Exhibit 10.5

 

FORM OF MYND LOCK-UP AGREEMENT

 

This LOCK-UP AGREEMENT (this “Agreement”), dated as of January 4, 2019, is being
executed and delivered as of January 4, 2019, by [●] (“Stockholder”) in favor of
and for the benefit of MYND ANALYTICS, INC. (“Parent”).

 

RECITALS

 

A.          Stockholder is a director or officer of Parent.

 

B.           Emmaus Life Sciences, Inc., a Delaware corporation (the “Company”),
Parent, and ATHENA MERGER SUBSIDIARY INC., a Delaware corporation and a direct
wholly owned subsidiary of Parent (“Merger Sub”), have entered into that certain
Agreement and Plan of Merger and Reorganization (as amended from time to time,
the “Merger Agreement”), dated as of January 4, 2019, pursuant to which Merger
Sub will merge with and into the Company (the “Merger”) and the Company will
continue as a direct wholly owned subsidiary of Parent.

 

Stockholder, intending to be legally bound, agrees as follows:

 

1.            Defined Terms. Each capitalized term used in this Agreement but
not otherwise defined herein shall have the meaning ascribed thereto in the
Merger Agreement.

 

2.            Representations and Warranties of Stockholder. Stockholder
represents and warrants to Parent as of the date hereof as follows:

 

(a)       Stockholder is the holder and “beneficial owner” (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) of the number of outstanding shares of common stock of Parent (the
“Parent Shares”) set forth beneath Stockholder’s signature on the signature page
hereof, and Stockholder has good and valid title to the Parent Shares, free and
clear of any liens, pledges, security interests, adverse claims, equities,
options, proxies, charges, encumbrances or restrictions of any nature, other
than as otherwise restricted under the Securities Act of 1933, as amended (the
“Securities Act”) and other applicable securities laws and regulations.

 

(b)       Stockholder has the sole right to vote and to dispose of the Parent
Shares.

 

(c)       Stockholder has read this Agreement and, to the extent Stockholder
felt necessary, has discussed with counsel the limitations imposed on
Stockholder’s ability to sell, transfer or otherwise dispose of the Parent
Shares after the Merger. Stockholder fully understands the limitations this
Agreement places upon Stockholder’s ability to sell, transfer or otherwise
dispose of the Parent Shares after the Merger.

 

(d)       [Stockholder is the holder and “beneficial owner” (i) shares of
Parent’s Series A Preferred Stock, par value $0.001 per share (the “Series A
Preferred Stock”), and/or shares of Parent’s Series A-1 Preferred Stock, par
value $0.001 per share (the “Series A-1 Preferred Stock”) and (ii) and warrants
to purchase shares of Common Stock of Parent that were purchased on March 29,
2018 (the “2018 Warrants”).]

 

 

 

 

3.            Lock-Up.

 

(a)       Stockholder will not, during the period commencing on the date of the
Effective Time of the Merger and, subject to the terms set forth herein, ending
90 days after the Effective Time of the Merger (the “Lock-up Period”), (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
Parent Shares, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Parent Shares, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of the Parent Shares, in cash or otherwise.

 

(b)       Notwithstanding the foregoing, Stockholder may transfer Parent Shares
(i) to Affiliates (including, for the avoidance of doubt, if Stockholder is a
corporation, partnership, limited liability company, investment fund, trust or
other business entity, such investment funds or other business entities
controlled or managed by, or that controls or manages, or under common
management with, the Stockholder) or charitable organizations; (ii) if
Stockholder is an individual, to any member of Stockholder’s immediate family,
or to a trust for the benefit of Stockholder or any member of Stockholder’s
immediate family for estate planning purposes or for the purposes of personal
tax planning, or upon the death of Stockholder, by will or intestacy; (iii) if
Stockholder is a corporation, partnership, limited liability company, investment
fund or other business entity, as part of a disposition, transfer or
distribution by the Stockholder to its equity holders; (iv) if the Stockholder
is a trust, to a trustor or beneficiary of the trust; or (v) to a nominee or
custodian of a Person or entity to whom a disposition or transfer would be
permissible under this clause (b); provided, however, that any such transfer
shall be permitted under this clause (b) only if, as a precondition to such
transfer, such donee, transferee or distributee agrees in writing to be bound by
all of the terms of this Agreement. In addition, notwithstanding the foregoing,
the restrictions set forth herein shall not apply to the establishment of a
trading plan that complies with Rule 10b5-1 under the Exchange Act; provided,
however, that the restrictions shall apply in full force to sales pursuant to
the trading plan during the Lock-Up Period.

