SIGNING DEBENTURE
NEITHER
THESE
SECURITIES
NOR
THE
SECURITIES
ISSUABLE
UPON
CONVERSION
HEREOF
HAVE
BEEN
REGISTERED
WITH
THE
UNITED
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
OR
THE
SECURITIES
COMMISSION
OF
ANY
STATE
OR
UNDER
THE
SECURITIES
ACT
OF
1933,
AS
AMENDED. THE
SECURITIES
ARE
RESTRICTED
AND
MAY
NOT
BE
OFFERED,
RESOLD,
PLEDGED
OR
TRANSFERRED
EXCEPT
AS
PERMITTED
UNDER
THE
ACT
PURSUANT
TO
REGISTRATION
REQUIREMENTS THEREOF OR EXEMPTION THEREFROM.
PARALLAX HEALTH SCIENCES, INC.
CONVERTIBLE DEBENTURE DUE NOVEMBER 14, 2021
Issuance Date: November 14, 2018
Principal Amount: $125,000.00
FOR
VALUE
RECEIVED,
PARALLAX
HEALTH
SCIENCES,
INC.
,
a
corporation
organized
and
existing
under
the
laws
of
the
State
of
Nevada
(the
“
Company
”
),
hereby
promises
to
pay
to
PEAK
ONE
OPPORTUNITY
FUND,
L.P.
,
having
its
address
at
333
South
Hibiscus
Drive,
Miami
Beach,
FL 33139,
or
its
assigns
(the
“
Holder
”
and
together
with
the
other
holders
of
Debentures
issued
pursuant
to
the
Securities
Purchase
Agreement
(as
defined below), the
“
Holders
”
),
the initial principal sum of One
Hundred
Twenty Five Thousand
and 00/100 Dollars ($125,000.00) (subject to adjustment as provided herein, the
“
Principal
Amount
”
) on November 14, 2021 (the
“
Maturity Date
”
). The Company has the option to redeem
this
Debenture
prior
to
the
Maturity Date
pursuant
to
Section
2(b).
All
unpaid
principal
due
and
payable
on
the
Maturity
Date
shall
be
paid
in
the
form
of
Common
Stock
of
the
Company,
par
value
$0.001
per
share
(
“
Common
Stock
”
)
pursuant
to
Section
3.
The
Holder
has
the
option
to
cause
any
outstanding
principal
and
accrued
interest,
if
any,
on
this
Debenture
to
be
converted
into Common Stock at any time prior to the Redemption Date (as defined
below) or the Maturity
Date pursuant to Section 2(a).
This
Debenture
is
one
of
the
Debentures
referred
to
in
the
Securities
Purchase
Agreement
(the
“
Securities
Purchase
Agreement
”
)
dated
as
of
November
14,
2018,
between
the
Company and the Holder. Capitalized terms used but not defined herein shall have the meanings
set forth in the Securities Purchase Agreement. This Debenture is subject to the provisions of the
Securities Purchase Agreement and further is subject to the following additional provisions:
1.
This Debenture has
been issued subject to investment representations
of the
original
purchaser
hereof
and
may
be
transferred
or
exchanged
only
in
compliance
with
the
Securities Act and other
applicable state and
foreign securities laws.
The
Holder may transfer or
assign
this
Debenture
(or
any
part
thereof)
without
the
prior
consent
of
the
Company,
and
the
Company
shall
cooperate
with
any
such
transfer. In
the
event
of
any
proposed
transfer
of
this
Debenture,
the
Company
may require,
prior
to
issuance
of
a
new
Debenture
in
the
name
of
such
other
Person,
that
it
receive
reasonable
transfer
documentation
including
legal
opinions
that
the
issuance
of
the
Debenture
in
such
other
name
does
not
and
will
not
cause
a
violation
of
the
Securities Act or any applicable state or foreign securities laws or is exempt from the registration
requirements
of
the
Securities
Act.
Prior
to
due
presentment
for
transfer
of
this
Debenture
to
which
the
Company
has
consented,
the
Company
and
any
agent
of
the
Company
may
treat
the
Person
in
whose
name
this
Debenture
is
duly
registered
on
the
Company's
books
and
records
of
outstanding
debt
securities
and
obligations
(
“
Debenture
Register
”
)
as
the
owner
hereof
for
the
purpose
of
receiving
payment
as
herein
provided
and
for
all
other
purposes,
whether
or
not
this
Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to
the contrary.
2.
Conversion at Holder
’
s Option; Redemption at Company
’
s Option.
a.
The
Holder
is
entitled
to,
at
any
time
or
from
time
to
time,
convert
the
Conversion
Amount
(as
defined
below)
into
Conversion
Shares,
at
a
conversion
price
for
each
share
of
Common
Stock
(the
“
Conversion
Price
”
)
equal
to
either:
(i)
if
no
Event
of
Default
(as
defined
herein)
has
occurred
and
the
date
of
conversion
is
prior
to
the
date
that
is
one
hundred
eighty
(180)
calendar
days
after
the
Issuance
Date,
$0.12,
or
(ii)
if
an
Event
of
Default
has
occurred or the date of conversion is on or after the date that is one hundred
eighty
(180)
calendar
days
after
the
Issuance
Date,
the
lesser
of
(a)
$0.12
or
(b)
Seventy percent
(70%)
of
the
second
lowest
traded
price
(as
reported
by
Bloomberg
LP)
of
the
Common
Stock
for
the
twenty
(20)
Trading
Days
immediately
preceding
the
date
of
the
date
of
conversion
of
the
Debentures
(for
clarification
purposes,
if
the
lowest
traded
price
during
the
applicable
period
is
equal
to
the
second
lowest
traded
price
during
the
applicable
period,
then
such
lowest
traded
price
shall
still
be
utilized
for
purposes
of
this
calculation),
provided,
further,
that
if
either
the
Company
is
not
DWAC
Operational
at
the
time
of
conversion
or
the
Common
Stock
is
traded
on
the
OTC
Pink
(
“
OTCP
”
)
at
the
time
of
conversion,
then
Seventy
percent
(70%)
shall
automatically
adjust
to
Sixty
percent
(60%)
of
the
second
lowest
traded
price
(as
reported
by
Bloomberg
LP)
of
the
Common
Stock
for
the
twenty
(20)
Trading
Days
immediately
preceding
the
date
of
conversion
of
the
Debentures
(for
clarification
purposes,
if
the
lowest
traded
price
during
the
applicable
period
is
equal
to
the
second
lowest
traded
price
during
the
applicable
period,
then
such
lowest
traded price shall still be utilized for purposes of this calculation), subject in each case to
equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar
events.
The
Company
shall
issue
irrevocable
instructions
to
its
Transfer
Agent
regarding
conversions
such
that
the
transfer
agent
shall
be
authorized
and
instructed
to
issue
Conversion
Shares
upon
its
receipt
of
a
Notice
of
Conversion
without
further
approval
or
authorization
from
the
Company.
For
purposes
of
this
Debenture,
the
“
Conversion
Amount
”
shall
mean
the
sum
of
(A)
all
or
any
portion
of
the
outstanding
Principal
Amount
of
this
Debenture,
as
designated
by
the
Holder
upon
exercise
of
its
right
of
conversion
plus
(B)
any
interest,
pursuant
to
Section
10
or
otherwise,
that
has
accrued
on
the
portion
of
the
Principal
Amount
that
has
been
designated
for payment pursuant to (A).
Conversion shall be effectuated by delivering by facsimile, email or other delivery
method
to
the
Transfer
Agent
of
the
completed
form
of
conversion
notice
attached
hereto
as
Annex
A
(the
“
Notice
of
Conversion
”
),
executed
by
the
Holder
of
the
Debenture
evidencing
such
Holder's
intention
to
convert
this
Debenture
or
a
specified
portion
hereof. No
fractional
shares
of
Common
Stock
or
scrip
representing
fractions
of
shares
will
be
issued
on
conversion,
but
the
number
of
shares
issuable
shall
be
rounded
to
the nearest
whole
share.
The
Holder
may,
at
its
election,
deliver
a
Notice
of
Conversion
to
either
the
Company or
the
Transfer
Agent.
The
date
on
which
notice
of
conversion
is
given
(the
“
Conversion
Date
”
)
shall
be
deemed
to
be
the
date
on
which
the
Company or
the
Transfer
Agent,
as
the
case
may be,
receives
by fax,
email
or
other means of delivery used by the Holder the Notice of Conversion (such receipt being
2
evidenced by electronic
confirmation of delivery by facsimile or email or confirmation of
delivery by such other delivery method used by the Holder).
Delivery of a
Notice of Conversion
to
the
Transfer
Agent
may
be
given
by
the
Holder
by
facsimile,
or
by
delivery
to
the
Transfer
Agent
at
the
address
set
forth
in
the
Transfer
Agent
Instruction
Letter
(or
such
other
contact
facsimile
number,
email
or
street
address
as
may
be
designated
by
the
Transfer
Agent
to
the
Holder).
Delivery
of
a
Notice
of
Conversion
to
the
Company
shall
be
given
by
the
Holder
pursuant
to
the
notice
provisions
set
forth
in
Section
10
of
the
Agreement.
The
Conversion
Shares
must
be
delivered
to
the
Holder
within
two (2)
business
days
from
the
date
of
delivery of
the
Notice
of
Conversion
to
the
Transfer
Agent
or
Company,
as
the
case
may
be. Conversion
shares
shall
be
delivered
by DWAC
so
long
as
the
Company is
then
DWAC
Operational,
unless
the
Holder
expressly
requests
delivery
in
certificated
form
or
the
Conversion
Shares
are
in
the
form of Restricted Stock and are required to bear
a restrictive legended. Conversion Shares shall
be deemed delivered (i) if delivered by DWAC, upon deposit into the Holder
’
s brokerage
account,
or
(ii)
if
delivered
in
certificated
form,
upon
the
Holder
’
s
actual
receipt
of
the
Conversion
Shares
in
certificated
form
at
the
address
specified
by
the
Holder
in
the
Notice
of
Conversion,
as
confirmed
by
written
receipt.
All
expenses
incurred
by
Holder,
for
the
issuance
and
clearing
of
the
Common
Stock
into
which
this
Debenture
is
convertible
into,
shall
immediately
and
automatically
be
added
to
the
balance
of
the
Debenture
at
such
time
as
the
expenses are incurred by Holder.
If
at
any
time
the
Conversion
Price
as
determined
hereunder
for
any
conversion
would be less than the par value of the Common Stock, then at the sole discretion of the Holder,
the
Conversion
Price
hereunder
may
equal
such
par
value
for
such
conversion
and
the
Conversion Amount for such conversion may
be increased to include Additional Principal,
where
“
Additional
Principal
”
means
such
additional
amount
to
be
added
to
the
Conversion
Amount
to
the
extent
necessary
to
cause
the
number
of
conversion
shares
issuable
upon
such
conversion
to
equal
the
same
number
of
conversion
shares
as
would
have
been
issued
had
the
Conversion Price not been adjusted by the Holder to the par value price.
Notwithstanding the foregoing, unless the Holder delivers to the Company written
notice
at
least
sixty-one
(61)
days
prior
to
the
effective
date
of
such
notice
that
the
provisions
of
this
paragraph
(the
“
Limitation
on
Ownership
”
)
shall
be
adjusted
to
9.99%
with
respect
to
the
Holder,
in
no
event
shall
a
holder
of
Debentures
have
the
right
to
convert
Debentures
into,
nor
shall the Company issue to such Holder, shares of Common Stock to the extent that such
conversion
would
result
in
the
Holder
and
its
affiliates
together
beneficially
owning
more
than
4.99% of the then issued and outstanding shares of Common Stock. For purposes hereof,
beneficial
ownership
shall
be
determined
in
accordance
with
Section
13(d)
of
the
Exchange
Act
and Regulation 13D-G under the Exchange Act.
b.
So long as no Event of Default (as defined in Section 10) shall have
occurred
and
be
continuing
(whether
such
Event
of
Default
has
been
declared
by
the
Holder)
(unless the Holder consents to such redemption notwithstanding such Event of Default, as
described
in
clause
(v),
below),
the
Company may
at
its
option
call
for
redemption
all
or
part
of
the
Debentures,
with
the
exception
of
any
portion
thereof
which
is
the
subject
of
a
previously-
delivered Notice of Conversion, prior to the Maturity Date, as follows:
(i)
The Debentures called for redemption shall be redeemable by
the
Company,
upon
not
more
than
two
(2)
days
written
notice,
for
an
amount
(the
“
Redemption
3
Price
”
)
equal
to:
(i)
if
the
Redemption
Date
(as
defined
below)
is
ninety
(90)
calendar
days
or
less from the date of issuance of this Debenture, One Hundred Ten percent (110%) of the sum of
the
Principal
Amount
so
redeemed
plus
accrued
interest,
if
any;
(ii)
if
the
Redemption
Date
is
greater than or equal to ninety-one (91) calendar days from the date of issuance of this Debenture
and
less
than
or
equal
to
one
hundred
twenty
(120)
calendar
days
from
the
date
of
issuance
of
this
Debenture,
One
Hundred
Twenty
percent
(120%)
of
the
sum
of
the
Principal
Amount
so
redeemed plus accrued interest, if any; (iii) if the Redemption Date is greater than or equal to one
hundred twenty one (121) calendar days from the date of issuance of this Debenture and less than
or
equal
to
one
hundred
eighty
(180)
calendar
days
from
the
date
of
issuance
of
this
Debenture,
One
Hundred Thirty
percent (130%)
of
the
sum of
the
Principal Amount so
redeemed plus
accrued interest, if any; and (iv) if either (1) the Debentures are in default but the Holder
consents
to
the
redemption
notwithstanding
such
default
or
(2)
the
Redemption
Date
is
greater
than
or
equal
to
one
hundred
eighty
one
(181)
calendar
days
from
the
date
of
issuance
of
this
Debenture,
One
Hundred
Forty percent
(140%)
of
the
sum
of
the Principal Amount
so
redeemed
plus
accrued
interest,
if
any.
The
date
upon
which
the
Debentures
are
redeemed
and
paid
shall
be referred to as the
“
Redemption Date
”
(and, in the case of multiple redemptions of less than the
entire
outstanding
Principal
Amount,
each
such
date
shall
be
a
Redemption
Date
with
respect
to
the corresponding redemption).
(ii)
If
fewer
than
all
outstanding
Debentures
are
to
be
redeemed
and
are
held
by different investors, then all Debentures shall be partially redeemed on a
pro rata
basis.
(iii) [Reserved]
(iv)
On
the
Redemption
Date,
the
Company
shall
cause
the
Holders
whose
Debentures
have
been
presented
for
redemption
to
be
issued
payment
of
the
Redemption
Price.
In
the
case
of
a
partial
redemption,
the
Company shall
also
issue
new
Debentures
to
the
Holders
for
the
Principal
Amount
remaining
outstanding
after
the
Redemption
Date
promptly
after
the
Holders
’
presentation of the Debentures called for redemption.
(v)
To
effect
a
redemption
the
Company
shall
provide
a
written
notice
to
the
Holder(s)
not
more
than
two
(2)
days
prior
to
the
Redemption
Date
(the
“
Redemption
Notice
”
),
setting forth the following:
1.
the Redemption Date;
2.
the Redemption Price;
3.
the
aggregate
Principal
Amount
of
the
Debentures
being
called
for
redemption;
4.
a
statement
instructing
the
Holders
to
surrender
their
Debentures
for
redemption
and
payment
of
the
Redemption
Price,
including
the
name
and
address
of
the
Company
or,
if
applicable,
the
paying
agent
of
the
Company,
where
Debentures
are
to
be
surrendered
for
redemption;
4
5.
a
statement
advising
the
Holders
that
the
Debentures
(or,
in
the
case
of
a
partial
redemption,
that
portion
of
the
Principal
Amount
being
called
for
redemption)
as
of
the
Redemption
Date
will
cease
to
be
convertible
into
Common
Stock
as
of
the
Redemption
Date;
and
6.
in
the
case
of
a
partial
redemption,
a
statement
advising
the
Holders
that
after
the
Redemption
Date
a
substitute
Debenture
will
be
issued
by the
Company after
deduction
the
portion
thereof
called
for
redemption,
at
no
cost
to
the
Holder,
if
the
Holder
so
requests.
Notwithstanding the foregoing, in the event the Company issues a Redemption Notice but fails to
fund
the
redemption
on
the
Redemption
Date,
then
such
Redemption
Notice
shall
be
null
and
void,
and
(i)
the
Holder(s)
shall
be
entitled
to
convert
the
Debentures
previously
the
subject
of
the Redemption Notice, and (ii) the Company may not redeem such Debentures for at least thirty
(30)
days
following
the
intended
Redemption
Date
that
was
voided,
and
the
Company
shall
be
required
to
pay
to
the
Holder(s)
the
Redemption
Price
simultaneously
with
the
issuance
of
a
Redemption Notice in connection with any subsequent redemption pursued by the Company.
3.
Unless
demand
has
otherwise
been
made
by the
Holder
in
writing
for
payment
in
cash as provided hereunder, and so long as no Event of Default shall exist (whether or not notice
thereof has been delivered by the Holder to the Company), any Debentures not previously
tendered
to
the
Company
for
conversion
as
of
the
Maturity
Date
shall
be
deemed
to
have
been
surrendered
for
conversion,
without
further
action
of
any
kind
by
the
Company
or
any
of
its
agents,
employees
or
representatives,
as
of
the
Maturity
Date
at
the
Conversion
Price
applicable
on the Maturity Date (
“
Mandatory Conversion
”
).
4.
No
provision
of
this
Debenture
shall
alter
or
impair
the
obligation
of
the
Company,
which is
absolute and unconditional to
convert this Debenture into Common Stock, at
the
time,
place,
and
rate
herein
prescribed.
This
Debenture
is
a
direct
obligation
of
the
Company.
5.
If
the
Company
(a)
merges
or
consolidates
with
another
corporation
or
business
entity
and
the
Company
is
not
the
surviving
entity
or
(b)
sells
or
transfers
all
or
substantially
all
of its assets to another Person and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for Common Stock, then as a condition of such
merger, consolidation, sale or transfer, the Company and any such successor, purchaser or
transferee
will
agree
that
this
Debenture
may thereafter
be
converted
on
the
terms
and
subject
to
the conditions set forth above into the kind and amount of stock, securities or property receivable
upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common
Stock
into
which
this
Debenture
might
have
been
converted
immediately
before
such
merger,
consolidation,
sale
or
transfer,
subject
to
adjustments
which
shall
be
as
nearly equivalent
as
may
be
practicable.
In
the
event
of
any
(i)
proposed
merger
or
consolidation
where
the
Company
is
not
the
surviving
entity
or
(ii)
sale
or
transfer
of
all
or
substantially
all
of
the
assets
of
the
Company (in
either
such
case,
a
“
Sale
”
),
the
Holder
shall
have
the
right
to
convert
by delivering
a
Notice
of
Conversion
to
the
Company within
fifteen
(15)
days
of
receipt
of
notice
of
such
Sale
from the Company.
5
6.
If, at any time while any portion of this Debenture remains outstanding, the
Company effectuates a stock split or reverse stock split of its Common Stock or issues a dividend
on its Common Stock consisting of shares of Common Stock or otherwise recapitalizes its
Common
Stock,
the
Conversion
Price
shall
be
equitably adjusted
to
reflect
such
action.
By way
of
illustration,
and
not
in limitation,
of the
foregoing (i)
if
the
Company effectuates
a
2:1
split
of
its
Common
Stock,
thereafter,
with
respect
to
any
conversion
for
which
the
Company
issues
the
shares
after
the
record
date
of
such
split,
the
Conversion
Price
shall
be
deemed
to
be
one-half
of
what
it
had
been
calculated
to
be
immediately prior
to
such
split;
(ii)
if
the
Company effectuates
a 1:10 reverse split of its Common Stock, thereafter, with respect to any conversion for which the
Company issues
the
shares
after
the
record
date
of
such
reverse
split,
the
Conversion
Price
shall
be deemed to
be
the
amount of such
Conversion
Price
calculated immediately prior
to the
record
date multiplied by 10; and (iii) if the Company declares a stock dividend of one share of
Common
Stock
for
every
10
shares
outstanding,
thereafter,
with
respect
to
any
conversion
for
which the Company issues the shares after the record date of such dividend, the Conversion Price
shall
be
deemed
to
be
the
amount
of
such
Conversion
Price
calculated
immediately prior
to
such
record
date
multiplied
by
a
fraction,
of
which
the
numerator
is
the
number
of
shares
for
which
a
dividend
share
will
be
issued
and
the
denominator
is
such
number
of
shares
plus
the
dividend
share(s) issuable or issued thereon.
7.
All
payments
contemplated
hereby
to
be
made
“
in
cash
”
shall
be
made
by
wire
transfer
of
immediately available
funds
in
such
coin
or
currency of
the
United
States
of
America
as
at
the
time
of
payment
is
legal
tender
for
payment
of
public
and
private
debts.
All
payments
of
cash
and
each
delivery
of
shares
of
Common
Stock
issuable
to
the
Holder
as
contemplated
hereby
shall
be
made
to
the
Holder
to
an
account
designated
by
the
Holder
to
the
Company
and
if the Holder has not designated any such accounts at the address last appearing on the Debenture
Register
of
the
Company
as
designated
in
writing
by
the
Holder
from
time
to
time;
except
that
the
Holder
may designate,
by notice
to
the
Company,
a
different
delivery
address
for
any one
or
more specific payments or deliveries.
8.
The
Holder
of
the
Debenture,
by
acceptance
hereof,
agrees
that
this
Debenture
is
being
acquired
for
investment
and
that
such
Holder
will
not
offer,
sell
or
otherwise
dispose
of
this Debenture or the Shares of Common Stock issuable upon conversion thereof except in
compliance
with the terms of the Securities Purchase Agreement and
under
circumstances which
will not result in a violation of the Securities Act or any applicable state Blue Sky or foreign laws
or similar laws relating to the sale of securities.
9.
This
Debenture
shall
be
governed
by
and
construed
in
accordance
with
the
laws
of
the
State
of
Nevada.
Each
of
the
parties
consents
to
the
exclusive
jurisdiction
and venue of
the
state
and/or federal
courts
located
in
Miami-Dade County,
Florida
in
connection
with
any
dispute
arising
under
this
Agreement,
and
each waives
any
objection
based
on forum
non
conveniens.
This
provision
is
intended
to
be
a
“
mandatory
”
forum
selection
clause
and
governed
by
and
interpreted
consistent
with
Florida
law (Nevada law governing all other,
substantive matters).
Each of the parties hereby
consents
to the
exclusive jurisdiction and
venue
of
any
state
or
federal
court
having
its
situs
in
Miami-Dade County,
Florida,
and
each
waives
any objection based on forum non conveniens
. To
the
extent
determined
by
such
court,
the
Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by
6
the
Holder
in enforcement of
or
protection
of any
of
its rights under this Debenture
or
the
Securities Purchase Agreement.
10.
The following shall constitute an
“
Event of Default
”
:
a.
The
Company
fails
in
the
payment
of
principal
or
interest
(to
the
extent
that
interest
is
imposed
under
this
Section
10)
on
this
Debenture
as
required
to
be
paid
in
cash
hereunder, and payment
shall not have been
made for
a period of five (5) business days
following the payment due date (as to which no further cure period shall apply); or
b.
Any
of
the
representations
or
warranties
made
by
the
Company
herein,
in
the
Securities
Purchase
Agreement
or
in
any
certificate
or
financial
or
other
written
statements
heretofore
or
hereafter
furnished
by
the
Company
to
the
Holder
in
connection
with
the
issuance
of this Debenture, shall be false or misleading (including without limitation by
way
of the
misstatement
of
a
material
fact
or
the
omission
of
a
material
fact)
in
any
material
respect
at
the
time made (as to which no cure period shall apply); or
c.
The
Company
fails
to
remain
listed
on
OTCP,
OTCQB,
or
OTCQX,
or
a
more
senior
stock
exchange
any
time
from
the
date
hereof
to
the
Maturity
Date
for
a
period
in
excess of five (5) Trading Days (as to which no further cure period shall apply); or
d.
The Company (i) fails to timely file required SEC reports when due
(including
extensions),
becomes,
is
deemed
to
be
or
asserts
that
it
is
a
“
shell
company
”
at
any
time
for
purposes
of
the
1933
Act,
and
Rule
144
promulgated
thereunder
or
otherwise
takes
any
action,
or
refrains
from
taking
any
action,
the
result
of
which
makes
Rule
144
under
the
1933
unavailable
to
the
Holder
for
the
sale
of
their
Securities,
(ii)
fails
to
issue
shares
of
Common
Stock to the
Holder
or to
cause
its Transfer
Agent to
issue shares of Common
Stock
upon
exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this
Debenture,
(iii)
fails
to
transfer
or
to
cause
its
Transfer
Agent
to
transfer
any
certificate
for
shares
of
Common
Stock
issued
to
the
Holder
upon
conversion
of
this
Debenture
as
and
when
required by this Debenture and such transfer is otherwise lawful, (iv) fails to remove any
restrictive legend or to cause its Transfer Agent to transfer any
certificate or any
shares of
Common Stock issued to the Holder upon
conversion of this Debenture
as
and when
required
by
the
relevant
Transaction
Document(s)
and
such
legend
removal
is
otherwise
lawful,
or
(v)
the
Company fails to perform or observe any of its obligations under the Section 5 of the Agreement
or
under
the
Transfer
Agent
Instruction
Letter
(no
cure
period
shall
apply
in
the
case
of
clauses
(i) through (v) above, inclusive); or
e.
The
Company
fails
to
perform
or
observe,
in
any
material
respect
(i)
any
other
covenant,
term,
provision,
condition,
agreement
or
obligation
set
forth
in
the
Debenture,
(subject
to
a
cure
period
of
five
(5)
days
other
than
in
the
case
of
a
failure
under
Section
5
hereof, as
to
which
no cure
period
shall
apply),
or
(ii)
any
other
covenant,
term,
provision,
condition,
agreement
or
obligation
of
the
Company
set
forth
in
the
Securities
Purchase
Agreement
and
such
failure
shall
continue
uncured
for
a
period
of
either
(1)
three
(3)
days
after
the
occurrence
of
the
Company
’
s
failure
under
Section
4(d),
(e)
(except
as
described
in
Section
10(c)
hereof,
as
to
which
Section
10(c)
hereof
shall
control),
(f),
(g)
or
(h)
of
the
Securities
Purchase
Agreement,
or
(2)
ten
(10)
days
after
the
occurrence
of
the
Company
’
s
failure
under
7
any other provision of the Securities Purchase Agreement not otherwise specifically addressed in
the Events of Default set forth in this Section 10; or
f.
The Company shall (1) admit in writing its inability to pay its debts
generally
as they
mature; (2)
make
an
assignment for
the
benefit of
creditors or
commence
proceedings for its dissolution; or (3) apply
for or consent to the appointment of a trustee,
liquidator
or
receiver
for
its
or
for
a
substantial
part
of
its
property
or
business
(as
to
which
no
cure period shall apply); or
g.
A
trustee,
liquidator
or
receiver
shall
be
appointed
for
the
Company or
for
a
substantial
part
of
its
property
or
business
without
its
consent
and
shall
not
be
discharged
within sixty
(60) days after such appointment (as to which no cure period shall apply); or
h.
Any
governmental
agency
or
any
court
of
competent
jurisdiction
at
the
instance of any governmental agency shall assume custody or control of the whole or any
substantial
portion
of
the
properties
or
assets
of
the
Company
and
shall
not
be
dismissed
within
sixty (60) days thereafter (as to which no cure period shall apply); or
i.
Any
money
judgment,
writ
or
warrant
of
attachment,
or
similar
process
(including an arbitral determination), in excess of Fifty Thousand Dollars ($50,000) in the
aggregate shall be entered or filed against the Company or any of its properties or other assets (as
to which no cure period shall apply); or
j.
The
occurrence
of
a
breach
or
an
event
of
default
under
the
terms
of
any
indebtedness or financial instrument of the Company or any subsidiary (including but not limited
to
any
Subsidiary)
of
the
Company
in
an
aggregate
amount
in
excess
of
Fifty
Thousand
Dollars
($50,000)
or
more
which
is
not
waived
by the
creditors
under
such
indebtedness
(as
to
which
no
cure period shall apply); or
k.
Bankruptcy, reorganization, insolvency or liquidation proceedings or other
proceedings
for
relief
under
any
bankruptcy
law
or
any
law
for
the
relief
of
debtors
shall
be
instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed
within
sixty
(60)
days
after
such
institution
or
the
Company
shall
by
any
action
or
answer approve of, consent to, or acquiesce in any such proceedings or admit the material
allegations
of,
or
default
in
answering
a
petition
filed
in
any
such
proceeding
(as
to
which
no
further cure period shall apply); or
l.
The
issuance
of
an
order,
ruling,
finding
or
similar
adverse
determination
the SEC, the Secretary of
State of the State of Nevada or other applicable state of incorporatin of
the
Company,
the
National
Association
of
Securities
Dealers,
Inc.
or
any
other
securities
regulatory
body
(whether
in
the
United
States,
Canada
or
elsewhere)
having
proper
jurisdiction
that the Company and/or any of its past or present directors or officers have committed a material
violation of applicable securities laws or regulations (as to which no cure period shall apply); or
m.
The
Company
shall
have
its
Common
Stock
suspended
or
delisted
from
a
national
securities
exchange
or
an
electronic
quotation
service
such
as
the
OTCP,
OTCQB,
or
OTCQX
for
a
period
in
excess
of
five
(5)
Trading
Days
(as
to
which
no
further
cure
period
shall
apply); or
8
n.
Any of the following shall occur and be continuing: a breach or default by
any
party
under
(a)
any
agreement
identified
by
the
Company
in
its
SEC
filings
as
a
material
agreement
or
(b)
any
note
or
other
form
of
indebtedness
in
favor
of
the
Company
representing
indebtedness of at least Fifty Thousand Dollars ($50,000.00), irrespective of whether such
breach or default was waived (as to which no cure period shall apply); or
o.
Notice
of
a
Material
Adverse
Effect
is
provided
by
the
Company
or
the
determination
in
good
faith
by
the
Holder
that
a
Material
Adverse
Effect
has
occurred
(as
to
which no cure period shall apply); or
p.
The
Company
attempts
to
modify,
amend,
withdraw,
rescind,
disavow
or
repudiate any part of the Irrevocable Instructions (as to which no cure period shall apply).
q.
Any
attempt
by
the
Company
or
its
officers,
directors,
and/or
affiliates
to
transmit,
convey,
disclose,
or
any
actual
transmittal,
conveyance,
or
disclosure
by
the
Company
or its officers, directors, and/or affiliates of, material non-public information concerning the
Company, to the Holder or its successors and assigns, which is not immediately cured by
Company
’
s filing of a Form 8-K pursuant to Regulation FD on that same date.
r.
At any time while this Debenture is outstanding, the lowest traded price on
the
OTCP,
OTCQB,
or
OTCQX,
or
other
applicable
principal
trading
market
for
the
Common
Stock, is equal to or less than
$0.0001.
