Exhibit 10.1

 

SECURITIES AMENDMENT AGREEMENT

 

THIS SECURITIES AMENDMENT AGREEMENT (this “Agreement”), dated as March 5, 2019,
is entered into by and between EMMAUS LIFE SCIENCES, INC., a Delaware
corporation (the “Company”), and the parties identified as “Holders” on the
signature page hereto (the “Holders”).

 

WHEREAS, pursuant to the Securities Purchase Agreement, dated as of September 7,
2018, as amended on October 1, 2018 (as so amended, the “Purchase Agreement”),
between the Company and the purchasers thereto, the Company issued to the
purchasers (and the purchasers’ assigns), in the aggregate, (i) $12,200,000 in
principal amount of 10% Senior Secured Debentures due April 21, 2020 (the
“Debentures”) and (ii) Common Stock purchase warrants to purchase up to
1,220,000 shares of Common Stock (the “Warrants” and together with the Purchase
Agreement and Debentures, the “Transaction Documents”);

 

WHEREAS, referenc is made to the Agreement and Plan of Merger, dated as of
January 4, 2019 (the “MA”), among the Company, MYnd Analytics, Inc. (“MYnd”) and
Athena Merger Subsidiary, Inc. (“Merger Sub”) filed as Exhibit 2.1 to the
Company’s Current Report on Form 8-K filed on January 7, 2019 with the
Securities and Exchange Commission, pursuant to which, subject to the terms and
conditions of the MA, Merger Sub will merge (the “Merger”) with and into the
Company, with the Company to survive the Merger as a subsidiary of MYnd; and

 

WHEREAS, subject to the terms and conditions of the MA, at the “Effective Time”
as defined in the MA (the “Effective Time”), the outstanding shares of Common
Stock of the Company will be converted into the right to receive shares of
common stock of MYnd which are to be listed for trading on The NASDAQ Capital
Market; and

 

WHEREAS, in order to facilitate the Merger, pursuant to the terms herein, the
Company and the Holder wish to amend the Transaction Documents effective
immediately prior to the Effective Time;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and the Holders hereby agree as
follows:

 

1.       Definitions. Terms used as defined terms herein and not otherwise
defined shall have the meanings provided therefor in the Purchase Agreement or
the other Transaction Documents. In addition, subject to the terms and
conditions herein, the Purchase Agreement as it pertains to the Holders is
amended to include the following definitions:

 

“‘Conversion Shares’ shall have the meaning ascribed to such term in the
Debentures.”

 

“‘Underlying Shares’ means the Warrant Shares and the Conversion Shares, in each
case without respect to any limitation or restriction on the conversion of the
Debentures or the exercise of the Warrants.”

 

 

 

 

2.       Amendment of Debentures; Waiver. Subject to the terms and conditions
herein, the Holders’ Debentures are amended to, among other things, provide for
the conversion thereof at the option of each Holder into shares of Common Stock
at a Conversion Price of $10.00 per share (subject to adjustment therein) and
extend the Maturity Date and the Monthly Redemption Date as provided therein and
restated in their entirety as set forth in Exhibit A attached hereto (such
amended and restated Debentures, the “A&R Debentures”). Following the Effective
Time, the Company shall promptly deliver to the Holders their respective A&R
Debentures, in each case in exchange for the surrender to the Company and
cancellation of the Holders’ original Debentures. Notwithstanding Section 8 or
other provision of this Amendment or of the Debentures, the Holders hereby
irrevocably waive the Monthy Redemption due May 1, 2019 if the Merger shall not
have been completed before such date.

 

3.       Amendment of Warrants. Subject to the terms and conditions herein, the
Holders’ Warrants are amended to increase by 20 percent the number of Warrant
Shares purchasable thereunder and reduce the Exercise Price thereof to $10.00
(subject to adjustment therein and restated in their entirety as set forth in
Exhibit B attached hereto (such amended and restated Warrants, the “A&R
Warrants”). Following the Effective Time, the Company shall promptly deliver to
the Holders their respective A&R Warrants, in each case in exchange for the
surrender to the Company and cancellation of the Holders’ original Warrants.

