EXHIBIT 10.1

 

WARRANT EXERCISE AGREEMENT

 

This Warrant Exercise Agreement (this “Agreement”), dated as of December 20,
2019 (the “Effective Date”), is made by and between Emerald Bioscience, Inc.,
f/k/a Nemus Bioscience Inc., a Nevada corporation (the “Company”), and Emerald
Health Sciences Inc., as the holder (the “Holder”) of a Warrant to Purchase
Common Stock (the “Warrant”) described in the notice of exercise attached as
Exhibit A hereto (the “Exercise Notice”).

 

WHEREAS, Holder, as lender (in such capacity, the “Lender”), and the Company, as
borrower (in such capacity, the “Borrower”), are parties to that certain Multi
Draw Credit Agreement dated as of October 5, 2018 (as amended, restated,
supplemented or modified from time to time, the “Credit Agreement”), pursuant to
which the Company issued the Warrant to the Holder.

 

WHEREAS, as of the date hereof, the aggregate obligations of the Company due to
the Holder and outstanding under the Credit Agreement exceed $6.0 million
(“Credit Obligations”).

 

WHEREAS, concurrently with the execution hereof, the Holder has delivered to the
Company the Exercise Notice of its right to purchase the Warrant Shares (as
defined therein) electing Cash Exercise (as defined therein).

 

WHEREAS, the Holder has requested and the Company has agreed that, the Holder
pay the aggregate Exercise Price for the Warrant Shares in the total amount of
$4.08 million (the “Aggregate Exercise Price”) in the form of a reduction of the
Credit Obligations in the amount of the Aggregate Exercise Price, rather than by
remittance of immediately available funds, as further described herein (“Credit
Consideration”).

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Holder and the Company agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definitions. Capitalized terms not defined in this Agreement shall
have the meanings ascribed to such terms in the Warrant.

 

ARTICLE II

EXERCISE OF THE WARRANTS

 

Section 2.1 Exercise of the Warrants. The Holder hereby agrees to exercise its
Warrant pursuant to the Exercise Notice and the terms hereof.

 

Section 2.2 Credit Consideration. Each of the Holder (including in its capacity
as Lender) and the Company (including in its capacity as Borrower) hereby agree
that as of the date hereof (a) the Credit Obligations shall be reduced by the
Aggregate Exercise Price, which shall be applied first to the accrued but unpaid
interest and then to the principal outstanding under the Credit Agreement, (b)
the Company thereby shall be deemed to have received the Aggregate Exercise
Price as of such date, and (c) the Company shall effectuate the issuance and
delivery of the Warrant Shares in accordance with the terms of the Warrant.

 

  

  

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.1 Representations and Warranties of the Company. The Company hereby
makes the representations and warranties set forth below to the Holder that as
of the date of its execution of this Agreement:

 

(a) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of such Company and no further
action is required by such Company, its board of directors or its stockholders
in connection therewith. This Agreement has been duly executed by the Company
and, when delivered in accordance with the terms hereof will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(b) No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any provision of the
Company’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien upon any of the properties or
assets of the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other material instrument
(evidencing Company debt or otherwise) or other material understanding to which
the Company is a party or by which any property or asset of the Company is bound
or affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.

 

  

  

 

(c) SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company under the Securities Act
and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the Company
was required by Law to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein being
collectively referred to herein as the “SEC Reports”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

 

Section 3.2 Representations and Warranties of the Holder. The Holder hereby
makes the representations and warranties set forth below to the Company that as
of the date of its execution of this Agreement:

 

(a) Due Authorization. The Holder represents and warrants that (i) the execution
and delivery of this Agreement by it and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
action on its behalf and (ii) this Agreement has been duly executed and
delivered by the Holder and constitutes the valid and binding obligation of the
Holder, enforceable against it in accordance with its terms.

 

(b) No Conflicts. The execution, delivery and performance of this Agreement by
the Holder and the consummation by the Holder of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any provision of the
Holder’s organizational or charter documents, or (ii) conflict with or result in
a violation of any agreement, law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
which would interfere with the ability of the Holder to perform its obligations
under this Agreement.

 

(c) Access to Information. The Holder acknowledges that it has had the
opportunity to review this Agreement and the Company’s SEC Reports and the risk
factors contained therein and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
exercise of the Warrants and the merits and risks of investing in the Warrant
Shares; (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the investment.

 

  

  

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be made in accordance with
the provisions of the Credit Agreement.

 

Section 4.2 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

 

Section 4.3 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

Section 4.4 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined pursuant to
the Governing Law provision of the Warrant.

 

Section 4.5 Entire Agreement. The Agreement, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

Section 4.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

[Signature page follows]

 

  

  

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

COMPANY:

 

 

 

 

 

EMERALD BIOSCIENCE, INC.

    By: 

 

Name:

   Title:  

 

HOLDER:

 

EMERALD HEALTH SCIENCES INC.

 By: 

Name:

 Title: 

 

  

  

 

Exhibit A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO

PURCHASE COMMON STOCK

 

EMERALD BIOSCIENCE, INC.

 

The undersigned holder hereby exercises the right to purchase 40,800,000 of the
shares of Common Stock (“Warrant Shares”) of Emerald Bioscience, Inc., f/k/a
Nemus Bioscience Inc., a Nevada corporation (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms
used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

 

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:

 

______ a “Cash Exercise” with respect to Warrant Shares;

 

______ a “Cashless Exercise” with respect to Warrant Shares; and/or

 

____x__ “Credit Consideration” as defined in the Warrant Exercise Agreement
dated as of the date hereof with respect to Warrant Shares (the “Warrant
Exercise Agreement”).

 

2. Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of [ ] to
the Company in accordance with the terms of the Warrant. In the event that the
holder has elected Credit Consideration with respect to some or all of the
Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate
Exercise Price in accordance with the terms of the Warrant Exercise Agreement.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder Warrant
Shares in accordance with the terms of the Warrant.

 

Date: December 20, 2019

 

Emerald Health Sciences Inc.

Name of Registered Holder

 

By:

Name:

Avtar Dhillon, MD

 

Title:

Executive Chairman and Chief Executive Officer