Document:

EXHIBIT 10.5

SETTLEMENT
agreement

 

This Settlement Agreement
(the “Agreement”), entered into as of this 4th day of October, 2012 by and between Apricus Biosciences,
Inc., a Nevada corporation, with a principal place of business at 11975 El Camino Real, Suite 300, San Diego, CA 92130 (“Apricus
Bio”) and Innovus Pharmaceuticals, Inc., a Nevada corporation with a principal place of business at 80 W. Sierra Madre
Blvd., #392 Sierra Madre, CA 91024 (“Innovus”). In this Agreement, Apricus Bio and Innovus may each be referred
to as a “Party” and collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, Bio-Quant,
Inc. (“Bio-Quant”), formerly a subsidiary of Apricus Bio, and FasTrack Pharmaceuticals, Inc. (“FasTrack”),
now wholly-owned by Innovus, entered into an Asset Purchase Agreement, dated October 1, 2009, pursuant to which FasTrack acquired
the rights to PrevOncoTM, certain PrevOncoTM back-up compounds (the “Back-Up Compounds”), and another
early stage cancer product candidate (the “2009 Agreement”);

 

WHEREAS, FasTrack and
NexMed, Inc. (“NexMed”), now Apricus Bio, entered into an Asset Purchase Agreement in March 2010, pursuant to
which: (a) NexMed acquired the rights to PrevOncoTM; (b) FasTrack acquired a fifty percent (50%) share of any future revenue
generated from the licensing of PrevOncoTM (the “PrevOnco Rights”); and (c) the Parties cancelled an October
1, 2009 promissory note in the amount of $204,896, thereby relieved FasTrack of its payment obligations under that note (the “2010
Agreement”);

 

WHEREAS, NexMed and
FasTrack subsequently entered into an Asset Purchase Agreement dated April 4, 2011, pursuant to which: (a) NexMed acquired the
rights to the Back-Up Compounds; (b) FasTrack acquired certain rights to NexMed’s NexACT® drug delivery company (the
“NexACT® License Rights”); (c) NexMed provided FasTrack with a fully funded loan of $250,000 in the form
of a secured convertible promissory note (the “Loan Note”); (d) the Parties agreed to the conversion of FasTrack’s
indebtedness to NexMed in the amount of $224,519.7 into an amended and restated promissory note (the “Restated Note”);
and (e) the Parties entered into a Security Agreement (the “Security Agreement”), which governs the Obligations
(as defined in the Security Agreement) owed from Innovus to Apricus Bio (the “2011 Agreement”);

 

WHEREAS, Innovus notified
Apricus Bio of the occurrence of an M&A Event, as defined in the 2011 Agreement, in December 2011, as a result of which Innovus
converted the Loan Note and the Restated Note into 135,888 shares of common stock of Innovus in March 2012 (the “Innovus
Stock”) and Apricus Bio received the Innovus Stock;

 

WHEREAS, Innovus notified
Apricus Bio by a letter of May 15, 2012 that Innovus elected to terminate its NexACT® License Rights under the 2011 Agreement
(“License Termination Letter”);

 

WHEREAS, Apricus Bio
and Innovus wish to settle all existing rights under the 2011 Agreement, 2010 Agreement, 2009 Agreement, and all other related
agreements (collectively, the “Prior Agreements”), as described herein and according the terms and conditions
described below;

 

NOW, THEREFORE, in
consideration of the mutual covenants and promises contained herein, Apricus Bio and Innovus agree as follows:

 

 

AGREEMENT

 

ARTICLE I

SETTLEMENT

 

1.1               
Termination of Licenses, Notes, and Security Agreement. Upon the execution of this Agreement, the Prior Agreements,
the Loan Note, the Restated Note, and the Security Agreement shall be terminated in their entirety as
of the date hereof and shall be of no further force or effect. Within thirty (30) days after the execution of this Agreement, Apricus
Bio shall terminate any UCC filing that Apricus Bio has made against Innovus and its assets.