 

4.       Amendments to Purchase Agreement. Subject to the terms and conditions
herein:

 

Section 4.1(c) of the Purchase Agreement as it pertains to the Holders is
amended and restated to read in its entirety as follows:

 

“Certificates evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Underlying Shares pursuant
to Rule 144 (assuming cashless exercise of the Warrants), (iii) if such
Underlying Shares are eligible for sale under Rule 144 (assuming cashless
exercise of the Warrants), without the requirement for the Company to be in
compliance with the current public information required under Rule 144 as to
such Underlying Shares and without volume or manner-of-sale restrictions or (iv)
if such legend is not required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff
of the Commission). The Company shall cause its counsel to issue a legal opinion
to the Transfer Agent or the Purchaser promptly after the Effective Date if
required by the Transfer Agent to effect the removal of the legend hereunder, or
if requested by a Purchaser, respectively. If all or any portion of a Debenture
is converted or Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold under Rule 144 without the requirement for the
Company to be in compliance with the current public information required under
Rule 144 (assuming cashless exercise of the Warrants) as to such Underlying
Shares and without volume or manner-of-sale restrictions or if such legend is
not otherwise required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission) then such Warrant Shares shall be issued free of all legends.
The Company agrees that following the Effective Date or at such time as such
legend is no longer required under this Section 4.1(c), it will, no later than
two (2) Business Days following the delivery by a Purchaser to the Company or
the Transfer Agent of a certificate representing Warrant Shares, as applicable,
issued with a restrictive legend (such date, the “Legend Removal Date”), deliver
or cause to be delivered to such Purchaser a certificate representing such
shares that is free from all restrictive and other legends. The Company may not
make any notation on its records or give instructions to the Transfer Agent that
enlarge the restrictions on transfer set forth in this Section 4.1(c). Following
the Going Public Event Date, certificates for Underlying Shares subject to
legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by such Purchaser.”

 

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Section 4.1(d) of the Purchase Agreement as it pertains to the Holders is hereby
amended and restated to read in its entirety as follows:

 

“In addition to such Purchaser’s other available remedies, in the event that the
Company’s Common Stock is listed or quoted on a Trading Market, the Company
shall pay to a Purchaser, in cash, (i) as partial liquidated damages and not as
a penalty, for each $1,000 of Underlying Shares (based on the per share exercise
price of a Warrant Share or per share conversion price of the Debentures)
delivered for removal of the restrictive legend and subject to Section 4.1(c),
$10 per Business Day (increasing to $20 per Business Day five (5) Business Days
after such damages have begun to accrue) for each Business Day after the Legend
Removal Date until such certificate is delivered without a legend and (ii) if
the Company fails to (a) issue and deliver (or cause to be delivered) to a
Purchaser by the Legend Removal Date a certificate representing the Securities
so delivered to the Company by such Purchaser that is free from all restrictive
and other legends and (b) if after the Legend Removal Date such Purchaser
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Purchaser of all or any portion of the
number of shares of Common Stock, or a sale of a number of shares of Common
Stock equal to all or any portion of the number of shares of Common Stock that
such Purchaser anticipated receiving from the Company without any restrictive
legend, then, an amount equal to the excess of such Purchaser’s total purchase
price (including customary brokerage commissions and other reasonable
out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including customary brokerage commissions and other reasonable out-of-pocket
expenses, if any) (the “Buy-In Price”) over the product of (A) such number of
Underlying Shares that the Company was required to deliver to such Purchaser by
the Legend Removal Date multiplied by (B) the lowest closing sale price of the
Common Stock on any Business Day during the period commencing on the date of the
delivery by such Purchaser to the Company of the applicable Underlying Shares
(as the case may be) and ending on the date of such delivery and payment under
this clause (ii).”

 

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Section 4.3(a) of the Purchase Agreement as it pertains to the Holders is hereby
amended and restated to read in its entirety as follows:

 

“(a) If the Common Stock is not registered under Section 12(b) or 12(g) of the
Exchange Act on the date hereof, the Company agrees to cause the Common Stock to
be registered under Section 12(g) of the Exchange Act on or before the 60th
calendar day following the date hereof. Until the earliest of the time that (i)
no Purchaser owns Securities or (ii) all of the Securities may be sold without
the requirement of the Company to be in compliance with Rule 144(c)(1) and
otherwise without restriction or limitation pursauant to Rule 144, the Company
covenants to maintain the registration of the Common Stock under Section 12(b)
or 12(g) of the Exchange Act and the timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.”

 

5.       Representations and Warranties. The Company hereby makes to the Holders
as of the date hereof the following representations and warranties:

 

(a)       Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in: (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

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(b)       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 the Company and no
further action is required by the 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.

 

(c)       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 or any Subsidiary’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 any Subsidiary, 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 a Company or
Subsidiary debt or otherwise) or other material understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary 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
or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.

