EXHIBIT 3.1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 2017
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Nemus Bioscience, Inc. |
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(Exact name of registrant as specified in its charter) |
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Nevada |
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000-55136 |
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45-0692882 |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
600 Anton Boulevard, Suite 1100, Costa Mesa, CA 92626
(Address of principal effective offices) (Zip Code)
Registrant's telephone number, including area code: (949) 396-0330
_______________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on December 29, 2016, Nemus Bioscience, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Agreement”) to sell up to 1,500 shares of Series D Convertible Preferred Stock (“Preferred Shares”) to certain accredited investors (as such terms are defined in the Securities Act of 1933 and the rules and regulations promulgated thereunder, all as amended) at a purchase price of $1,000 for each Preferred Share for aggregate gross proceeds of up to $1,500,000 (the “Financing”). Pursuant to the Agreement, the Preferred Shares were to be issued and sold in two closings.
On January 3, 2017, the Company consummated the first closing for the issuance and sale of 500 Preferred Shares for aggregate gross proceeds of $500,000 (the “Initial Closing”).
On January 9, 2017, the Company consummated the second closing for the issuance and sale of 700 Preferred Shares for aggregate gross proceeds of $700,000 (the “Additional Closing”). Pursuant to the terms of the Agreement, the accredited investors who purchased shares in the Additional Closing (together with the accredited investors who purchased shares in the Initial Closing, the “Purchasers”) became a party to the Agreement. The terms of the Preferred Shares issued and sold in the Additional Closing are the same as the terms of the Preferred Shares issued and sold in the Initial Closing, as described in the Company’s Current Report on Form 8-K filed with the Commission on December 29, 2016, which is incorporated by reference herein.
In connection with the Initial Closing, the Company entered into Lock-Up Agreements (“Lock-Up Agreements”) with each of the Company’s officers and directors, including Brian S. Murphy, Elizabeth M. Berecz, Cosmas N. Lykos, Gerald W. McLaughlin, Thomas A. George and Douglas S. Ingram (collectively, the “Lock-Up Stockholders”), as a condition to, and to be effective, on the Initial Closing. The Lock-Up Agreements provide that each of the Lock-Up Stockholders have agreed to refrain from selling shares of the Company’s common stock from the date of the Lock-Up Agreements and to the date that is ninety (90) days after the earlier of (i) the date that one or more registration statements covering the resale of all the shares of common stock underlying the Series D Convertible Preferred Stock sold pursuant to the Agreement has been effective and available for the re-sale of all such securities and (ii) the date all the shares of common stock underlying the Series D Convertible Preferred Stock sold pursuant to the Agreement are eligible for sale without restriction or limitation pursuant to Rule 144.
The foregoing description of the Lock-Up Agreements is not complete and is qualified in its entirety by reference to the full text of the form of Lock-Up Agreements, a copy of which is filed as Exhibit 10.1 to this report and is incorporated by reference herein.
Item 3.02. Unregistered Sales of Equity Securities.
At the Initial Closing and the Additional Closing, the Company closed the issuance and sale of 500 and 700 Preferred Shares, respectively, to certain accredited investors at an aggregate purchase price of $500,000 and $700,000, respectively (collectively, the “Financing”), or $1,000 for each Preferred Share pursuant to the Agreement. The designations, preferences and relative rights of the Series D Convertible Preferred Stock are specified in the Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, a description of which is provided below in Item 5.03.
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As part of the terms of the Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers pursuant to which the Company has agreed to file a registration statement to register for resale the shares of common stock underlying the Preferred Shares, within 30 calendar days following the Initial Closing. Subject to certain exceptions, in the event the registration statement does not become effective within certain time periods set forth in the Registration Rights Agreement, the Company would be required to pay the Purchasers in the Financing an amount in cash equal to two percent (2.0%) of the aggregate purchase price of the Preferred Shares every month until such time as the registration statement becomes effective or the shares of common stock underlying the Preferred Shares sold in the Financing may be sold by the Purchasers pursuant to Rule 144 without any restrictions or limitations.
