Document:

Exhibit

Exhibit 10.4

Execution Copy

FIRST AMENDMENT TO INTERCREDITOR AGREEMENT

THIS FIRST AMENDMENT TO INTERCREDITOR AGREEMENT (this “Amendment”), dated as of May 6, 2019, is entered into by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, lender under the ABL Credit Agreement (such term and each other capitalized term used but not defined herein having the meaning given to it in the Intercreditor Agreement, as defined below), together with its successors and assigns (the “ABL Agent”) and TCW ASSET MANAGEMENT COMPANY LLC, in its capacity as collateral agent under the Term Credit Agreement, together with its successors and assigns in such capacity (the “Term Agent” and together with the ABL Agent, the “Agents”).  
W I T N E S S E T H
WHEREAS, the ABL Agent and Term Agent are party to that certain Intercreditor Agreement dated as of November 30, 2018 (as amended, restated or otherwise modified, the “Intercreditor Agreement”);
WHEREAS, as of the date hereof, the ABL Agent and the Borrowers are entering into a First Amendment to Fourth Amended and Restated Credit and Security Agreement (the “ABL Amendment”), which ABL Amendment, among other things, amends the definition of “Borrowing Base” appearing therein;
WHEREAS, in connection with the ABL Amendment, the ABL Agent and the Term Agent with to amend the Intercreditor Agreement as set forth herein; and
WHEREAS, upon the terms and conditions set forth herein, the ABL Agent and Term Agent are willing to make certain amendments to the Intercreditor Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.Amendments to Intercreditor Agreement.  Effective upon the satisfaction of the conditions precedent set forth in Section 3 hereof, and subject to the terms and conditions set forth herein, the Intercreditor Agreement is hereby amended as follows:
(a)Section 1.2 of the Intercreditor Agreement is hereby amended by amending and restating the definition of “Borrowing Base” as follows: 
“Borrowing Base” shall have the meaning given such term in the ABL Credit Agreement (as in effect on the First Amendment Effective Date (and without giving effect to any changes to the applicable percentages of, or the eligibility criteria with respect to, “Eligible Accounts”, “Eligible Equipment” or “Eligible Inventory” (and as each term used therein is defined) in the ABL Credit Agreement as in effect on First Amendment Effective Date)), in each case, whether or not then in effect)), measured after giving effect to any and all Reserves maintained by ABL Agent on the date of determination.
(b)Section 1.2 of the Intercreditor Agreement is hereby amended by adding the following defined term in appropriate alphabetical order:

LEGAL_US_E # 141533550.2

“First Amendment Effective Date” shall mean the “First Amendment Effective Date” as defined in the First Amendment to Fourth Amended and Restated Credit and Security Agreement among ABL Agent and the Borrowers dated as of May 6, 2019.
2.Representations and Warranties of Agents. Each Agent, severally (not jointly) as to itself, hereby represents and warrants to each other Agent that as of the date hereof it is duly authorized to execute this Amendment.
3.Conditions Precedent to Amendment. This Amendment shall become effective upon the later of the execution hereof by each of the Agents and the First Amendment Effective Date.
4.Miscellaneous.
(a)Effect of Amendment. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Agent under the Intercreditor Agreement, or constitute a waiver of any provision of the Intercreditor Agreement.
(b)Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other similar method of electronic transmission shall be as effective as delivery of a manually executed counterpart of this Amendment.
(c)Severability. In the event that any provision of this Amendment is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity, legality and enforceability of the remaining provisions of this Amendment shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Amendment.
(d)Captions. Section captions used in this Amendment are for convenience only, and shall not affect the construction of this Amendment.
(e)Entire Agreement. This Amendment embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof.
(f)References. Any reference to the Intercreditor Agreement contained in any notice, request, certificate, or other document executed concurrently with or after the execution and delivery of this Amendment shall be deemed to include this Amendment unless the context shall otherwise require. Reference in any of this Amendment, the ABL Credit Loan Agreement, the Term Credit Agreement or any other ABL Document or Term Document to the Intercreditor Agreement shall be a reference to the Intercreditor Agreement as amended hereby and as further amended, modified, restated, supplemented or extended from time to time.
(g)Reaffirmation; Continued Effectiveness. Each Agent acknowledges and reaffirms that notwithstanding this Amendment or any other matter the Intercreditor Agreement, as amended hereby, shall remain in full force and effect.

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LEGAL_US_E # 141533550.2

5.Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
[Signature pages follow.]

