes of this Agreement, “Confidential Information” is agreed to include, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, documents, operations, services, strategies, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, trade secrets, policy  manuals, records, vendor information, financial information, results, accounting records, legal information, marketing information, pricing information, credit information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, reports, internal controls, security procedures, market studies, sales information, revenue, costs, notes, communications, product plans, ideas, customer information, customer lists,  of the Bank or any existing or prospective customer, supplier, investor or other associated third party, or of any other person or entity that has entrusted information to the Bank in confidence.

 

10.    Restrictive Covenants.

 

a.            Non-solicitation of Employees. The Executive agrees and covenants not to directly or indirectly solicit, recruit, attempt to recruit, or induce the termination of employment of any employee of the Bank or Company, for twelve (12) months beginning on the Termination Date.

 

b.            Non-solicitation of Customers. The Executive understands and acknowledges that because of the Executive’s experience with and relationship to the Bank, he will have access to and learn about much or all of the Bank’s customer information. “Customer Information” includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, account history, preferences, chain of command, pricing information and other information identifying facts and circumstances specific to the customer and relevant to services desirable to the customer.

 

The Executive understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm.

 

The Executive agrees and covenants, for twelve (12) months beginning on the Termination Date, not to directly or indirectly solicit  the Company’s current, former or

 

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prospective customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Bank.

 

This restriction shall only apply to customers about whom the Executive has information that is not available publicly.

 

11.    Non-disparagement. The Executive agrees and covenants that he will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Bank or Company or its businesses, or any of its directors, employees, officers, existing and prospective customers, vendors, investors and other associated third parties.

 

This Section 11 does not, in any way, restrict or impede the Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation or order. The Executive shall promptly provide written notice of any such order to the Company’s Chief Legal Officer.

 

12.    Notwithstanding anything to the contrary contained herein, the obligation to make payment of any severance benefits as provided herein (including, without limitation, any payment contemplated under Section 2), is conditioned upon (i) the Bank obtaining any necessary approval from the Federal Deposit Insurance Corporation, and (ii) compliance with applicable law, including 12 C.F.R. Part 359.  In addition, the Executive covenants and agrees that the Company and its successors and assigns shall have the right to demand the return of any “golden parachute payments” (as defined in 12 C.F.R. Part 359) in the event that any of them obtain information indicating that the Executive committed, is substantially responsible for, or has violated, the respective acts or omissions, conditions, or offenses contained in 12 C.F.R. § 359.4(a)(4), and the Executive shall promptly return any such “golden parachute payment” upon such demand.

 

13.    This Agreement, for all purposes, shall be construed in accordance with the laws of California without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of California, county of San Luis Obispo. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

 

14.    Unless specifically provided herein, this Agreement contains all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter, including the Prior Agreement. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement.

 

15.    No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and by the Chief Executive

 

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Officer of the Bank. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.

 

16.    Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement.

 

17.    If, at the time any sums would otherwise be payable under this Agreement, the Bank is deemed to be in troubled condition or under any regulatory order which would result in the payment of such sums being deemed as prohibited “Golden Parachute” payments; or if payment of such sums would violate any law or regulation then applicable to the Bank, this Agreement shall be null and void and no sum shall be due to Executive hereunder.

 

18.    Section 409A. This Agreement is intended to comply with Section 409A or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. For purposes of determining the timing of any payments to be made under this Agreement by reference to Executive’s termination of employment, “termination” and “termination of employment” shall refer to Executive’s “separation from service” as defined for purposes of Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall be paid on the first payroll date to occur following the six-month anniversary of the Termination Date (the “Specified Employee Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Executive in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date set forth on page 1.

 

	
Heritage Oaks Bank
    	
Executive
    
	
 
    	
 
    
	
 
    	
 
    
	
By: /s/Simone Lagomarsino
    	
/s/Rob Osterbauer
    
	
Simone Lagomarsino
    	
Rob Osterbauer
    
	
Chief Executive Officer
    	
EVP/Chief Agriculture and Commercial   Officer
    

 

7

 

Exhibit A

 

Form of Waiver and Release Agreement

 

 

WAIVER AND RELEASE AGREEMENT

 

This Waiver and Release Agreement (“Agreement”) is made as of the date last written below, by and between Heritage Oaks Bank (“Employer”) and [*] (“Employee”).  This Agreement is made with specific reference to the following facts:

 

RECITALS

 

A.      Employer and Employee have entered into an Executive Salary Protection Agreement dated [xx/xx/20xx].

 

B.      A condition precedent to Employer’s obligations under the Executive Salary Protection Agreement is the Employee’s execution of this Agreement upon termination of Employee’s employment.

 

C.      As an at-will employee, Employee is not entitled to receive severance pay or any additional termination benefits from Employer, other than as set forth in the Executive Salary Protection Agreement.

 

Waiver and Release

 

NOW, THEREFORE, for and in consideration of the foregoing Recitals, and the mutual covenants, agreements and considerations set forth below, the sufficiency of which are hereby agreed, the parties, intending to be legally bound, agree as follows:

 

1.         In consideration of this Agreement and the consideration extended to Employee under the Executive Salary Protection Agreement which is conditioned upon Employee’s execution of this Agreement, Employee does hereby for himself, his administrators, agents, successors-in-interest and assigns, fully and forever release and discharge Employer, its shareholders, directors, officers, employees, attorneys and agents, and each of them, of and from any and all promises, agreements, claims, demands, actions, causes of action, losses and expenses of every nature whatsoever known or unknown, suspected or unsuspected, filed or unfiled, against them by reason of any occurrences or any damages or injuries in any way sustained by Employee at any time prior to and including the date of this Agreement, including, but not limited to, any and all claims or causes of action arising from his employment by Employer or the termination of his employment with Employer.