The foregoing description of the Agreement and the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by the form of Agreement and the form of Registration Rights Agreement, attached to the Company’s Current Report on Form 8-K filed with the Commission on December 29, 2016, each of which is incorporated herein by reference.
Roth Capital Partners LLC (“Roth”) served as placement agent for the Financing and will receive a warrant to purchase 480,000 shares of common stock at an exercise price of $0.25 per share for a term of five years (the “Warrant”) for its services in the Financing. The Warrant will be exercisable by Roth by payment in cash or on a cashless basis. In the event that the Warrant is exercised on a cashless basis, the Company will not receive any proceeds. The exercise price of the Warrant will be subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like.
The Preferred Shares were and the Warrant will be offered and issued in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. The Purchasers represented to the Company that each was an “accredited investor” as such term is defined under Regulation D and the Financing did not involve any form of general solicitation or general advertising.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On December 29, 2016, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of Nevada to create a series of preferred stock consisting of one thousand five hundred (1,500) out of the twenty million (20,000,000) shares of the Company’s Preferred Stock, which will be designated “Series D Convertible Preferred Stock.” The Certificate of Designation was approved by the Company's Board of Directors on December 28, 2016. The Certificate of Designation provides, among other things, that:
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The Preferred Shares have a stated value of $1,000 per share (“Stated Value”) and are convertible into shares of common stock at a conversion price of $0.25. |
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The Series D Convertible Preferred Stock include customary provisions including anti-dilution protection, rights upon a fundamental transaction and adjustments for dividends and purchase rights. |
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The Series D Convertible Preferred Stock includes a “most favored nation” provision which provides that as long as the Purchasers hold any of the Preferred Shares, if the Company issues any new securities in a private placement or public offering (a “ Subsequent Financing ”), the Purchasers may exchange all of the Preferred Shares at their Stated Value for the securities issued in the Subsequent Financing on the same terms of such Subsequent Financing. |
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The Series D Convertible Preferred Stock has a limitation on conversion into common stock to preclude the holder from acquiring beneficial ownership of more than 4.99% of our outstanding common stock, which may be increased to 9.99% in certain circumstances. |
This brief description of the Certificate of Designation is not intended to be complete and is qualified in its entirety by reference to the full text of the Certificate of Designation as attached as Exhibit 3.1 to this report and incorporated by reference herein.
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Item 7.01 Regulation FD Disclosure.
On January 10, 2017, the Company issued a press release announcing the closing of the Financing. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The Company is furnishing the information in this Current Report on Form 8-K and in Exhibit 99.1 to comply with Regulation FD. Such information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statement and Exhibits.
(d) Exhibits
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Description |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Nemus Bioscience, Inc. |
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Date: January 10, 2017 |
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/s/ Brian Murphy |
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Brian Murphy |
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Chief Executive Officer |
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EXHIBIT INDEX
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Description |
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EXHIBIT 3.1
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EXHIBIT 10.1
NEMUS BIOSCIENCE, INC.
December __, 2016
Nemus Bioscience, Inc.
600 Anton Blvd., Suite 1100
Costa Mesa, California 92626
Telephone: (949) 396-0330
Facsimile: (949) 266-0346
Re: Nemus Bioscience, Inc. - Lock-Up Agreement
Dear Sirs:
This Lock-Up Agreement is being delivered to you in connection with the Securities Purchase Agreement (the " Purchase Agreement "), dated as of December 28, 2016 by and among Nemus Bioscience, Inc. (the " Company ") and the investors party thereto (the " Buyers "), with respect to the issuance of shares of Series D Convertible Preferred Stock of the Company, par value $0.001 per share. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.