 

    	1

    	 

    

  

 

1.2               
Termination of PrevOncoTM Rights. Upon the execution of this Agreement and as a result of the termination
of the Prior Agreements, Innovus hereby acknowledges that the PrevOncoTM Rights (as granted to Innovus in the 2010 Agreement)
shall terminate and Innovus shall hereafter have no interest of any kind in PrevOncoTM. For clarity, upon the execution of
this Agreement, Apricus Bio shall have full ownership without restriction or obligation to Innovus of all PrevOncoTM Rights.

 

1.3               
Transfer of Innovus Stock. Upon the execution of this Agreement, Apricus Bio shall transfer the Innovus Stock
to Innovus, free and clear of any and all liens, charges, or other encumbrances (collectively, “Encumbrances”).

 

1.4               
Transfer of Innovus. Within seven (7) days of the execution of this Agreement, Apricus Bio shall pay Innovus
the sum of $25,000 (the “Cash Payment”), which amount shall be paid in check or by wire transfer.

 

1.5               
Closing; Deliveries. The closing of this Agreement (the “Closing”) shall take place concurrently
with the execution of this Agreement. At the Closing, Apricus Bio shall: (a) deliver the Innovus Stock to Innovus and (b) provide
the Cash Payment to Innovus.

 

1.6               
Further Assurances. The Parties shall execute any further documents, instruments of transfer and assignment,
and other papers and take such further action as may be reasonably required to carry out the provisions hereof and the transactions
completed hereby.

 

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF
INNOVUS

 

In
order to induce Apricus Bio to enter into this Agreement and consummate the transaction contemplated
hereby, Innovus makes to Apricus Bio the following representations and warranties:

 

2.1               
Organization and Corporate Power. Innovus is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada. Innovus has all required corporate power and authority to carry on its business as presently
conducted, to enter into this Agreement and the agreements contemplated hereby to which it is a party, and to carry out the transactions
contemplated hereby and thereby.

 

2.2               
Authority. This Agreement and all agreements, documents, and instruments executed by Innovus pursuant hereto
are valid and binding obligations of Innovus, enforceable in accordance with their respective terms. The execution, delivery, and
performance of this Agreement and all agreements, documents, and instruments executed by Innovus pursuant hereto, including the
termination of the PrevOncoTM Rights, have been duly authorized by the Innovus Board of Directors and all other necessary
action under Innovus’ charter and by-laws.

 

2.3               
Non-Contravention. The execution, deliver, and performance by Innovus of this Agreement and all agreements, documents,
and instruments to be executed and delivered by Innovus pursuant hereto, including the termination of the PrevOncoTM Rights,
do not and will not: (i) violate or result in a violation of, conflict with or constitute or result in a default (whether after
the giving of notice, lapse of time or both) under, accelerate any obligation under, or give rise to a right of termination of,
any material contract, agreement, obligation, permit, license, or authorization to which Innovus is a party or by which Innovus
or its assets are bound, or any provision of Innovus’ organizational documents; (ii) violate or result in a violation of,
or constitute a default (whether after the giving of notice, lapse or time or both) under, any provision of any law, regulation
or rule, or any order of, or any restriction imposed by, any court or governmental agency applicable to Innovus; or (iii)
require from Innovus any notice to, declaration or filing with, or consent or approval of, any governmental authority or other
third party (that has not already been obtained). Innovus has not defaulted in its obligations under Prior Agreements.

 

    	2

    	 

    

  

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
APRICUS BIO

 

In
order to induce Innovus to enter into this Agreement and consummate the transaction contemplated hereby, Apricus Bio
makes to Innovus the following representations and warranties:

 

3.1               
Organization and Corporate Power. Apricus Bio is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada. Apricus Bio has all required corporate power and authority to carry on its business
as presently conducted, to enter into this Agreement and the agreements contemplated hereby to which it is a party, and to carry
out the transaction contemplated hereby and thereby.

 

3.2               
Authority. This Agreement and all agreements, documents, and instruments executed by Apricus Bio pursuant hereto
are valid and binding obligations of Apricus Bio, enforceable in accordance with their respective terms. The execution, delivery,
and performance of this Agreement and all agreements, documents, and instruments executed by Apricus Bio pursuant hereto, have
been duly authorized by all necessary corporate and other action of Apricus Bio.