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LEGAL_US_E # 141533550.2

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as ABL Agent
By:    /s/ Amber Vestal                    
Name:    Amber Vestal                
Title:    Vice President                

[SIGNATURE PAGE TO FIRST AMENDMENT TO INTERCREDITOR]

TCW ASSET MANAGEMENT
COMPANY LLC, as Term Agent

By:    /s/ Suzanne Grosso                
Name:    Suzanne Grosso                
Title:    Managing Director            

[SIGNATURE PAGE TO FIRST AMENDMENT TO INTERCREDITOR]Exhibit

EXHIBIT 10.2.1

SUMMARY OF COMPENSATION FOR THE
COMPANY'S NON-EMPLOYEE DIRECTORS

On May, 22 2019, the Board of Directors (the "Board") of EMC Insurance Group Inc. (the "Company") approved the terms of compensation to be paid to non-employee directors for the ensuing year, effective as of May 22, 2019 (the date of the Company's board meeting).  Compensation for non-employee directors includes an annual retainer of $75,000, board and committee meeting attendance fees of $2,500 per meeting, and reimbursement of travel and business expenses.  In addition, the chair of the Board of Directors shall receive an annual fee of $22,000, the chair of the audit committee shall receive an annual fee of $18,000, the chairs of all other board committees shall receive an annual fee of $5,000, and the chairs of each board committee shall receive an additional $1,000 committee meeting fee for each meeting at which such director serves as chair.  Non-employee directors are also entitled to receive $1,000 ($1,500 for the chair of the audit committee) for each special audit committee meeting held primarily for the purpose of considering revisions to the Company's non-GAAP operating income guidance for the year, $2,500 and reimbursement of travel and business expense for each day that they attend an approved educational program or seminar, $2,500 for each webinar and similar computer-based educational program attended lasting more than two hours, and $250 for each webinar and similar computer-based educational program attended lasting two hours or less.  

The non-employee directors are also eligible to participate in Employers Mutual Casualty Company’s Non-Employee Director Stock Purchase Plan, though this plan is currently suspended pending the outcome of the Agreement and Plan of Merger (the "Merger Agreement") between the Company, Employers Mutual, and Oak Merger Sub, Inc., a wholly owned subsidiary of Employers Mutual.  Under this plan, directors are allowed to purchase the Company’s common stock in an amount up to 100 percent of their annual retainer at a price equal to 75 percent of the fair market value of the common stock on the purchase date.

Due to the pending Merger Agreement, the non-employee director compensation in the forms of the annual retainer and the Board and various committee chair compensation shall be prorated monthly based on the number of months a director continues to serve on the Board.  Accordingly, such amounts shall be paid in twelve equal monthly installments beginning on May 23, 2019 and continuing on the 23rd day of each month thereafter; provided, however, that no further monthly payments shall be due and payable after a director resigns from his or her position on the Board; and provided further that once made, a monthly installment payment shall not be subject to forfeiture if a director resigns his or her position prior to the next monthly installment payment.embi_ex101.htm

EXHIBIT 10.1
 
THE SYMBOL “[****]” DENOTES PLACES WHERE CERTAIN IDENTIFIED
INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i)
NOT MATERIAL, AND (ii) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE
COMPANY IF PUBLICLY DISCLOSED
 
FIRST AMENDMENT TO SUPPLY AGREEMENT
 
This First Amendment to the Supply Agreement (the “First Amendment”), dated as of July 30, 2019 (“First Amendment Effective Date”), is entered into by and between Noramco, Inc., a Georgia corporation, (“Noramco”) and EMERALD Bioscience, Inc., a Nevada corporation, with a place of business at 130 N. Marina Drive, Long Beach, CA 90803 (“Client”), to amend that certain Supply Agreement entered into between Noramco and NEMUS Bioscience, Inc. effective as of February 25, 2019 (the “Agreement”).
 
Whereas, NEMUS Bioscience, Inc. has changed its name to EMERALD Bioscience, Inc., and the parties wish to add a new API and SOW to the Agreement. Noramco and Client desire to amend the Agreement on the terms and conditions set forth herein. Now, therefore, for the promises exchanged herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows: 
 
1. Amendments. The terms of the Agreement shall be modified and amended only as set forth below. Capitalized terms used, but not defined herein, shall have the meanings given to such terms in the Agreement.
 
(a) This Agreement is amended by deleting “NEMUS Bioscience, Inc.” in its entirety from the first paragraph and signatory line of the Agreement and replacing it with the following:
 
“EMERALD Bioscience, Inc.”
 
(b) Section 1.2 of the Agreement is amended by adding the following after “(CBDVHS)”:
 
“and Tetrahydrocannabinol-Mono-Valinate-Mono-Hemisuccinate (THCVHS)”
 
(c) Exhibit A is amended by adding the attached new SOW related to THCVHS.
 
(d) Section 9.3 and Exhibit B are each amended by deleting “NEMUS” and replacing with the following:
 
“Emerald”
 
2. This First Amendment will be effective and binding on the Parties from and after the First Amendment Effective Date. This First Amendment shall not amend or modify the covenants, terms, conditions, rights and obligations of the parties under the Agreement, except as specifically set forth herein. The Agreement shall continue in full force and effect in accordance with its terms as amended by this First Amendment.
 