Then, or at any time thereafter, the Company shall immediately give
written
notice
of
the
occurrence
of
such
Event
of
Default
to
the
Holders
of
all
Debentures
then
outstanding,
and
in
each
and
every
such
case,
unless
such
Event
of
Default
shall
have
been
waived
in
writing
by
a
majority in
interest
of
the
Holders
of
the
Debentures
(which
waiver
shall
not
be
deemed
to
be
a
waiver
of
any
subsequent
default),
then
at
the
option
of
a
majority
in
interest
of
the
Holders
and
in
the
discretion
of
a
majority
in
interest
of
the
Holders,
take
any
or
all
of
the
following actions:
(i)
pursue
remedies
against
the
Company in
accordance
with
any of
the
Holder
’
s
rights,
(ii)
increase
the
interest
rate
applicable
to
the
Debentures
to
the
lesser
of
eighteen
percent
(18%)
per
annum
and
the
maximum
interest
rate
allowable
under
applicable
law,
(iii)
in
the
case
of
an
Event
of
Default
under
Section
10(e)(ii)(1)
based
on
the
Company
’
s
failure
to
be
DWAC
Operational,
increase
the
Principal
Amount
to
an
amount
equal
to
one
hundred
ten
percent
(110%)
of
the
then-outstanding
Principal
Amount,
(iv)
in
the
case
of
an
Event
of
Default
under
Section
10(d)(i),
increase
the
Principal
Amount
to
an
amount
equal
to
one
hundred
twenty percent
(120%)
of
the
then-outstanding
Principal
Amount
and
an
additional
ten
percent
(10%)
discount
shall
be
factored
into
the
Conversion
Price
until
this
Debenture
is
no
longer
outstanding,
(v)
in
the
case
of
an
Event
of
Default
under
Section
10(d)(i)
through
(v),
increase
the
Principal
Amount
of
the
relevant
Holder
’
s
Debenture
by One
Thousand
Dollars
and
00/100
($1,000.00)
for
each
day
the
related
failure
continues,
(vi)
in
the
case
of
an
Event
of
Default
under
Section
10(d)(ii)
through
(v)
arising
from
an
untimely
delivery
to
the
Holder
of
Conversion Shares or shares of Common Stock in de-legended form, if the lowest traded price of
the
Common
Stock
on
the
Trading
Day
immediately
prior
to the actual date
of
delivery
of
Conversion Shares or
de-legended shares,
as the case may be, is less than the lowest traded
price
on the Trading Day immediately prior to the date when Conversion Shares or de-legended shares
were
required
to
be
delivered,
increase
the
Principal
Amount
of
the
relevant
Holder
’
s
Debenture
9
by an amount per share equal to such difference, and (vii) following the expiration of the
applicable
grace
period
(if
any),
at
the
option
and
discretion
of
the
Holder,
accelerate
the
full
indebtedness
under
this
Debenture,
in
an
amount
equal
to
one
hundred
forty
percent
(140%)
of
the
outstanding
Principal
Amount
and
accrued
and
unpaid
interest
(the
“
Acceleration
Amount
”
),
whereupon
the
Acceleration
Amount
shall
be
immediately due
and
payable,
without
presentment,
demand,
protest
or
notice
of
any
kinds,
all
of
which
are
hereby
expressly
waived,
anything
contained
herein,
in
the
Securities
Purchase
Agreement
or
in
any
other
note
or
instruments
to
the
contrary
notwithstanding. In
the
case
of
an
Event
of
Default
under
Section
10(d)(ii),
the
Holder
may
either
(i)
declare
the
Acceleration
Amount
to
exclude
the
Conversion
Amount
that
is
the
subject
of
the
Event
of
Default,
in
which
case
the
Acceleration
Amount
shall
be
based
on
the
remaining
Principal
Amount
and
accrued
interest
(if
any),
in
which
case
the
Company shall continue to be obligated to issue the Conversion Shares, or (ii) declare the
Acceleration
Amount to include
the
Conversion Amount that is the
subject of
the Event of
Default,
in
which
case
the
Acceleration
Amount
shall
be
based
on
the
full
Principal
Amount,
including the Conversion Amount, and accrued
interest (if any), whereupon the Notice of
Conversion
shall
be
deemed
withdrawn.
At
its
option,
the
Holder
may
elect
to
convert
the
Debenture
pursuant
to
Section
2
notwithstanding
the
prior
declaration
of
a
default
and
acceleration,
in
the
sole
discretion
of
such
Holder. A
majority
in
interest
of
the
Holders
may
immediately enforce any and all of the Holder's rights and remedies provided herein or any other
rights
or
remedies
afforded
by
applicable
law. Notwithstanding
the
foregoing,
in
the
case
of
a
default
under
Section
10(d)(ii)
through
(iv),
the
Holder
of
the
Debenture
sought
to
be
converted,
transferred
or
de-legended,
as
the
case
may
be,
acting
singly,
shall
have
the
sole
and
absolute
discretion to increase the applicable interest rate on the Debentures held by such Holder and/or to
accelerate
the
Debenture(s)
held
by
such
Holder.
The
Company
expressly
acknowledges
and
agrees
that
the
Holder
’
s
exercise
of
any or
all
of
the
remedies
provided
herein
or
under
applicable
law,
including
without limitation
the
increase(s)
in the
Principal Amount and the
Acceleration
Amount
as
may
be
declared
in
the
case
of
a
default,
is
reasonable
and
appropriate
due
to
the
inability to
define
the
financial
hardship
that
the
Company
’
s
default
would
impose
on
the
Holders. To
the
extent
that
the
Holder
’
s
exercise
of
any
of
its
remedies
in
the
case
of
an
Event of Default shall be construed to exceed the maximum interest rate allowable under
applicable
law,
then
such
remedies
shall
be
reduced
to
equal
the
maximum
interest
rate
allowable under applicable law
11.
Nothing
contained
in
this
Debenture
shall
be
construed
as
conferring
upon
the
Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in
respect
of
any meeting
of
shareholders
or
any
rights
whatsoever
as
a
shareholder
of
the
Company, unless and to the extent converted in accordance with the terms hereof.
12.
So
long
as
this
Debenture
is
outstanding,
upon
any
issuance
by
the
Company
or
any of its subsidiaries of any security with any term more favorable to the holder of such security
or
with
a
term
in
favor
of
the
holder
of
such
security
that
was
not
similarly
provided
to
the
Holder
in
this
Debenture,
then
the
Company
shall
notify
the
Holder
of
such
additional
or
more
favorable
term
and
such
term,
at
Holder
’
s
option,
shall
become
a
part
of
the
transaction
documents
with
the
Holder.
The
types
of
terms
contained
in
another
security
that
may
be
more
favorable
to
the
holder
of
such
security include,
but
are
not
limited
to,
terms
addressing
conversion discounts, prepayment rate, conversion
lookback periods, interest rates, original issue
discounts, stock sale price, private placement price per share, and warrant coverage.
10
13.
This Debenture may be amended only by the written consent of the parties hereto.
Notwithstanding
the
foregoing,
the
Principal
Amount
of
this
Debenture
shall
automatically
be
reduced
by
any
and
all
Conversion
Amounts
(to
the
extent
that
the
same
relate
to
principal
hereof).
In
the
absence
of
manifest
error,
the
outstanding Principal
Amount
of
the
Debenture
on
the Holder
’
s book and records shall be the correct amount.
14.
In
the
event
of
any
inconsistency
between
the
provisions
of
this
Debenture
and
the provisions of any other Transaction Document, the provisions of this Debenture shall prevail.
Without
limiting
the
generality
of
the
foregoing,
in
the
event
the
Transfer
Agent
is
not
required
to
transfer
any
Common
Stock,
issue
Conversion
Shares
or
de-legended
shares
of
Restricted
Stock
pursuant
to
the
Transfer
Agent Instruction
Letter,
this
shall
not operate
as
an
excuse,
extension
or
waiver
of
the
Company
’
s
obligation
to
issue
and
deliver
Conversion
Shares
or
de-
legended Restricted Stock.
15.
The
Company
specifically
acknowledges
and
agrees
that
in
the
event
of
a
breach
or threatened breach by the Company of any provision hereof or of any other Transaction
Document, the Holder will be irreparably damaged, and that damages at law would be an
inadequate
remedy
if
this
Debenture
or
such
other
Transaction
Document
were
not
specifically
enforced.
Therefore,
in
the
event
of
a
breach
or
threatened
breach
by
the
Company,
the
Holder
shall
be
entitled,
in
addition
to
all
other
rights
and
remedies,
to
an
injunction
restraining
such
breach,
without
being
required
to
show
any
actual
damage
or
to
post
any
bond
or
other
security,
and/or
to
a
decree
for
a
specific
performance
of
the
provisions
of
this
Debenture
and
the
other
Transaction Documents.
16.
No waivers or consents in regard to any provision
of this Debenture may be given
other than by an instrument in writing signed by the Holder.
17.
Each time, while this Debenture is outstanding, the Company enters into a Section
3(a)(9)
transaction
(including
but
not
limited
to
the
issuance
of
new
promissory notes
or
debentures, or of a replacement promissory note or debenture), or Section 3(a)(10) transaction, in
which
any
3rd
party
has
the right
to
convert
monies
owed
to
that
3rd
party
(or
receive
shares
pursuant
to
a
settlement
or
otherwise)
at
a
discount
to
market
greater
than
the
Conversion
Price
in
effect
at
that
time
(prior
to
all
other
applicable
adjustments
in
this
Debenture),
then
the
Conversion Price
shall be automatically adjusted
to such
greater discount
percentage
(prior
to all
applicable
adjustments
in
this
Debenture)
until
this
Debenture
is
no
longer
outstanding.
Each
time,
while
this
Debenture
is
outstanding,
the
Company
enters
into
a
Section
3(a)(9)
transaction
(including but not limited to the issuance of new promissory notes or debentures, or of a
replacement
promissory
note
or
debenture),
or
Section
3(a)(10)
transaction,
in
which
any
3rd
party
has
a
look
back
period
greater
than
the
look
back
period
in
effect
under
this
Debenture
at
that
time,
then
the
Holder
’
s
look
back
period
shall
automatically
be
adjusted
to
such
greater
number
of
days
until
this
Debenture
is
no
longer
outstanding.
The
Company
shall
give
written
notice
to
the
Holder,
with
the
adjusted
Conversion
Price
and/or
adjusted
look
back
period
(each
adjustment that is applicable due to the triggering event), within one (1) business day of an event
that
requires
any
adjustment
described
in
this
section. So
long
as
this
Note
is
outstanding,
the
Company
shall not enter
into
any
transaction
or
arrangement structured in
accordance
with,
based
upon,
or
related
or
pursuant
to,
in
whole
or
in
part,
either
Section
3(a)(9)
of
the
Securities
Act
(a
“
3(a)(9)
Transaction
”
)
or
Section
3(a)(l0)
of
the
Securities
Act
(a
“
3(a)(l0)
Transaction
”
).
In
the
event
that
the
Company
does
enter
into,
or
makes
any issuance
of
Common
Stock
related
11
to
a
3(a)(9)
Transaction
or
a
3(a)(l0)
Transaction
while
this
note
is
outstanding,
a
liquidated
damages
charge
of
20%
of
the
outstanding
principal
balance
of
this
Note,
but
not
less
than
Fifteen
Thousand
Dollars,
will
be
assessed
and
will
become
immediately
due
and
payable
to
the
Holder at its election in the form of cash payment or addition to the balance of this Note.
18.
So
long
as
this
Debenture
is
outstanding,
upon
any
issuance
by
the
Company
or
any of its subsidiaries of any security with any term more favorable to the holder of such security
or
with
a
term
in
favor
of
the
holder
of
such
security
that
was
not
similarly
provided
to
the
Holder
in
this
Debenture,
then
the
Company
shall
notify
the
Holder
of
such
additional
or
more
favorable
term
and
such
term,
at
Holder
’
s
option,
shall
become
a
part
of
the
transaction
documents with the
Holder (regardless of whether
the Company notifies the Holder or
not). The
types
of
terms
contained
in
another
security
that
may
be
more
favorable
to
the
holder
of
such
security
include,
but
are
not
limited
to,
terms
addressing
conversion
discounts,
prepayment
rate,
conversion
lookback
periods,
interest
rates,
original
issue
discounts,
stock
sale
price,
private
placement price per share, and warrant coverage.
19.
If the Company fails to redeem (i) this Debenture or (ii) the entirety of the
$600,000.00
in
convertible
promissory
notes
issued
by
the
Company
between
April
and
June
of
2018, on or before the date which is 180 calendar days after the
Issuance Date, then the principal
amount of this Debenture shall increase by
$18,750.00 (under Holder
’
s and the Company
’
s
expectation that any principal amount increase will tack back to the Issuance Date).
[Signature Page Follows]
12
IN WITNESS WHEREOF
, the Company has caused this Debenture to be duly executed
by an officer thereunto duly authorized as of the date of issuance set forth above.
PARALLAX HEALTH SCIENCES, INC.
By:
______________________________________
Name: Paul Arena
Title: Chief Executive Officer
[Signature Page to Convertible Debenture]
13
ANNEX A
PARALLAX HEALTH SCIENCES, INC.
NOTICE OF CONVERSION
(To Be Executed by the Registered Holder in Order to Convert the Debenture)
The undersigned hereby irrevocably
elects to convert $ ________________ of the Principal
Amount of the above Debenture into Shares of Common Stock of Parallax
Health Sciences,
Inc.,
a Nevada corporation (the
“
Company
”
), according to the conditions hereof, as of the date written
below. After giving effect to the conversion requested hereby, the outstanding Principal Amount
of such debenture is $
____________________,
absent manifest error.
Pursuant
to
the
Debenture,
certificates
representing
Common
Stock
upon
conversion
must
be
delivered
(including
delivery
by
DWAC
or
DRS)
to
the
undersigned
within
two
(2)
business
days from the date of delivery of the Notice of Conversion to the Transfer Agent.
Conversion Date
____________________________________________________________________________
Applicable Conversion Price
____________________________________________________________________________
Signature
____________________________________________________________________________
Print Name
____________________________________________________________________________
Address
____________________________________________________________________________
____________________________________________________________________________
14
SIGNING DEBENTURE
NEITHER
THESE
SECURITIES
NOR
THE
SECURITIES
ISSUABLE
UPON
CONVERSION
HEREOF
HAVE
BEEN
REGISTERED
WITH
THE
UNITED
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
OR
THE
SECURITIES
COMMISSION
OF
ANY
STATE
OR
UNDER
THE
SECURITIES
ACT
OF
1933,
AS
AMENDED. THE
SECURITIES
ARE
RESTRICTED
AND
MAY
NOT
BE
OFFERED,
RESOLD,
PLEDGED
OR
TRANSFERRED
EXCEPT
AS
PERMITTED
UNDER
THE
ACT
PURSUANT
TO
REGISTRATION
REQUIREMENTS THEREOF OR EXEMPTION THEREFROM.
PARALLAX HEALTH SCIENCES, INC.
CONVERTIBLE DEBENTURE DUE NOVEMBER 14, 2021
Issuance Date: November 14, 2018
Principal Amount: $125,000.00
FOR
VALUE
RECEIVED,
PARALLAX
HEALTH
SCIENCES,
INC.
,
a
corporation
organized
and
existing
under
the
laws
of
the
State
of
Nevada
(the
“
Company
”
),
hereby
promises
to
pay
to
TFK
INVESTMENTS,
LLC
,
having
its
address
at
1500
NW
10
th
Ave.,
Suite
101,
Boca
Raton,
FL
33486,
or
its
assigns
(the
“
Holder
”
and
together
with
the
other
holders
of
Debentures
issued
pursuant
to
the
Securities
Purchase
Agreement
(as
defined
below),
the
“
Holders
”
),
the
initial
principal
sum
of
One
Hundred
Twenty
Five
Thousand
and
00/100
Dollars
($125,000.00)
(subject
to
adjustment
as
provided
herein,
the
“
Principal
Amount
”
)
on
November
14,
2021
(the
“
Maturity Date
”
).
The
Company has
the
option
to
redeem
this
Debenture
prior
to
the
Maturity
Date
pursuant
to
Section
2(b).
All
unpaid
principal
due
and
payable
on
the
Maturity
Date
shall
be
paid
in
the
form
of
Common
Stock
of
the
Company,
par
value
$0.001
per
share
(
“
Common
Stock
”
)
pursuant
to
Section
3.
The
Holder
has
the
option
to
cause
any
outstanding
principal
and
accrued
interest,
if
any,
on
this
Debenture
to
be
converted
into Common Stock at any time prior to the Redemption Date (as defined
below) or the Maturity
Date pursuant to Section 2(a).
This
Debenture
is
one
of
the
Debentures
referred
to
in
the
Securities
Purchase
Agreement
(the
“
Securities
Purchase
Agreement
”
)
dated
as
of
November
14,
2018,
between
the
Company and the Holder. Capitalized terms used but not defined herein shall have the meanings
set forth in the Securities Purchase Agreement. This Debenture is subject to the provisions of the
Securities Purchase Agreement and further is subject to the following additional provisions:
1.
This Debenture has
been issued subject to investment representations
of the
original
purchaser
hereof
and
may
be
transferred
or
exchanged
only
in
compliance
with
the
Securities Act and other
applicable state and
foreign securities laws.
The
Holder may transfer or
assign
this
Debenture
(or
any
part
thereof)
without
the
prior
consent
of
the
Company,
and
the
Company
shall
cooperate
with
any
such
transfer. In
the
event
of
any
proposed
transfer
of
this
Debenture,
the
Company
may require,
prior
to
issuance
of
a
new
Debenture
in
the
name
of
such
other
Person,
that
it
receive
reasonable
transfer
documentation
including
legal
opinions
that
the
issuance
of
the
Debenture
in
such
other
name
does
not
and
will
not
cause
a
violation
of
the
Securities Act or any applicable state or foreign securities laws or is exempt from the registration
requirements
of
the
Securities
Act.
Prior
to
due
presentment
for
transfer
of
this
Debenture
to
which
the
Company
has
consented,
the
Company
and
any
agent
of
the
Company
may
treat
the
Person
in
whose
name
this
Debenture
is
duly
registered
on
the
Company's
books
and
records
of
outstanding
debt
securities
and
obligations
(
“
Debenture
Register
”
)
as
the
owner
hereof
for
the
purpose
of
receiving
payment
as
herein
provided
and
for
all
other
purposes,
whether
or
not
this
Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to
the contrary.
2.
Conversion at Holder
’
s Option; Redemption at Company
’
s Option.
a.
The
Holder
is
entitled
to,
at
any
time
or
from
time
to
time,
convert
the
Conversion
Amount
(as
defined
below)
into
Conversion
Shares,
at
a
conversion
price
for
each
share
of
Common
Stock
(the
“
Conversion
Price
”
)
equal
to
either:
(i)
if
no
Event
of
Default
(as
defined
herein)
has
occurred
and
the
date
of
conversion
is
prior
to
the
date
that
is
one
hundred
eighty
(180)
calendar
days
after
the
Issuance
Date,
$0.12,
or
(ii)
if
an
Event
of
Default
has
occurred or the date of conversion is on or after the date that is one hundred
eighty
(180)
calendar days
after
the
Issuance
Date,
the
lesser
of
(a)
$0.12
or
(b)
Seventy percent
(70%)
of
the
second
lowest
traded
price
(as
reported
by
Bloomberg
LP)
of
the
Common
Stock
for
the
twenty
(20)
Trading
Days
immediately
preceding
the
date
of
the
date
of
conversion
of
the
Debentures
(for
clarification
purposes,
if
the
lowest
traded
price
during
the
applicable
period
is
equal
to
the
second
lowest
traded
price
during
the
applicable
period,
then
such
lowest
traded
price
shall
still
be
utilized
for
purposes
of
this
calculation),
provided,
further,
that
if
either
the
Company
is
not
DWAC
Operational
at
the
time
of
conversion
or
the
Common
Stock
is
traded
on
the
OTC
Pink
(
“
OTCP
”
)
at
the
time
of
conversion,
then
Seventy
percent
(70%)
shall
automatically
adjust
to
Sixty
percent
(60%)
of
the
second
lowest
traded
price
(as
reported
by
Bloomberg
LP)
of
the
Common
Stock
for
the
twenty
(20)
Trading
Days
immediately
preceding
the
date
of
conversion
of
the
Debentures
(for
clarification
purposes,
if
the
lowest
traded
price
during
the
applicable
period
is
equal
to
the
second
lowest
traded
price
during
the
applicable
period,
then
such
lowest
traded price shall still be utilized for purposes of this calculation), subject in each case to
equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar
events.
The
Company
shall
issue
irrevocable
instructions
to
its
Transfer
Agent
regarding
conversions
such
that
the
transfer
agent
shall
be
authorized
and
instructed
to
issue
Conversion
Shares
upon
its
receipt
of
a
Notice
of
Conversion
without
further
approval
or
authorization
from
the
Company.
For
purposes
of
this
Debenture,
the
“
Conversion
Amount
”
shall
mean
the
sum
of
(A)
all
or
any
portion
of
the
outstanding
Principal
Amount
of
this
Debenture,
as
designated
by
the
Holder
upon
exercise
of
its
right
of
conversion
plus
(B)
any
interest,
pursuant
to
Section
10
or
otherwise,
that
has
accrued
on
the
portion
of
the
Principal
Amount
that
has
been
designated
for payment pursuant to (A).
Conversion shall be effectuated by delivering by facsimile, email or other delivery
method
to
the
Transfer
Agent
of
the
completed
form
of
conversion
notice
attached
hereto
as
Annex
A
(the
“
Notice
of
Conversion
”
),
executed
by
the
Holder
of
the
Debenture
evidencing
such
Holder's
intention
to
convert
this
Debenture
or
a
specified
portion
hereof. No
fractional
shares
of
Common
Stock
or
scrip
representing
fractions
of
shares
will
be
issued
on
conversion,
but
the
number
of
shares
issuable
shall
be
rounded
to
the nearest
whole
share.
The
Holder
may,
at
its
election,
deliver
a
Notice
of
Conversion
to
either
the
Company or
the
Transfer
Agent.
The
date
on
which
notice
of
conversion
is
given
(the
“
Conversion
Date
”
)
shall
be
deemed
to
be
the
date
on
which
the
Company or
the
Transfer
Agent,
as
the
case
may be,
receives
by fax,
email
or
other means of delivery used by the Holder the Notice of Conversion (such receipt being
2
evidenced by electronic
confirmation of delivery by facsimile or email or confirmation of
delivery by such other delivery method used by the Holder).
Delivery of a
Notice of Conversion
to
the
Transfer
Agent
may
be
given
by
the
Holder
by
facsimile,
or
by
delivery
to
the
Transfer
Agent
at
the
address
set
forth
in
the
Transfer
Agent
Instruction
Letter
(or
such
other
contact
facsimile
number,
email
or
street
address
as
may
be
designated
by
the
Transfer
Agent
to
the
Holder).
Delivery
of
a
Notice
of
Conversion
to
the
Company
shall
be
given
by
the
Holder
pursuant
to
the
notice
provisions
set
forth
in
Section
10
of
the
Agreement.
The
Conversion
Shares
must
be
delivered
to
the
Holder
within
two (2)
business
days
from
the
date
of
delivery of
the
Notice
of
Conversion
to
the
Transfer
Agent
or
Company,
as
the
case
may
be. Conversion
shares
shall
be
delivered
by DWAC
so
long
as
the
Company is
then
DWAC
Operational,
unless
the
Holder
expressly
requests
delivery
in
certificated
form
or
the
Conversion
Shares
are
in
the
form of Restricted Stock and are required to bear
a restrictive legended. Conversion Shares shall
be deemed delivered (i) if delivered by DWAC, upon deposit into the Holder
’
s brokerage
account,
or
(ii)
if
delivered
in
certificated
form,
upon
the
Holder
’
s
actual
receipt
of
the
Conversion
Shares
in
certificated
form
at
the
address
specified
by
the
Holder
in
the
Notice
of
Conversion,
as
confirmed
by
written
receipt.
All
expenses
incurred
by
Holder,
for
the
issuance
and
clearing
of
the
Common
Stock
into
which
this
Debenture
is
convertible
into,
shall
immediately
and
automatically
be
added
to
the
balance
of
the
Debenture
at
such
time
as
the
expenses are incurred by Holder.
If
at
any
time
the
Conversion
Price
as
determined
hereunder
for
any
conversion
would be less than the par value of the Common Stock, then at the sole discretion of the Holder,
the
Conversion
Price
hereunder
may
equal
such
par
value
for
such
conversion
and
the
Conversion Amount for such conversion may
be increased to include Additional Principal,
where
“
Additional
Principal
”
means
such
additional
amount
to
be
added
to
the
Conversion
Amount
to
the
extent
necessary
to
cause
the
number
of
conversion
shares
issuable
upon
such
conversion
to
equal
the
same
number
of
conversion
shares
as
would
have
been
issued
had
the
Conversion Price not been adjusted by the Holder to the par value price.
Notwithstanding the foregoing, unless the Holder delivers to the Company written
notice
at
least
sixty-one
(61)
days
prior
to
the
effective
date
of
such
notice
that
the
provisions
of
this
paragraph
(the
“
Limitation
on
Ownership
”
)
shall
be
adjusted
to
9.99%
with
respect
to
the
Holder,
in
no
event
shall
a
holder
of
Debentures
have
the
right
to
convert
Debentures
into,
nor
shall the Company issue to such Holder, shares of Common Stock to the extent that such
conversion
would
result
in
the
Holder
and
its
affiliates
together
beneficially
owning
more
than
4.99% of the then issued and outstanding shares of Common Stock. For purposes hereof,
beneficial
ownership
shall
be
determined
in
accordance
with
Section
13(d)
of
the
Exchange
Act
and Regulation 13D-G under the Exchange Act.
b.
So long as no Event of Default (as defined in Section 10) shall have
occurred
and
be
continuing
(whether
such
Event
of
Default
has
been
declared
by
the
Holder)
(unless the Holder consents to such redemption notwithstanding such Event of Default, as
described
in
clause
(v),
below),
the
Company may
at
its
option
call
for
redemption
all
or
part
of
the
Debentures,
with
the
exception
of
any
portion
thereof
which
is
the
subject
of
a
previously-
delivered Notice of Conversion, prior to the Maturity Date, as follows:
(i)
The Debentures called for redemption shall be redeemable by
the
Company,
upon
not
more
than
two
(2)
days
written
notice,
for
an
amount
(the
“
Redemption
3
Price
”
)
equal
to:
(i)
if
the
Redemption
Date
(as
defined
below)
is
ninety
(90)
calendar
days
or
less from the date of issuance of this Debenture, One Hundred Ten percent (110%) of the sum of
the
Principal
Amount
so
redeemed
plus
accrued
interest,
if
any;
(ii)
if
the
Redemption
Date
is
greater than or equal to ninety-one (91) calendar days from the date of issuance of this Debenture
and
less
than
or
equal
to
one
hundred
twenty
(120)
calendar
days
from
the
date
of
issuance
of
this
Debenture,
One
Hundred
Twenty
percent
(120%)
of
the
sum
of
the
Principal
Amount
so
redeemed plus accrued interest, if any; (iii) if the Redemption Date is greater than or equal to one
hundred twenty one (121) calendar days from the date of issuance of this Debenture and less than
or
equal
to
one
hundred
eighty
(180)
calendar
days
from
the
date
of
issuance
of
this
Debenture,
One
Hundred Thirty
percent (130%)
of
the
sum of
the
Principal Amount so
redeemed plus
accrued interest, if any; and (iv) if either (1) the Debentures are in default but the Holder
consents
to
the
redemption
notwithstanding
such
default
or
(2)
the
Redemption
Date
is
greater
than
or
equal
to
one
hundred
eighty
one
(181)
calendar
days
from
the
date
of
issuance
of
this
Debenture,
One
Hundred
Forty percent
(140%)
of
the
sum
of
the Principal Amount
so
redeemed
plus
accrued
interest,
if
any.
The
date
upon
which
the
Debentures
are
redeemed
and
paid
shall
be referred to as the
“
Redemption Date
”
(and, in the case of multiple redemptions of less than the
entire
outstanding
Principal
Amount,
each
such
date
shall
be
a
Redemption
Date
with
respect
to
the corresponding redemption).
(ii)
If
fewer
than
all
outstanding
Debentures
are
to
be
redeemed
and
are
held
by different investors, then all Debentures shall be partially redeemed on a
pro rata
basis.
(iii) [Reserved]
(iv)
On
the
Redemption
Date,
the
Company
shall
cause
the
Holders
whose
Debentures
have
been
presented
for
redemption
to
be
issued
payment
of
the
Redemption
Price.
In
the
case
of
a
partial
redemption,
the
Company shall
also
issue
new
Debentures
to
the
Holders
for
the
Principal
Amount
remaining
outstanding
after
the
Redemption
Date
promptly
after
the
Holders
’
presentation of the Debentures called for redemption.
(v)
To
effect
a
redemption
the
Company
shall
provide
a
written
notice
to
the
Holder(s)
not
more
than
two
(2)
days
prior
to
the
Redemption
Date
(the
“
Redemption
Notice
”
),
setting forth the following:
1.
the Redemption Date;
2.
the Redemption Price;
3.
the
aggregate
Principal
Amount
of
the
Debentures
being
called
for
redemption;
4.
a
statement
instructing
the
Holders
to
surrender
their
Debentures
for
redemption
and
payment
of
the
Redemption
Price,
including
the
name
and
address
of
the
Company
or,
if
applicable,
the
paying
agent
of
the
Company,
where
Debentures
are
to
be
surrendered
for
redemption;
4
5.
a
statement
advising
the
Holders
that
the
Debentures
(or,
in
the
case
of
a
partial
redemption,
that
portion
of
the
Principal
Amount
being
called
for
redemption)
as
of
the
Redemption
Date
will
cease
to
be
convertible
into
Common
Stock
as
of
the
Redemption
Date;
and
6.
in
the
case
of
a
partial
redemption,
a
statement
advising
the
Holders
that
after
the
Redemption
Date
a
substitute
Debenture
will
be
issued
by the
Company after
deduction
the
portion
thereof
called
for
redemption,
at
no
cost
to
the
Holder,
if
the
Holder
so
requests.
Notwithstanding the foregoing, in the event the Company issues a Redemption Notice but fails to
fund
the
redemption
on
the
Redemption
Date,
then
such
Redemption
Notice
shall
be
null
and
void,
and
(i)
the
Holder(s)
shall
be
entitled
to
convert
the
Debentures
previously
the
subject
of
the Redemption Notice, and (ii) the Company may not redeem such Debentures for at least thirty
(30)
days
following
the
intended
Redemption
Date
that
was
voided,
and
the
Company
shall
be
required
to
pay
to
the
Holder(s)
the
Redemption
Price
simultaneously
with
the
issuance
of
a
Redemption Notice in connection with any subsequent redemption pursued by the Company.
3.
Unless
demand
has
otherwise
been
made
by the
Holder
in
writing
for
payment
in
cash as provided hereunder, and so long as no Event of Default shall exist (whether or not notice
thereof has been delivered by the Holder to the Company), any Debentures not previously
tendered
to
the
Company
for
conversion
as
of
the
Maturity
Date
shall
be
deemed
to
have
been
surrendered
for
conversion,
without
further
action
of
any
kind
by
the
Company
or
any
of
its
agents,
employees
or
representatives,
as
of
the
Maturity
Date
at
the
Conversion
Price
applicable
on the Maturity Date (
“
Mandatory Conversion
”
).
4.
No
provision
of
this
Debenture
shall
alter
or
impair
the
obligation
of
the
Company,
which is
absolute and unconditional to
convert this Debenture into Common Stock, at
the
time,
place,
and
rate
herein
prescribed.
This
Debenture
is
a
direct
obligation
of
the
Company.
5.
If
the
Company
(a)
merges
or
consolidates
with
another
corporation
or
business
entity
and
the
Company
is
not
the
surviving
entity
or
(b)
sells
or
transfers
all
or
substantially
all
of its assets to another Person and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for Common Stock, then as a condition of such
merger, consolidation, sale or transfer, the Company and any such successor, purchaser or
transferee
will
agree
that
this
Debenture
may thereafter
be
converted
on
the
terms
and
subject
to
the conditions set forth above into the kind and amount of stock, securities or property receivable
upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common
Stock
into
which
this
Debenture
might
have
been
converted
immediately
before
such
merger,
consolidation,
sale
or
transfer,
subject
to
adjustments
which
shall
be
as
nearly equivalent
as
may
be
practicable.
In
the
event
of
any
(i)
proposed
merger
or
consolidation
where
the
Company
is
not
the
surviving
entity
or
(ii)
sale
or
transfer
of
all
or
substantially
all
of
the
assets
of
the
Company (in
either
such
case,
a
“
Sale
”
),
the
Holder
shall
have
the
right
to
convert
by delivering
a
Notice
of
Conversion
to
the
Company within
fifteen
(15)
days
of
receipt
of
notice
of
such
Sale
from the Company.
5
6.
If, at any time while any portion of this Debenture remains outstanding, the
Company effectuates a stock split or reverse stock split of its Common Stock or issues a dividend
on its Common Stock consisting of shares of Common Stock or otherwise recapitalizes its
Common
Stock,
the
Conversion
Price
shall
be
equitably adjusted
to
reflect
such
action.