 

3.3               
Non-Contravention. The execution, deliver, and performance by Apricus Bio of this Agreement and all agreements,
documents, and instruments to be executed and delivered by Apricus Bio pursuant hereto, do not and will not: (i) violate or result
in a violation of, conflict with or constitute or result in a default (whether after the giving of notice, lapse of time or both)
under, accelerate any obligation under, or give rise to a right of termination of, any material contract, agreement, obligation,
permit, license. or authorization to which Apricus Bio is a party or by which Apricus Bio or its assets are bound, or any provision
of Apricus Bio’s organizational documents; (ii) violate or result in a violation of, or constitute a default (whether after
the giving of notice, lapse or time or both) under, any provision of any law, regulation or rule, or any order of, or any restriction
imposed by, any court or governmental agency applicable to Apricus Bio; (iii) require any notice to, declaration or filing
with, or consent or approval of, any governmental authority or other third party (that has not already been obtained); or (iv)
violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse or time or both) under,
accelerate any obligation under, or give rise to a right of termination of, any contract, agreement, permit, license, authorization
or other obligation to which Apricus Bio is a party or by which Apricus Bio or any of its assets are bound.

 

 

ARTICLE IV

MUTUAL RELEASE AND NON-DISPARAGEMENT

 

4.1               
Release by Innovus. Innovus, its affiliates, subsidiaries, and each of their respective officers, directors,
agents, employees, stockholders, and representative and each of their predecessors, successors, and assigns (collectively, the
“Innovus Parties”) do hereby voluntarily, knowingly, forever, fully, finally, completely, and unconditionally
release, remise and discharge the Apricus Bio Parties (defined below) of and from any, and all
manner of, liabilities, claims, rights, debts, actions and causes of action, obligations, promises, expenses, bills, liens, suits,
dues, accounts, bounds, covenants, contracts, agreements, judgments, matters, issues, damages, costs, expenses, injuries, and demands
of any nature whatsoever, whether at law or in equity, or otherwise, known or unknown, discovered or undiscovered, accrued or unaccrued,
liquidated or non-liquidated, contingent or absolute (“Claims”), which the Innovus Parties, or any of them,
or any other person or entity claiming by, through, or under them hereafter, ever had, now has, or hereafter can, shall, or may
have against the Apricus Bio Parties, either directly or indirectly, individually, representatively,
derivatively, by virtue of subrogation, or in any other capacity, from the beginning of time to the date of this Agreement (the
“Innovus Released Matters”) including, but not limited to, Claims related to, arising in any manner from, or
in any way connected with, the Prior Agreements. Notwithstanding the foregoing, the Innovus Released Matters shall exclude and
shall not release any Claim related to or arising in any manner from, or in any way connected with this Agreement.

 

4.2               
Release by Apricus Bio. Apricus Bio, its affiliates, subsidiaries, and each
of their respective officers, directors, agents, employees, stockholders, and representative and each of their predecessors, successors,
and assigns (collectively, the “Apricus Bio Parties”) do hereby voluntarily, knowingly, forever, fully, finally,
completely, and unconditionally release, remise and discharge the Innovus Parties of and from any, and all manner of Claims, which
the Apricus Bio Parties, or any of them, or any other person or entity claiming by, through or
under them hereafter, ever had, now has, or hereafter can, shall or may have against the Innovus Parties, either directly or indirectly,
individually, representatively, derivatively, by virtue of subrogation, or in any other capacity, from the beginning of time to
the date of this Agreement (the “Apricus Bio Released Matters”) including, but not limited to, Claims related
to, arising in any manner from, or in any way connected with, the Prior Agreements. Notwithstanding the foregoing, the Apricus
Bio Released Matters shall exclude and shall not release any Claim related to or arising in any manner
from, or in any way connected with this Agreement.