 

(c)       For the avoidance of doubt, the restrictions in this Agreement shall
apply only to the Parent Shares owned by the Stockholder as of the Effective
Time of the Merger and Parent Shares issued upon the exercise of options
outstanding as of the Effective Time of the Merger and no other security of
Parent or any Affiliate thereof.

 

4.            Stop Transfer Instructions. Stockholder acknowledges and agrees
that stop transfer instructions will be given to Parent’s transfer agent with
respect to the Parent Shares until the expiration of the Lock-Up Period.

 

5.            Independence of Obligations. The covenants and obligations of
Stockholder set forth in this Agreement shall be construed as independent of any
other agreement or arrangement between Stockholder, on the one hand, and Parent,
on the other hand. The existence of any claim or cause of action by Stockholder
against Parent shall not constitute a defense to the enforcement of any of such
covenants or obligations against Stockholder.

 

2 

 

 

6.            Specific Performance. Stockholder acknowledges that Parent could
be damaged irreparably if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that any breach of this
Agreement by Stockholder could not be adequately compensated by monetary
damages. Accordingly, Stockholder agrees that, (a) it will waive, in any action
for specific performance, the defense of adequacy of a remedy at law, and (b) in
addition to any other right or remedy to which Parent may be entitled, at law or
in equity, Parent will be entitled to seek to enforce any provision of this
Agreement by a decree of specific performance and to seek temporary, preliminary
and permanent injunctive relief to prevent breaches or threatened breaches of
any of the provisions of this Agreement, without posting any bond or other
undertaking.

 

7.            Notices. All notices and other communications hereunder shall be
in writing (including email or similar writing) and must be given:

 

(a)          If to Parent, to:

 

MYnd Analytics, Inc. 

26522 La Alameda, Suite 290 

Mission Viejo, CA 92691 

Attention: Patrick Herguth 

Email: pherguth@myndanalytics.com

 

with a copy (which will not constitute notice) to:

 

Dentons US LLP
1221 Avenue of the Americas
New York, NY 10020
Attention:      Jeffrey Baumel
                      Ilan Katz 

Email:            jeffrey.baumel@dentons.com
                      ilan.katz@dentons.com

 

(b)         If to Stockholder, to the address set forth on Schedule I hereto.

 

or such other physical address or email address as a party may hereafter specify
for the purpose by notice to the other parties hereto. Each notice, consent,
waiver or other communication under this Agreement will be effective only (i) if
given by email, when the email is transmitted to the email address specified in
this Section 7 or (ii) if given by overnight courier or personal delivery when
delivered at the physical address specified in this Section 7.

 

8.            Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
affecting the validity or enforceability of the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction will not invalidate or
render unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, the provision will be
interpreted to be only so broad as is enforceable.

 

3 

 

 

9.            Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto will be
governed by, construed under and enforced in accordance with the laws of the
State of Delaware, without giving effect to principles of conflict or choice of
laws which would result in the application of the laws of any other
jurisdiction.

 

10.          Consent to Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby or thereby will be
brought exclusively in the United States District Court for the District of
Delaware or in the Court of Chancery of the State of Delaware, and each of the
parties hereto hereby consents to the exclusive jurisdiction of those courts
(and of the appropriate appellate courts therefrom) in any suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by applicable
Law, any objection which it may now or hereafter have to the laying of the venue
of any suit, action or proceeding in any of those courts or that any suit,
action or proceeding which is brought in any of those courts has been brought in
an inconvenient forum. Process in any suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any of the named courts. Without limiting the foregoing, each party agrees
that service of process on it by notice as provided in Section 7 will be deemed
effective service of process. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

11.          Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither any failure nor any delay by a party
in exercising any right, power or privilege under this Agreement or any of the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable Law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in a written document signed by the other party, (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given, and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of that party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.

 

12.          Effectiveness; Termination. This Agreement shall only be effective
upon the Effective Time of the Merger and shall automatically terminate in the
event of the termination of the Merger Agreement for any reason or upon the
consummation following the Merger of a change of control of Parent, meaning (a)
the consummation of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of Parent, or (b) the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of either (i) the then-outstanding shares of common stock of
Parent; or (ii) the combined voting power of the then-outstanding voting
securities of Parent entitled to vote generally in the election of directors.

 

4 

 

 

13.          Further Assurances. Stockholder shall execute and/or cause to be
delivered to Parent such instruments and other documents and shall take such
other actions as Parent may reasonably request for the purpose of carrying out
the transactions contemplated by this Agreement.

 

14.          Entire Agreement and Modification. This Agreement, the Merger
Agreement and any other documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to its subject matter
and constitute (along with the documents delivered pursuant to this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended,
supplemented or otherwise modified except by a written document executed by the
party against whose interest the modification will operate. The parties will not
enter into any other agreement inconsistent with the terms and conditions of
this Agreement and the Merger Agreement, or that addresses any of the subject
matters addressed in this Agreement and the Merger Agreement.