By way
of
illustration,
and
not
in limitation,
of the
foregoing (i)
if
the
Company effectuates
a
2:1
split
of
its
Common
Stock,
thereafter,
with
respect
to
any
conversion
for
which
the
Company
issues
the
shares
after
the
record
date
of
such
split,
the
Conversion
Price
shall
be
deemed
to
be
one-half
of
what
it
had
been
calculated
to
be
immediately prior
to
such
split;
(ii)
if
the
Company effectuates
a 1:10 reverse split of its Common Stock, thereafter, with respect to any conversion for which the
Company issues
the
shares
after
the
record
date
of
such
reverse
split,
the
Conversion
Price
shall
be deemed to
be
the
amount of such
Conversion
Price
calculated immediately prior
to the
record
date multiplied by 10; and (iii) if the Company declares a stock dividend of one share of
Common
Stock
for
every
10
shares
outstanding,
thereafter,
with
respect
to
any
conversion
for
which the Company issues the shares after the record date of such dividend, the Conversion Price
shall
be
deemed
to
be
the
amount
of
such
Conversion
Price
calculated
immediately prior
to
such
record
date
multiplied
by
a
fraction,
of
which
the
numerator
is
the
number
of
shares
for
which
a
dividend
share
will
be
issued
and
the
denominator
is
such
number
of
shares
plus
the
dividend
share(s) issuable or issued thereon.
7.
All
payments
contemplated
hereby
to
be
made
“
in
cash
”
shall
be
made
by
wire
transfer
of
immediately available
funds
in
such
coin
or
currency of
the
United
States
of
America
as
at
the
time
of
payment
is
legal
tender
for
payment
of
public
and
private
debts.
All
payments
of
cash
and
each
delivery
of
shares
of
Common
Stock
issuable
to
the
Holder
as
contemplated
hereby
shall
be
made
to
the
Holder
to
an
account
designated
by
the
Holder
to
the
Company
and
if the Holder has not designated any such accounts at the address last appearing on the Debenture
Register
of
the
Company
as
designated
in
writing
by
the
Holder
from
time
to
time;
except
that
the
Holder
may designate,
by notice
to
the
Company,
a
different
delivery
address
for
any one
or
more specific payments or deliveries.
8.
The
Holder
of
the
Debenture,
by
acceptance
hereof,
agrees
that
this
Debenture
is
being
acquired
for
investment
and
that
such
Holder
will
not
offer,
sell
or
otherwise
dispose
of
this Debenture or the Shares of Common Stock issuable upon conversion thereof except in
compliance
with the terms of the Securities Purchase Agreement and
under
circumstances which
will not result in a violation of the Securities Act or any applicable state Blue Sky or foreign laws
or similar laws relating to the sale of securities.
9.
This
Debenture
shall
be
governed
by
and
construed
in
accordance
with
the
laws
of
the
State
of
Nevada.
Each
of
the
parties
consents
to
the
exclusive
jurisdiction
and venue of
the
state
and/or federal courts
located in
Palm
Beach County,
Florida
in
connection
with
any
dispute
arising
under
this
Agreement,
and
each waives
any
objection
based
on forum
non
conveniens.
This
provision
is
intended
to
be
a
“
mandatory
”
forum
selection
clause
and
governed
by
and
interpreted
consistent
with
Florida
law (Nevada law governing all other,
substantive matters).
Each of the parties hereby
consents
to the
exclusive jurisdiction and
venue
of
any
state
or
federal
court
having
its
situs
in
Palm
Beach County,
Florida,
and
each
waives
any objection based on forum non conveniens
. To
the
extent
determined
by
such
court,
the
Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by
6
the
Holder
in enforcement of
or
protection
of any
of
its rights under this Debenture
or
the
Securities Purchase Agreement.
10.
The following shall constitute an
“
Event of Default
”
:
a.
The
Company
fails
in
the
payment
of
principal
or
interest
(to
the
extent
that
interest
is
imposed
under
this
Section
10)
on
this
Debenture
as
required
to
be
paid
in
cash
hereunder, and payment
shall not have been
made for
a period of five (5) business days
following the payment due date (as to which no further cure period shall apply); or
b.
Any
of
the
representations
or
warranties
made
by
the
Company
herein,
in
the
Securities
Purchase
Agreement
or
in
any
certificate
or
financial
or
other
written
statements
heretofore
or
hereafter
furnished
by
the
Company
to
the
Holder
in
connection
with
the
issuance
of this Debenture, shall be false or misleading (including without limitation by
way
of the
misstatement
of
a
material
fact
or
the
omission
of
a
material
fact)
in
any
material
respect
at
the
time made (as to which no cure period shall apply); or
c.
The
Company
fails
to
remain
listed
on
OTCP,
OTCQB,
or
OTCQX,
or
a
more
senior
stock
exchange
any
time
from
the
date
hereof
to
the
Maturity
Date
for
a
period
in
excess of five (5) Trading Days (as to which no further cure period shall apply); or
d.
The Company (i) fails to timely file required SEC reports when due
(including
extensions),
becomes,
is
deemed
to
be
or
asserts
that
it
is
a
“
shell
company
”
at
any
time
for
purposes
of
the
1933
Act,
and
Rule
144
promulgated
thereunder
or
otherwise
takes
any
action,
or
refrains
from
taking
any
action,
the
result
of
which
makes
Rule
144
under
the
1933
unavailable
to
the
Holder
for
the
sale
of
their
Securities,
(ii)
fails
to
issue
shares
of
Common
Stock to the
Holder
or to
cause
its Transfer
Agent to
issue shares of Common
Stock
upon
exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this
Debenture,
(iii)
fails
to
transfer
or
to
cause
its
Transfer
Agent
to
transfer
any
certificate
for
shares
of
Common
Stock
issued
to
the
Holder
upon
conversion
of
this
Debenture
as
and
when
required by this Debenture and such transfer is otherwise lawful, (iv) fails to remove any
restrictive legend or to cause its Transfer Agent to transfer any
certificate or any
shares of
Common Stock issued to the Holder upon
conversion of this Debenture
as
and when
required
by
the
relevant
Transaction
Document(s)
and
such
legend
removal
is
otherwise
lawful,
or
(v)
the
Company fails to perform or observe any of its obligations under the Section 5 of the Agreement
or
under
the
Transfer
Agent
Instruction
Letter
(no
cure
period
shall
apply
in
the
case
of
clauses
(i) through (v) above, inclusive); or
e.
The
Company
fails
to
perform
or
observe,
in
any
material
respect
(i)
any
other
covenant,
term,
provision,
condition,
agreement
or
obligation
set
forth
in
the
Debenture,
(subject
to
a
cure
period
of
five
(5)
days
other
than
in
the
case
of
a
failure
under
Section
5
hereof, as
to
which
no cure
period
shall
apply),
or
(ii)
any
other
covenant,
term,
provision,
condition,
agreement
or
obligation
of
the
Company
set
forth
in
the
Securities
Purchase
Agreement
and
such
failure
shall
continue
uncured
for
a
period
of
either
(1)
three
(3)
days
after
the
occurrence
of
the
Company
’
s
failure
under
Section
4(d),
(e)
(except
as
described
in
Section
10(c)
hereof,
as
to
which
Section
10(c)
hereof
shall
control),
(f),
(g)
or
(h)
of
the
Securities
Purchase
Agreement,
or
(2)
ten
(10)
days
after
the
occurrence
of
the
Company
’
s
failure
under
7
any other provision of the Securities Purchase Agreement not otherwise specifically addressed in
the Events of Default set forth in this Section 10; or
f.
The Company shall (1) admit in writing its inability to pay its debts
generally
as they
mature; (2)
make
an
assignment for
the
benefit of
creditors or
commence
proceedings for its dissolution; or (3) apply
for or consent to the appointment of a trustee,
liquidator
or
receiver
for
its
or
for
a
substantial
part
of
its
property
or
business
(as
to
which
no
cure period shall apply); or
g.
A
trustee,
liquidator
or
receiver
shall
be
appointed
for
the
Company or
for
a
substantial
part
of
its
property
or
business
without
its
consent
and
shall
not
be
discharged
within sixty
(60) days after such appointment (as to which no cure period shall apply); or
h.
Any
governmental
agency
or
any
court
of
competent
jurisdiction
at
the
instance of any governmental agency shall assume custody or control of the whole or any
substantial
portion
of
the
properties
or
assets
of
the
Company
and
shall
not
be
dismissed
within
sixty (60) days thereafter (as to which no cure period shall apply); or
i.
Any
money
judgment,
writ
or
warrant
of
attachment,
or
similar
process
(including an arbitral determination), in excess of Fifty Thousand Dollars ($50,000) in the
aggregate shall be entered or filed against the Company or any of its properties or other assets (as
to which no cure period shall apply); or
j.
The
occurrence
of
a
breach
or
an
event
of
default
under
the
terms
of
any
indebtedness or financial instrument of the Company or any subsidiary (including but not limited
to
any
Subsidiary)
of
the
Company
in
an
aggregate
amount
in
excess
of
Fifty
Thousand
Dollars
($50,000)
or
more
which
is
not
waived
by the
creditors
under
such
indebtedness
(as
to
which
no
cure period shall apply); or
k.
Bankruptcy, reorganization, insolvency or liquidation proceedings or other
proceedings
for
relief
under
any
bankruptcy
law
or
any
law
for
the
relief
of
debtors
shall
be
instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed
within
sixty
(60)
days
after
such
institution
or
the
Company
shall
by
any
action
or
answer approve of, consent to, or acquiesce in any such proceedings or admit the material
allegations
of,
or
default
in
answering
a
petition
filed
in
any
such
proceeding
(as
to
which
no
further cure period shall apply); or
l.
The
issuance
of
an
order,
ruling,
finding
or
similar
adverse
determination
the SEC, the Secretary of
State of the State of Nevada or other applicable state of incorporatin of
the
Company,
the
National
Association
of
Securities
Dealers,
Inc.
or
any
other
securities
regulatory
body
(whether
in
the
United
States,
Canada
or
elsewhere)
having
proper
jurisdiction
that the Company and/or any of its past or present directors or officers have committed a material
violation of applicable securities laws or regulations (as to which no cure period shall apply); or
m.
The
Company
shall
have
its
Common
Stock
suspended
or
delisted
from
a
national
securities
exchange
or
an
electronic
quotation
service
such
as
the
OTCP,
OTCQB,
or
OTCQX
for
a
period
in
excess
of
five
(5)
Trading
Days
(as
to
which
no
further
cure
period
shall
apply); or
8
n.
Any of the following shall occur and be continuing: a breach or default by
any
party
under
(a)
any
agreement
identified
by
the
Company
in
its
SEC
filings
as
a
material
agreement
or
(b)
any
note
or
other
form
of
indebtedness
in
favor
of
the
Company
representing
indebtedness of at least Fifty Thousand Dollars ($50,000.00), irrespective of whether such
breach or default was waived (as to which no cure period shall apply); or
o.
Notice
of
a
Material
Adverse
Effect
is
provided
by
the
Company
or
the
determination
in
good
faith
by
the
Holder
that
a
Material
Adverse
Effect
has
occurred
(as
to
which no cure period shall apply); or
p.
The
Company
attempts
to
modify,
amend,
withdraw,
rescind,
disavow
or
repudiate any part of the Irrevocable Instructions (as to which no cure period shall apply).
q.
Any
attempt
by
the
Company
or
its
officers,
directors,
and/or
affiliates
to
transmit,
convey,
disclose,
or
any
actual
transmittal,
conveyance,
or
disclosure
by
the
Company
or its officers, directors, and/or affiliates of, material non-public information concerning the
Company, to the Holder or its successors and assigns, which is not immediately cured by
Company
’
s filing of a Form 8-K pursuant to Regulation FD on that same date.
r.
At any time while this Debenture is outstanding, the lowest traded price on
the
OTCP,
OTCQB,
or
OTCQX,
or
other
applicable
principal
trading
market
for
the
Common
Stock, is equal to or less than
$0.0001.
Then, or at any time thereafter, the Company shall immediately give
written
notice
of
the
occurrence
of
such
Event
of
Default
to
the
Holders
of
all
Debentures
then
outstanding,
and
in
each
and
every
such
case,
unless
such
Event
of
Default
shall
have
been
waived
in
writing
by
a
majority in
interest
of
the
Holders
of
the
Debentures
(which
waiver
shall
not
be
deemed
to
be
a
waiver
of
any
subsequent
default),
then
at
the
option
of
a
majority
in
interest
of
the
Holders
and
in
the
discretion
of
a
majority
in
interest
of
the
Holders,
take
any
or
all
of
the
following actions:
(i)
pursue
remedies
against
the
Company in
accordance
with
any of
the
Holder
’
s
rights,
(ii)
increase
the
interest
rate
applicable
to
the
Debentures
to
the
lesser
of
eighteen
percent
(18%)
per
annum
and
the
maximum
interest
rate
allowable
under
applicable
law,
(iii)
in
the
case
of
an
Event
of
Default
under
Section
10(e)(ii)(1)
based
on
the
Company
’
s
failure
to
be
DWAC
Operational,
increase
the
Principal
Amount
to
an
amount
equal
to
one
hundred
ten
percent
(110%)
of
the
then-outstanding
Principal
Amount,
(iv)
in
the
case
of
an
Event
of
Default
under
Section
10(d)(i),
increase
the
Principal
Amount
to
an
amount
equal
to
one
hundred
twenty percent
(120%)
of
the
then-outstanding
Principal
Amount
and
an
additional
ten
percent
(10%)
discount
shall
be
factored
into
the
Conversion
Price
until
this
Debenture
is
no
longer
outstanding,
(v)
in
the
case
of
an
Event
of
Default
under
Section
10(d)(i)
through
(v),
increase
the
Principal
Amount
of
the
relevant
Holder
’
s
Debenture
by One
Thousand
Dollars
and
00/100
($1,000.00)
for
each
day
the
related
failure
continues,
(vi)
in
the
case
of
an
Event
of
Default
under
Section
10(d)(ii)
through
(v)
arising
from
an
untimely
delivery
to
the
Holder
of
Conversion Shares or shares of Common Stock in de-legended form, if the lowest traded price of
the
Common
Stock
on
the
Trading
Day
immediately
prior
to the actual date
of
delivery
of
Conversion Shares or
de-legended shares,
as the case may be, is less than the lowest traded
price
on the Trading Day immediately prior to the date when Conversion Shares or de-legended shares
were
required
to
be
delivered,
increase
the
Principal
Amount
of
the
relevant
Holder
’
s
Debenture
9
by an amount per share equal to such difference, and (vii) following the expiration of the
applicable
grace
period
(if
any),
at
the
option
and
discretion
of
the
Holder,
accelerate
the
full
indebtedness
under
this
Debenture,
in
an
amount
equal
to
one
hundred
forty
percent
(140%)
of
the
outstanding
Principal
Amount
and
accrued
and
unpaid
interest
(the
“
Acceleration
Amount
”
),
whereupon
the
Acceleration
Amount
shall
be
immediately due
and
payable,
without
presentment,
demand,
protest
or
notice
of
any
kinds,
all
of
which
are
hereby
expressly
waived,
anything
contained
herein,
in
the
Securities
Purchase
Agreement
or
in
any
other
note
or
instruments
to
the
contrary
notwithstanding. In
the
case
of
an
Event
of
Default
under
Section
10(d)(ii),
the
Holder
may
either
(i)
declare
the
Acceleration
Amount
to
exclude
the
Conversion
Amount
that
is
the
subject
of
the
Event
of
Default,
in
which
case
the
Acceleration
Amount
shall
be
based
on
the
remaining
Principal
Amount
and
accrued
interest
(if
any),
in
which
case
the
Company shall continue to be obligated to issue the Conversion Shares, or (ii) declare the
Acceleration
Amount to include
the
Conversion Amount that is the
subject of
the Event of
Default,
in
which
case
the
Acceleration
Amount
shall
be
based
on
the
full
Principal
Amount,
including the Conversion Amount, and accrued
interest (if any), whereupon the Notice of
Conversion
shall
be
deemed
withdrawn.
At
its
option,
the
Holder
may
elect
to
convert
the
Debenture
pursuant
to
Section
2
notwithstanding
the
prior
declaration
of
a
default
and
acceleration,
in
the
sole
discretion
of
such
Holder. A
majority
in
interest
of
the
Holders
may
immediately enforce any and all of the Holder's rights and remedies provided herein or any other
rights
or
remedies
afforded
by
applicable
law. Notwithstanding
the
foregoing,
in
the
case
of
a
default
under
Section
10(d)(ii)
through
(iv),
the
Holder
of
the
Debenture
sought
to
be
converted,
transferred
or
de-legended,
as
the
case
may
be,
acting
singly,
shall
have
the
sole
and
absolute
discretion to increase the applicable interest rate on the Debentures held by such Holder and/or to
accelerate
the
Debenture(s)
held
by
such
Holder.
The
Company
expressly
acknowledges
and
agrees
that
the
Holder
’
s
exercise
of
any or
all
of
the
remedies
provided
herein
or
under
applicable
law,
including
without limitation
the
increase(s)
in the
Principal Amount and the
Acceleration
Amount
as
may
be
declared
in
the
case
of
a
default,
is
reasonable
and
appropriate
due
to
the
inability to
define
the
financial
hardship
that
the
Company
’
s
default
would
impose
on
the
Holders. To
the
extent
that
the
Holder
’
s
exercise
of
any
of
its
remedies
in
the
case
of
an
Event of Default shall be construed to exceed the maximum interest rate allowable under
applicable
law,
then
such
remedies
shall
be
reduced
to
equal
the
maximum
interest
rate
allowable under applicable law
11.
Nothing
contained
in
this
Debenture
shall
be
construed
as
conferring
upon
the
Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in
respect
of
any meeting
of
shareholders
or
any
rights
whatsoever
as
a
shareholder
of
the
Company, unless and to the extent converted in accordance with the terms hereof.
12.
So
long
as
this
Debenture
is
outstanding,
upon
any
issuance
by
the
Company
or
any of its subsidiaries of any security with any term more favorable to the holder of such security
or
with
a
term
in
favor
of
the
holder
of
such
security
that
was
not
similarly
provided
to
the
Holder
in
this
Debenture,
then
the
Company
shall
notify
the
Holder
of
such
additional
or
more
favorable
term
and
such
term,
at
Holder
’
s
option,
shall
become
a
part
of
the
transaction
documents
with
the
Holder.
The
types
of
terms
contained
in
another
security
that
may
be
more
favorable
to
the
holder
of
such
security include,
but
are
not
limited
to,
terms
addressing
conversion discounts, prepayment rate, conversion
lookback periods, interest rates, original issue
discounts, stock sale price, private placement price per share, and warrant coverage.
10
13.
This Debenture may be amended only by the written consent of the parties hereto.
Notwithstanding
the
foregoing,
the
Principal
Amount
of
this
Debenture
shall
automatically
be
reduced
by
any
and
all
Conversion
Amounts
(to
the
extent
that
the
same
relate
to
principal
hereof).
In
the
absence
of
manifest
error,
the
outstanding Principal
Amount
of
the
Debenture
on
the Holder
’
s book and records shall be the correct amount.
14.
In
the
event
of
any
inconsistency
between
the
provisions
of
this
Debenture
and
the provisions of any other Transaction Document, the provisions of this Debenture shall prevail.
Without
limiting
the
generality
of
the
foregoing,
in
the
event
the
Transfer
Agent
is
not
required
to
transfer
any
Common
Stock,
issue
Conversion
Shares
or
de-legended
shares
of
Restricted
Stock
pursuant
to
the
Transfer
Agent Instruction
Letter,
this
shall
not operate
as
an
excuse,
extension
or
waiver
of
the
Company
’
s
obligation
to
issue
and
deliver
Conversion
Shares
or
de-
legended Restricted Stock.
15.
The
Company
specifically
acknowledges
and
agrees
that
in
the
event
of
a
breach
or threatened breach by the Company of any provision hereof or of any other Transaction
Document, the Holder will be irreparably damaged, and that damages at law would be an
inadequate
remedy
if
this
Debenture
or
such
other
Transaction
Document
were
not
specifically
enforced.
Therefore,
in
the
event
of
a
breach
or
threatened
breach
by
the
Company,
the
Holder
shall
be
entitled,
in
addition
to
all
other
rights
and
remedies,
to
an
injunction
restraining
such
breach,
without
being
required
to
show
any
actual
damage
or
to
post
any
bond
or
other
security,
and/or
to
a
decree
for
a
specific
performance
of
the
provisions
of
this
Debenture
and
the
other
Transaction Documents.
16.
No waivers or consents in regard to any provision
of this Debenture may be given
other than by an instrument in writing signed by the Holder.
17.
Each time, while this Debenture is outstanding, the Company enters into a Section
3(a)(9)
transaction
(including
but
not
limited
to
the
issuance
of
new
promissory notes
or
debentures, or of a replacement promissory note or debenture), or Section 3(a)(10) transaction, in
which
any
3rd
party
has
the right
to
convert
monies
owed
to
that
3rd
party
(or
receive
shares
pursuant
to
a
settlement
or
otherwise)
at
a
discount
to
market
greater
than
the
Conversion
Price
in
effect
at
that
time
(prior
to
all
other
applicable
adjustments
in
this
Debenture),
then
the
Conversion Price
shall be automatically adjusted
to such
greater discount
percentage
(prior
to all
applicable
adjustments
in
this
Debenture)
until
this
Debenture
is
no
longer
outstanding.
Each
time,
while
this
Debenture
is
outstanding,
the
Company
enters
into
a
Section
3(a)(9)
transaction
(including but not limited to the issuance of new promissory notes or debentures, or of a
replacement
promissory
note
or
debenture),
or
Section
3(a)(10)
transaction,
in
which
any
3rd
party
has
a
look
back
period
greater
than
the
look
back
period
in
effect
under
this
Debenture
at
that
time,
then
the
Holder
’
s
look
back
period
shall
automatically
be
adjusted
to
such
greater
number
of
days
until
this
Debenture
is
no
longer
outstanding.
The
Company
shall
give
written
notice
to
the
Holder,
with
the
adjusted
Conversion
Price
and/or
adjusted
look
back
period
(each
adjustment that is applicable due to the triggering event), within one (1) business day of an event
that
requires
any
adjustment
described
in
this
section. So
long
as
this
Note
is
outstanding,
the
Company
shall not enter
into
any
transaction
or
arrangement structured in
accordance
with,
based
upon,
or
related
or
pursuant
to,
in
whole
or
in
part,
either
Section
3(a)(9)
of
the
Securities
Act
(a
“
3(a)(9)
Transaction
”
)
or
Section
3(a)(l0)
of
the
Securities
Act
(a
“
3(a)(l0)
Transaction
”
).
In
the
event
that
the
Company
does
enter
into,
or
makes
any issuance
of
Common
Stock
related
11
to
a
3(a)(9)
Transaction
or
a
3(a)(l0)
Transaction
while
this
note
is
outstanding,
a
liquidated
damages
charge
of
20%
of
the
outstanding
principal
balance
of
this
Note,
but
not
less
than
Fifteen
Thousand
Dollars,
will
be
assessed
and
will
become
immediately
due
and
payable
to
the
Holder at its election in the form of cash payment or addition to the balance of this Note.
18.
So
long
as
this
Debenture
is
outstanding,
upon
any
issuance
by
the
Company
or
any of its subsidiaries of any security with any term more favorable to the holder of such security
or
with
a
term
in
favor
of
the
holder
of
such
security
that
was
not
similarly
provided
to
the
Holder
in
this
Debenture,
then
the
Company
shall
notify
the
Holder
of
such
additional
or
more
favorable
term
and
such
term,
at
Holder
’
s
option,
shall
become
a
part
of
the
transaction
documents with the
Holder (regardless of whether
the Company notifies the Holder or
not). The
types
of
terms
contained
in
another
security
that
may
be
more
favorable
to
the
holder
of
such
security
include,
but
are
not
limited
to,
terms
addressing
conversion
discounts,
prepayment
rate,
conversion
lookback
periods,
interest
rates,
original
issue
discounts,
stock
sale
price,
private
placement price per share, and warrant coverage.
19.
If the Company fails to redeem (i) this Debenture or (ii) the entirety of the
$600,000.00
in
convertible
promissory
notes
issued
by
the
Company
between
April
and
June
of
2018, on or before the date which is 180 calendar days after the
Issuance Date, then the principal
amount of this Debenture shall increase by
$18,750.00 (under Holder
’
s and the Company
’
s
expectation that any principal amount increase will tack back to the Issuance Date).
[Signature Page Follows]
12
IN WITNESS WHEREOF
, the Company has caused this Debenture to be duly executed
by an officer thereunto duly authorized as of the date of issuance set forth above.
PARALLAX HEALTH SCIENCES, INC.
By:
______________________________________
Name: Paul Arena
Title: Chief Executive Officer
[Signature Page to Convertible Debenture]
13
ANNEX A
PARALLAX HEALTH SCIENCES, INC.
NOTICE OF CONVERSION
(To Be Executed by the Registered Holder in Order to Convert the Debenture)
The undersigned hereby irrevocably
elects to convert $ ________________ of the Principal
Amount of the above Debenture into Shares of Common Stock of Parallax
Health Sciences,
Inc.,
a Nevada corporation (the
“
Company
”
), according to the conditions hereof, as of the date written
below. After giving effect to the conversion requested hereby, the outstanding Principal Amount
of such debenture is $
____________________,
absent manifest error.
Pursuant
to
the
Debenture,
certificates
representing
Common
Stock
upon
conversion
must
be
delivered
(including
delivery
by
DWAC
or
DRS)
to
the
undersigned
within
two
(2)
business
days from the date of delivery of the Notice of Conversion to the Transfer Agent.
Conversion Date
____________________________________________________________________________
Applicable Conversion Price
____________________________________________________________________________
Signature
____________________________________________________________________________
Print Name
____________________________________________________________________________
Address
____________________________________________________________________________
____________________________________________________________________________
14
NEITHER
THIS
SECURITY
NOR
THE
SECURITIES
AS
TO
WHICH
THIS
SECURITY
MAY
BE
EXERCISED
HAVE
BEEN
REGISTERED
WITH
THE
SECURITIES
AND
EXCHANGE
COMMISSION
OR
THE
SECURITIES
COMMISSION
OF ANY
STATE
IN
RELIANCE
UPON
AN
EXEMPTION
FROM REGISTRATION
UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED
(THE
“
SECURITIES ACT
”
), AND, ACCORDINGLY, MAY NOT BE
OFFERED
OR
SOLD
EXCEPT
PURSUANT
TO
AN
EFFECTIVE
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES
ACT
OR
PURSUANT
TO
AN
AVAILABLE
EXEMPTION
FROM,
OR
IN
A
TRANSACTION
NOT
SUBJECT
TO,
THE
REGISTRATION
REQUIREMENTS
OF
THE
SECURITIES
ACT
AND
IN
ACCORDANCE
WITH
APPLICABLE
STATE
SECURITIES
LAWS
AS
EVIDENCED
BY
A
LEGAL
OPINION
OF
COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE
TO
THE
COMPANY.
THIS
SECURITY
AND
THE
SECURITIES
ISSUABLE
UPON
EXERCISE
OF
THIS
SECURITY
MAY
BE
PLEDGED
IN
CONNECTION
WITH
A
BONA
FIDE
MARGIN
ACCOUNT
OR
OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
PARALLAX HEALTH SCIENCES, INC.
Warrant Shares: 300,000
Date of Issuance: November 14, 2018 (
“
Issuance Date
”
)
This COMMON STOCK PURCHASE WARRANT (the
“
Warrant
”
) certifies that, for value received (in
connection with the issuance of the $125,000.00 convertible debenture to Peak One Opportunity Fund,
L.P., a
Delaware limited partnership (the
“
Fund
”
) on or around November 14, 2018 (the
“
Debenture
”
), Peak One Investments,
LLC,
a
Delaware
limited
liability
company
(including
any
permitted
and
registered
assigns, the
“
Holder
”
),
is
entitled,
upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after
the date of issuance hereof, to purchase from Parallax Health Sciences, Inc., a Nevada corporation (the
“
Company
”
), up
to 300,000 shares of Common Stock (as defined below) (the
“
Warrant Shares
”
) (whereby such number may be adjusted
from
time
to
time
pursuant
to
the
terms
and
conditions
of
this
Warrant)
at
the
Exercise
Price
per
share
then
in
effect.
This
Warrant
is
issued
by
the
Company
as
of
the
date
hereof
in
connection
with
that
certain
securities
purchase
agreement dated November 14, 2018, by and among the Company and the Fund (the
“
Purchase Agreement
”
).
Capitalized
terms
used
in
this
Warrant
shall
have
the
meanings
set
forth
in
the
Purchase
Agreement
unless
otherwise defined in the body of this Warrant or in Section 12 below. For purposes of this Warrant, the term
“
Exercise
Price
”
shall
mean
$0.15,
subject
to
adjustment
as
provided
herein
(including
but
not
limited
to
cashless
exercise),
and
the
term
“
Exercise
Period
”
shall
mean
the
period
commencing
on
the
Issuance
Date
and
ending
on
5:00
p.m.
eastern
standard time on the five-year anniversary thereof.
1.
EXERCISE OF WARRANT
.
(a)
Mechanics
of
Exercise
.
Subject
to
the
terms
and
conditions
hereof,
the
rights
represented
by
this
Warrant
may
be
exercised
in
whole
or
in
part
at
any
time
or
times
during
the
Exercise
Period
by
delivery
of
a
written notice, in the form attached hereto as
Exhibit A (
the
“
Exercise Notice
”
), of the Holder
’
s election to exercise this
Warrant. The
Holder
shall
not
be
required
to
deliver
the
original
Warrant
in
order
to
effect
an
exercise
hereunder.
Partial
exercises
of
this
Warrant
resulting
in
purchases
of
a
portion
of
the
total
number
of
Warrant
Shares
available
hereunder
shall
have
the
effect
of
lowering
the
outstanding
number
of
Warrant
Shares
purchasable
hereunder
in
an
amount equal to the applicable number of Warrant Shares purchased. On or before the third Trading Day
(the
“
Warrant
Share
Delivery
Date
”
)
following
the
date
on
which
the
Company
shall
have
received
the
Exercise
Notice,
and
upon
receipt
by the
Company of
payment
to
the
Company of
an
amount
equal
to the
applicable
Exercise Price
multiplied
by
the
number
of
Warrant
Shares
as
to
which
all
or
a
portion
of
this
Warrant
is
being
exercised
(the
“
Aggregate
Exercise
Price
”
and
together
with
the
Exercise
Notice,
the
“
Exercise
Delivery
Documents
”
)
in
cash
or
by
wire
transfer
of
immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price
provided),
the
Company
shall
(or
direct
its
transfer
agent
to)
issue
and
dispatch
by
overnight
courier
to
the
address
as
specified
in
the
Exercise
Notice,
a
certificate,
registered
in
the
Company
’
s
share
register
in
the
name
of
the
Holder
or
its
designee,
for
the
number
of
shares
of
Common
Stock
to
which
the
Holder
is
entitled
pursuant
to
such
exercise.
Upon
delivery
of
the
Exercise
Delivery
Documents,
the
Holder
shall
be
deemed
for
all
corporate
purposes
to
have
become
the
holder
of
record
of
the
Warrant
Shares
with
respect
to
which
this
Warrant
has
been
exercised,
irrespective
of
the
date
of
delivery
of
the
certificates
evidencing
such
Warrant
Shares.
If
this
Warrant
is
submitted
in
connection
with
any exercise
and
the
number
of
Warrant
Shares
represented
by this
Warrant
submitted
for
exercise
is
greater
than
the
number
of
Warrant
Shares
being
acquired
upon
an
exercise,
then
the
Company
shall
as
soon
as
practicable
and
in
no
event
later
than
three
Business
Days
after
any exercise
and
at
its
own
expense,
issue
a
new
Warrant
(in
accordance
with Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
If
the
Company
fails
to
cause
its
transfer
agent
to
transmit
to
the
Holder
the
respective
shares
of
Common
Stock
by
the
respective
Warrant
Share
Delivery
Date,
then
the
Holder
will
have
the
right
to
rescind
such
exercise
in
Holder
’
s sole discretion, and such failure shall be deemed an event of default under the Debenture.