[Remainder of Page Intentionally Left Blank]  	 
	 
	
 
	 

 
IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute this First Amendment as of the First Amendment Effective Date.
 
	NORAMCO, INC.
	 
	EMERALD Bioscience, Inc.
	 

	 
	 
	 
	 
	 
	 

	By:
	/s/ T.L. Jones
	 
	By:
	/s/ Brian Murphy, MD 
	 

	 
	 
	 
	 
	 
	 

	Name:
	T. L. Jones 
	 
	Name:
	 Brian Murphy, MD
	 

	 
	 
	 
	 
	 
	 

	Title:
	VP Business Development 
	 
	Title: 
	 Chief Executive Officer 
	 

 
[Signature Page to First Amendment to Supply Agreement]
 
	 
	 
	
 
	 

 
Exhibit A 
 
Scope of Work
 
THCVHS
 
 
	Part 1: 
	Synthesis of [****] non-GMP THCVHS suitable for preclinical studies.

	 
	 
	 

	Part 2: 
	GMP Manufacturing of [****] THCVHS suitable for Phase 1 human clinical trials.

	 
	 
	 

	 
	a.
	Process development to identify a suitable route to scale-up and manufacture Phase 1 clinical supplies.

	 
	b.
	GMP production of up to [****] of THCVHS suitable for Phase 1 human clinical trials.

	 
	c. 
	Analytical development in support of Phase 1 API release testing, method qualification/validation for the Phase 1 API, and a certificate of analysis.

	 
	d.
	A Phase 1 stability study to support API retest period and container closure selection of the clinical trial material. 

	 
	 
	 

	Location: 
	[****]

	 
	 

	Testing:
	Full Analytical Certificate of Analysis: Chemical Identification, Solvent Impurities, Inorganic Impurities, Chromatographic Impurities, Micro Limits Testing. Validated/qualified methods for release of the Phase 1 supply.

	 
	 

	Specifications: 
	To be determined. Specifications will follow US FDA regulations and guidelines for Phase 1 human clinical use. Noramco and EMBI must agree to specifications before GMP production of [****] can begin.

	 
	 

	Timing: 
	Part 1: [****] from PO receipt
Part 2: GMP manufacturing initiation: [****] 2019*
GMP material shipment: [****] 2019*

	 
	 

	 
	*Manufacturing window is flexible and will be locked upon receipt of a PO. PO is required to support DEA quota submission request as well as reserving regulatory starting materials.

	 
	 

	Payment
	 

	Terms:
	For each respective part of the proposal, [****]% ($257,800) paid in advance, [****]% ([****]) paid upon shipment of material.

	 
	 

	Reporting:
	This project will be assigned a project manager to provide EMBI with a single point of contact for continuity. Regular teleconferences will be held throughout the duration of the project.

	 
	 

	Stability:
	Noramco will conduct a stability study on the clinical API of not less than 12 months. The stability conditions and timepoints will follow the general guidance outlined in ICH Q1 so far as storage conditions and frequency of testing. Noramco will develop and use stability-indicating methods to conduct testing.

	 
	 

	Reference 
	 

	Standards: 
	Noramco will develop and qualify an API analytical reference standard to support EMBI’s dosage form development as well as support release testing.

 
	 
	 
	
 
	 

 
Assumptions:
 
	·	Noramco’s manufacturing activities for [****] of material will be performed under GMP conditions and considered suitable for Phase I clinical trials in humans. The GMP clinical material will be manufactured as a non-sterile parenteral grade.
	 
	 

	·	Total volume of material may be delivered in multiple batches.
	 
	 

	·	This offer is contingent on Noramco being able to secure starting material from its existing supply chain.
	 
	 

	·	The proposal is contingent on approval of appropriate US DEA quota to execute the campaign for production of [****] GMP material.
	 
	 

	·	If the work cannot be completed in the time allotted, then Noramco will notify EMBI.
	 
	 

	·	If Noramco deems the chemistry to be unsafe at any time, Noramco reserves the right to stop research and notify EMBI within 5 business days.
	 
	 

	·	New IP or trade secret(s) specifically relating to EMBI’s THCVHS product, as described in the scope of work under this proposal, will belong to EMBI.
	 
	 

	·	If EMBI has qualified/validated analytical methods for THCVHS available, Noramco will utilize the analytical package for release of GMP clinical use material. Otherwise, Noramco will develop/qualify analytical methods.
	 
	 

	·	CMC information will be provided to EMBI for the clinical regulatory filing, as requested.

 
 
Price for API and Services: 
 
Part 1: [****] non-GMP THCVHS:                  $[****]
 
Part 2: Up to [****] GMP THCVHS:               $[****]*
 
*Price above includes preparation of cGMP documentation, plant time, analytical method development/qualification/transfer, analytical release testing, stability testing (12 months), R&D, etc. The material will be a manufactured as a non-sterile parenteral grade (NSP), which could be suitable for a sterile dosage form.

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