 

    	3

    	 

    

 

4.3               
Non-Disparagement. Each Party hereby agrees and covenants to, and each shall cause its respective Innovus Parties
and Apricus Bio Parties to, refrain from making, now or at any time in the future, any disparaging,
false, or defamatory comment, statement, or other communication concerning the other party, its products, technologies, services,
or any current or former directors, officers, or employees of such other party to any third party, including, without limitation,
the press, vendors, and any individual or entity with whom such other party has a current or prospective business relationship.
Each party shall be responsible for any breach of this Section 4.3 by Innovus Parties, its affiliates, agents, or representatives,
and Apricus Bio Parties, its affiliates, agents, or representatives.

 

 

ARTICLE V

INTELLECTUAL PROPERTY RIGHTS

 

5.1               
Proprietary Information. To the effect not assigned previously by Innovus to Apricus Bio, Innovus, its affiliates
and sublicensees shall assign and deliver promptly to Apricus Bio all proprietary information relating to the NexACT® License
Rights, pre-clinical and clinical trial results and data relating to NexACT® License Rights, regulatory filings with Regulatory
Authorities for any products under the NexACT® License Rights, clinical development and trials program results, research results,
data, etc., and intellectual property of any type whatsoever developed or licensed by Innovus or any of its affiliates or consultants
relating to the NexACT® License Rights. Proprietary information shall include all know-how, trade secret, patentable information,
non-patent information, and all other information and materials related to the development, manufacture, sale, or use related to
the NexACT® License Rights and all related technical and other data and submissions and any improvements thereto.

 

 

ARTICLE 6

MISCELLANEOUS

 

6.1               
Confidentiality. The parties and their attorneys shall keep the specific terms, conditions, and covenants of
this Agreement confidential except: (i) where mutually agreed to in writing by the parties; (ii) where necessary to share such
information with the parties’ accountants or attorneys; (iii) where disclosure to a governmental entity is required; or (iv)
where disclosure is required by the U.S. Securities and Exchange Commission, the NASDAQ capital market, or similar body, ordered
by a court of competent jurisdiction. The parties and their attorneys shall not communicate with anyone associated with any media
or publication entities concerning the terms of this Agreement. This confidentiality provision is a material term of this Agreement,
and its violation shall constitute a breach of this Agreement.

 

6.2               
Effect of Breach. The Parties agree that money damages would not be a sufficient remedy for any breach of this
Agreement by the breaching party and that the other party shall be entitled to seek equitable relief, including, without limitation,
specific performance and injunction as a remedy for any such breach. The breaching party further agrees to waive any requirement
for the securing or posting of any bond in connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy
for the breaching party’s breach of this Agreement, but shall be in addition to all other remedies available at law or in
equity to the other party.

 

6.3               
Survival of Representations and Warranties. The representations, warranties, covenants, and agreements made herein
or in any certificates or documents executed in connection herewith shall survive the execution and delivery hereof and the Closing
contemplated hereby and shall bind the successors and assigns of the relevant party, where so expressed or not, and all such covenants,
agreements, representations, and warranties shall inure to the benefit of the successors and assigns of the parties hereto, where
so expressed or not.

 

    	4

    	 

    

  

6.4               
No Third-Party Beneficiaries. No person or entity not a party to this Agreement, including any employee of any
party to this Agreement, shall have or acquire any rights by reason of this Agreement, nor shall any party have any obligations
or liability to such person or entity by reason of this Agreement.

 

6.5               
Entire Agreement. This Agreement including each of the exhibits attached hereto, together constitute the full
and entire understanding and agreement among the parties hereto with respect to the subject matters hereof and thereof and any
and all other written or oral agreements existing prior to or contemporaneously herewith are expressly superseded and canceled.

 

6.6               
Amendments, Waivers, and Consents. For the purpose of the Agreement, no course of dealing between the Parties
and no delay on the part of any Party herein in exercising any rights hereunder or thereunder shall operate as a waiver of the
rights hereof and thereof. Any term or provision hereof may be amended, terminated, or waived (either generally or in a particular
instance and either retroactively or prospectively) with the written consent of Apricus Bio and Innovus.