If
the
Market
Price
of
one
share
of
Common
Stock
is
greater
than
the
Exercise
Price,
the
Holder
may elect
to
receive
Warrant
Shares
pursuant
to
a
cashless
exercise,
in
lieu
of
a
cash
exercise,
equal
to
the
value
of
this
Warrant
determined
in
the
manner
described
below
(or
of
any
portion
thereof
remaining
unexercised)
by
surrender
of
this
Warrant
and
a
Notice
of
Exercise,
in
which
event
the
Company
shall
issue
to
Holder
a
number
of
Common
Stock
computed using the
following
formula:
X =
Y (A-B)
A
Where
X
=
the number of Shares to
be issued
to
Holder.
Y =
the number of
Warrant Shares that the Holder elects to purchase under this
Warrant
(at the
date
of such
calculation).
A =
the Market Price (at the date of such
calculation).
B =
Exercise Price
(as adjusted
to
the date of such
calculation).
(b)
No
Fractional
Shares
.
No
fractional
shares
shall
be
issued
upon
the
exercise
of
this
Warrant
as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of
this
Warrant
may
be
aggregated
for
purposes
of
determining
whether
the
exercise
would
result
in
the
issuance
of
any
fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall,
in
lieu
of
issuance of
any fractional
share, pay the
Holder otherwise
entitled
to
such fraction
a
sum in
cash equal to
the
product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
(c)
Holder
’
s
Exercise
Limitations
. The
Company
shall
not
effect
any
exercise
of
this
Warrant,
and
a
Holder
shall
not
have
the
right
to
exercise
any
portion
of
this
Warrant,
to
the
extent
that
after
giving
effect
to
issuance
of
Warrant
Shares
upon
exercise
as
set
forth
on
the
applicable
Notice
of
Exercise,
the
Holder
(together
with
the
Holder
’
s
Affiliates,
and
any
other
persons
acting
as
a
group
together
with
the
Holder
or
any
of
the
Holder
’
s
Affiliates),
would
beneficially
own
in
excess
of
the
Beneficial
Ownership
Limitation,
as
defined
below.
For
purposes
of
the
foregoing
sentence,
the
number
of
shares
of
Common
Stock
beneficially owned
by
the
Holder
and
its
Affiliates
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such
determination
is
being
made,
but
shall
exclude
the
number
of
shares
of
Common
Stock
which
would
be
issuable
upon
(i)
exercise
of
the
remaining,
non-exercised
portion
of
this
Warrant
beneficially
owned
by
the
Holder
or
any
of
its
Affiliates
and
(ii)
exercise
or
conversion
of
the
unexercised
or
non-converted
portion
of
any
other
securities
of
the
Company (including without
limitation any other
Common Stock Equivalents) subject to a limitation on conversion or
2
exercise
analogous
to
the
limitation
contained
herein
beneficially owned
by the
Holder
or
any of
its
Affiliates.
Except
as
set
forth
in
the
preceding
sentence,
for
purposes
of
this
paragraph
(d),
beneficial
ownership
shall
be
calculated
in
accordance
with
Section
13(d)
of
the
Exchange
Act,
it
being
acknowledged
by
the
Holder
that
the
Company
is
not
representing
to
the
Holder
that
such
calculation
is
in
compliance
with
Section
13(d)
of
the
Exchange
Act
and
the
Holder
is
solely
responsible
for
any
schedules
required
to
be
filed
in
accordance
therewith.
To
the
extent
that
the
limitation
contained
in
this
paragraph
applies,
the
determination
of
whether
this
Warrant
is
exercisable
(in
relation
to
other
securities
owned
by
the
Holder
together
with
any
affiliates)
and
of
which
portion
of
this
Warrant
is
exercisable
shall
be
in
the
sole
discretion
of
the
Holder,
and
the
submission
of
a
Notice
of
Exercise
shall
be
deemed
to
be
the
Holder
’
s
determination
of
whether
this
Warrant
is
exercisable
(in
relation
to
other
securities
owned
by
the
Holder
together
with
any Affiliates)
and
of
which
portion
of
this
Warrant
is
exercisable,
in
each
case
subject
to
the
Beneficial
Ownership
Limitation,
and
the
Company
shall
have
no
obligation
to
verify
or
confirm
the
accuracy
of
such
determination.
For
purposes
of
this
paragraph,
in
determining
the
number
of
outstanding
shares
of
Common
Stock,
a
Holder
may
rely
on
the
number
of
outstanding
shares
of
Common
Stock
as
reflected
in
(A)
the
Company
’
s
most
recent
periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or its transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the request of a Holder, the Company shall within two Trading Days confirm to the
Holder
the
number
of
shares
of
Common
Stock
then
outstanding. In
any
case,
the
number
of
outstanding
shares
of
Common
Stock
shall
be
determined
after
giving
effect
to
the
conversion
or
exercise
of
securities
of
the
Company,
including
this
Warrant,
by
the
Holder
or
its
affiliates
since
the
date
as
of
which
such
number
of
outstanding
shares
of
Common
Stock
was
reported.
The
“
Beneficial
Ownership
Limitation
”
shall
be
4.99%
of
the
number
of
shares
of
the
Common
Stock
outstanding
immediately
after
giving
effect
to
the
issuance
of
shares
of
Common
Stock
issuable
upon
exercise of this Warrant. Upon no fewer than 61 days
’
prior notice to the Company, a Holder may increase or decrease
the Beneficial Ownership Limitation provisions of this paragraph, provided that the Beneficial Ownership Limitation in
no
event
exceeds
9.99%
of
the
number
of
shares
of
the
Common
Stock
outstanding
immediately
after
giving
effect
to
the
issuance
of
shares
of
Common
Stock
upon
exercise
of
this
Warrant
held
by
the
Holder
and
the
provisions
of
this
paragraph
shall
continue
to
apply. Any
such
increase
or
decrease
will
not
be
effective
until
the
61st
day
after
such
notice is delivered to the Company and shall only apply to such Holder and no other Holder. The limitations contained
in this paragraph shall apply to a successor Holder of this Warrant.
2.
ADJUSTMENTS.
The
Exercise
Price
and
the
number
of
Warrant
Shares
shall
be
adjusted
from
time
to time as follows:
(a)
Distribution
of
Assets
. If
the
Company
shall
declare
or
make
any
dividend
or
other
distribution
of
its
assets
(or
rights
to
acquire
its
assets)
to
holders
of
shares
of
Common
Stock,
by
way
of
return
of
capital or otherwise
(including without limitation any distribution of cash, stock or other securities, property or options
by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a
“
Distribution
”
),
at any time after the issuance of this Warrant, then, in each such case:
(i)
any
Exercise
Price
in
effect
immediately
prior
to
the
close
of
business
on
the
record
date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall
be reduced, effective as of the close of business on such record date, to a price determined by multiplying such
Exercise
Price
by
a fraction (i) the numerator of which shall
be the
Closing
Sale
Price of the shares of
Common
Stock
on
the
Trading
Day
immediately
preceding
such
record
date
minus
the
value
of
the
Distribution
(as
determined
in
good
faith
by
the
Company
’
s
Board
of
Directors)
applicable
to
one
share
of
Common
Stock,
and
(ii)
the
denominator
of
which
shall
be
the
Closing
Sale
Price
of
the
shares
of
Common
Stock on the Trading Day immediately preceding such record date; and
(ii)
the
number
of
Warrant
Shares
shall
be
increased
to
a
number
of
shares
equal
to
the
number
of
shares
of
Common
Stock
obtainable
immediately
prior
to
the
close
of
business
on
the
record
date
fixed for the determination of holders of shares of Common Stock entitled to
receive the Distribution
multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided,
3
however,
that
in
the
event
that
the
Distribution
is
of
shares
of
common
stock
of
a
company
(other
than
the
Company)
whose
common
stock
is
traded
on
a
national
securities
exchange
or
a
national
automated
quotation
system
(
“
Other
Shares
of
Common
Stock
”
),
then
the
Holder
may
elect
to
receive
a
warrant
to
purchase
Other
Shares
of
Common
Stock
in
lieu
of
an
increase
in
the
number
of
Warrant
Shares,
the
terms
of
which
shall
be
identical
to
those
of
this
Warrant,
except
that
such
warrant
shall
be
exercisable
into
the
number
of
shares
of
Other
Shares
of
Common
Stock
that
would
have
been
payable
to
the
Holder
pursuant
to
the
Distribution
had
the
Holder
exercised
this
Warrant
immediately
prior
to
such
record
date
and
with
an
aggregate
exercise
price
equal
to
the
product
of
the
amount
by
which
the
exercise
price
of
this
Warrant
was
decreased
with
respect
to
the
Distribution
pursuant
to
the
terms
of
the
immediately
preceding
clause
(i)
and
the
number
of
Warrant
Shares calculated in accordance with the first part of this clause (ii).
(iii)
For
the
avoidance
of
doubt,
no
adjustment
shall
occur
when
shares
of
outstanding
Common
Stock
are
merged
proportionally
across
all
stockholders
to
form
a
smaller
number
of
outstanding
shares of Common Stock.
(b)
Anti-Dilution
Adjustments
to
Exercise
Price
. If
the
Company
or
any
Subsidiary
thereof,
as
applicable,
at any time
while
this
Warrant is
outstanding, shall
sell
or grant
any option
to
purchase, or sell
or
grant
any
right
to
reprice,
or
otherwise
dispose
of
or
issue
(or
announce
any
offer,
sale,
grant
or
any
option
to
purchase
or
other
disposition)
any
Common
Stock
or
securities
entitling
any
person
or
entity
to
acquire
shares
of
Common
Stock
(upon
conversion,
exercise
or
otherwise)
(including
but
not
limited
to
under
the
Debenture),
at
an
effective
price
per
share
less
than
the
then
Exercise Price
(such
lower
price,
the
“
Base
Share Price
”
and
such issuances
collectively,
a
“
Dilutive
Issuance
”
)
(if
the
holder
of
the
Common
Stock
or
Common
Stock
Equivalents
so
issued
shall
at
any
time,
whether
by
operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise,
or
due to
warrants,
options
or
rights
per
share which
are issued
in
connection with
such
issuance, be entitled
to
receive
shares
of
Common
Stock
at
an
effective
price
per
share
which
is
less
than
the
Exercise
Price,
such
issuance
shall
be
deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price
shall be reduced at the option of the Holder and only reduced to equal the Base Share Price, and the number of Warrant
Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into
account
the
decrease
in
the
Exercise
Price,
shall
be
equal
to
the
aggregate
Exercise
Price
prior
to
such
adjustment.
Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The
Company
shall
notify
the
Holder
in
writing,
no
later
than
the
Trading
Day
following
the
issuance
of
any
Common
Stock
or
Common
Stock
Equivalents
subject
to
this
Section
2(b),
indicating
therein
the
applicable
issuance
price,
or
applicable
reset
price,
exchange
price,
conversion
price
and
other
pricing
terms
(such
notice
the
“
Dilutive
Issuance
Notice
”
).
For
purposes
of
clarification,
whether
or
not
the
Company
provides
a
Dilutive
Issuance
Notice
pursuant
to
this
Section
2(b),
upon
the
occurrence
of
any
Dilutive
Issuance,
after
the
date
of
such
Dilutive
Issuance
the
Holder
is
entitled
to
receive
a
number
of
Warrant
Shares
based
upon
the
Base
Share
Price
regardless
of
whether
the
Holder
accurately refers to the Base Share Price in the Notice of Exercise.
3.
FUNDAMENTAL
TRANSACTIONS
. If, at any time while this Warrant is outstanding, (i) the
Company
effects
any
merger
of
the
Company
with
or
into
another
entity
and
the
Company
is
not
the
surviving
entity
(such
surviving
entity,
the
“
Successor
Entity
”
),
(ii)
the
Company effects
any sale
of
all
or
substantially all
of
its
assets
in
one
or
a
series
of
related
transactions,
(iii)
any
tender
offer
or
exchange
offer
(whether
by
the
Company
or
by
another individual or entity,
and approved by the Company) is completed pursuant to
which holders of Common
Stock
are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the holders
of
at
least
50%
of the
Common
Stock
accept
such
offer,
or
(iv) the
Company
effects
any
reclassification of
the
Common
Stock
or
any compulsory share
exchange
pursuant
to
which
the
Common
Stock
is
effectively
converted
into
or
exchanged
for
other
securities,
cash
or
property
(other
than
as
a
result
of
a
subdivision
or
combination
of
shares
of
Common
Stock)
(in
any such
case, a
“
Fundamental
Transaction
”
),
then, upon any subsequent
exercise
of
this Warrant,
the
Holder
shall
have
the
right
to
receive
the
number
of
shares
of
Common
Stock
of
the
Successor
Entity
or
of
the
Company
and
any
additional
consideration
(the
“
Alternate
Consideration
”
)
receivable
upon
or
as
a
result
of
such
reorganization,
reclassification,
merger,
consolidation
or
disposition
of
assets
by
a
holder
of
the
number
of
shares
of
Common
Stock
for
which
this
Warrant
is
exercisable
immediately
prior
to
such
event
(disregarding
any
limitation
on
exercise contained herein solely
for the purpose of such determination). For purposes of any
such exercise, the
4
determination
of
the
Exercise
Price
shall
be
appropriately
adjusted
to
apply
to
such
Alternate
Consideration
based
on
the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction,
and
the
Company
shall
apportion
the
Exercise
Price
among
the
Alternate
Consideration
in
a
reasonable
manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock
are
given
any choice
as
to
the
securities,
cash
or
property to
be
received
in
a
Fundamental
Transaction,
then
the
Holder
shall
be
given
the
same
choice
as
to
the
Alternate
Consideration
it
receives
upon
any
exercise
of
this
Warrant
following
such
Fundamental
Transaction.
To
the
extent
necessary
to
effectuate
the
foregoing
provisions,
any
Successor Entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing
provisions and evidencing the Holder
’
s right to exercise such warrant into Alternate Consideration.
4.
NON-CIRCUMVENTION.
The Company covenants
and
agrees
that it
will
not,
by amendment
of
its
certificate
of
incorporation,
bylaws
or
through
any
reorganization,
transfer
of
assets,
consolidation,
merger,
scheme
of
arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the
observance
or
performance
of
any
of
the
terms
of
this
Warrant,
and
will
at
all
times
in
good
faith
carry
out
all
the
provisions
of
this
Warrant
and
take
all
action
as
may
be
required
to
protect
the
rights
of
the
Holder.
Without
limiting
the
generality
of
the
foregoing,
the
Company
(i)
shall
not
increase
the
par
value
of
any
shares
of
Common
Stock
receivable
upon
the
exercise
of
this
Warrant
above
the
Exercise
Price
then
in
effect,
(ii)
shall
take
all
such
actions
as
may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable
shares
of
Common
Stock
upon
the
exercise
of
this
Warrant,
and
(iii)
shall,
for
so
long
as
this
Warrant
is
outstanding,
have
authorized
and
reserved,
free
from
preemptive
rights,
ten
(10)
times
the
number
of
shares
of
Common
Stock
into
which
the
Warrants
are
then
exercisable
into
to
provide
for
the
exercise
of
the
rights
represented
by
this
Warrant
(without regard to any limitations on exercise).
5.
WARRANT
HOLDER
NOT
DEEMED
A
STOCKHOLDER
.
Except
as
otherwise
specifically
provided
herein,
this
Warrant,
in
and
of
itself,
shall
not
entitle
the
Holder
to
any
voting
rights
or
other
rights
as
a
stockholder
of
the
Company.
In
addition,
nothing
contained
in
this
Warrant
shall
be
construed
as
imposing
any
liabilities
on
the
Holder
to
purchase
any
securities
(upon
exercise
of
this
Warrant
or
otherwise)
or
as
a
stockholder
of
the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
6.
REISSUANCE.
(a)
Lost,
Stolen
or
Mutilated
Warrant
.
If
this
Warrant
is
lost,
stolen,
mutilated
or
destroyed,
the
Company
will,
on
such
terms
as
to
indemnity
or
otherwise
as
it
may
reasonably
impose
(which
shall,
in
the
case
of
a
mutilated
Warrant,
include
the
surrender
thereof),
issue
a
new
Warrant
of
like
denomination
and
tenor
as
this
Warrant
so lost, stolen, mutilated or destroyed.
(b)
Issuance
of
New
Warrants
.
Whenever
the
Company
is
required
to
issue
a
new
Warrant
pursuant
to
the
terms
of
this
Warrant,
such
new
Warrant
shall
be
of
like
tenor
with
this
Warrant,
and
shall
have
an
issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.
7.
TRANSFER
.
(a)
Notice
of
Transfer
.
The Holder
agrees
to
give
written
notice
to
the
Company before
transferring
this
Warrant
or
transferring
any Warrant
Shares
of
such
Holder
’
s
intention
to
do
so,
describing
briefly
the
manner
of
any
proposed
transfer.
Promptly
upon
receiving
such
written
notice,
the
Company
shall
present
copies
thereof to the Company
’
s counsel.
If the proposed transfer may be effected without registration or qualification (under
any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder thereof,
whereupon
the
Holder
shall
be
entitled
to
transfer
this
Warrant
or
to
dispose
of
Warrant
Shares
received
upon
the
previous exercise of this Warrant, all
in accordance with the terms of the notice delivered by
the Holder to the
Company;
provided,
however,
that
an
appropriate
legend
may
be
endorsed
on
this
Warrant
or
the
certificates
for
such
Warrant
Shares
respecting
restrictions
upon
transfer
thereof
necessary
or advisable
in
the
opinion
of
counsel
and
satisfactory to
the
Company to
prevent
further
transfers
which
would
be
in
violation
of
Section
5
of
the
Securities
Act
and
applicable
state
securities
laws;
and
provided
further
that
the
prospective
transferee
or
purchaser
shall
execute
the
5
Assignment of Warrant attached hereto as
Exhibit B
and such other documents and make such representations,
warranties,
and
agreements
as
may
be
required
solely
to
comply
with
the
exemptions
relied
upon
by
the
Company
for
the transfer or disposition of the Warrant or Warrant Shares.
(b)
If the proposed transfer or disposition of this Warrant or such Warrant Shares described in the
written
notice
given
pursuant
to
this
Section
7
may not
be
effected
without
registration
or
qualification
of
this
Warrant
or
such
Warrant
Shares,
the Holder
will
limit
its
activities
in
respect
to
such
transfer
or
disposition
as
are
permitted
by
law.
(c)
Any transferee of all or a portion of this Warrant shall succeed to the rights and benefits of the
initial Holder of this Warrant.
8.
NOTICES.
Whenever
notice
is
required
to
be
given
under
this
Warrant,
unless
otherwise
provided
herein,
such
notice
shall
be given
in
accordance
with
the
notice
provisions
contained
in
the
Purchase
Agreement.
The
Company
shall
provide
the
Holder
with
prompt
written
notice
(i) immediately
upon
any
adjustment
of
the
Exercise
Price,
setting
forth
in
reasonable
detail,
the
calculation
of
such
adjustment
and
(ii)
at
least
20
days
prior
to
the
date
on
which
the
Company closes
its
books
or
takes
a
record
(A)
with
respect
to
any dividend
or
distribution
upon
the
shares
of Common Stock,
(B)
with respect
to any
grants, issuances
or sales
of any
stock or
other securities directly
or
indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the
holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution
or
liquidation,
provided
in
each
case
that
such
information
shall
be
made
known
to
the
public
prior
to
or
in
conjunction with such notice being provided to the Holder.
9.
AMENDMENT
AND
WAIVER.
The
terms
of
this Warrant
may
be
amended
or
waived
(either
generally
or
in
a
particular
instance
and
either
retroactively
or
prospectively)
only
with
the
written
consent
of
the
Company and the Holder.
10.
GOVERNING
LAW
.
This
Warrant
shall
be
governed
by
and
construed
in
accordance
with
the
laws
of
the State
of Nevada without
regard to
principles of
conflicts
of
laws.
Any action brought by either
party against
the
other
concerning
the
transactions
contemplated
by
this
Warrant
shall
be
brought
only
in
the
state
courts
or
federal
courts
located
in
the
State
of
Florida,
County
of
Miami-Dade.
The
parties
to
this
Warrant
hereby
irrevocably
waive
any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack
of
jurisdiction
or
venue
or
based
upon
forum
non
conveniens
.
EACH
PARTY
HEREBY
IRREVOCABLY
WAIVES
ANY
RIGHT
IT
MAY
HAVE
TO,
AND
AGREES
NOT
TO
REQUEST,
A
JURY
TRIAL
FOR
THE
ADJUDICATION
OF
ANY
DISPUTE
HEREUNDER
OR
UNDER
ANY
OTHER
TRANSACTION
DOCUMENT ENTERED INTO IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
THEREBY
.
The
prevailing
party
shall
be
entitled
to
recover
from
the
other
party
its
reasonable
attorney's
fees
and
costs.
In
the
event
that
any
provision
of
this
Warrant
or
any
other
agreement
delivered
in
connection
herewith
is
invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any
such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents
to
process
being
served
in
any
suit,
action
or
proceeding
in
connection
with
this
Agreement
or
any
other
Transaction
Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to
such
party
at
the
address
in
effect
for
notices
to
it
under
this
Agreement
and
agrees
that
such
service
shall
constitute
good
and
sufficient
service
of
process
and
notice
thereof. Nothing
contained
herein
shall
be
deemed
to
limit
in
any
way any right to serve process in any other manner permitted by law.
11.
ACCEPTANCE.
Receipt
of
this
Warrant
by the
Holder
shall
constitute
acceptance
of
and
agreement
to all of the terms and conditions contained herein.
6
12.
CERTAIN
DEFINITIONS
.
For
purposes
of
this
Warrant,
the
following
terms
shall
have
the
following meanings:
(a)
“
Nasdaq
”
means www.Nasdaq.com.
(b)
“
Closing Sale Price
”
means, for any security as
of any date, (i)
the last closing trade price for
such
security
on
the
Principal
Market,
as
reported
by
Nasdaq,
or,
if
the
Principal
Market
begins
to
operate
on
an
extended
hours
basis
and
does
not
designate
the
closing
trade
price,
then
the
last
trade
price
of
such
security
prior
to
4:00
p.m.,
New
York
time,
as
reported
by
Nasdaq,
or
(ii) if
the
foregoing
does
not
apply,
the
last
trade
price
of
such
security in the over-the-counter market for such security as reported by Nasdaq, or (iii) if no last trade price is reported
for
such
security
by
Nasdaq,
the
average
of
the
bid
and
ask
prices
of
any
market
makers
for
such
security
as
reported
by
the
OTC
Markets.
If
the
Closing
Sale
Price
cannot
be
calculated
for
a
security
on
a
particular
date
on
any
of
the
foregoing
bases,
the
Closing
Sale
Price
of
such
security
on
such
date
shall
be
the
fair
market
value
as mutually
determined
by
the
Company
and
the
Holder.
All
such
determinations
to
be
appropriately
adjusted
for
any
stock
dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
(c)
“
Common Stock
”
means the Company
’
s common stock, and any other class of securities into
which such securities may hereafter be reclassified or changed.
(d)
“
Common
Stock
Equivalents
”
means
any
securities
of
the
Company
that
would
entitle
the
holder
thereof
to
acquire
at
any
time
Common
Stock,
including
without
limitation
any
debt,
preferred
stock,
rights,
options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
(e)
“
Dilutive
Issuance
”
is
any
issuance
of
Common
Stock
or
Common
Stock
Equivalents
described in Section 2(b) above; provided, however, that a Dilutive Issuance shall not include any Exempt Issuance.
(f)
“
Exempt
Issuance
”
means
the
issuance
of
(i)
shares
of
Common
Stock
or
options
to
officers
or
directors
of
the
Company
pursuant
to
any
stock
or
option
plan
duly
adopted
by
a
majority
of
the
non-employee
members
of
the
Board
of
Directors
of
the
Company
or
a
majority
of
the
members
of
a
committee
of
non-employee
directors
established
for
such
purpose,
(ii)
securities
issued
pursuant
to
acquisitions
approved
by
a
majority
of
the
disinterested
directors
of
the
Company,
and
(iii)
shares
of
Common
Stock
issued
pursuant
to
any real
property
leasing
arrangement or financing from a national bank approved by the Board of Directors of the Company.
(g)
“
Principal
Market
”
means
the
primary
national
securities
exchange
on
which
the
Common
Stock is then traded.
(h)
“
Market Price
”
means the highest traded price of the Common Stock during the thirty Trading
Days prior to the date of the respective Exercise Notice.
(i)
“
Trading Day
”
means
(i)
any day on
which
the
Common
Stock
is
listed
or
quoted
and
traded
on
its
Principal
Market,
(ii)
if
the
Common
Stock
is
not
then
listed
or
quoted
and
traded
on
any
national
securities
exchange,
then a day on
which
trading occurs on
any over-the-counter
markets,
or
(iii)
if
trading
does not
occur on
the
over-the-counter markets, any Business Day.
* * * * * * *
7
IN
WITNESS
WHEREOF,
the
Company has
caused
this
Warrant
to
be
duly executed
as
of
the
Issuance
Date
set forth above.
PARALLAX HEALTH SCIENCES, INC.
Name: Paul Arena
Title: Chief Executive Officer
EXHIBIT A
EXERCISE NOTICE
(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)
T
HE
U
NDERSIGNED
holder hereby exercises the right to purchase _________________ of the shares of
Common
Stock
(
“
Warrant
Shares
”
)
of
Parallax
Health
Sciences,
Inc.,
a
Nevada
corporation
(the
“
Company
”
),
evidenced
by
the
attached
copy
of
the
Common
Stock
Purchase
Warrant
(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 (check one):
☐
a cash exercise with respect to _________________ Warrant Shares; or
☐
by cashless exercise pursuant to the Warrant.
2.
Payment
of
Exercise
Price.
If
cash
exercise
is
selected
above,
the
holder
shall
pay
the
applicable
Aggregate
Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.
3.
Delivery
of
Warrant
Shares
. The
Company
shall
deliver
to
the
holder
__________________
Warrant
Shares
in
accordance with the terms of the Warrant.
Date:
(Print Name of Registered Holder)
By:
Name:
Title:
EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized transfer of the Warrant)
F
OR
V
ALUE
R
ECEIVED
,
the
undersigned
hereby
sells,
assigns,
and
transfers
unto
____________________
the
right
to
purchase
_______________
shares
of
common
stock
of
Parallax
Health
Sciences,
Inc.,
to
which
the
within
Common
Stock
Purchase
Warrant
relates
and
appoints
____________________,
as
attorney-in-fact,
to
transfer
said
right
on
the
books
of Parallax
Health
Sciences,
Inc.
with
full
power
of
substitution
and
re-substitution
in
the
premises.
By
accepting
such
transfer,
the
transferee
has
agreed
to
be
bound
in
all
respects
by
the
terms
and
conditions
of
the
within Warrant.
Dated: __________________
(Signature) *
(Name)
(Address)
(Social Security or Tax Identification No.)
*
The
signature
on
this
Assignment
of
Warrant
must
correspond
to
the
name
as
written
upon
the
face
of
the
Common
Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever. When signing
on
behalf
of
a
corporation,
partnership,
trust
or
other
entity,
please
indicate
your
position(s)
and
title(s)
with
such
entity.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
(this
"
Agreement"
),
dated as of
November 14,
2018,
by
and
between
PARALLAX
HEALTH SCIENCES,
INC.,
a Nevada
corporation
(the
"
Company
"),
and
PEAK
ONE
OPPORTUNITY
FUND,
L.P.,
a
Delaware
limited
partnership
(together
with
it
permitted
assigns,
the
“
Buyer
”
).
Capitalized
terms
used
herein
and
not
otherwise
defined
herein
shall
have
the
respective
meanings
set
forth
in
the
equity
purchase
agreement
by
and
between
the
parties
hereto,
dated
as
of
the
date
hereof
(as
amended,
restated,
supplemented
or
otherwise
modified
from
time
to time, the "
Purchase Agreement"
).
WHEREAS:
The
Company
has
agreed,
upon
the
terms
and
subject
to
the
conditions
of
the
Purchase
Agreement,
to
sell
to
the
Buyer
up
to
Ten
Million
Dollars
($10,000,000.00)
of
Put
Shares
and
to
induce
the
Buyer
to
enter
into
the
Purchase
Agreement,
the
Company
has
agreed
to
provide
certain
registration
rights
under
the
Securities
Act
of
1933,
as
amended,
and
the
rules
and
regulations
thereunder,
or
any
similar successor statute (collectively, the "
Securities Act"
), and applicable state securities laws.
NOW,
THEREFORE,
in
consideration
of
the
promises
and
the
mutual
covenants
contained
herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Buyer hereby agree as follows:
1.
DEFINITIONS.
As used in this Agreement, the following terms shall have the following meanings:
a.
"
Investor
"
means
the
Buyer,
any
transferee
or
assignee
thereof
to
whom
a
Buyer
assigns its rights under this Agreement
in accordance with Section 9 and who agrees to become bound by
the provisions of
this Agreement, and any transferee or
assignee thereof
to whom a transferee or
assignee
assigns its rights under this Agreement
in accordance with Section 9 and who agrees to become bound by
the provisions of this Agreement.
b.
"
Person
"
means
any
individual
or
entity
including
but
not
limited
to
any
corporation,
a
limited
liability
company,
an
association,
a
partnership,
an
organization,
a
business,
an
individual, a governmental or political subdivision thereof or a governmental agency.
c.
"
Register,
" "
registered
," and "
registration
" refer to a registration effected by
preparing
and
filing
one
or
more
registration
statements
of
the
Company
in
compliance
with
the
Securities
Act
and/or
pursuant
to
Rule
415
under
the
Securities
Act
or
any
successor
rule
providing
for
offering
securities
on
a
continuous
basis
("
Rule
415"
),
and
the
declaration
or
ordering
of
effectiveness
of
such registration statement(s) by the United States Securities and Exchange Commission (the "
SEC
").
d.
"
Registrable
Securities
"
means
all
of
the
Put
Shares
which
have
been,
or
which
may,
from
time
to
time
be
issued,
including
without
limitation
all
of
the
shares
of
common
stock
which
have
been
issued
or
will
be
issued
to
the
Investor
under
the
Purchase
Agreement
(without
regard
to
any
limitation
or
restriction
on
purchases),
and
any
and
all
shares
of
capital
stock
issued
or
issuable
with
respect
to
the
Put
Shares,
800,000
shares
of
common
stock
(400,000
of
which
shall
be
issued
to
the
Investor
and
400,000
of
which
shall
be
issued
to
Peak
One
Investments,
LLC
(
“
Investments
”
))
for
its
commitment
to
enter
into
the
Purchase
Agreement
(the
“
Commitment
Shares
”
),
and
shares
of
common
stock
issued
to
the
Investor
as
a
result
of
any
stock
split,
stock
dividend,
recapitalization,
exchange
or
similar event or otherwise, without regard to any limitation on purchases under the Purchase Agreement.
1
e.
"
Registration
Statement
"
means
one
or
more
registration
statements
of
the
Company covering only the sale of the Registrable Securities.
2.
REGISTRATION.
a.
Mandatory
Registration.
T
he
Company
shall,
within
thirty
(30)
calendar
days
from
the
date
hereof,
file
with
the
SEC
an
initial
Registration
Statement
covering
the
maximum
number
of
Registrable
Securities
(beginning
with
the
Commitment Shares
with
respect
to
Investor
and
Investments) as shall be permitted to be included thereon in accordance with applicable SEC rules,
regulations
and
interpretations
so
as
to
permit
the
resale
of
such
Registrable
Securities
by
the
Investor,
including but
not
limited to under Rule 415 under the Securities Act at then prevailing market
prices (and
not
fixed
prices), subject
to the
aggregate
number
of
authorized
shares
of
the
Company
’
s
Common
Stock
then
available
for
issuance
in
its
Certificate
of
Incorporation.
The
initial
Registration
Statement
shall
register
only the
Registrable
Securities
.