 

15.          Non-Exclusivity. The rights and remedies of Parent hereunder are
not exclusive of or limited by any other rights or remedies which Parent may
have, whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative).

 

16.          Expenses. Except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such expenses.

 

17.          Assignment. This Agreement and all obligations of Stockholder
hereunder are personal to Stockholder and may not be transferred or delegated by
Stockholder at any time, except in accordance with Section 2(b) of this
Agreement. Parent may freely assign any or all of its rights under this
Agreement, in whole or in part, to any successor entity without obtaining the
consent or approval of Stockholder.

 

18.          Binding Nature. Subject to Section 17, this Agreement will inure to
the benefit of Parent and its successors and assigns and will be binding upon
Stockholder and Stockholder’s representatives, executors, administrators,
estate, heirs, successors and assigns.

 

19.          Survival. Each of the representations, warranties, covenants and
obligations contained in this Agreement shall survive the consummation of the
Mergers.

 

20.          Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which,
taken together, will constitute one and the same instrument. An electronic copy
of a party’s signature (including signatures in Adobe PDF or similar format)
shall be deemed an original signature for purposes hereof.

 

5 

 

 

21.          Headings; Construction. The headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. In this Agreement (a) words denoting the
singular include the plural and vice versa, (b) “it” or “its” or words denoting
any gender include all genders and (c) the word “including” means “including
without limitation,” whether or not expressed.

 

22.          [Conversion of Parent Preferred Stock. Stockholder hereby agrees
that all shares of Series A Preferred Stock and/or shares of Series A-1
Preferred Stock held by such Stockholder shall automatically, and without any
further action by the Stockholder, convert into Parent Shares, immediately prior
to, and contingent upon the occurrence of, the Effective Time, in accordance
with, and pursuant to the terms of, Section 5 of the Certificate of Designation,
Preferences and Rights of Series A Preferred Stock or Section 5 of the
Certificate of Designation, Preferences and Rights of Series A-1 Preferred
Stock, as applicable. In exchange for Stockholder agreeing to convert its shares
of Series A Preferred Stock and/or shares of Series A1 Preferred Stock, Parent
hereby agrees, in connection with the Spinoff, to cause the Parent California
Subsidiary to issue to Stockholder (in addition to any other equity of Parent
California Subsidiary that Stockholder might be entitled to receive on other
Parent securities owned by Stockholder) newly issues shares of preferred stock
of the Parent California Subsidiary (instead of shares of common stock of the
Parent California Subsidiary) that will have substantially the same rights and
preferences as the shares of Series A Preferred Stock (the “California Preferred
Shares”). The California Preferred Shares will represent a percentage of the
fully-diluted common stock of the Parent California Subsidiary that is equal to
the percentage of the outstanding preferred stock and common stock of Parent
represented by all shares of Series A Preferred Stock and/or shares of Series
A-1 Preferred Stock held by such Stockholder prior to the conversion provided
for herein. In addition, Parent will take all actions reasonably necessary to
permit the Stockholder to exchange their 2018 Warrants into warrants to purchase
shares of common stock of the Parent California Subsidiary prior to the
Effective Time using the same exchange ratio utilized for the issuance of the
California Preferred Shares and with the same exercise price as applicable to
the 2018 Warrants (as adjusted for the exchange ratio utilized for the issuance
of the California Preferred Shares).]

 

(Signature Page Follows)

 

6 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Lock-Up Agreement to be
duly executed as of the day and year first above written.

 

  THE COMPANY         MYND ANALYTICS, INC.         By:       Name:     Title:

 

Signature Page to MYnd Lock-Up Agreement

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Lock-Up Agreement to be
duly executed as of the day and year first above written.

 

STOCKHOLDER:               INDIVIDUAL:   PARTNERSHIP, CORPORATION,
LLC, TRUST OR OTHER ENTITY:               (Print Name)   (Print Name of Entity)
            By:   (Signature)   (Signature)               (Jurisdiction of
Residence)   (Print Name)                 (Print Title)                   (Type
of Entity)                   (Jurisdiction of Organization)

 

Signature Page to MYnd Lock-Up Agreement

 

 

 

 

SCHEDULE I

 

Name and Contact
Information Shares of
Parent
Common
Stock Shares of
Parent
Preferred
Stock Parent
Warrants Parent
Options Beneficially
Owned Shares
with a Right to
Vote

[Name] 

[Address] 

Attention: [●] 

Facsimile: [●] 

Email: [●] 

         

 

Schedule I to MYnd Lock-Up Agreement