 

6.7               
Notice and Demands. All notices, requests, demands, and other communications hereunder shall be in writing and
shall be deemed to have been duly given if faxed (with transmission acknowledgement received), delivered personally, or mailed
by certified or registered mail (return receipt requested) as follows:

 

 

 

	 	To Apricus Bio:	Apricus Biosciences, Inc.	 	 
	 	 	11975 El Camino Real, Suite 300	 
	 	 	San Diego, CA 92130	 
	 	 	Attention: General Counsel	 
	 	 	 	 	 
	 	To Innovus:	Innovus Pharmaceuticals, Inc.	 
	 	 	80 W. Sierra Madre Blvd., #392 	 
	 	 	Sierra Madre, CA 91024	 
	 	 	Attention: CEO	 

 

Notice shall be effective as of the date
of such delivery, mailing, or fax.

 

6.8               
Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to
be effective and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited or invalid under
such applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition
or invalidity shall not invalidate the remainder of such provision or the other provisions of this Agreement.

 

6.9               
Counterparts. This Agreement and any exhibits or schedules hereto may be executed in multiple counterparts, each
of which shall constitute an original but all of which shall constitute but one and the same instrument. One or more counterparts
of this Agreement or any exhibits or schedule hereto may be delivered via facsimile, with the intention that they shall have the
same effect as an original counterpart hereof.

 

6.10           
Governing Law and Venue. This Agreement shall be deemed a contract made under the laws of the State of California
and all disputes, claims, or controversies arising out of this Agreement, or the negotiation, validity or performance hereof or
the transaction contemplated herein, shall be construed under and governed by the laws of such state, without giving effect to
its conflicts of law principles. Any disputes hereunder shall be adjudicated in the relevant state or federal court in San Diego,
California.

 

 

 

[Signature Page Follows]

 

    	5

    	 

    

 

IN WITNESS WHEREOF,
the undersigned have executed this Agreement as of the day and year first above written.

 

 

 

 

	
        APRICUS BIOSCIENCES, INC.

         

         

         
	INNOVUS PHARMACEUTICALS, INC. 
	Signature:	
        /s/Steve Martin

         

         

         
	  Signature:	/s/Vivian Liu
	Name: 	Steve Martin	  Name: 	Vivian Liu
	Title:	Senior Vice President & Chief Financial Officer	  Title:	President & Chief Executive Officer
	Date:	October 4, 2012	  Date:	October 4, 2012

 

    	6EXHIBIT 10.11(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

 

	$250,000	San Diego, CA 

 

Dated as of: January 22, 2013

 

The undersigned, Innovus
Pharmaceuticals, Inc., a Nevada corporation ("Issuer"), hereby promises to pay Bassam Damaj, Ph.D. ("Debenture Holder")
or his assigns, on the Maturity Date (as hereinafter defined), up to Two Hundred and Fifty Thousand Dollars ($250,000), or so much
thereof as shall then equal the outstanding principal amount hereof following one or more requests for advance by Issuer and Debenture
Holder agreeing to make such advance(s) in his sole and absolute discretion (such amount, as modified from time to time as provided
herein, the "Principal Amount”), 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.

 

1.         Terms
of the Debenture.

 

1.1         Interest;
Interest Rate; Repayment.

 

(a)         The
Principal Amount 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 Amount shall be payable in cash on the earlier of (i) January 14, 2014, 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), subject to the provisions of Section 4.1 below.

 

1.2         Elective
Conversion. Upon the PIPE Financing, the Principal Amount 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-

    	 

    

 

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;

 

    	-2-

    	 

    

 

(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 January 14, 2014, 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):

 

    	-3-

    	 

    

 

If to Issuer:

 

Innovus Pharmaceuticals, Inc.

4275 Executive Square, Suite 207

San
Diego CA 92037

Attn: Chief Financial Officer

Facsimile: 858-964-2301

 

If to Debenture Holder at
its address as furnished to Issuer.

 

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 pari passu 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.

 

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

    	-4-

    	 

    

 

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

 

	 	INNOVUS PHARMACEUTICALS, INC.
	 	 	 
	 	By:	/s/ Henry Esber
	 	 	Name: Henry Esber, Ph.D.
	 	 	Title: Chairman of the Board

  

    	-5-

    	 

    

 

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:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00214-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00214-of-00352.parquet"}]]