The
Investor
and
its
counsel shall
have a reasonable
opportunity
to
review
and
comment
upon
such
Registration
Statement
and
any
amendment
or
supplement
to
such
Registration Statement
and any related prospectus prior
to its filing with the SEC, and the Company shall
give
due
consideration
to
all
reasonable
comments.
The
Investor
shall
furnish
all
information reasonably
requested
by
the
Company
for
inclusion
therein.
The
Company
shall
use
its
reasonable
best
efforts
to
have
the
Registration
Statement
declared
effective
by
the
SEC
within
ninety
(90)
calendar
days
from
the
date hereof
(or
at
the earliest
possible date if
prior
to ninety (90)
calendar
days from the date hereof), and
any
amendment declared
effective by
the SEC at the earliest possible
date.
The
Company
shall use
reasonable
best
efforts
to
keep
the
Registration
Statement
effective,
including
but
not
limited
to
pursuant
to
Rule 415 promulgated under
the
Securities
Act
and available for
the resale
by the Investor
of
all
of
the
Registrable
Securities
covered
thereby at
all
times
until
the earlier
of
(i)
the
date
as
of
which
the
Investor
may
sell
all
of
the
Registrable
Securities
without
restriction
pursuant
to
Rule
144
promulgated
under
the
Securities
and
(ii)
the
date
on
which
the
Investor
shall
have
sold
all
the
Registrable
Securities
covered
thereby
and
no
Available
Amount
remains
under
the
Purchase
Agreement
(the
"
Registration
Period
").
The
Registration
Statement
(including
any
amendments
or
supplements
thereto
and
prospectuses
contained
therein)
shall
not
contain any untrue statement
of
a
material
fact
or
omit
to state
a
material
fact
required
to
be
stated
therein,
or
necessary to
make
the
statements
therein,
in
light
of
the
circumstances
in
which they were made, not misleading.
b.
Rule
424
Prospectus.
The
Company
shall,
as
required
by
applicable
securities
regulations,
from
time
to
time
file
with
the
SEC,
pursuant
to
Rule
424
promulgated
under
the
Securities
Act, the prospectus and prospectus supplements, if any, to be used in connection with sales of the
Registrable Securities under the Registration Statement. The Investor and its counsel shall have a
reasonable opportunity to review
and comment
upon such
prospectus prior
to its filing with the
SEC, and
the
Company
shall
give
due
consideration
to
all
such
comments. The
Investor
shall
use
its
reasonable
best
efforts
to
comment
upon
such
prospectus
within
one
(1)
Business
Day
from
the
date
the
Investor
receives the final pre-filing version of such prospectus.
c.
Sufficient Number of Shares Registered
. In the event the number of shares
available
under
the
Registration
Statement
is
insufficient
to
cover
all
of
the
Registrable
Securities,
the
Company
shall
amend
the
Registration
Statement
or
file
a
new
Registration
Statement
(a
“
New
Registration
Statement
”
),
so
as
to
cover
all
of
such
Registrable
Securities
(subject
to
the
limitations
set
forth
in
Section
2(a))
as
soon
as
practicable,
but
in
any
event
not
later
than
ten
(10)
Business
Days
after
the
necessity
therefor
arises,
subject
to
any
limits
that
may
be
imposed
by
the
SEC
pursuant
to
Rule
415
under
the
Securities
Act. The
Company
shall
use
it
reasonable
best
efforts
to
cause
such
amendment
and/or New Registration Statement to become effective as soon as practicable following the filing thereof.
In the event that any
of
the Put Shares
or Commitment Shares are
not included
in
the Registration
2
Statement, or have not been included in any New Registration Statement and the Company files any other
registration statement under the Securities Act (other than on Form S-4, Form S-8, or with respect to other
employee
related
plans
or
rights
offerings)
(
“
Other
Registration
Statement
”
)
then
the
Company
shall
include
in
such
Other
Registration
Statement
first
all
of
such
Put
Shares
that
have
not
been
previously
registered,
second all
of
such Commitment
Shares
that
not
have
been
previously registered,
and third
any
other
securities
the
Company
wishes
to
include
in
such
Other
Registration
Statement.
The
Company
agrees that it shall not file any such Other Registration Statement unless all of the Put Shares and
Commitment
Shares
have
been
included
in
such
Other
Registration
Statement
or
otherwise
have
been
registered for resale as described above.
d.
Offering
.
If
the staff
of
the SEC (the
“
Staff
”
)
or the SEC seeks to characterize
any
offering
pursuant
to
a
Registration
Statement
filed
pursuant
to
this
Agreement
as
constituting
an
offering of securities that does not permit such Registration Statement to become effective and be used for
resales
by
the
Investor
under
Rule
415
at
then-prevailing
market
prices
(and
not
fixed
prices),
or
if
after
the
filing
of
the
initial
Registration
Statement
with
the
SEC
pursuant
to
Section
2(a),
the
Company
is
otherwise
required
by
the
Staff
or
the
SEC
to
reduce
the
number
of
Registrable
Securities
included
in
such
initial
Registration
Statement,
then
the
Company
shall
reduce
the
number
of
Registrable
Securities
to
be
included
in
such
initial
Registration
Statement
(with
the
prior
consent,
which
shall
not
be
unreasonably withheld,
of
the
Investor
and
its legal
counsel
as
to the
specific
Registrable
Securities to
be
removed
therefrom)
until
such
time
as
the
Staff
and
the
SEC
shall
so
permit
such
Registration
Statement
to
become
effective
and
be
used
as
aforesaid.
In
the
event
of
any
reduction
in
Registrable
Securities
pursuant
to
this
paragraph,
the
Company
shall
file
one
or
more
New
Registration
Statements
in
accordance
with
Section
2(c)
until
such
time
as
all
Registrable
Securities
have
been
included
in
Registration
Statements
that
have
been
declared
effective
and
the
prospectus
contained
therein
is
available
for
use
by the
Investor.
Notwithstanding
any
provision
herein
or
in
the
Purchase
Agreement
to
the
contrary,
the
Company
’
s
obligations
to
register
Registrable
Securities
(and
any
related
conditions
to
the
Investor
’
s
obligations)
shall
be
qualified
as
necessary to
comport
with
any requirement
of
the
SEC
or
the Staff as addressed in this Section 2(d).
3.
RELATED OBLIGATIONS.
With
respect
to
the
Registration
Statement
and
whenever
any
Registrable
Securities
are
to
be
registered
pursuant
to
Section
2
including
on
any
New
Registration
Statement,
the
Company
shall
use
its
reasonable best efforts
to
effect the registration of
the Registrable Securities in accordance with
the
intended
method of
disposition
thereof
and,
pursuant thereto,
the
Company
shall have
the
following
obligations:
a.
The
Company
shall
prepare
and
file
with
the
SEC
such
amendments
(including
post-effective
amendments)
and
supplements
to
any
registration
statement
and
the
prospectus
used
in
connection with such registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New
Registration
Statement effective
at
all
times
during
the
Registration
Period,
and,
during
such
period,
comply with the provisions of the Securities Act with respect to the disposition of all Registrable
Securities
of
the
Company
covered
by
the
Registration
Statement
or
any
New
Registration
Statement
until
such
time
as
all
of
such
Registrable
Securities
shall
have
been
disposed
of
in
accordance
with
the
intended methods of disposition by the seller or sellers thereof as set forth in such registration statement.
b.
The
Company
shall
permit
the
Investor
to
review
and
comment
upon
the
Registration
Statement
or
any
New
Registration
Statement
and
all
amendments
and
supplements
thereto
at
least
two
(2)
Business
Days
prior
to
their
filing
with
the
SEC,
and
not
file
any
document
in
a
form
to
which Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon the
3
Registration
Statement
or
any
New
Registration
Statement
and
any
amendments
or
supplements
thereto
within two (2)
Business Days from the date the Investor
receives the final
version
thereof. The Company
shall
furnish
to
the
Investor,
without
charge
any
correspondence
from
the
SEC
or
the
staff
of
the
SEC
to
the Company or its representatives relating to the Registration Statement or any New Registration
Statement.
c.
Upon request of the Investor, the Company shall furnish to the Investor, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of such registration
statement
and
any
amendment(s)
thereto,
including
financial
statements
and
schedules,
all
documents
incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement,
a
copy
of
the
prospectus
included
in
such
registration
statement
and
all
amendments
and
supplements
thereto
(or
such
other
number
of
copies
as
the
Investor
may
reasonably
request)
and
(iii)
such
other
documents, including copies of any preliminary or final prospectus, as the Investor may reasonably
request
from
time
to
time
in
order
to
facilitate
the
disposition
of
the
Registrable
Securities
owned
by
the
Investor.
For
the
avoidance
of
doubt,
any
filing
available
to
the
Investor
via
the
SEC
’
s
live
EDGAR
system shall be deemed
“
furnished to the Investor
”
hereunder.
d.
The
Company
shall use
reasonable
best
efforts
to
(i)
register
and
qualify
the
Registrable
Securities
covered
by
a
registration
statement
under
such
other
securities
or
"blue
sky"
laws
of
such jurisdictions in the United States as the Investor
reasonably requests, (ii) prepare and file in
those
jurisdictions, such amendments (including post-effective amendments) and supplements to such
registrations and qualifications
as may
be necessary
to maintain
the effectiveness
thereof during
the
Registration
Period,
(iii)
take
such
other
actions
as
may
be
necessary
to
maintain
such
registrations
and
qualifications
in
effect
at
all
times
during
the
Registration
Period,
and
(iv)
take
all
other
actions
reasonably
necessary
or
advisable
to
qualify
the
Registrable
Securities
for sale
in
such
jurisdictions;
provided,
however,
that
the
Company
shall
not
be
required
in
connection
therewith
or
as
a
condition
thereto
to
(x)
qualify
to
do
business
in
any
jurisdiction
where
it
would
not
otherwise
be
required
to
qualify but
for
this
Section 3(d), (y)
subject
itself
to
general
taxation in
any such jurisdiction,
or
(z)
file
a
general
consent
to
service
of
process
in
any
such
jurisdiction. The
Company
shall
promptly
notify
the
Investor
who
holds
Registrable
Securities
of
the
receipt
by
the
Company
of
any
notification
with
respect
to the suspension of the registration or qualification of any of
the Registrable Securities for
sale under the
securities
or
"blue
sky"
laws
of
any
jurisdiction
in
the
United
States
or
its
receipt
of
actual
notice
of
the
initiation or threatening of any proceeding for such purpose.
e.
As promptly
as practicable after becoming
aware of such event or
facts, the
Company shall
notify the Investor in writing of
the happening of any event
or existence of
such facts as a
result
of
which
the
prospectus
included in
any registration statement,
as
then
in
effect, includes
an
untrue
statement
of
a
material
fact
or
omits
to
state
a
material
fact
required
to
be
stated
therein
or
necessary
to
make
the
statements
therein,
in
light
of
the
circumstances
under
which
they
were
made,
not
misleading,
and
promptly
prepare
a
supplement
or
amendment
to
such
registration
statement
to
correct
such
untrue
statement or omission, and deliver a copy of such supplement or amendment to the Investor (or such other
number
of
copies
as
the
Investor
may
reasonably
request).
The
Company
shall
also
promptly
notify
the
Investor
in
writing
(i)
when
a
prospectus
or
any
prospectus
supplement
or
post-effective
amendment
has
been
filed,
and
when
a
registration
statement or
any
post-effective
amendment has
become
effective
(notification of such effectiveness shall be delivered to the Investor by email or facsimile on the same day
of
such
effectiveness and by overnight
mail), (ii)
of
any request
by the SEC
for
amendments
or
supplements
to
any
registration
statement
or
related
prospectus
or
related
information,
and
(iii)
of
the
Company's reasonable determination that a post-effective amendment to a registration statement would be
appropriate.
4
f.
The
Company
shall
use
its
reasonable
best
efforts
to
prevent
the
issuance
of
any
stop
order
or
other
suspension
of
effectiveness
of
any
registration
statement,
or
the
suspension
of
the
qualification
of
any
Registrable
Securities
for
sale
in
any
jurisdiction
and,
if
such
an
order
or
suspension
is
issued,
to
obtain
the
withdrawal
of
such
order
or
suspension
at
the
earliest
possible
moment
and
to
notify the Investor of the issuance of such order and the resolution thereof or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
g.
The
Company
shall
(i)
cause
all
the
Registrable
Securities
to
be
listed
on
each
securities exchange on which securities of
the same class or
series issued by the Company are then listed,
if
any,
if
the
listing
of
such
Registrable
Securities
is
then
permitted
under
the
rules
of
such
exchange,
or
(ii) secure designation and quotation of all the Registrable Securities on the principal exchange or
recognized
quotation
system
for
the
Company
’
s
common
stock.
The
Company
shall
pay
all
fees
and
expenses in connection with satisfying its obligation under this Section.
h.
The Company shall cooperate with the Investor to facilitate the timely
preparation and delivery of the Registrable Securities (not bearing any restrictive legend) either by
DWAC,
DRS,
or
in
certificated
form
if
DWAC
or
DRS
is
unavailable,
to
be
offered
pursuant
to
any
registration
statement
and
enable
such
Registrable
Securities
to
be
in
such
denominations
or
amounts
as
the Investor may reasonably request and registered in such names as the Investor may request.
i.
The Company shall at all times provide a transfer agent and registrar with respect
to its Common Stock.
j.
If
reasonably requested by the Investor, the Company shall
(i) immediately
incorporate
in
a
prospectus
supplement
or
post-effective
amendment
such
information
as
the
Investor
believes
should
be
included
therein
relating
to
the
sale
and
distribution
of
Registrable
Securities,
including, without limitation, information with respect to the number
of
Registrable Securities being sold,
the
purchase
price
being
paid
therefor
and
any
other
terms
of
the
offering
of
the
Registrable
Securities;
(ii)
make
all
required
filings
of
such
prospectus
supplement
or
post-effective
amendment
as
soon
as
practicable
upon
notification
of
the
matters
to
be
incorporated
in
such
prospectus
supplement
or
post-
effective amendment; and (iii) supplement or make amendments to any registration statement.
k.
The Company shall
use its reasonable best
efforts to cause
the
Registrable
Securities
covered
by
any
registration
statement
to
be
registered
with
or
approved
by
such
other
governmental
agencies
or
authorities
as
may
be
necessary
to
consummate
the
disposition
of
such
Registrable Securities.
l.
Within
one
(1)
Business
Day
after
any
registration
statement
which
includes
the
Registrable
Securities
is
ordered
effective
by
the
SEC,
the
Company
shall
deliver,
and
shall
cause
legal
counsel
for
the
Company
to
deliver,
to
the
transfer
agent
for
such
Registrable
Securities
(with
copies
to
the
Investor)
confirmation
that
such
registration
statement
has
been
declared
effective
by
the
SEC
in
the
form
attached
hereto
as
Exhibit
A
.
Thereafter,
if
requested
by
the
Buyer
at
any
time,
the
Company
shall
require its
counsel
to
deliver
to the
Buyer
a
written
confirmation
whether
or
not
the
effectiveness
of
such
registration statement
has lapsed at
any time for any reason (including, without limitation, the issuance of
a stop order) and whether or not the registration statement is current and available to the Buyer for sale of
all of the Registrable Securities.
m.
The
Company
shall
take
all
other
reasonable
actions
necessary
to
expedite
and
facilitate disposition by the Investor of Registrable Securities pursuant to any registration statement.
5
4.
OBLIGATIONS OF THE INVESTOR.
a.
The
Company
shall
notify
the
Investor
in
writing
of
the
information
the
Company
reasonably
requires
from
the
Investor
in
connection
with
any
registration
statement
hereunder.
The
Investor
shall
furnish
to
the
Company
such
information
regarding
itself,
the
Registrable
Securities
held
by
it
and
the
intended
method
of
disposition
of
the
Registrable
Securities
held
by
it
as
shall
be
reasonably required to effect the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably request.
b.
The
Investor
agrees
to
cooperate
with
the
Company
as
reasonably
requested
by
the Company in connection with the preparation and filing of any registration statement hereunder.
c.
The
Investor
agrees
that,
upon
receipt
of
any
notice
from
the
Company
of
the
happening
of
any
event
or
existence
of
facts
of
the
kind
described
in
Section
3(f)
or
the
first
sentence
of
3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any
registration
statement(s)
covering
such
Registrable
Securities
until
the
Investor's
receipt
of
the
copies
of
the
supplemented
or
amended prospectus
contemplated by
Section
3(f) or
the
first sentence
of 3(e).
Notwithstanding
anything
to
the
contrary,
the
Company
shall
cause
its
transfer
agent
to
promptly
deliver
shares
of
Common
Stock
without
any
restrictive
legend
in
accordance
with
the
terms
of
the
Purchase
Agreement
in
connection
with
any
sale
of
Registrable
Securities
with
respect
to
which
an
Investor
has
entered into a contract for sale prior to the Investor's receipt of a notice from the Company
of the
happening
of
any
event
of
the
kind
described
in
Section
3(f)
or
the
first
sentence
of
Section
3(e)
and
for
which the Investor has not yet settled.
5.
EXPENSES OF REGISTRATION.
All
reasonable
expenses,
other
than
sales
or
brokerage
commissions,
incurred
in
connection
with
registrations,
filings
or
qualifications
pursuant
to
Sections
2
and
3,
including,
without
limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company, shall be paid by the Company.
6.
INDEMNIFICATION.
a.
To the fullest extent permitted by law, the Company will, and hereby does,
indemnify,
hold
harmless
and
defend
the
Investor,
each
Person,
if
any,
who
controls
the
Investor,
the
members,
the
directors,
officers,
partners,
employees,
agents,
representatives
of
the
Investor
and
each
Person,
if
any,
who
controls
the
Investor
within
the
meaning
of
the
Securities
Act or
the
Securities
Exchange
Act
of
1934,
as
amended
(the
"
Exchange
Act"
)
(each,
an
"
Indemnified
Person
"),
against
any
losses,
claims,
damages,
liabilities,
judgments,
fines,
penalties,
charges,
costs,
attorneys'
fees,
amounts
paid
in
settlement
or
expenses,
joint
or
several,
(collectively,
"
Claims
")
incurred
in
investigating,
preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the
foregoing
by
or
before
any court
or
governmental,
administrative
or
other
regulatory
agency,
body
or
the
SEC,
whether
pending
or
threatened,
whether
or
not
an
indemnified
party
is
or
may
be
a
party
thereto
("
Indemnified
Damages
"),
to
which
any
of
them
may
become
subject
insofar
as
such
Claims
(or
actions
or
proceedings,
whether
commenced
or
threatened,
in
respect
thereof)
arise
out
of
or
are
based
upon:
(i)
any untrue statement or alleged untrue statement of a material fact in the Registration Statement, any New
Registration
Statement
or
any
post-effective
amendment
thereto
or
in
any
filing
made
in
connection
with
the
qualification
of
the
offering
under
the
securities
or
other
"blue
sky"
laws
of
any
jurisdiction
in
which
Registrable
Securities
are
offered
("
Blue
Sky
Filing
"),
or
the
omission
or
alleged
omission
to
state
a
material
fact
required to
be stated
therein
or
necessary to
make
the
statements
therein
not
misleading,
(ii)
any
untrue
statement
or
alleged
untrue
statement
of
a
material
fact
contained
in
the
final
prospectus
(as
6
amended
or
supplemented,
if
the
Company
files
any
amendment
thereof
or
supplement
thereto
with
the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the
statements
made
therein, in light
of
the circumstances under
which the
statements therein
were
made,
not
misleading,
(iii)
any
violation
or
alleged
violation
by
the
Company
of
the
Securities
Act,
the
Exchange
Act, any other law, including, without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer
or sale of the Registrable Securities pursuant to the Registration Statement
or
any New Registration Statement
or (iv)
any material
violation by the Company of
this Agreement
(the
matters
in
the
foregoing
clauses
(i)
through
(iv)
being,
collectively,
"
Violations
"). The
Company
shall
reimburse
each
Indemnified
Person
promptly
as
such
expenses
are
incurred
and
are
due
and
payable,
for
any
reasonable
legal
fees
or
other
reasonable
expenses
incurred
by
them
in
connection
with
investigating
or
defending
any
such
Claim.
Notwithstanding
anything
to
the
contrary
contained
herein,
the
indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
Person
arising
out
of
or
based
upon
a
Violation
which
occurs
in
reliance
upon
and
in
conformity
with
information about the Investor furnished in writing to the Company by such Indemnified Person expressly
for
use in connection with the
preparation of
the
Registration
Statement,
any New Registration Statement
or
any
such
amendment
thereof
or
supplement
thereto,
if
such
prospectus
was
timely
made
available
by
the
Company
pursuant
to
Section
3(c)
or
Section
3(e);
(ii)
with
respect
to
any
superseded
prospectus,
shall not inure to the benefit of any such person from whom the person asserting any such Claim
purchased
the
Registrable
Securities
that
are
the
subject
thereof
(or
to
the
benefit
of
any
person
controlling
such
person)
if
the
untrue
statement
or
omission
of
material
fact
contained
in
the
superseded
prospectus
was
corrected
in
the
revised
prospectus,
as
then
amended
or
supplemented,
if
such
revised
prospectus
was
timely
made
available
by
the
Company
pursuant
to
Section
3(c)
or
Section
3(e),
and
the
Indemnified
Person
was
promptly
advised
in
writing
not
to
use
the
incorrect
prospectus
prior
to
the
use
giving rise to a violation and such Indemnified Person, notwithstanding such advice, used it; (iii) shall not
be
available
to
the
extent
such
Claim
is
based
on
a
failure
of
the
Investor
to
deliver
or
to
cause
to
be
delivered
the
prospectus
made
available
by
the
Company,
if
such
prospectus
was
timely
made
available
by
the
Company
pursuant
to
Section
3(c)
or
Section
3(e);
and
(iv)
shall
not
apply
to
amounts
paid
in
settlement
of
any
Claim
if
such
settlement
is
effected
without
the
prior
written
consent
of
the
Company,
which
consent
shall
not
be
unreasonably
withheld.
Such
indemnity
shall
remain
in
full
force
and
effect
regardless
of
any
investigation
made
by
or
on
behalf
of
the
Indemnified
Person
and
shall
survive
the
transfer of the Registrable Securities by the Investor pursuant to Section 9.
b.
Promptly
after
receipt
by
an
Indemnified
Person
or
Indemnified
Party
under
this
Section 6 of notice of the commencement of any action or proceeding (including any governmental action
or
proceeding)
involving
a
Claim,
such
Indemnified
Person
or
Indemnified
Party
shall,
if
a
Claim
in
respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the
indemnifying party a
written
notice
of
the
commencement
thereof,
and
the
indemnifying
party shall
have
the
right
to
participate
in,
and,
to
the
extent
the
indemnifying
party
so
desires,
jointly
with
any
other
indemnifying
party
similarly
noticed,
to
assume
control
of
the
defense
thereof
with
counsel
mutually
satisfactory
to
the
indemnifying
party
and
the
Indemnified
Person
or
the
Indemnified
Party,
as
the
case
may be;
provided, however, that an Indemnified Person or Indemnified Party shall
have the right to retain
its
own
counsel
with
the
fees
and
expenses
to
be
paid
by
the
indemnifying
party,
if,
in
the
reasonable
opinion
of
counsel
retained
by
the
indemnifying
party,
the
representation
by
such
counsel
of
the
Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual
or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party
represented
by
such
counsel
in
such
proceeding.
The
Indemnified
Party
or
Indemnified
Person
shall
cooperate
fully
with
the
indemnifying
party
in
connection
with
any
negotiation
or
defense
of
any
such
action
or
claim
by
the
indemnifying
party
and
shall
furnish
to
the
indemnifying
party
all
information
reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times
as to the status
of
the defense
or
any settlement
negotiations
with respect
thereto.
No
indemnifying party
7
shall
be
liable
for
any
settlement
of
any
action,
claim
or
proceeding
effected
without
its
written
consent,
provided,
however,
that
the
indemnifying
party
shall
not
unreasonably
withhold,
delay
or
condition
its
consent. No
indemnifying
party
shall, without the
consent of
the
Indemnified Party
or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other compromise which does not
include
as
an
unconditional
term thereof
the
giving by
the
claimant
or
plaintiff
to such
Indemnified
Party
or
Indemnified
Person
of
a
release
from
all
liability
in
respect
to
such
claim
or
litigation.
Following
indemnification
as
provided
for
hereunder,
the
indemnifying
party
shall
be
subrogated
to
all
rights
of
the
Indemnified Party or
Indemnified Person with respect
to all
third parties, firms or
corporations relating to
the matter for which indemnification has been made. The failure to deliver written notice to the
indemnifying
party
within
a
reasonable
time
of
the
commencement
of
any
such
action
shall
not
relieve
such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this
Section
6,
except
to
the
extent
that
the
indemnifying
party
is
prejudiced
in
its
ability
to
defend
such
action.
c.
The
indemnification
required
by
this
Section
6
shall
be
made
by
periodic
payments
of
the
amount
thereof
during
the
course
of
the
investigation
or
defense,
as
and
when
bills
are
received or Indemnified Damages are incurred.
d.
The
indemnity
agreements
contained
herein
shall
be
in
addition
to
(i)
any
cause
of
action
or
similar
right
of
the
Indemnified
Party
or
Indemnified
Person
against
the
indemnifying
party
or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7.
CONTRIBUTION.
To
the
extent
any
indemnification
by
an
indemnifying
party
is
prohibited
or
limited
by
law,
the
indemnifying
party
agrees
to
make
the
maximum
contribution
with
respect
to
any
amounts
for
which
it
would
otherwise
be
liable
under
Section
6
to
the
fullest
extent
permitted
by
law;
provided,
however,
that:
(i)
no
seller
of
Registrable
Securities
guilty
of
fraudulent
misrepresentation
(within
the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of
Registrable
Securities
who
was
not
guilty
of
fraudulent
misrepresentation;
and
(ii)
contribution
by
any
seller
of
Registrable
Securities
shall
be limited in
amount
to the
net
amount
of
proceeds
received
by such
seller from the sale of such Registrable Securities.
8.
REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.
With
a
view
to
making
available
to
the
Investor
the
benefits
of
Rule
144
promulgated
under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the
Investor
to
sell
securities
of
the
Company
to
the
public
without
registration
("
Rule
144
"),
the
Company
agrees, at the Company
’
s sole expense, to:
a.
make
and
keep
public
information
available,
as
those
terms
are
understood
and
defined in Rule 144;
b.
file
with
the
SEC
in
a timely
manner
all
reports
and
other
documents required
of
the
Company
under
the
Securities
Act
and
the
Exchange
Act
so
long
as
the
Company
remains
subject
to
such requirements and the
filing
of such reports and other documents
is required for the applicable
provisions of Rule 144;
c.
furnish to the Investor
so long as the Investor
owns Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has complied with the reporting and
or
disclosure
provisions
of
Rule
144,
the
Securities
Act
and
the
Exchange
Act,
(ii)
a
copy
of
the
most
8
recent
annual
or
quarterly
report
of
the
Company
and
such
other
reports
and
documents
so
filed
by
the
Company,
and
(iii)
such
other
information
as
may
be
reasonably
requested
to
permit
the
Investor
to
sell
such securities pursuant to Rule 144 without registration; and
d.
take
such
additional
action
as
is
requested
by
the
Investor
to
enable
the
Investor
to
sell
the
Registrable
Securities
pursuant
to
Rule
144,
including,
without
limitation,
delivering
all
such
legal
opinions,
consents,
certificates,
resolutions
and
instructions
to
the
Company
’
s
Transfer
Agent
as
may
be
requested
from
time
to
time
by
the
Investor
and
otherwise
fully
cooperate
with
Investor
and
Investor
’
s broker to effect such sale of securities pursuant to Rule 144.
The
Company
agrees
that
damages
may
be
an
inadequate
remedy
for
any
breach
of
the
terms
and
provisions
of
this
Section
8
and
that
Investor
shall,
whether
or
not
it
is
pursuing
any
remedies
at
law,
be
entitled
to
equitable
relief
in
the
form
of
a
preliminary
or
permanent
injunctions,
without
having
to
post
any
bond
or
other
security,
upon
any
breach
or
threatened
breach
of
any
such
terms
or
provisions.
9.
ASSIGNMENT OF REGISTRATION RIGHTS.
The
Company
shall
not
assign
this
Agreement
or
any
rights
or
obligations
hereunder
without
the
prior
written
consent of
the
Investor.
The
Investor may
not assign
its
rights
under
this
Agreement (except with respect to the Commitment Shares) without the written consent of the Company.
10.
AMENDMENT OF REGISTRATION RIGHTS.
No
provision of
this Agreement may be
amended
or
waived
by the
parties from and
after
the
date
that
is
one
Business
Day
immediately
preceding
the
initial
filing
of
the
Registration
Statement
with
the
SEC.
Subject
to
the
immediately
preceding
sentence,
no
provision
of
this
Agreement
may
be
(i)
amended
other
than
by
a
written
instrument
signed
by
both
parties
hereto
or
(ii)
waived
other
than
in
a
written instrument signed by the party against whom enforcement of such waiver is sought. Failure of any
party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.
11.
MISCELLANEOUS
.
a.
A Person is deemed to be a holder of Registrable Securities whenever such
Person owns or is deemed to own of record such Registrable Securities. If the Company receives
conflicting
instructions,
notices
or
elections
from
two
or
more
Persons
with
respect
to
the
same
Registrable
Securities,
the
Company
shall
act
upon
the
basis
of
instructions,
notice
or
election
received
from the registered owner of such Registrable Securities.
b.
Any notices, consents,
waivers
or
other
communications
required
or
permitted to
be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:
(i)
upon
receipt,
when
delivered
personally;
(ii)
upon
receipt,
when
sent
by
facsimile
or
email
(provided
confirmation
of
transmission
is
mechanically
or
electronically
generated
and
kept
on
file
by
the
sending
party);
or
(iii)
one (1)
Business
Day after
deposit
with a
nationally recognized
overnight
delivery service,
in each case properly addressed to the party to receive the same.
The addresses for
such communications
shall be:
9
If to the Company:
Parallax Health Sciences, Inc.
1327 Ocean Avenue, Suite B
Santa Monica, CA 90401
Email: info@parallaxhealthsciences.com
Attention: Paul Arena
If to the Investor:
Peak One Opportunity Fund, L.P.
333 South Hibiscus Drive
Miami Beach, FL 33139
E-mail: JGoldstein@PeakOneInvestments.com
Attention: Jason Goldstein
or
at
such
other
address
and/or
facsimile
number
and/or
to
the
attention
of
such
other
person
as
the
recipient
party
has
specified
by
written
notice
given
to
each
other
party
three
(3)
Business
Days
prior
to
the
effectiveness
of
such
change.
Written
confirmation
of
receipt
(A)
given
by
the
recipient
of
such
notice,
consent, waiver
or
other
communication,
(B) mechanically
or electronically
generated by
the
sender's
facsimile
machine
or
email
account
containing
the
time,
date,
recipient
facsimile
number
or
email
address,
as
applicable,
and
an
image
of
the
first
page
of
such
transmission
or
(C)
provided
by
a
nationally
recognized
overnight
delivery
service,
shall
be
rebuttable
evidence
of
personal
service,
receipt
by
facsimile
or
receipt
from a
nationally
recognized
overnight
delivery
service
in
accordance
with
clause
(i), (ii) or (iii) above, respectively.
c.
The corporate laws of
the State
of
Nevada
shall
govern
all
issues
concerning this
Agreement.
All
other
questions
concerning
the
construction,
validity,
enforcement
and
interpretation
of
this Agreement shall be governed by the internal laws of the State of Nevada, without giving effect to any
choice of
law or
conflict of
law provision or
rule (whether
of
the State of Nevada or
any other
jurisdictions)
that
would
cause
the
application
of
the
laws
of
any
jurisdictions
other
than
the
State
of
Nevada.