 

1.1.        Employee expressly acknowledges and agrees that this Agreement releases claims that include, but are not limited to: breach of contract (express or implied); intentional infliction of emotional harm; wrongful discharge; defamation or other tort claims; attorneys’ fees or court costs; claims arising out of:  Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000(e) et seq. (Title VII); the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. Section 621 et seq. (“ADEA”); the Older Workers Benefit Protection Act (“OWBPA”); the California Fair Employment and Housing Act, Part 2.8 Division 3, Title 2 of the Government Code, Section 12900-12996 (FEHA); the Rehabilitation Act of 1973, as amended, Section 1981 of Title 42 of the United States Code; Labor Code Section 1102.1; or any other federal, state, or municipal statute, ordinance or common-law theory relating to wrongful employment termination, breach of contract, breach of fiduciary duty, discrimination in employment or unfair employment practices.

 

1.2.        Employee hereby releases Employer from any unknown or unanticipated damages arising from the matters set forth in this Agreement.  Employee acknowledges that she is familiar

 

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with, and hereby waives, all rights recognized by the provisions of Section 1542 of the California Civil Code, which provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

Being thus familiar and aware, Employee expressly waives the effects of Civil Code Section 1542, as well as any analogous state or federal statute or regulation.  Thus, notwithstanding the provisions of Civil Code Section 1542, and for the purpose of effecting a full and complete release, Employee expressly acknowledges that this Agreement is intended to include in its effect, without limitation, any and all claims or causes of action which Employee may now have or did have, including claims or causes of action she does not know of or suspect to exist in his favor as of the Effective Date of this Agreement, and that this Agreement contemplates that all such claims and causes of action will be extinguished.  The parties hereby acknowledge and agree that this release does not waive any future claims the Employee may have.

 

2.         This Agreement shall become effective on the 8th calendar day after the date of execution by Employee (the “Effective Date”).  In all events, however, this Agreement must have been executed by Employee and delivered to Employer no later than 5:00 p.m. on [expiration date].  Thereafter, this Agreement shall be deemed withdrawn by Employer and shall no longer be capable of acceptance or execution by Employee.

 

2.1.        In express consideration for Employee’s voluntary execution and delivery of this Agreement, Employer shall pay to Employee those benefits set forth in the Executive Salary Protection Agreement.

 

3.         Employee acknowledges that, but for this Agreement, she would not be entitled to the benefits set forth in the Employment Agreement.

 

4.         Employee is advised to review this Agreement and its terms with an attorney and any other advisors of his choice.  Employee represents that she understands all terms and conditions of this Agreement completely and executes this Agreement voluntarily, without any inducements, promises, or representations made by Employer or any person purporting to represent or serve Employer, except as stated in this Agreement.

 

5.         The following miscellaneous provisions shall apply to this Agreement:

 

5.1.        This Agreement and any other documents referred to herein shall in all respects be interpreted, enforced and governed by and under the laws of the State of California.  The language of this Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties.

 

5.2.        This Agreement contains all of the understandings and agreements of whatsoever kind and nature existing between the parties with respect to the matters addressed herein.  This Agreement may only be amended by a written agreement signed by the parties hereto.

 

5.3.        This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement.

 

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5.4.        Each party executing this Agreement has full authority, mental capacity and power to do so, and no further actions are otherwise necessary to bind him to it.

 

5.5.        If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid by a court of competent jurisdiction, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which this Agreement is held invalid shall not be affected thereby.  The parties hereto agree that each provision of this Agreement is a material provision and that failure of any party to perform any one provision hereof shall be the basis of the voiding of the entire Agreement at the option of the other party, or for pursuing an action at law for such breach.  Any party may waive or excuse the failure of any other party to perform any provision of this Agreement; provided, however, that any such waiver shall not preclude the enforcement of this Agreement upon any subsequent breach.  The parties further agree that in the event a court of competent jurisdiction finds any of the provisions of this Agreement to be unenforceable, it is the parties’ intent that such provisions be reduced in scope by the court, but only to the extent being necessary by the court to render the provision reasonable and enforceable.

 

5.6.        Each of the parties agrees to execute any and all further agreements or documents necessary to effectuate the intent and purposes of this Agreement.

 

5.7.        All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons or entities may require.

 

5.8.        The provisions of this Agreement shall be deemed to obligate, extend to and inure to the benefit of the successors, assigns, transferees, grantees and indemnities of the parties.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date designated below their signatures.

 

 

	
 
    	
“EMPLOYEE” 
    	
 
    	
“EMPLOYER”
    	
 
    
	
 
    	
 
    	
 
    	
HERITAGE OAKS BANK
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    	
 
    
	
 
    	
Name: 
    	
 
    	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
Dated:
    	
 
    	
 
    	
Dated:
    	
 
    	
 
    	
*
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

* No sooner than seven calendar (7) days after the Employee’s signature

 

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