 

(d)       Bring Down of Representations and Warranties. The Company expressly
reaffirms that each of the Company’s representations and warranties set forth in
the Purchase Agreement (as supplemented or qualified by the disclosures in any
disclosure schedule thereto), continues to be true, accurate and complete in all
material respects as of the date hereof and the Company hereby remakes and
incorporates herein by reference each such representation and warranty as though
made on the date of this Agreement (unless as of a specific date therein),
except as set forth in the Company’s updated Disclosure Schedules accompanying
this Agreement.

 

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6.       Representations and Warranties of the Holder. Each Holder hereby
represents and warrants as of the date hereof to the Company as follows:

 

(a)       Organization; Authority. The Holder is either an individual or an
entity duly incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction of its incorporated or formed with full right,
corporate, partnership, limited liability company or similar 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 and performance by the Holder of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as
applicable, on the part of the Holder. This Agreement has been duly executed by
the Holder, and when delivered by the Holder in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the Holder,
enforceable against it 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)       Bring Down of Representations and Warranties. Each Holder expressly
reaffirms that each of the Holder’s representations and warranties set forth in
the Purchase Agreement continues to be true, accurate and complete in all
material respects as of the date hereof and the Holder hereby remakes and
incorporates herein by reference each such representation and warranty as though
made on the date of this Agreement (unless as of a specific date therein).

 

The Company acknowledges and agrees that the representations contained in this
Section 6 shall not modify, amend or affect the Holder’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transaction contemplated hereby.

 

7.       Company Acknowledgements. The Company hereby acknowledges and agrees
that (a) the A&R Debentures and the A&R Warrants delivered to the Holders
pursuant to this Agreement are issued to replace the Debentures and the
Warrants, (b) the security interests granted to the Holders pursuant to the
Security Agreement by and among the Company and the Holders, dated as of
September 7, 2018, applies to and covers the obligations of the Company to the
Holders evidenced by the A&R Debentures and (b) all references to Debentures and
Warrants in the Transaction Documents shall include the A&R Debentures and A&R
Warrants.

 

8.       Merger Condition; Expiration. The amendments to the Transaction
Documents set forth in this Agreement shall be effective immediately prior to
the Effective Time only. In the event that the Merger does not occur on or
before the “Outside Date” as defined in the MA, as it may be extended as
provided therein, then this Agreement shall automatically terminate and be of no
further force or effect and the Transaction Documents shall remain in full force
and effect under their respective terms and conditions as of the date
immediately prior to the date hereof.

 

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9.       Miscellaneous.

 

(a)       This Agreement may be executed in two or more counterparts and by
facsimile signature or otherwise, and each of such counterparts shall be deemed
an original and all of such counterparts together shall constitute one and the
same agreement. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.

 

(b)       If any provision of this Agreement is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be valid and
enforceable, and the invalidity or unenforceability of such provision shall not
affect the validity of the remaining provisions of this Agreement so long as
this Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).

 

(c)       Except as expressly set forth herein, all of the terms and conditions
of the Transaction Documents shall continue in full force and effect after the
execution of this Agreement and shall not be in any way changed, modified or
superseded by the terms set forth herein.

 

(d)       This Agreement shall be governed by and interpreted in accordance with
laws of the State of New York, excluding its choice of law rules. The parties
hereto hereby waive the right to a jury trial in any litigation resulting from
or related to this Agreement. The parties hereto consent to exclusive
jurisdiction and venue in the federal courts sitting in the southern district of
New York, unless no federal subject matter jurisdiction exists, in which case
the parties hereto consent to exclusive jurisdiction and venue in the New York
state courts in the borough of Manhattan, New York. Each party waives all
defenses of lack of personal jurisdiction and forum non conveniens. Process may
be served on any party hereto in the manner authorized by applicable law or
court rule.

 

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

 

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IN WITNESS WHEREOF, this Securities Amendment Agreement is executed as of the
date first set forth above.

 

EMMAUS LIFE SCIENCES, INC.           By:   /s/ Yutaka Niihara      
Name:  Yutaka Niihara, M.D., M.P.H.       Title:    Chairman and Chief Executive
Officer  

 

[Signature page of Holder to follow]

 

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SIGNATURE PAGE OF HOLDER TO

SECURITIES AMENDMENT AGREEMENT

BY AND AMONG EMMAUS LIFE SCIENCES, INC. AND

THE HOLDERS THEREUNDER

 

Name of Holder:         By:             Name:           Title:    

 

[Signature Pages Continue]