Each
party
hereby
irrevocably
submits
to
the
exclusive
jurisdiction
of
the
state
and
federal
courts
sitting
the
State
of
Florida,
County
of
Miami-Dade,
for
the
adjudication
of
any
dispute
hereunder
or
in
connection
herewith
or
with
any
transaction
contemplated
hereby
or
discussed
herein,
and
hereby
irrevocably
waives,
and
agrees
not
to
assert
in
any
suit,
action
or
proceeding,
any
claim
that
it
is
not
personally
subject
to
the
jurisdiction
of
any
such
court,
that
such
suit,
action
or
proceeding
is
brought
in
an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably
waives
personal
service
of
process
and
consents
to
process
being
served
in
any
such
suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this
Agreement
and
agrees
that
such
service
shall
constitute
good
and
sufficient
service
of
process
and
notice
thereof.
Nothing
contained
herein
shall
be
deemed
to
limit
in
any
way
any
right
to
serve
process
in
any
manner
permitted
by
law. If
any
provision
of
this
Agreement
shall
be
invalid
or
unenforceable
in
any
jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the
remainder
of
this
Agreement
in
that
jurisdiction
or
the
validity
or
enforceability
of
any
provision
of
this
Agreement in any other jurisdiction.
d.
This Agreement and the Purchase Agreement constitute the entire agreement
among
the
parties
hereto
with
respect
to
the
subject
matter
hereof
and
thereof.
There
are
no
restrictions,
promises,
warranties
or
undertakings,
other
than
those
set
forth
or
referred
to
herein
and
therein. This
10
Agreement
and
the
Purchase
Agreement
supersede
all
prior
agreements
and
understandings
among
the
parties hereto with respect to the subject matter hereof and thereof.
e.
Subject to the requirements of Section 9, this Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the parties hereto.
f.
The
headings
in
this
Agreement
are
for
convenience
of
reference
only
and
shall
not limit or otherwise affect the meaning hereof.
g.
This
Agreement
may
be
executed
in
identical
counterparts,
each
of
which
shall
be
deemed
an
original
but
all
of
which
shall
constitute
one
and
the
same
agreement. This
Agreement,
once
executed
by
a
party,
may
be
delivered
to
the
other
party
hereto
by
facsimile
transmission
or
by
e-
mail in
a
“
.pdf
”
format data
file of
a
copy
of this
Agreement bearing
the
signature
of
the
party
so
delivering this Agreement.
h.
Each
party
shall
do
and
perform,
or
cause
to
be
done
and
performed,
all
such
further
acts
and
things,
and
shall
execute
and
deliver
all
such
other
agreements,
certificates,
instruments
and
documents,
as
the
other
party
may
reasonably request
in
order
to
carry
out
the
intent
and
accomplish
the purposes of this Agreement and the consummation of the transactions contemplated hereby.
i.
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.
j.
This
Agreement
is
intended
for
the
benefit
of
the
parties
hereto
and
their
respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.
* * * * * *
11
IN
WITNESS
WHEREOF,
the
parties
have
caused
this
Agreement
to
be
duly
executed
as
of
day and year first above written.
THE COMPANY:
PARALLAX HEALTH SCIENCES, INC.
By:______________________
Name: Paul Arena
Title: Chief Executive Officer
INVESTOR:
PEAK ONE OPPORTUNITY FUND, L.P.
By: Peak One Investments, LLC,
General Partner
By: ___________________________________
Name: Jason Goldstein
Title: Managing Member
[Signature Page to registration rights agreement]
12
EXHIBIT A
TO REGISTRATION RIGHTS AGREEMENT
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______, 2018
Action Stock Transfer Corporation
2469 E. Fort Union Blvd., Suite 214
Salt Lake City, UT 84121
Re: Effectiveness of Registration Statement
Ladies and Gentlemen:
We
are
counsel
to
PARALLAX
HEALTH
SCIENCES,
INC.
,
a
Nevada
corporation
(the
“
Company
”
),
and
have
represented
the
Company
in
connection
with
that
certain
Purchase
Agreement,
dated
as
of
November
14,
2018 (the
“
Purchase
Agreement
”
),
entered
into
by and
between the
Company and
Peak One
Opportunity
Fund,
L.P.
(the
“
Buyer
”
)
pursuant
to
which
the
Company
has
agreed
to
issue
to
the
Buyer
shares
of
the
Company's
Common
Stock,
$0.001
par
value
(the
“
Common
Stock
”
),
in
an
amount
up
to
Ten
Million
Dollars
($10,000,000.00)
(the
“
Put
Shares
”
),
in
accordance
with
the
terms
of
the
Purchase
Agreement. In
connection
with
the
transactions
contemplated by the Purchase Agreement, the Company has registered with the U.S. Securities & Exchange
Commission the following shares of Common Stock:
(1)
__________ Put Shares
to be issued to the Buyer
upon purchase
from the
Company by the Buyer
from
time to time in accordance with the Purchase Agreement; and
(2)
__________Commitment
Shares
issued
to
the
Buyer
and
Investments
pursuant
to
the
Purchase
Agreement.
Pursuant
to
the
Purchase
Agreement,
the
Company also
has
entered
into
a
Registration Rights Agreement,
of
even
date
with
the
Purchase
Agreement
with
the
Buyer
(the
“
Registration
Rights
Agreement
”
)
pursuant
to
which
the
Company
agreed,
among
other
things,
to
register
the
Put
Shares
and
Commitment
Shares
under
the
Securities
Act
of
1933,
as
amended
(the
“
Securities
Act
”
).
In
connection
with
the
Company's
obligations
under
the
Purchase
Agreement
and
the
Registration
Rights
Agreement,
on
[_____],
2018,
the
Company
filed
a
Registration
Statement
(File No. 333-[_________]) (the
“
Registration Statement
”
) with the Securities and Exchange Commission (the
“
SEC
”
) relating to the resale of the Put Shares and/or the Commitment Shares.
In
connection with
the
foregoing, we
advise you
that
a
member of
the
SEC's
staff
has
advised us
by
telephone
that
the
SEC
has
entered
an
order
declaring
the
Registration
Statement
effective
under
the
Securities
Act
at
[_____]
[A.M./P.M.] on [__________], 2018 and
we
have
no
knowledge,
after
telephonic
inquiry of a
member
of
the
SEC's
staff,
that
any
stop
order
suspending
its
effectiveness
has
been
issued
or
that
any
proceedings
for
that
purpose
are
pending before,
or
threatened
by,
the
SEC and
the Put
Shares and
Commitment
Shares
are
available
for
resale
under
the
Securities
Act
pursuant
to
the
Registration
Statement
and
may
be
issued
without
any
restrictive
legend.
Very truly yours,
[Company Counsel]
By:____________________
cc:
Peak One Opportunity Fund, L.P.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT
(the
“
Agreement
”
), dated
as
of
November 14, 2018, is entered into by and between PARALLAX HEALTH SCIENCES, INC., a
Nevada
corporation,
(the
“
Company
”
)
and
PEAK
ONE
OPPORTUNITY
FUND,
L.P.,
a
Delaware limited partnership (the
“
Buyer
”
).
WITNESSETH:
WHEREAS
, the Company and the Buyer are executing and delivering this Agreement in
accordance
with
and
in
reliance
upon
the
exemption
from
securities
registration
afforded,
inter
alia
,
by
Rule
506
under
Regulation
D
(
“
Regulation
D
”
)
as
promulgated
by
the
United
States
Securities
and
Exchange
Commission (the
“
SEC
”
)
under
the
Securities
Act
of
1933,
as
amended
(the
“
1933 Act
”
), and/or Section 4(2) of the 1933 Act; and
WHEREAS,
the
Buyer
wishes
to
purchase
from
the
Company,
and
the
Company wishes
to
sell
the
Buyer,
upon
the
terms
and
subject
to
the
conditions
of
this
Agreement,
securities
consisting of the Company
’
s Convertible Debentures due three
years from the respective dates of
issuance
(the
“
Debentures
”
),
each
of
which
are
in
the
form
of
Exhibit
A
hereto,
which
will
be
convertible into shares
of the Company
’
s
common stock, par value $0.001 per share
(the
“
Common Stock
”
), in the aggregate principal amount of up to Two Hundred Eighty
Seven
Thousand
Five
Hundred
and
00/100
Dollars
($287,500.00),
for
an
aggregate
Purchase
Price
of
up to Two Hundred Fifty Eight Thousand Seven Hundred Fifty and 00/100 Dollars
($258,750.00),
as
well
as
that
certain
Warrant
(as
defined
herein),
all
upon
the
terms
and
subject
to the conditions of this Agreement, the Debentures, and other related documents;
NOW
THEREFORE
,
in
consideration
of
the
premises
and
the
mutual
covenants
contained herein
and other
good
and valuable consideration, the receipt and sufficiency of
which
are hereby acknowledged, the parties agree as follows:
1.
DEFINITIONS; AGREEMENT TO PURCHASE.
a.
Certain
Definitions.
As
used
herein,
each
of
the
following
terms
has
the
meaning set forth below, unless the context otherwise requires:
(i)
“
Affiliate
”
means, with respect to a specific Person referred to in the
relevant provision, another Person who or which controls or is controlled by or is under common
control with such specified Person.
(ii)
“
Certificates
”
means certificates representing the Conversion Shares
issuable hereunder, each duly executed on behalf of the Company and issued hereunder.
(iii)
“
Closing
Date
”
means
the
date
on
which
one
of
the
two
(2)
Closings
are
held, which are the Signing Closing Date and the Second Closing Date.
(iv)
[Reserved]
(v)
“
Commitment
Fee
”
shall
have
the
meaning
ascribed
to
such
term
in
Section 12(a).
(vi)
“
Common
Stock
”
shall
have
the
meaning
ascribed
to
such
term in
the
Recitals.
(vii)
“
Conversion
Amount
”
shall
mean
the
Conversion
Amount
as
defined
in
the
Debentures,
provided,
however
that
for
purposes
of
the
foregoing
calculation,
the
full
indebtedness
under
the
Debentures
shall
be
deemed
immediately
convertible,
notwithstanding
the 4.99% limitation on ownership set forth in the Debentures.
(viii)
“
Conversion Price
”
means the Conversion Price as defined in the
Debentures.
(ix)
“
Conversion
Shares
”
means
the
shares
of
Common
Stock
issuable
upon
conversion of the Debentures.
(x)
“
DWAC
Operational
”
means
that
the
Common
Stock
is
eligible
for
clearing
through
the
Depository
Trust
Company
(
“
DTC
”
)
via
the
DTC
’
s
Deposit
Withdrawal
Agent
Commission
or
“
DWAC
”
system
and
active
and
in
good
standing
for
DWAC
issuance
by
the Transfer Agent (as defined herein).
(xi)
“
Dollars
”
or
“
$
”
means United States Dollars.
(xii)
“
Exchange Act
”
means the Securities Exchange Act of 1934, as amended.
(xiii)
“
Investments
”
means
Peak
One
Investments,
LLC,
the
general
partner
of
the Buyer.
(xiv)
“
Irrevocable Resolutions
”
has the meaning set forth in Section 8(i).
(xv)
“
Market Price of the Common Stock
”
means (x) the lowest traded price of
the
Common
Stock
for
the
period
indicated
in
the
relevant
provision
hereof
(unless
a
different
relevant
period
is
specified
in
the
relevant
provision),
as
reported
by Bloomberg,
LP
or,
if
not
so
reported,
as reported on the OTCQB,
OTCQX or
OTC Pink or (y) if the
Common Stock is listed
on a stock exchange, the closing price on such exchange, as reported by Bloomberg LP.
(xvi)
“
Material Adverse Effect
”
means a material adverse effect on the
business, operations or condition (financial or otherwise)
or results of operation of the Company
and
its
Subsidiaries
taken
as
a
whole,
in
the
reasonable
commercial
discretion
of
the
Buyer,
irrespective of any finding of fault, magnitude of liability (or lack of financial liability). Without
limiting the generality of
the foregoing, the occurrence of any of the following, in the reasonable
commercial
discretion
of
the
Buyer,
shall
be
considered
a
Material
Adverse
Effect:
(i)
any
final
money,
judgment,
writ
or
warrant
of
attachment,
or
similar
process
(including
an
arbitral
determination) in excess of Fifty Thousand Dollars ($50,000) shall be entered or filed against the
Company or
any of
its
Subsidiaries
(including,
in
any event,
products
liability claims
against
the
2
Company
or
its
Subsidiaries)
other
than
what
is
previously
disclosed
in
public
filings,
(ii)
the
suspension or withdrawal of any governmental authority or permit pertaining to a material
amount
of
the
Company
’
s
or
any
Subsidiary
’
s
products
or
services,
(iii)
the
loss
of
any
material
insurance
coverage
(including,
in
any
case,
comprehensive
general
liability
coverage,
products
liability coverage or directors and officers coverage, in each case in effect at the time of
execution and delivery of this Agreement), (iv) an action by a regulatory agency or governmental
body
affecting
the
Common
Stock
(including,
without
limitation,
(1)
the
commencement
of
any
regulatory investigation of which the Company is aware, the suspension of trading of the
Common
Stock
by
the
Financial
Industry
Regulation
Authority
(
“
FINRA
”
),
the
SEC,
the
OTC
Bulletin Board (
“
OTCBB
”
) or the OTC Markets Group, Inc., the failure of the Common Stock to
be
DTC
eligible
or
the
placing of
the
Common
Stock
on
the
DTC
“
chill
list
”
or
(2) the
engaging
in any market manipulation or other unlawful or improper trading or other activity by any
Affiliate),
(v)
the
Company
’
s
independent
registered
accountants
shall
resign
under
circumstances
where
a
disagreement
exists
between
the
Company
and
its
independent
registered
accountants,
(vi)
the
Company
shall
fail
to
timely
file
any
disclosure
document
as
required
by
applicable
federal
or
state
securities
laws
and
regulations
or
by
the
rules
and
regulations
of
any
exchange,
trading
market
or
quotation
system
to
which
the
Company
or
the
Common
Stock
is
subject, or (vii) the Chief
Executive Officer of the
Company or
any other key full-time officer or
director
of
the
Company,
shall,
for
any
reason
(including,
without
limitation,
termination,
resignation,
retirement,
death
or
disability)
cease
to
act
on
behalf
of
the
Company
in
the
same
role
and
to
the
same
extent
as
his
or
her
involvement
as
of
the
date
of
execution
and
delivery
of
this Agreement.
(xvii)
“
Person
”
means
any
living
person
or
any
entity,
such
as,
but
not
necessarily limited to, a corporation, partnership or trust.
(xviii)
“
Purchase Price
”
means the price that the Buyer pays for the Debentures at
each respective Closing,
which are the Signing Purchase Price and the Second Purchase Price, as
the case may be.
(xix)
“
Registrable Securities
”
shall mean the Conversion Shares, and, to the
extent applicable, and any other shares of capital stock or other securities of the Company or any
successor
to
the
Company
that are
issued
upon
exchange
of
Conversion
Shares and/or
such
Restricted Stock.
(xx)
“
Registration
Statement
”
shall
mean
a
registration
statement
on
Form
S-1
(or
any successor
thereto)
filed
or
contemplated
to
be
filed
by the
Company with
the
SEC
under
the Securities Act.
(xxi)
“
Restricted
Stock
”
shall mean
shares of
Common
Stock
which
are
not
freely trading shares when issued.
(xxii)
“
Securities
”
means the Debentures and the Shares.
(xxiii)
“
Shares
”
means the Conversion Shares.
3
(xxiv)
“
Second
Closing
Date
”
shall
have
the
meaning
ascribed
to
such
term
in
Section 6(b).
(xxv)
“
Second
Debenture
”
means
the
second
of
the
two
(2)
Debentures,
in
the
principal amount of One Hundred Sixty Two Thousand Five Hundred and 00/100 Dollars
($162,500.00), which is issued by the Company to the Buyer on the Second Closing Date.
(xxvi)
“
Second
Purchase
Price
”
shall
be
One
Hundred
Forty
Six
Thousand
Two
Hundred Fifty and 00/100 Dollars ($146,250.00)
(xxvii)
“
Signing
Closing
Date
”
shall
have
the
meaning
ascribed
to
such
term
in
Section 6(a).
(xxviii)
“
Signing
Debenture
”
means
the
first
of
the
two
(2)
Debentures,
in
the
principal
amount
of
One
Hundred
Twenty
Five
Thousand
and
00/100
Dollars
($125,000.00),
to
be issued by the Company to the Buyer on the Signing Closing Date.
(xxix)
“
Signing
Purchase
Price
”
shall
be
One
Hundred
Twelve
Thousand
Five
Hundred and 00/100 Dollars ($112,500.00).
(xxx)
“
Subsidiary
”
shall have the meaning ascribed to such term in Section 3(b).
(xxxi)
“
Transaction Documents
”
means, collectively, this Agreement, the
Debentures,
the
Transfer
Agent Instruction Letter,
the Irrevocable Resolutions and
the
other
agreements, documents and instruments contemplated hereby or thereby.
(xxxii)
“
Transfer
Agent
”
shall
have
the
meaning
ascribed
to
such
term
in
Section
4(a).
(xxxiii)
“
Transfer
Agent
Instruction
Letter
”
shall
have
the
meaning
ascribed
to
such term in Section 5(a).
b.
Purchase and Sale of Debentures
.
(i)
The
Buyer
agrees
to
purchase
from
the
Company,
and
the
Company
agrees
to
sell
to
the
Buyer,
the
Debentures
and
Warrant
on
the
terms
and
conditions
set
forth
below
in
this
Agreement
and
the
other
Transaction
Documents.
The
Warrant
shall
be
earned
in
full as an inducement fee as of the Signing Closing Date.
(ii)
Subject to the terms and conditions of this Agreement
and the other
Transaction
Documents,
the
Buyer
will
purchase
the
Debentures
and
Warrant
at
certain
closings
(each, a
“
Closing
”
) to be held on certain respective Closing Dates.
c.
[Reserved]
(i)
[Reserved]
4
(ii)
[Reserved]
2.
BUYER
’
S REPRESENTATIONS, WARRANTIES, ETC.
The
Buyer
represents
and
warrants
to,
and
covenants
and
agrees
with,
the
Company
as
follows:
a.
Investment
Purpose.
Without
limiting
the
Buyer
’
s
right
to
sell
the
Shares
pursuant
to
a
Registration
Statement,
Buyer
is
purchasing
the
Debentures,
and
will
be
acquiring
the
Conversion
Shares,
for
its
own
account
for
investment
only
and
not
with
a
view
towards
the
public
sale
or
distribution
thereof
and
not
with
a
view
to
or
for
sale
in
connection
with
any
distribution thereof.
b.
Accredited
Investor
Status.
Buyer
is
(i)
an
“
accredited
investor
”
as
that
term
is
defined
in
Rule
501
of
the
General
Rules
and
Regulations
under
the
1933
Act
by
reason
of
Rule
501(a)(3),
(ii)
experienced
in
making
investments
of
the
kind
described
in
this
Agreement
and
the
related
documents,
(iii)
able,
by
reason
of
the
business
and
financial
experience
of
its
officers
(if
an
entity)
and
professional
advisors
(who
are
not
affiliated
with
or
compensated
in
any
way
by
the
Company
or
any
of
its
affiliates
or
selling
agents),
to
protect
its
own
interests
in
connection
with
the
transactions
described
in
this
Agreement,
and
the
related
documents, and (iv) able to afford the entire loss of its investment in the Securities.
c.
Subsequent
Offers
and
Sales.
All
subsequent
offers
and
sales
of
the
Securities
by
the
Buyer
shall
be
made
pursuant
to
registration
of
the
Shares
under
the
1933
Act
or
pursuant
to
an
exemption
from
registration
and
compliance
with
applicable
states
’
securities
laws.
d.
Reliance
on
Exemptions.
Buyer
understands
that
the
Securities
are
being
offered
and
sold
to
it
in
reliance
on
specific
exemptions
from
the
registration
requirements
of
United States federal and state securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer
’
s compliance with,
the representations, warranties, agreements,
acknowledgments
and
understandings
of
the
Buyer
set
forth
herein
in
order
to
determine
the
availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
e.
Information.
Buyer
and
its
advisors
have
been
furnished
with
all
materials
relating
to
the
business,
finances
and
operations
of
the
Company
and
materials
relating
to
the
offer
and
sale
of
the
Securities
which
have
been
requested
by the
Buyer.
Buyer
and
its
advisors
have been afforded the opportunity to ask questions of the Company and have received complete
and
satisfactory
answers
to
any such
inquiries.
Without
limiting
the
generality of
the
foregoing,
Buyer
has
also
had
the
opportunity
to
obtain
and
to
review
the
Company
’
s
Annual
Report
on
Form 10-K for the fiscal year ended December 31, 2017, and Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2018 (collectively, the
“
SEC Documents
”
).
f.
Investment Risk.
Buyer understands that its investment in the securities
constitutes
high
risk
investment,
its
investment
in
the
Securities
involves
a
high
degree
of
risk,
including the risk of loss of the Buyer
’
s entire investment.
5
g.
Governmental
Review.
Buyer
understands
that
no
United
States
federal
or
state agency
or any
other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
h.
Organization;
Authorization.
Buyer
is
duly
organized,
validly
existing
and
in
good
standing
under
the
laws
of
the
jurisdiction
of
its
organization.
This
Agreement
and
the
other
Transaction
Documents
have
been
duly
and
validly
authorized,
executed
and
delivered
on
behalf of the Buyer and create a valid and binding agreement of the Buyer enforceable in
accordance
with
its
terms,
subject
as
to
enforceability
to
general
principles
of
equity
and
to
bankruptcy,
insolvency,
moratorium
and
other
similar
laws
affecting
the
enforcement
of
creditors
’
rights generally.
i.
Residency.
The
state
in
which
any
offer
to
sell
Securities
hereunder
was
made to or accepted by the Buyer is the state shown as the Buyer
’
s address contained herein, and
Buyer is a resident of such state only.
3.
COMPANY REPRESENTATIONS AND WARRANTIES, ETC.
The Company represents and warrants to the Buyer that:
a.
Concerning the Debentures and the Shares.
There are no preemptive rights
of any stockholder of the Company to acquire the Debentures or the Shares.
b.
Organization;
Subsidiaries;
Reporting
Company
Status.
Attached
hereto
as
Schedule
3(b)
is
an
organizational
chart
describing
all
of
the
Company
’
s
wholly-owned
and
majority-owned
subsidiaries
(the
“
Subsidiaries
”
)
and
other
Affiliates,
including
the
relationships
among
the
Company
and
such
Subsidiaries,
including
as
to
each
Subsidiary
its
jurisdiction
of
organization
and
the
percentage
of
ownership
held
by
the
Company,
and
the
parent
company
of
the Subsidiary, including the percentage of ownership of the Company held by it.
The Company
and
each
Subsidiary
is
a
corporation
or
other
form
of
businesses
entity
duly
organized,
validly
existing
and
in
good
standing
under
the
laws
its
respective
jurisdiction
of
organization
(except
that RoxSan Pharmacy Inc. is not in good standing as of the date of this Agreement), and each of
them
has
the
requisite corporate
or
other
power
to
own
its
properties
and
to
carry on
its
business
as now
being
conducted.
The
Company
and
each
Subsidiary
is duly
qualified
as a
foreign
corporation
or
other
entity
to
do
business
and
is
in
good
standing
in
each
jurisdiction
where
the
nature
of
the
business
conducted
or
property
owned
by
it
makes
such
qualification
necessary,
other than those jurisdictions in which the failure to so qualify would not have a Material
Adverse
Effect.
The
Common
Stock
is
listed
and
traded
on
the
OTCM
(as
defined
below)
(trading
symbol:
PRLX).
The
Company
has
received
no
notice,
either
oral
or
written,
from
FINRA, the
SEC,
or any
other
organization,
with
respect to
the continued
eligibility
of
the
Common Stock for such listing, and the Company has maintained all requirements for the
continuation
of
such
listing.
The
Company is
an
operating
company in
that,
among
other
things
(A)
it
primarily engages,
wholly or
substantially,
directly or
indirectly through
a
majority owned
Subsidiary or Subsidiaries, in the production or sale, or the research or development, of a product
or
service
other
than
the
investment
of
capital,
(B)
it
is
not
an
individual
or
sole
proprietorship,
6
(C)
it
is
not
an
entity
with
no
specific
business
plan
or
purpose
and
its
business
plan
is
not
to
engage
in
a
merger
or
acquisition
with
an
unidentified
company
or
companies
or
other
entity
or
person,
and
(D)
it
intends
to
use
the
proceeds
from
the
sale
of
the
Debentures
solely
for
the
operation
of
the
Company
’
s
business
and
uses
other
than
personal,
family,
or
household
purposes.
c.
Authorized
Shares.
Schedule
3(c)
sets
forth
all
capital
stock
and
derivative
securities
of
the
Company
that
are
authorized
for
issuance
and
that
are
issued
and
outstanding.
All issued
and
outstanding
shares of
Common
Stock
have
been
duly
authorized
and
validly
issued and are fully paid and nonassessable.
The Company has sufficient authorized and
unissued
shares
of
Common
Stock
as
may
be
necessary
to
effect
the
issuance
of
the
Shares,
assuming
the
prior
issuance
and
exercise,
exchange
or
conversion,
as
the
case
may
be,
of
all
derivative securities authorized, as indicated in Schedule 3(c). The Shares have been duly
authorized
and,
when
issued
upon
conversion
of,
or
as
interest
on,
the
Debentures,
the
Shares
will
be
duly
and
validly
issued,
fully
paid
and
non-assessable
and
will
not
subject
the
holder
thereof to personal liability by reason of being such holder. At all times, the Company shall keep
available
and
reserved
for
issuance
to
the
holders
of
the
Debentures
shares
of
Common
Stock
duly authorized for issuance against the Debentures.
d.
Authorization.
This
Agreement,
the
issuance
of
the
Debentures
(including
without
limitation
the
incurrence
of
indebtedness
thereunder),
the
issuance
of
the
Conversion
Shares
under
the
Debentures,
and
the
other
transactions
contemplated
by
the
Transaction
Documents, have been duly, validly and irrevocably authorized by the Company, and this
Agreement
has
been
duly
executed
and
delivered
by
the
Company. The
Company
’
s
board
of
directors,
in
the
exercise
of
its
fiduciary
duties,
has
irrevocably
approved
the
entry
into
and
performance
of
the
Transaction
Documents,
including,
without
limitation
the
sale
of
the
Debentures
and
the
issuance
of
Conversion
Shares,
based
upon
a
reasonable
inquiry
concerning
the Company
’
s financing objectives and financial situation. Each of the Transaction Documents,
when
executed
and
delivered
by the
Company,
are
and
will
be,
valid,
legal
and
binding
agreements
of
the
Company,
enforceable
in
accordance
with
their
respective
terms,
subject
as
to
enforceability
to
general
principles
of
equity
and
to
bankruptcy,
insolvency,
moratorium,
and
other similar laws affecting the enforcement of creditors
’
rights generally.
e.
Non-contravention.
The
execution
and
delivery of
the
Transaction
Documents,
the
issuance
of
the
Securities
and
the
consummation
by
the
Company
of
the
other
transactions
contemplated
by
this
Agreement
and
the
Debentures
(including
without
limitation
the
incurrence
of
indebtedness
thereunder)
do
not
and
will
not
conflict
with
or
result
in
a
breach
by the
Company of
any of
the
terms
or
provisions
of,
or
constitute
a
default
under
(i)
the
articles
of
incorporation
or
by-laws of
the
Company, each
as currently
in effect,
(ii)
any
indenture,
mortgage,
deed
of
trust,
or
other
material
agreement
or
instrument
to
which
the
Company
is
a
party
or
by
which
it
or
any
of
its
properties
or
assets
are
bound,
including
any
listing
agreement
for the Common Stock, except as herein set forth
or an event which results in the creation of any
lien,
charge
or
encumbrance
upon
any
assets
of
the
Company
or
the
triggering
of
any
anti-
dilution rights, rights of first refusal or first offer on the part of holders of the Company
’
s
securities, (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable
decree,
judgment,
or
order
of
any
court,
United
States
federal
or
state
regulatory
body,
7
administrative
agency,
or
other
governmental
body having jurisdiction
over
the
Company or
any
of
its
properties
or
assets,
or
(iv)
the
Company
’
s
listing
agreement
for
its
Common
Stock
(if
applicable).
f.
Approvals.
No authorization, approval or consent of any court, governmental
body,
regulatory
agency,
self-regulatory
organization,
or
stock
exchange
or
market
or
the
stockholders of the Company is required to be obtained by the Company for the entering into and
performing
this
Agreement
and
the
other
Transaction
Documents
(including
without
limitation
the
issuance
and
sale
of
the
Securities
to
the
Buyer
as
contemplated
by
this
Agreement)
except
such authorizations,
approvals and
consents that have
been
obtained,
or such
authorizations,
approvals and consents, the failure of which to obtain would not have a Material Adverse Effect.
g.
SEC
Filings;
Rule
144
Status.
None
of
the
SEC
Documents
contained,
at
the
time
they
were
filed,
any
untrue
statement
of
a
material
fact
or
omitted
to
state
any
material
fact required to be stated
therein or
necessary to
make the statements made therein in light of
the
circumstances under
which
they
were
made,
not misleading.
The
Company
timely
filed all
requisite
forms,
reports
and
exhibits
thereto
with
the
SEC
as
required.
The
Company
is
not
aware
of
any
event
occurring
on
or
prior
to
the
execution
and
delivery
of
this
Agreement
that
would
require
the
filing
of,
or
with
respect
to
which
the
Company
intends
to
file,
a
Form
8-K
after
such
time. The
Company
satisfies
the
requirements
of
Rule
144(i)(2),
and
the
Company
shall continue to satisfy all applicable
requirements of Rule 144 (or
any successor
thereto)
for so
long
as
any
Securities
are
outstanding
and
not
registered
pursuant
to
an
effective
registration
statement filed with the SEC.
h.
Absence
of
Certain
Changes.
Since
June
30,
2018,
when
viewed
from
the
perspective
of
the
Company
and
its
Subsidiaries
taken
as
a
whole,
there
has
been
no
material
adverse
change
and
no
material
adverse
development
in
the
business,
properties,
operations,
condition
(financial
or
otherwise),
or
results
of
operations
of
the
Company
and
its
Subsidiaries
(including, without limitation, a change or development which constitutes, or with the passage of
time
is
reasonably
likely
to
become,
a
Material
Adverse
Effect),
except
as
disclosed
in
the
SEC
Documents.
Since
June
30,
2018,
except
as
provided
in
the
SEC
Documents,
the
Company
has
not (i)
incurred
or
become
subject to
any
material liabilities (absolute
or
contingent)
except
liabilities
incurred
in
the
ordinary
course
of
business
consistent
with
past
practices;
(ii)
discharged or satisfied any
material lien or encumbrance or paid any
material obligation or
liability
(absolute
or
contingent),
other
than
current
liabilities
paid
in
the
ordinary
course
of
business consistent with past practices; (iii) declared or made any payment or distribution of cash
or
other
property
to
stockholders
with
respect
to
its
capital
stock,
or
purchased
or
redeemed,
or
made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred
any
other
tangible
assets,
or
canceled
any
debts
or
claims,
except
in
the
ordinary
course
of
business
consistent
with
past
practices;
(v)
suffered
any
substantial
losses
or
waived
any
rights
of
material
value,
whether
or
not
in
the
ordinary
course
of
business,
or
suffered
the
loss
of
any
material
amount
of
existing
business;
(vi)
made
any
changes
in
employee
compensation,
except
in
the
ordinary
course
of
business
consistent
with
past
practices;
or
(vii)
experienced
any
material
problems
with
labor
or
management
in
connection
with
the
terms
and
conditions of their employment.
8
i.
Full
Disclosure.
There
is
no
fact
known
to
the
Company
(other
than
general
economic
conditions
known
to
the
public
generally
or
as
disclosed
in
the
SEC
Documents)
that
has
not
been
disclosed
in
writing
to
the
Buyer
that
(i)
would
reasonably
be
expected
to
have
a
Material Adverse Effect, (ii) would reasonably be expected to materially and adversely affect the
ability of the
Company to perform its obligations
pursuant to the Transaction Documents, or
(iii)
would reasonably be expected to materially and adversely affect the value of the rights granted to
the Buyer in the Transaction Documents.
j.
Absence
of
Litigation.