In order to induce the Buyers to enter into the Purchase Agreement, the undersigned agrees that, commencing on the date hereof and ending on the date that is ninety (90) days after the earlier of (x) the date that one or more Registration Statement(s) (as defined in the Registration Rights Agreement) covering the resale of all Registrable Securities (as defined in the Registration Rights Agreement) has been effective and available for the re-sale of all such Registrable Securities and (y) the date all the Conversion Shares are eligible for sale without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the 1933 Act (the " Lock-Up Period "), the undersigned will not, and will cause all affiliates (as defined in Rule 144 promulgated under the 1933 Act) of the undersigned or any person in privity with the undersigned or any affiliate of the undersigned not to, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase, make any short sale or otherwise dispose of or agree to dispose of, directly or indirectly, any shares of Common Stock or Common Stock Equivalents, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities and Exchange Act of 1934, as amended and the rules and regulations of the Securities and Exchange Commission promulgated thereunder with respect to any shares of Common Stock or Common Stock Equivalents owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the Securities and Exchange Commission (collectively, the " Undersigned's Shares "), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Undersigned's Shares, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of shares of Common Stock or other securities, in cash or otherwise, (iii) make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of Common Stock or Common Stock Equivalents or (iv) publicly disclose the intention to do any of the foregoing.
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The foregoing restriction is expressly agreed to preclude the undersigned, and any affiliate of the undersigned and any person in privity with the undersigned or any affiliate of the undersigned, from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned's Shares even if the Undersigned's Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include, without limitation, any short sale or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any of the Undersigned's Shares or with respect to any security that includes, relates to, or derives any significant part of its value from the Undersigned's Shares.
Notwithstanding the foregoing, the undersigned may transfer the Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein or (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value. For purposes of this Lock-Up Agreement, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. The undersigned now has, and, except as contemplated by the immediately preceding sentence, for the duration of this Lock-Up Agreement will have, good and marketable title to the Undersigned's Shares, free and clear of all liens, encumbrances, and claims whatsoever. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent (the " Transfer Agent ") and registrar against the transfer of the Undersigned's Shares except in compliance with the foregoing restrictions.
In order to enforce this covenant, the Company shall impose irrevocable stop-transfer instructions preventing the Transfer Agent from effecting any actions in violation of this Lock-Up Agreement.
The undersigned acknowledges that the execution, delivery and performance of this Lock-Up Agreement is a material inducement to each Buyer to complete the transactions contemplated by the Purchase Agreement and that the Company shall be entitled to specific performance of the undersigned's obligations hereunder. The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform this Lock-Up Agreement, that the undersigned has received adequate consideration therefor and that the undersigned will indirectly benefit from the closing of the transactions contemplated by the Purchase Agreement.
The undersigned understands and agrees that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned's heirs, legal representatives, successors, and assigns.
This Lock-Up Agreement may be executed in two counterparts, each of which shall be deemed an original but both of which shall be considered one and the same instrument.
This Lock-Up Agreement will be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice of law or conflicting provision or rule (whether of the State of New York, or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of New York to be applied. In furtherance of the foregoing, the internal laws of the State of New York will control the interpretation and construction of this Lock-Up Agreement, even if under such jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.
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Very truly yours, |
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Agreed to and Acknowledged: |
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NEMUS BIOSCIENCE, INC. |
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EXHIBIT 99.1
NEMUS Bioscience Announces Closing of $1,200,000 Preferred Stock Financing
COSTA MESA, CA – January 10, 2017 - NEMUS Bioscience, Inc. (OTCQB: NMUS) today announced the closing of its Preferred Stock financing for gross proceeds of $1,200,000. Roth Capital Partners acted as the exclusive placement agent for the transaction.
ABOUT NEMUS BIOSCIENCE, INC.
The Company is a biopharmaceutical company, headquartered in Costa Mesa, California, focused on the discovery, development, and commercialization of cannabis-based therapeutics for significant unmet medical needs in global markets. Utilizing certain proprietary technology licensed from the University of Mississippi, NEMUS is working to develop novel ways to deliver cannabis-based drugs for specific indications, with the aim of optimizing the clinical effects of such drugs, while limiting the potential adverse events. NEMUS' strategy will explore the use of natural and synthetic compounds, alone or in combination. The Company is led by a highly qualified team of executives with decades of biopharmaceutical experience and significant background in early-stage drug development. For more information, visit www.nemusbioscience.com .
CONTACTS:
Adam Holdsworth, Investor Relations
Email: adamh@pcgadvisory.com
Phone: 646-862-4607
Janet Vasquez, Public Relations
Email: jvasquez@jvprny.com
Phone: 212-645-5498