Except
as
described
in
the
SEC
Documents,
there
is
no
action,
suit,
proceeding,
inquiry or
investigation
before
or
by any court,
public
board
or
body
pending
or,
to
the
knowledge
of
the
Company,
threatened
against
or
affecting
the
Company,
wherein
an
unfavorable
decision,
ruling
or
finding
would
have
a
Material
Adverse
Effect
or
which
would
adversely
affect
the
validity
or
enforceability
of,
or
the
authority
or
ability
of
the
Company to
perform
its
obligations
under,
any of
the
Transaction
Documents.
The
Company is
not
a
party
to
or
subject
to
the
provisions
of,
any
order,
writ,
injunction,
judgment
or
decree
of
any court or government agency or instrumentality which could reasonably be expected to have a
Material Adverse Effect.
k.
Absence of
Liens.
The Company
’
s assets are not encumbered by any liens or
mortgages except as described in the SEC Documents.
l.
Absence
of
Events
of
Default.
No
event
of
default
(or
its
equivalent
term),
as
defined
in
the
respective
agreement,
indenture,
mortgage,
deed
of
trust
or
other
instrument,
to
which
the
Company
is
a
party,
and
no
event
which,
with
the
giving
of
notice
or
the
passage
of
time
or
both,
would
become
an
event
of
default
(or
its
equivalent
term)
(as
so
defined
in
such
document), has occurred and is continuing, which would have a Material Adverse Effect.
m.
No
Undisclosed
Liabilities
or
Events.
The
Company
has
no
liabilities
or
obligations
other
than
those
disclosed
in
the
SEC
Documents
or
those
incurred
in
the
ordinary
course
of
the
Company
’
s
business
since
June 30,
2018,
and
which
individually or
in
the
aggregate,
do
not
or
would
not
have
a
Material
Adverse
Effect.
No
event
or
circumstances
has
occurred or
exists with respect to the Company or its properties, business,
condition (financial or
otherwise),
or
results
of
operations,
which,
under
applicable
law,
rule
or
regulation,
requires
public
disclosure
or
announcement
prior
to
the
date
hereof
by
the
Company
but
which
has
not
been
so
publicly
announced
or
disclosed.
There
are
no
proposals
currently
under
consideration
or
currently
anticipated
to
be
under
consideration
by
the
Board
of
Directors
or
the
executive
officers
of
the
Company
which
proposal
would
(x)
change
the
articles
of
incorporation,
by-laws
or
any
other
charter
document
of
the
Company,
each
as
currently
in
effect,
with
or
without
shareholder
approval,
which
change
would
reduce
or
otherwise
adversely
affect
the
rights
and
powers
of
the
shareholders
of
the
Common
Stock
or
(y)
materially
or
substantially
change
the
business, assets or capital of the Company.
n.
No
Integrated
Offering.
Neither
the
Company
nor
any
of
its
affiliates
nor
any
Person
acting
on
its
or
their
behalf
has,
directly
or
indirectly,
at
any
time
during
the
six
month
period
immediately
prior
to
the
date
of
this
Agreement
made
any
offer
or
sales
of
any
security or
solicited
any
offers
to
buy
any security
under
circumstances
that
would
eliminate
the
9
availability
of
the
exemption
from
registration
under
Rule
506
of
Regulation
D
in
connection
with
the
offer
and
sale
of
the
Securities
as
contemplated
hereby.
The
issuance
of
the
Securities
to
the
Buyer
will
not
be
integrated
with
any
other
issuance
of
the
Company
’
s
securities
(past,
current or future) for purposes of any shareholder approval provisions applicable to the Company
or its securities.
o.
Dilution.
The
number
of
Shares
issuable
upon
conversion
of
the
Debentures
may increase
substantially in
certain
circumstances,
including,
but
not
necessarily limited
to,
the
circumstance wherein
the Market Price of
the Common Stock declines prior to the
conversion of
the
Debentures. The
Company
’
s
executive
officers
and
directors
have
studied
and
fully
understand the nature of
the securities being sold
hereby and recognize that they have
a potential
dilutive
effect
and
further
that
the
conversion
of
the
Debentures
and/or
sale
of
the
Conversion
Shares
may
have
an
adverse
effect
on
the
Market
Price
of
the
Common
Stock. The
Board
of
Directors
of
the
Company
has
concluded,
in
its
good
faith
business
judgment
that
such
issuance
is in the best interests of the Company. The Company specifically acknowledges that its
obligation to issue the Conversion Shares upon conversion of the Debentures is binding upon the
Company
and
enforceable
regardless
of
the
dilution
such
issuance
may
have
on
the
ownership
%s of other shareholders of the Company.
p.
Regulatory
Permits.
The
Company
has
all
such
permits,
easements,
consents, licenses, franchises and other governmental and regulatory authorizations from all
appropriate
federal,
state,
local
or
other
public
authorities
(
“
Permits
”
)
as
are
necessary
to
own
and
lease
its
properties
and
conduct
its
businesses
in
all
material
respects
in
the
manner
described
in
the
SEC
Documents
and
as
currently
being
conducted.
All
such
Permits
are
in
full
force
and
effect
and
the
Company has
fulfilled
and
performed
all
of
its
material
obligations
with
respect
to
such
Permits,
and
no
event
has
occurred
that
allows,
or
after
notice
or
lapse
of
time
would
allow,
revocation
or
termination
thereof
or
will
result
in
any other
material
impairment
of
the
rights
of
the
holder
of
any
such
Permit,
subject
in
each
case
to
such
qualification
as
may
be
disclosed
in
the
SEC
Documents.
Such
Permits
contain
no
restrictions
that
would
materially
impair
the
ability
of
the
Company
to
conduct
businesses
in
the
manner
consistent
with
its
past
practices.
The
Company
has
not
received
notice
or
otherwise
has
knowledge
of
any
proceeding
or action relating to the revocation or modification of any such Permit.
q.
Residency.
The
state
in
which
any
offer
to
sell
Securities
hereunder
was
made
or
accepted
by
the
Seller
is
the
state
shown
as
the
Seller
’
s
address
contained
herein,
and
Seller is a resident of such state only.
r.
Hazardous
Materials.
The
Company
is
in
compliance
with
all
applicable
Environmental
Laws
in
all
respects
except
where
the
failure
to
comply
does
not
have
and
could
not reasonably be expected to have a Material Adverse Effect. For purposes of the foregoing:
“
Environmental Laws
”
means, collectively, the Comprehensive Environmental
Response,
Compensation
and
Liability
Act
of
1980,
as
amended,
the
Superfund
Amendments
and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Toxic
Substances
Control
Act,
as
amended,
the
Clean
Air
Act,
as
amended,
the
Clean
Water
Act,
as
amended, any other
“
Superfund
”
or
“
Superlien
”
law or any other applicable federal, state or local
10
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing
liability
or standards of conduct concerning, the environment or any Hazardous Material.
“
Hazardous Material
”
means and includes any hazardous, toxic or dangerous
waste, substance or material, the generation, handling, storage, disposal, treatment or emission of
which is subject to any Environmental Law.
s.
Independent
Public
Accountants.
The
Company
’
s
auditor
is
an
independent
registered
public
accounting
firm
with
respect
to
the
Company,
as
required
by
the
1933 Act, the Exchange Act and the rules and regulations promulgated thereunder.
t.
Internal Accounting Controls.
The Company maintains a system of internal
accounting controls sufficient to provide
reasonable assurances
that (1) transactions are executed
in accordance
with management
’
s
general
or specific authorization; (2)
transactions are recorded
as
necessary
to
permit
preparation
of
financial
statements
in
conformity
with
generally
accepted
accounting
principles
and
to
maintain
accountability
for
assets;
(3)
access
to
assets
is
permitted
only
in
accordance
with
management
’
s
general
or
specific
authorization;
and
(4)
the
recorded
accountability
for
assets
is
compared
with
existing
assets
at
reasonable
intervals
and
appropriate
action is taken with respect to any differences.
u.
Brokers.
No Person (other than the Buyer and its principals, employees and
agents) is entitled to receive any consideration from the Company or the Buyer arising from any
finder
’
s agreement, brokerage agreement or other agreement to which the Company is a party.
v.
DWAC
Operational; DRS.
The
Company
is currently
and shall remain
DWAC Operational and eligible for DRS
4.
CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a.
Transfer
Restrictions.
The
parties
acknowledge
and
agree
that
(1)
the
Debentures
have
not
been
registered
under
the
provisions
of
the
1933
Act
and
the
Shares
have
not
been
registered
under
the
1933
Act,
and
may
not
be
transferred
unless
(A)
subsequently
registered
thereunder
or
(B)
the
Securities
to
be
sold
or
transferred
may
be
sold
or
transferred
pursuant
to
an
exemption
from
such
registration;
(2)
any
sale
of
the
Securities
made
in
reliance
on Rule 144 promulgated under the 1933 Act (
“
Rule 144
”
) may be made only in accordance with
the
terms
of
Rule
144
and
further,
if
Rule
144
is
not
applicable,
any
resale
of
such
Securities
under
circumstances
in
which
the
seller,
or
the
Person
through
whom
the
sale
is
made,
may
be
deemed
to
be
an
underwriter,
as
that
term
is
used
in
the
1933
Act,
may
require
compliance
with
some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder, (3)
at
the
request
of
the
Buyer,
the
Company
shall,
from
time
to
time,
within
two
(2)
business
days
of
such
request,
at
the
sole
cost
and
expense
of
the
Company,
either
(i)
deliver
to
its
transfer
agent
and
registrar
for
the
Common
Stock
(the
“
Transfer
Agent
”
)
a
written
letter
instructing and
authorizing
the
Transfer
Agent
to
process
transfers
of
the
Shares
at
such
time
as
the
Buyer
has
held
the
Securities
for
the
minimum
holding
period
permitted
under
Rule
144,
subject
to
the
Buyer
’
s
providing
to
the
Transfer
Agent
certain
customary
representations
contemporaneously
with
any requested
transfer,
or
(ii)
at
the
Buyer
’
s
option
or
if
the
Transfer
Agent
requires
further
11
confirmation of the availability of an exemption from registration, furnish to the Buyer an
opinion
of
the
Company
’
s
counsel
in
favor
of
the
Buyer
(and,
at
the
request
of
the
Buyer,
any
agent
of
the
Buyer,
including
but
not
limited
to
the
Buyer
’
s
broker
or
clearing
firm)
and
the
Transfer Agent, reasonably satisfactory in form, scope and substance to the Buyer and the
Transfer
Agent,
to
the
effect
that
a
contemporaneously
requested
transfer
of
shares
does
not
require
registration
under
the
1933
Act,
pursuant
to
the
1933
Act,
Rule
144
or
other
regulations
promulgated
under
the
1933
Act
and
(4)
neither
the
Company nor
any other
Person
is
under
any
obligation
to
register
the
Securities
(other
than
pursuant
to
this
Agreement)
under
the
1933
Act
or to comply with the terms and conditions of any exemption thereunder.
b.
Restrictive
Legend.
The
Buyer
acknowledges
and
agrees
that
the
Debentures, and, until such time as the Shares have been registered under the 1933 Act as
contemplated hereby and sold in accordance with an effective Registration Statement, certificates
and
other
instruments
representing
any of
the
Securities
shall
bear
a
restrictive
legend
in
substantially the
following
form
(and
a
stop-transfer
order
may be
placed
against
transfer
of
any
such Securities):
THIS
SECURITY
HAS
NOT
BEEN
REGISTERED
WITH
THE
SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES
COMMISSION
OF
ANY
STATE
IN
RELIANCE
UPON
AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES
ACT
OF
1933,
AS
AMENDED
(THE
“
SECURITIES
ACT
”
),
AND,
ACCORDINGLY,
MAY
NOT
BE
OFFERED
OR
SOLD
EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER
THE
SECURITIES
ACT
OR
PURSUANT
TO
AN
AVAILABLE
EXEMPTION
FROM,
OR IN
A TRANSACTION NOT
SUBJECT
TO,
THE
REGISTRATION
REQUIREMENTS
OF
THE
SECURITIES
ACT
AND
IN
ACCORDANCE
WITH
APPLICABLE
STATE
SECURITIES
LAWS
AS
EVIDENCED
BY
A
LEGAL
OPINION
OF
COUNSEL
TO
THE
TRANSFEROR
TO
SUCH
EFFECT,
THE
SUBSTANCE
OF
WHICH
SHALL
BE
REASONABLY
ACCEPTABLE TO THE COMPANY.
c.
[Intentionally Omitted].
d.
Securities
Filings.
The
Company
undertakes
and
agrees
to
make
all
necessary
filings
(including,
without
limitation,
a
Form
D)
in
connection
with
the
sale
of
the
Securities
to
the
Buyer
required
under
any
United
States
laws
and
regulations
applicable
to
the
Company
(including
without
limitation
state
“
blue
sky
”
laws),
or
by
any
domestic
securities
exchange
or
trading
market,
and
to
provide
a
copy
thereof
to
the
Buyer
promptly
after
such
filing.
e.
Reporting Status; Public Trading Market; DTC Eligibility.
So long as the
Buyer
and/or
Investments
beneficially
own
any
Securities,
(i)
the
Company
shall
timely
file,
prior
to
or
on
the
date
when
due,
all
reports
that
would
be
required
to
be
filed
with
the
SEC
pursuant
to
Section
13
or
15(d)
of
the
Exchange
Act
if
the
Company
had
securities
registered
12
under
Section
12(b)
or
12(g)
of
the
Exchange
Act;
(ii)
the
Company shall
not
be
operated
as,
or
report,
to
the
SEC
or
any other
Person,
that
the
Company is
a
“
shell
company
”
or
indicate
to
the
contrary
to
the
SEC
or
any
other
Person;
(iii)
the
Company
shall
take
all
other
action
under
its
control necessary to ensure the availability of Rule 144 under the 1933 Act
for the sale of Shares
by
the
Buyer
at
the
earliest
possible
date;
and
(iv)
the
Company
shall
at
all
times
while
any
Securities are outstanding
maintain its engagement of an independent registered public
accounting
firm. Except
as
otherwise
set
forth
in
Transaction
Documents,
the
Company
shall
take
all
action
under
its
control
necessary
to
obtain
and
to
continue
the
listing
and
trading
of
its
Common
Stock
(including,
without
limitation,
all
Registrable
Securities)
on
the
OTC
Markets,
Inc. (
“
OTCM
”
) on the OTC Pink (
“
OTCP
”
), OTCQB (
“
OTCQB
”
), or OTCQX (
“
OTCQX
”
), and
will
comply
in
all
material
respects
with
the
Company
’
s
reporting,
filing
and
other
obligations
under
the
by-laws
or
rules
of
the
Financial
Industry
Regulatory
Authority
(
“
FINRA
”
).
If,
so
long as the Buyer and/or Investments beneficially own any of the Securities, the Company
receives
any
written
notice
from
the
OTCM,
FINRA,
or
the
SEC
with
respect
to
either
any
alleged deficiency in the
Company
’
s compliance
with applicable rules and regulations (including
without limitation any comments from the SEC on any of the Company
’
s documents filed (or the
failure to have made any such filing) under the 1933 Act or the Exchange Act) (each, a
“
Regulatory Notice
”
), then the Company shall
promptly,
and in any event within two (2)
business
days,
provide
copies
of
the
Regulatory
Notice
to
the
Buyer,
and
shall
promptly,
and
in
any event within five (5) business days of receipt of the Regulatory Notice (a
“
Regulatory
Response
”
),
respond
in
writing
to
the
OTCM,
FIRNA
and/or
SEC
(as
the
case
may
be),
setting
forth
the
Company
’
s
explanation
and/or
response
to
the
issues
raised
in
the
Regulatory
Notice,
with
a
view
towards
maintaining
and/or
regaining
full
compliance
with
the
applicable
rules
and
regulations of the OTCM, FIRNA and/or SEC and maintaining or regaining good standing of the
Company
with
the
OTCM,
FINRA
and/or
SEC,
as
the
case
may
be,
the
intent
being
to
ensure
that
the
Company
maintain
its
reporting
company
status
with
the
SEC
and
that
its
Common
Stock
be
and
remain
available
for
trading
on
the
OTCP,
OTCQB,
or
OTCQX. Further,
at
all
times
after
the
30th
calendar
day
after
the
date
of
this
Agreement,
the
Common
Stock
shall
be
DWAC
Operational,
and
the
Common Stock
shall not
be
subject
to any DTC
“
chill
”
designation
or similar restriction on the clearing of the Common Stock through DTC.
f.
Use
of
Proceeds.
The
Company
shall
use
the
proceeds
from
the
sale
of
the
Debentures
for
working
capital
purposes
only subject
to
customary restrictions.
Absent
the
prior
written
approval
of
a
majority
of
the
principal
amount
of
the
Debentures
then
outstanding,
the
Company shall
not
use
any portion
of
the
proceeds
of
the
sale
of
the
Debentures
to
(i)
repay any
indebtedness
or
other
obligation
of
the
Company
incurred
prior
to
the
date
of
this
Agreement
outside the normal course of business, (ii) pay any dividends or redemption amount on any of the
Company
’
s equity
or equity
equivalents,
(iii)
pay
any
amounts,
whether
on
account of
debt
obligations
of
the
Company
or
otherwise,
except
for
compensation,
to
any
officer,
director
or
other
related
party
of
the
Company
or
(iv)
pay
deferred
compensation
or
any
compensation
to
any
of
the
directors
or
officers
of
the
Company
in
excess
of
the
rate
or
amount
paid
or
accrued
during
the
fiscal
year
ended
December,
2017
(as
base
compensation
and
excluding
any
discretionary amounts),
other
than
modest
increases
consistent
with
prior
practice
that
are
approved by the Company
’
s Board of Directors.
13
g.
Available
Shares.
Commencing on
the
date
of
execution
and
delivery of
this
Agreement,
the
Company
shall
have
and
maintain
authorized
and
reserved
for
issuance,
free
from
preemptive
rights,
that
number
of
shares
equal
to
Seven
Hundred
percent
(700%)
(with
the
understanding
that
Six
Hundred
percent
(600%)
shall
be
deemed
satisfactory
for
the
initial
45
calendar
days
after
the
date
of
this
Agreement)
of
the
number
of
shares
of
Common
Stock
(1)
issuable
based
upon
the
conversion
of
the
then-outstanding
Debentures
(including
accrued
interest
thereon)
as
may
be
required
to
satisfy the
conversion
rights
of
the
Buyer
pursuant
to
the
terms
and
conditions
of
the Debenture
(for
the
avoidance
of
doubt,
this
shall
be
calculated
based
on the applicable conversion price that would
result on or after the date that is 180 calendar days
after the issuance date of the respective Debenture(s) regardless of the date of calculation)
(without
giving
effect
to
the
4.99%
limitation
on
ownership
as
set
forth
in
the
Debentures),
provided,
however
that
for
purposes
of
the
foregoing
calculation,
the
full
indebtedness
under
the
Debentures
shall
be
deemed
immediately
convertible
and
(2)
issuable
to
the
Buyer
on
future
Closing
Dates,
based
upon
the
lowest
traded
price
per
share
of
the
Common
Stock
on
the
date
before
the
most
recent
Closing
Date
(as
reported
by
Bloomberg
LP)
(collectively
in
the
aggregate the
“
Required
Reserve Amount
”
). The Company shall monitor its compliance with the
foregoing requirements on an ongoing basis.
If at any time the Company does not have available
an
amount
of
authorized
and
non-issued
Shares
required
to
be
reserved
pursuant
to
this
Section,
then
the
Company
shall,
without
notice
or
demand
by
the
Buyer,
call
within
thirty
(30)
days
of
such occurrence and hold within sixty (60) days
of such occurrence
a special meeting of
shareholders,
for
the
sole
purpose
of
increasing
the
number
of
shares
authorized.
Management
of
the
Company
shall
recommend
to
shareholders
to
vote
in
favor
of
increasing
the
number
of
Common
Stock
authorized
at
the
meeting.
Members
of
the
Company
’
s
management
shall
also
vote all of their own shares in favor of increasing the number of Common Stock authorized at the
meeting.
If
the
increase
in
authorized
shares
is
approved
by the
stockholders
at
the
meeting,
the
Company
shall
implement
the
increase
in
authorized
shares
within
one
(1)
business
day
following
approval
at
such
meeting.
Alternatively,
to
the
extent
permitted
by
applicable
law,
in
lieu
of
calling
and
holding
a
meeting
as
described
above,
the
Company
may,
within
thirty
(30)
days
of
the
date
when
the
Company
does
not
have
available
an
amount
of
authorized
and
non-
issued
Shares
required
to
be
reserved
as
described
above,
procure
the
written
consent
of
stockholders
to
increase
the
number
of
shares authorized,
and
provide
the
stockholders
with
notice
thereof
as
may
be
required
under
applicable
law
(including
without
limitation
Section
14(c)
of
the
Exchange
Act
and
Regulation
14C
thereunder).
Upon
obtaining
stockholder
approval
as
aforesaid,
the
Company
shall
cause
the
appropriate
increase
in
its
authorized
shares
of
Common
Stock
within
one
(1)
business
day
(or
as
soon
thereafter
as
permitted
by
applicable
law).
Company
’
s
failure
to
comply with
these
provisions
will
be
an
Event
of
Default
(as
defined
in the Debentures).
h.
Reimbursement.
If
(i)
Buyer
and/or
Investments
becomes
a
party
defendant
in
any
capacity
in
any
action
or
proceeding
brought
by
any
stockholder
of
the
Company,
in
connection
with
or
as
a
result
of
the
consummation
of
the
transactions
contemplated
by
the
Transaction
Documents,
or
if
the
Buyer
and/or
Investments
is
impleaded
in
any
such
action,
proceeding
or
investigation
by
any
Person,
or
(ii)
the
Buyer
and/or
Investments,
other
than
by
reason
of
its
own
gross
negligence,
willful
misconduct
or
breach
of
law
(as
adjudicated
by
a
court of law having proper jurisdiction and such adjudication is not subject to appeal), becomes a
party
defendant in
any
capacity
in
any
action
or
proceeding
brought by
the
SEC against or
14
involving the
Company or
in
connection
with
or
as
a
result
of
the
consummation
of
the
transactions contemplated by
the Transaction Documents, or if the Buyer or Investments is
impleaded
in
any
such
action,
proceeding
or
investigation
by
any
Person,
then
in
any
such
case,
the
Company
shall
promptly
reimburse
the
Buyer
and/or
Investments
for
its
or
their
reasonable
legal
and
other
expenses
(including
the
cost
of
any
investigation
and
preparation)
incurred
in
connection
therewith.
The
reimbursement
obligations
of
the
Company under
this
paragraph
shall
be
in
addition
to
any
liability
which
the
Company
may
otherwise
have,
shall
extend
upon
the
same
terms
and
conditions
to
any
affiliates
of
the
Buyer
and/or
Investments
who
are
actually
named in such action, proceeding or investigation, and partners, directors, agents, employees and
controlling Persons (if any), as the case may be, of the Buyer, Investments and any such
Affiliate,
and
shall
be
binding upon
and
inure
to
the
benefit
of
any successors,
assigns,
heirs
and
personal
representatives
of
the
Company,
the
Buyer,
Investments
and
any such
Affiliate
and
any
such
Person.
Except
as
otherwise
set
forth
in
the
Transaction
Documents,
the
Company
also
agrees
that
neither
any
Buyer,
Investments
nor
any
such
Affiliate,
partners,
directors,
agents,
employees or controlling Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a result of the
consummation of the Transaction Documents.
i. The
Company shall
provide
the
Transfer
Agent
and/or
the
Buyer,
Investments
or
their respective
brokerage and/or clearing
firm with
all relevant legal opinions and other
documentation
requested
by
the
Buyer
or
Investments
in
connection
with
the
issuance
of
the
Conversion
Shares
or
the
Restricted
Stock,
or
the
sale
thereof,
to
confirm
the
share
issuance(s)
such
that
the
Conversion
Shares
and/or
Restricted
Stock
may
be
deposited
with
the
applicable
brokerage and/or clearing firm.
j.
No
Payments
to
Affiliates
or
Related
Parties.
So
long
as
any of
the
Debentures
remain
outstanding,
if
the
Debentures
are
in
default,
the
Company
shall
not,
absent
the
prior
written
consent
of
the
holders
of
all
Debentures
then
outstanding,
make
any
payments
to
any
of
the
Company
’
s
or
the
Subsidiaries
’
respective
affiliates
or
related
parties,
including
without
limitation
payments
or
prepayments
of
principal
or
interest
accrued
on
any indebtedness
or
obligation
in
favor
of
affiliates
or
related
parties.
Notwithstanding
anything
to
the
contrary
contained
herein,
the
provisions
of
this
Section
4(j)
shall
not
apply
to
payments
to
the
Subsidiaries, or other businesses in which
affiliates have an
interest, made
in the ordinary course
of business and consistent with past practice as disclosed in the SEC Documents.
k.
Notice
of
Material
Adverse
Effect.
The
Company
shall
notify
the
Buyer
(and
any
subsequent
holder
of
the
Debentures),
as
soon
as
practicable
and
in
no
event
later
than
three
(3)
business
days
of
the
Company
’
s
knowledge
of
any
Material
Adverse
Effect
on
the
Company.
For
purposes
of
the
foregoing,
“
knowledge
”
means
the
earlier
of
the
Company
’
s
actual knowledge or the Company
’
s constructive knowledge upon due inquiry.
l.
Public
Disclosure.
Except
to
the
extent
required
by
applicable
law,
absent
the
Buyer
’
s
prior
written
consent,
the
Company shall
not
reference
the
name
of
the
Buyer
in
any
press release, securities disclosure, business plan, marketing or funding proposal.
m.
Nature of Transaction; Savings Clause.
It is the parties
’
express
understanding
and
agreement
that
the
transactions
contemplated
by
the
Transaction
Documents
15
constitute an investment and not a loan.
If nonetheless such transactions are deemed to be a loan
(as
adjudicated
by
a
court
of
law
having
proper
jurisdiction
and
such
adjudication
is
not
subject
to
appeal),
the
Company
shall
not
be
obligated
or
required
to
pay
interest
at
a
rate
that
could
subject
Buyer
to
either
civil
or
criminal
liability as
a
result
of
such
rate
exceeding
the
maximum
rate
that
the
Buyer
is
permitted
to
charge
under
applicable
law,
and
the
Company
’
s
obligations
under
the
Transaction
Documents
shall
not
be
void
or
voidable
on
the
basis
of
the
Buyer
’
s
lack
of
any
license
or
registration
as a
lender
with
any
governmental authority. It is expressly
understood
and
agreed
by
the
parties
that
neither
the
amounts
payable
pursuant
to
Section
12,
any
redemption
premium,
remedy
upon
an
Event
of
Default
(as
defined
in
the
Debentures)
or
any
Acceleration
Amount
(as
defined
in
the
Debentures),
original
issue
discount
nor
any
investment
returns
of
the
Buyer
on
the
sale
of
the
Debentures
or
the
sale
of
any
Conversion
Shares
(whether
unrealized
or
realized)
shall
be
construed
as
interest.
If,
by
the
terms
of
the
Debentures, any
other Transaction Document or
any
other
instrument, Buyer
is at any
time
required
or
obligated
to
pay
interest
at
a
rate
exceeding
such
maximum
rate,
interest
payable
under the Debenture and/or such other Transaction Documents or other instrument shall be
computed
(or
recomputed)
at
such
maximum
rate,
and
the
portion
of
all
prior
interest
payments
(if any) exceeding such
maximum shall be applied to payment of the outstanding principal of the
Debentures.
5.
TRANSFER AGENT INSTRUCTIONS.
a.
Transfer
Agent
Instruction
Letter.
On
or
before
the
Signing
Closing
Date,
the Company shall irrevocably instruct its Transfer Agent in writing using the letter substantially
in
the
form
of
Exhibit
B
annexed
hereto,
with
only
such
modifications
as
the
Buyer
agrees
to,
executed
by
the
Company,
the
Buyer
and
the
Transfer
Agent
(the
“
Transfer
Agent
Instruction
Letter
”
),
to
(i)
reserve
that
number
of
shares
of
Common
Stock
as
is
required
under
Section
4(g)
hereof,
and
(ii)
issue
Common
Stock
from
time
to
time
upon
conversion
of
the
Debentures
in
such
amounts
as
specified
from
time
to
time
by
the
Buyer
to
the
Transfer
Agent
in
a
Notice
of
Conversion,
in
such
denominations
to
be
specified
by the
Buyer
in
connection
with
each
conversion
of
the
Debentures.
The
Transfer
Agent
shall
not
be
restricted
from
issuing
shares
from only the allotment reserved hereunder for the Conversion Amount (as defined in the
Debentures),
but
instead
may,
to
the
extent
necessary
to
satisfy
the
amount
of
shares
issuable
upon
conversion,
issue
shares
above
and
beyond
the
amount
reserved
on
account
of
the
Conversion Amount, without any additional instructions or authorization from the Company, and
the Company shall not provide the Transfer Agent with any instructions or documentation
contrary to
the
foregoing.
As
of
the
date
of
this
Agreement,
the
Transfer
Agent
is
Action
Stock
Transfer
Corporation.
The
Company
shall
at
all
times
while
any
Debentures
are
outstanding
engage
a
Transfer
Agent
which
is
a
party
to
the
Transfer
Agent
Instruction
Letter. If
for
any
reason
the
Company
’
s
Transfer
Agent
is
not
a
signatory of
the
Transfer
Agent
Instruction
Letter
while
any
Debentures
or
Restricted
Stock
are
outstanding
and
held
by
the
Buyer
and/or
Investments, then such Transfer Agent shall nonetheless be deemed bound by the Transfer Agent
Instruction Letter,
and
the
Company
shall neither
(i)
permit the
Transfer
Agent to disclaim,
disregard
or
refuse
to
abide
by
the
Transfer
Agent
’
s
obligations,
terms
and
agreements
set
forth
in
the
Transfer
Agent
Instruction
Letter,
nor
(ii)
issue
any
instructions
to
the
Transfer
Agent
contrary
to
the
obligations,
terms
and
agreements
set
forth
in
the
Transfer
Agent
Instruction
Letter
.
The
Company
shall
not
terminate
the
Transfer
Agent
or
otherwise
change
Transfer
16
Agents
without
at
least
fifteen
(15)
days
prior
written
notice
to
the
Buyer
and
with
the
Buyer
’
s
prior written
consent
to such
change,
which
the
Buyer
may grant or
withhold in its sole
discretion. The
Company
shall
continuously
monitor
its
compliance
with
the
share
reservation
requirements
and,
if
and
to
the
extent
necessary
to
increase
the
number
of
reserved
shares
to
remain
and
be
at
least
the
Required
Reserve
Amount
to
account
for
any
decrease
in
the
Market
Price
of
the
Common
Stock,
the
Company
shall
immediately
(and
in
any
event
within
one
(1)
business
day)
notify
the
Transfer
Agent
in
writing
of
the
reservation
of
such
additional
shares,
provided
that
in
the
event
that
the
number
of
shares
reserved
for
conversion
of
the
Debentures
is
less
than
the
Required
Reserve
Amount,
the
Buyer
may also
directly instruct
the
Transfer
Agent
to
increase
the
reserved
shares
as
necessary
to
satisfy
the
minimum
reserved
share
requirement,
and
the
Transfer
Agent
shall
act
accordingly,
provided,
further,
that
the
Company
shall
within
one
(1)
business
day
provide
any
written
confirmation,
assent
or
documentation
thereof
as
the
Transfer Agent may request to act upon a share increase instruction delivered by the Buyer.
The
Company
shall provide the Buyer with a copy
of all written instructions to the Company
’
s
Transfer Agent with respect to the reservation of shares simultaneously with the issuance of such
instructions
to
the
Transfer
Agent.
The
Company
covenants
that
no
instruction
other
than
such
instructions
referred
to
in
this
Section
5
and
stop
transfer
instructions
to
give
effect
to
Section
4(a)
hereof
prior
to
registration
and
sale
of
the
Conversion
Shares
under
the
1933
Act
will
be
given
by
the
Company
to
the
Transfer
Agent
and
that
the
Conversion
Shares
shall
otherwise
be
freely transferable on the books and records of the Company as and to the extent provided in this
Agreement
and
applicable
law. If
the
Buyer
provides
the
Company
and/or
the
Transfer
Agent
with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by
the Buyer of any
of the Securities in accordance with clause (1)(B) of Section 4(a) of this
Agreement
is
not
required
under
the
1933
Act,
the
Company
shall
(except
as
provided
in
clause
(2)
of
Section
4(a)
of
this
Agreement)
permit
the
de-legending
or
transfer
of
the
Securities
and,
in
the
case
of
the
Conversion
Shares,
instruct
the
Company
’
s
Transfer
Agent
to
issue
one
or
more
certificates
for
Common
Stock
without
legend
in
such
name
and
in
such
denominations
as
specified by the Buyer.
b.
Conversion.
(i)
The
Company
shall
permit
the
Buyer
to
exercise
the
right
to
convert
the
Debentures
by
faxing,
emailing
or
delivering
overnight
an
executed
and
completed
Notice of Conversion to the Company or the Transfer Agent.
If so requested by the Buyer or the
Transfer
Agent,
the
Company shall
within
one
(1)
business
day respond
with
its
endorsement
so
as
to
confirm
the
outstanding
principal
amount
of
any
Debenture
submitted
for
conversion
or
shall
reconcile
any
difference
with
the
Buyer
promptly
after
receiving
such
Notice
of
Conversion.
(ii)
The
term
“
Conversion
Date
”
means,
with
respect
to
any
conversion
elected
by the
holder
of
the Debentures,
the date
specified
in the
Notice
of Conversion, provided
the copy
of the Notice of Conversion is given either via mail or facsimile to or otherwise
delivered
to
the
Transfer
Agent
and/or
the
Company in
accordance
with
the
provisions
hereof
so
that it is received by the Transfer Agent and/or the Company on or before such specified date.
(iii) The
Company
shall
deliver
(or
will
cause
the
Transfer
Agent
to
deliver)
the
Conversion
Shares
issuable
upon
conversion
as
follows:
(1)
if
the
Company
is
then
DWAC
Operational,
via
DWAC,
(2)
if
the
Common
Stock
is
then
eligible
for
the
Depository
Trust
Company
’
s Direct Registration
System (
“
DRS
”
),
if
so
requested
by
the
Buyer,
or
(3)
if
the
17
Company
is
not
then
DWAC
Operational
or
the
Common
Stock
is
not
then
eligible
for
DRS,
in
certificated
form,
to
the
Buyer
at
the
address
specified
in
the
Notice
of
Conversion
(which
may
be
the
Buyer
’
s
address
for
notices
as
contemplated
by
Section
10
hereof
or
a
different
address)
via express courier, in each case
within two (2) business days
(the
“
Delivery Date
”
) after (A) the
business
day
on
which
the
Company
or
the
Transfer
Agent
has
received
the
Notice
of
Conversion
(by
facsimile,
email
or
other
delivery)
or
(B)
the
date
on
which
payment
of
interest
and
principal
on
the
Debentures,
which
the
Company
has
elected
to
pay
by
the
issuance
of
Common Stock, as contemplated by the Debentures, was due, as the case may be.
c.
Failure
to
Timely
Issue Conversion
Shares
or De-Legended
Shares.
The
Company
’
s
failure
to
issue
and
deliver
Conversion
Shares
to
the
Buyer
(either
by
DWAC,
DRS
or
in
certificated
form,
as
required
by
Section
5(b))
on
or
before
the
Delivery
Date
shall
be
considered
an
Event
of
Default,
which
shall
entitle
the
Buyer
to
certain
remedies
set
forth
in
the
Debentures and provided by
applicable law
.
Similarly, the Company
’
s failure to issue and
deliver
Common
Stock
in
unrestricted
form
without
a
restrictive
legend
when
required
under
the
Transaction
Documents
shall entitle the
Buyer to
damages
for the diminution in value
(if
any)
of
the
relevant
shares
between
the
date
delivery
was
due
versus
the
date
ultimately
delivered
in
unrestricted
form. The Company
acknowledges that its failure
to timely
honor
a
Notice
of
Conversion
(or
the
occurrence
of
any
other
Event
of
Default)
shall
cause
definable
financial
hardship on the Buyer(s) and that the remedies set forth herein and in the Debentures are
reasonable and appropriate.
d.
Duties of Company; Authorization.
The Company shall inform the Transfer
Agent
of
the
reservation
of
shares
contemplated
by
Section
4(g)
and
this
Section
5,
and
shall
keep
current
in
its
payment
obligations
to
the
Transfer
Agent
such
that
the
Transfer
Agent
will
continue
to
process
share
transfers
and
the
initial
issuance
of
shares
of
Common
Stock
upon
the
conversion
of
Debentures.
The
Company hereby authorizes
and
agrees
to
authorize
the
Transfer
Agent to correspond and otherwise communicate with the Buyer or their representatives in
connection
with
the
foregoing
and
other
matters
related
to
the
Common
Stock.
Further,
the
Company hereby authorizes the Buyer or its representative to provide instructions to the Transfer
Agent
that
are
consistent
with
the
foregoing
and
instructs
the
Transfer
Agent
to
honor
any
such
instructions.
Should
the
Company
fail
for
any
reason
to
keep
current
in
its
payment
obligations
to
the
Transfer
Agent,
the
Buyer
and/or
Investments
may
pay
such
amounts
as
are
necessary
to
compensate the Transfer Agent for performing its duties with respect to share reservation,
issuance
of
Conversion
Shares
and/or
de-legending
certificates
representing
Restricted
Stock,
and
all
amounts
so
paid
shall
be
promptly
reimbursed
by
the
Company. If
not
so
reimbursed
within thirty (30) days, such amounts shall, at the option of the Buyer and without prior notice to
or consent of the Company, be added to the principal amount due under the Debenture(s) held by
the
Buyer,
whereupon
interest
will
begin
to
accrue
on
such
amounts
at
the
rate
specified
in
the
Debentures.
e.
Effect
of
Bankruptcy.
The
Buyer
shall
be
entitled
to
exercise
its
conversion
privilege
with
respect
to
the
Debentures
notwithstanding
the
commencement
of
any
case
under
11 U.S.C. §101
et seq. (
the
“
Bankruptcy Code
”
).
In the event the Company is a debtor under the
Bankruptcy
Code,
the
Company
hereby
waives,
to
the
fullest
extent
permitted,
any
rights
to
relief
it
may
have
under
11
U.S.C.
§362
in
respect
of
the
Buyer
’
s
conversion
privilege.
The
18
Company hereby waives,
to the fullest extent permitted, any rights to relief it may have under 11
U.S.C.
§362
in
respect
of
the
conversion
of
the
Debentures.
The
Company
agrees,
without
cost
or
expense
to
the
Buyer,
to
take
or
to
consent
to
any
and
all
action
necessary
to
effectuate
relief
under 11 U.S.C. §362.
6.
CLOSINGS.
a.
Signing Closing.
Promptly
upon the execution and delivery of this
Agreement,
the
Signing
Debenture,
Warrant,
and
all
conditions
in
Sections
7
and
8
herein
are
met
(the
“
Signing
Closing
Date
”
),
(A)
the
Company shall
deliver
to
the
Buyer
the
following:
(i)
the Signing Debenture and Warrant; (ii) the Transfer Agent
Instruction Letter; (iii) duly executed
counterparts
of
the
Transaction
Documents;
and (iv)
an
officer
’
s
certificate
of
the
Company
confirming
the
accuracy
of
the
Company
’
s
representations
and
warranties
contained
herein,
and
(B) the Buyer shall deliver to the Company the following: (i) the Signing Purchase Price and (ii)
duly
executed
counterparts
of
the
Transaction
Documents
(as
applicable). The
Company
shall
immediately
pay
the
fees
due
under
Section
12
of
this
Agreement
upon
receipt
of
the
Signing
Purchase Price if Buyer does not withhold such amounts from the Signing Purchase Price
pursuant to Section 12.
b.
Second
Closing.
At
any
time
after
sixty
(60)
days following
the
Signing
Closing
Date,
subject
to
the
mutual
agreement
of
the
Buyer
and
the
Company,
for
the
“
Second
Closing
Date
”
and
subject
to
satisfaction
of
the
conditions
set
forth
in
Sections
7
and
8,
(A)
the
Company shall
deliver
to
the
Buyer
the
following:
(i)
the Second
Debenture
and
Warrant;
(ii) an
amendment to the Transfer Agent Instruction Letter instructing the Transfer Agent to reserve that
number
of
shares
of
Common
Stock
as
is
required
under
Section
4(g)
hereof,
if
necessary;
and
(iii)
an officer
’
s certificate
of
the
Company
confirming,
as of
the
Second
Closing
Date,
the
accuracy
of
the
Company
’
s
representations
and
warranties
contained
herein
and
updating
Schedules
3(b),
3(c)
and
3(k)
as
of
the
Second
Closing
Date,
and
(B)
the
Buyer
shall
deliver
to
the Company the Second Purchase Price.
c.
Location
and
Time
of
Closings.
Each
Closing
shall
be
deemed
to
occur
on
the
related
Closing
Date
at
the
office
of
the
Buyer
’
s
counsel
and
shall
take
place
no
later
than
5:00
P.M.,
east
coast
time,
on
such
day
or
such
other
time
as
is
mutually
agreed
upon
by
the
Company and the Buyer.
7.
CONDITIONS TO THE COMPANY
’
S OBLIGATION TO SELL.
The Company
’
s obligation to sell the Debentures to the Buyer pursuant to this Agreement
on each Closing Date is conditioned upon:
a.
Purchase
Price.
Delivery
to
the
Company
of
good
funds
as
payment
in
full
of
the
respective
Purchase
Price
for
the
Debentures
at
each
Closing
in
accordance
with
this
Agreement;
b.
Representations
and
Warranties;
Covenants.
The
accuracy on
the
Closing
Date
of
the
representations
and
warranties
of
the
Buyer
contained
in
this
Agreement,
each
as
if
19
made on such date, and the performance by the Buyer on or before such date of all covenants and
agreements of the Buyer required to be performed on or before such date; and
c.
Laws
and
Regulations;
Consents
and
Approvals.
There
shall
not
be
in
effect
any law,
rule
or
regulation
prohibiting
or
restricting
the
transactions
contemplated
hereby,
or requiring any consent or approval which shall not have been obtained.
8.
CONDITIONS TO THE BUYER
’
S OBLIGATION TO PURCHASE.
The Buyer
’
s obligation to purchase the Debentures at each Closing is conditioned upon:
a.
Transaction
Documents.
The
execution
and
delivery
of
this
Agreement
by
the Company;
b.
Debenture(s).
Delivery by the Company to the Buyer of the Debentures to be
purchased in accordance with this Agreement;
c.
Section
4(2)
Exemption.
The
Debentures
and
the
Conversion
Shares
shall
be
exempt from registration under the Securities Act of 1933 (as amended), pursuant to Section 4(2)
thereof;
d.
DWAC Status
. The Common Stock shall be DWAC Operational;
e.
Representations
and
Warranties;
Covenants.
The
accuracy
in
all
material
respects
on
the
Closing
Date
of
the
representations
and
warranties
of
the
Company
contained
in
this Agreement, each as if made on such date, and the performance by the Company on or before
such date of all covenants and agreements of the Company required to be performed on or before
such date;
f.
Good-faith
Opinion.
It
should
be
Buyer
’
s
reasonable
belief
that
(i)
no
Event
of
Default
under
the
terms
of
any
outstanding
indebtedness
of
the
Company shall
have
occurred
or would likely
occur with the passage of time and (ii) no material adverse change in the
financial condition or business operations of the Company shall have occurred;
g.
Legal
Proceedings.
There
shall
be
no
litigation,
criminal
or
civil,
regulatory
impairment
or
other
legal
and/or
administrative
proceedings
challenging
or
seeking
to
limit
the
Company
’
s ability to issue the Securities or the Common Stock;
h. [Reserved];
i.
Corporate
Resolutions.
Delivery
by
the
Company
to
the
Buyer
a
copy
of
resolutions of the Company
’
s board of directors, approving and authorizing the execution,
delivery and performance of the Transaction Documents and the transactions contemplated
thereby in the form attached hereto as
Exhibit C (
the
“
Irrevocable Resolutions
”
);
j.
Officer
’
s
Certificate.
Delivery
by
the
Company
to
the
Buyer
of
a
certificate
of the Chief Executive Officer of the Company in the form attached hereto as
Exhibit D
;
20
k.
Search
Results.
Delivery
by
the
Company
to
the
Buyer
of
copies
of
UCC
search
reports,
issued
by
the
Secretary of
State
of
the
state
of
incorporation
of
the
Company and
each
Subsidiary,
dated
such
a
date
as
is
reasonably
acceptable
to
Buyer,
listing
all
effective
financing
statements
which
name
the
Company
or
Subsidiary
(as
applicable),
under
its
present
name and any previous names, as debtor, together with copies of such financing statements;
l.
Certificate
of
Good
Standing.
Delivery
by
the
Company
to
the
Buyer
of
a
copy
of
a
certificate
of
good
standing
with
respect
to
the
Company,
issued
by
the
Secretary
of
State
of
the
state
of
incorporation
of
the
Company,
dated
such
a
date
as
is
reasonably acceptable
to Buyer, evidencing the good standing thereof;
m.
Laws
and
Regulations;
Consents
and
Approvals.
There
shall
not
be
in
effect
any law,
rule
or
regulation
prohibiting
or
restricting
the
transactions
contemplated
hereby,
or requiring any consent or approval which shall not have been obtained; and
n.
Adverse
Changes.
From and
after
the
date
hereof
to
and
including
each
Closing
Date,
(i)
the
trading
of
the
Common
Stock
shall
not
have
been
suspended
by
the
SEC,
FINRA, or any
other governmental or self-regulatory organization, and trading in securities
generally
on
OTCM
shall
not
have
been
suspended
or
limited,
nor
shall
minimum
prices
been
established
for
securities
traded
on
the
OTCM;
(ii)
there
shall
not
have
occurred
any outbreak
or
escalation of hostilities involving the United States or any material adverse change in any
financial
market
that
in
either
case
in
the
reasonable
judgment
of
the
Buyer
makes
it
impracticable or inadvisable to purchase the Debentures.
9.
GOVERNING LAW; MISCELLANEOUS.
a.
MANDATORY
FORUM SELECTION.
ANY DISPUTE ARISING
UNDER,
RELATING
TO,
OR
IN
CONNECTION
WITH
THE
AGREEMENT
OR
RELATED
TO
ANY
MATTER
WHICH
IS
THE
SUBJECT
OF
OR
INCIDENTAL
TO
THE
AGREEMENT
(WHETHER
OR
NOT
SUCH
CLAIM
IS
BASED
UPON
BREACH
OF
CONTRACT
OR
TORT)
SHALL
BE
SUBJECT
TO
THE
EXCLUSIVE
JURISDICTION
AND
VENUE
OF
THE
STATE
AND/OR
FEDERAL
COURTS
LOCATED
IN
MIAMI-DADE
COUNTY,
FLORIDA.
THIS
PROVISION
IS
INTENDED
TO
BE
A
“
MANDATORY
”
FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED
CONSISTENTLY WITH FLORIDA LAW.
b.
Governing Law.
Except in the case of the Mandatory Forum Selection
clause
above,
this
Agreement
shall
be
delivered
and
accepted
in
and
shall
be
deemed
to
be
contracts
made
under
and
governed
by
the
internal
laws
of
the
State
of
Nevada,
and
for
all
purposes
shall
be
construed
in
accordance
with
the
laws
of
the
State
of
Nevada,
without
giving
effect to the choice of
law provisions.
To the extent determined by the applicable court
described above, the Company
shall reimburse the Buyer for any
reasonable legal fees and
disbursements
incurred
by
the
Buyer
in
enforcement
of
or
protection
of
any
of
its
rights
under
any of the Transaction Documents.
21
c.
Waivers.
Failure
of
any
party
to
exercise
any
right
or
remedy
under
this
Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate
as a waiver thereof.
d.
Successors
and
Assigns.
This
Agreement
shall
inure
to
the
benefit
of
and
be
binding upon the successors and assigns of each of the parties hereto.
e.
Construction.
All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may
require.
f.
Facsimiles;
E-mails.
A
facsimile
or
email
transmission
of
this
signed
Agreement
or
a
Notice
of
Conversion
under
the
Debentures
shall
be
legal
and
binding
on
all
parties hereto. Such electronic signatures shall be the equivalent of original signatures.
g.
Counterparts.
This
Agreement
may
be
signed
in
one
or
more
counterparts,
each of which shall be deemed an original.
h.
Headings.
The
headings
of
this
Agreement
are
for
convenience
of
reference
and shall not form part of, or affect the interpretation of, this Agreement.
i.
Enforceability.
If
any
provision
of
this
Agreement
shall
be
invalid
or
unenforceable
in
any jurisdiction,
such
invalidity
or
unenforceability
shall
not
affect
the
validity
or
enforceability
of
the
remainder
of
this
Agreement
or
the
validity
or
enforceability
of
this
Agreement in any other jurisdiction.
j.
Amendment.
This
Agreement
may
be
amended
only
by
the
written
consent
of
a
majority
in
interest
of
the
holders
of
the
Debentures
and
an
instrument
in
writing
signed
by
the Company.
k.
Entire Agreement.
This Agreement, together with the other Transaction
Documents,
supersedes
all
prior
agreements
and
understandings
among
the
parties
hereto
with
respect to the subject matter hereof.
l.
No Strict Construction.
This Agreement shall be construed as if both Parties
had equal say in its drafting, and thus shall not be construed against the drafter.
m.
Further
Assurances.
Each
party
shall
do
and
perform,
or
cause
to
be
done
and
performed,
all
such
further
acts
and
things,
and
shall
execute
and
deliver
all
such
other
agreements,
certificates,
instruments
and
documents,
as
the
other
party
may
reasonably
request
in
order
to
carry
out
the
intent
and
accomplish
the
purposes
of
this
Agreement
and
the
consummation of the transactions contemplated hereby.
10.
NOTICES.
Any
notice
required
or
permitted
hereunder
shall
be
given
in
writing
(unless
otherwise
specified herein) and shall be deemed effectively given on the earliest of:
22
a.
the
date
delivered,
if
delivered
by
personal
delivery
as
against
written
receipt
therefor or by confirmed facsimile or email transmission,
b. the
third
(3
rd
)
business
day
after
deposit,
postage
prepaid,
in
the
United
States
Postal Service by registered or certified mail, or
c.
the
first
(1
st
)
business
day
after
deposit
with
a
recognized
courier
service
(e.g.
FedEx,
UPS,
DHL,
US
Postal
Service)
for
delivery
by
next-day
express
courier,
with
delivery
costs and fees prepaid,
in
each
case,
addressed
to
each
of
the
other
parties
thereunto
entitled
at
the
following
addresses
(or
at
such
other
addresses
as
such
party may designate
by ten
(10)
days
’
advance
written
notice
similarly given to each of the other parties hereto):
COMPANY
:
Parallax Health Sciences, Inc.
1327 Ocean Avenue, Suite B
Santa Monica, CA 90401
Attention: Paul Arena, Chief Executive Officer
Email: Paul@ParallaxCare.com
With copies to (which shall not constitute notice):
_______________________________
_______________________________
_______________________________
Attention: ______________________
Email: _________________________
BUYER:
Peak One Opportunity Fund, L.P.
333 South Hibiscus Drive
Miami Beach, FL 33139
Attention: Jason Goldstein
Email: jgoldstein@peakoneinvestments.com
With copies to (which shall not constitute notice):
Anthony L.G., PLLC
330 Clematis Street, Suite 217
West Palm Beach, FL 33401
Attention: Chad Friend, Esq., LL.M.
Email: CFriend@AnthonyPLLC.com
23
11.
SURVIVAL
OF
REPRESENTATIONS
AND
WARRANTIES.
The
Company
’
s
representations and warranties herein shall survive for so long
as any
Debentures are
outstanding, and shall inure to the benefit of the Buyer, its successors and assigns.
12.
FEES; EXPENSES.
a.
Commitment
Fee
.
A
non-accountable
fee
(the
“
Commitment
Fee
”
)
of
(i)
Five
Thousand
and
00/100
Dollars
($5,000.00)
on
the
Signing
Closing
Date
(with
respect
to
the
Signing
Debenture),
and
Five
Thousand
and
00/100
Dollars
($5,000.00)
on
the
Second
Closing
Date
(with
respect
to
the
Second
Debenture),
shall
be
withheld
from
the
purchase
price
of
the
respective
debenture
to
cover
the
Buyer
’
s
accounting
fees,
legal
fees,
and
other
transactional
costs
incurred
in
connection
with
the
transactions
contemplated
by
this
Agreement.
The
Commitment
Fee
shall
be
paid
on
the
respective
closing
dates
if
Buyer
does
not
withhold
such
amounts from the respective purchase price pursuant to Section 12(b).
In
addition, at the time of
Buyer
’
s
funding
of
each
Debenture,
the
Company
shall
issue
to
Investments
as
a
commitment
fee,
a
common
stock
purchase
warrant
to
purchase
300,000
shares
of
the
Company
’
s
common
stock pursuant to the terms of the Warrant (all common stock purchase warrants issuable
hereunder,
including now
and
in
the
future,
shall
be
referred
to,
in
the
aggregate,
as
the
“
Warrant
”
).
b.
Disbursements.
In furtherance of the foregoing, the Company
hereby
authorizes the Buyer to deduct the cash portion of the Commitment Fee from the Signing
Purchase Price and Second Purchase Price, and transmit same to the respective payee.
[Signature Page Follows]
24
IN
WITNESS
WHEREOF
,
this
Agreement
has
been
duly
executed
by
the
Buyer
and
the Company as of the date first set forth above.
COMPANY:
PARALLAX HEALTH SCIENCES, INC.
By: ______________________________________
Name: Paul Arena
Title: Chief Executive Officer
BUYER:
PEAK ONE OPPORTUNITY FUND, L.P.
By:
Peak One Investments, LLC,
General Partner
By: ___________________________________
Name: Jason Goldstein
Title: Managing Member
[Signature Page to Securities Purchase Agreement]
SCHEDULE 3(b)
COMPANY ORGANIZATION CHART
Subsidiary / Affiliate
Jurisdiction of Incorporation
Percentage of Ownership
Name and Relationship
SCHEDULE 3(c)
COMPANY CAPITALIZATION TABLE
COMMON STOCK AND COMMON STOCK EQUIVALENTS
ISSUED, OUTSTANDING AND RESERVED
DESCRIPTION
AMOUNT
Authorized Common Stock
Authorized Capital Stock
Authorized Common Stock
Issued Common Stock
Outstanding Common Stock
Treasury Stock
Authorized, but unissued
Authorized Preferred Stock
Issued Preferred Stock
Reserved for Equity Incentive Plans
Reserved for Convertible Debt
Reserved for Options and Warrants
Reserved for Other Purposes
TOTAL COMMON STOCK AND COMMON
STOCK EQUIVALENTS OUTSTANDING
EXHIBITS
Exhibit A
FORM OF DEBENTURE
Exhibit B
FORM OF TRANSFER AGENT INSTRUCTION LETTER
Exhibit C
FORM OF RESOLUTIONS OF THE BOARD OF DIRECTORS
Exhibit D
FORM OF OFFICER
’
S CERTIFICATE
EXHIBIT A
FORM OF DEBENTURE
(see attached)
EXHIBIT B
PARALLAX HEALTH SCIENCES, INC.
IRREVOCABLE TRANSFER AGENT INSTRUCTION LETTER
(see attached)
EXHIBIT C
IRREVOCABLE CORPORATE
RESOLUTIONS OF
THE
BOARD OF DIRECTORS OF
PARALLAX HEALTH SCIENCES, INC.
(see attached)
EXHIBIT D
OFFICER'S CERTIFICATE
(see attached)
EXHIBIT I
ARTICLES OF INCORPORATION
(see attached)
EXHIBIT II
BYLAWS
(see attached)
EXHIBIT III
RESOLUTIONS OF THE BOARD OF DIRECTORS
(see attached)
EQUITY PURCHASE AGREEMENT
This
equity
purchase
agreement
is
entered
into
as
of
November
14,
2018
(this
"
Agreement"
), by and between Parallax Health Sciences, Inc., a Nevada corporation (the
"
Company
"), and Peak One Opportunity Fund, L.P., a Delaware limited partnership (the
"
Investor
").
WHEREAS
,
the
parties
desire
that,
upon
the
terms
and
subject
to
the
conditions
contained herein, the Company
shall issue and sell to the Investor, from time to time as
provided herein, and the Investor shall purchase up to Ten Million Dollars ($10,000,000.00) of
the Company
’
s Common Stock (as defined below);
NOW, THEREFORE
, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section
1.1
DEFINED
TERMS.
As
used
in
this
Agreement,
the
following
terms
shall
have the
following meanings specified or indicated (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"
Agreement"
shall have the meaning specified in the preamble hereof.
“
Average Daily Trading Value
”
shall mean the average trading volume of the
Company
’
s Common Stock in the ten (10) Trading Days immediately preceding the respective
Put
Date
multiplied
by
the
lowest
closing
bid
price
of
the
Company
’
s
Common
Stock
in
the
ten (10) Trading Days immediately preceding the respective Put Date.
“
Bankruptcy Law
”
means Title 11, U.S. Code, or any similar federal or state law for
the relief of debtors.
"
Claim Notice"
shall have the meaning specified in Section 9.3(a).
“
Clearing Costs
”
shall mean all of the Investor
’
s brokerage firm, clearing firm,
Transfer Agent fees, and attorney fees, with respect to the deposit of the Put Shares.
“
Clearing Date
”
shall be the date on which the Investor receives the Put Shares in its
brokerage account.
"
Closing"
shall mean one of the closings of
a
purchase and sale of
shares of
Common Stock pursuant to Section 2.3.
"
Closing
Certificate"
shall
mean
the
closing
certificate
of
the
Company
in
the
form
of
Exhibit B
hereto.
1
“
Closing Date
”
shall mean the date of any Closing hereunder.
“
Commitment
Shares
”
shall
mean
the
800,000
shares
of
the
Company
’
s
common
stock
as
a
commitment
fee
hereunder
(400,000
of
which
shall
be
issued
to
the
Investor
and
400,000 of which shall be issued to Peak One Investments, LLC (
“
Investments
”
)).
"
Commitment
Period
"
shall
mean
the
period
commencing
on
the
Execution
Date,
and ending on the earlier
of (i) the date
on which
the
Investor shall have purchased
Put Shares
pursuant
to
this
Agreement
equal
to
the
Maximum
Commitment
Amount,
(ii)
24
months
after
the
initial
effectiveness
of
the
Registration
Statement,
(iii)
written
notice
of
termination
by the
Company
to
the
Investor
(which
shall
not
occur
during
any
Valuation
Period
or
at
any
time
that
the
Investor
holds
any
of
the
Put
Shares),
(iv)
the
Registration
Statement
is
no
longer
effective,
or
(v)
the
date
that,
pursuant
to
or
within
the
meaning
of
any
Bankruptcy
Law,
the
Company
commences
a
voluntary
case
or
any
Person
commences
a
proceeding
against
the
Company, a
Custodian is appointed
for
the Company
or for all or substantially
all of
its
property or the Company makes a general assignment for the benefit of its creditors; provided,
however, that the provisions of Articles III, IV, V, VI, IX and the agreements and covenants of
the
Company
and
the Investor
set forth
in
Article
X
shall survive
the
termination
of
this
Agreement.
"
Common
Stock"
shall
mean
the
Company's
common
stock,
$0.001
par
value
per
share,
and
any
shares
of
any
other
class
of
common
stock
whether
now
or
hereafter
authorized, having the right to participate in the distribution of dividends (as and when
declared) and assets (upon liquidation of the Company).
“
Common
Stock
Equivalents
”
means
any
securities
of
the
Company
or
the
Subsidiaries
which
would
entitle
the
holder
thereof
to
acquire
at
any
time
Common
Stock,
including,
without
limitation,
any
debt,
preferred
stock,
right,
option,
warrant
or
other
instrument that is at any time convertible into or
exercisable or
exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
"
Company
" shall have the meaning specified in the preamble to this Agreement.
“
Custodian
”
means any receiver, trustee, assignee, liquidator or similar official
under any Bankruptcy Law.
"
Damages"
shall
mean any
loss,
claim,
damage,
liability,
cost
and expense
(including, without limitation, reasonable attorneys' fees and disbursements and costs and
expenses of expert witnesses and investigation).
"
Dispute Period"
shall have the meaning specified in Section 9.3(a).
“
DTC
”
shall
mean
The
Depository
Trust
Company,
or
any
successor
performing
substantially the same function for the Company.
2
“
DTC/FAST
Program
”
shall
mean
the
DTC
’
s
Fast
Automated
Securities
Transfer
Program.
“
DWAC
”
shall mean Deposit Withdrawal at Custodian as defined by the DTC.
“
DWAC
Eligible
”
shall
mean
that
(a)
the
Common
Stock
is
eligible
at
DTC
for
full
services
pursuant
to
DTC
’
s
Operational
Arrangements,
including,
without
limitation,
transfer
through
DTC
’
s
DWAC
system,
(b)
the
Company
has
been
approved
(without
revocation)
by
the
DTC
’
s
underwriting
department,
(c)
the
Transfer
Agent
is
approved
as
an
agent
in
the
DTC/FAST
Program,
(d)
the
Commitment
Shares
or
Put
Shares,
as
applicable,
are
otherwise
eligible for delivery via
DWAC, and (e) the Transfer Agent does
not have
a policy prohibiting
or limiting delivery of the Commitment Shares or Put Shares, as applicable, via DWAC.
“
DWAC
Shares
”
means
shares
of
Common
Stock
that
are
(i)
issued
in
electronic
form,
(ii)
freely
tradable
and
transferable
and
without
restriction
on
resale
and
(iii)
timely
credited
by
the
Company
to
the
Investor
’
s
or
its
designee
’
s
specified
DWAC
account
with
DTC under the DTC/FAST Program, or any similar program hereafter adopted by DTC
performing substantially the same function.
"
Exchange
Act"
shall
mean
the
Securities
Exchange
Act
of
1934,
as
amended,
and
the rules and regulations promulgated thereunder.
“
Exchange Cap
”
shall have the meaning set forth in Section 7.1(c).
"
Execution Date"
shall mean the date of this Agreement.
"
FINRA"
shall mean the Financial Industry Regulatory Authority, Inc.
"
Investment
Amount"
shall
mean
the
Put
Shares
referenced
in
the
Put
Notice
multiplied by
the Purchase Price minus the Clearing Costs.
"
Indemnified Party
" shall have the meaning specified in Section 9.2.
"
Indemnifying Party
" shall have the meaning specified in Section 9.2.
"
Indemnity Notice"
shall have the meaning specified in Section 9.3(e).
“
Initial Purchase Price
”
shall mean 88% of the lowest closing bid price of the
Company
’
s
Common
Stock
on
the
Trading
Day
immediately
preceding
the
respective
Put
Date.
"
Investor
" shall have the meaning specified in the preamble to this Agreement.
“
Lien
”
means
a
lien,
charge,
pledge,
security
interest,
encumbrance,
right
of
first
refusal, preemptive right or other restriction.
3
"
Market Price"
shall mean the lesser of the (i) lowest closing bid price of the
Common Stock on the Principal Market on the Trading Day immediately preceding the
respective
Put
Date,
or
(ii)
lowest
closing
bid
price
of
the
Common
Stock
on
the
Principal
Market for any Trading Day during the Valuation Period.
"
Material
Adverse
Effect"
shall
mean
any
effect
on
the
business,
operations,
properties,
or
financial
condition
of
the
Company
and
the
Subsidiaries
that
is
material
and
adverse
to
the
Company
and
the
Subsidiaries
and/or
any
condition,
circumstance,
or
situation
that
would
prohibit
or
otherwise
materially
interfere
with
the
ability
of
the
Company
to
enter
into and perform its obligations under any Transaction Document.
"
Maximum Commitment Amount"
shall mean Ten Million Dollars
($10,000,000.00).
"
Person"
shall
mean
an
individual,
a
corporation,
a
partnership,
an
association,
a
trust
or
other
entity
or
organization,
including
a
government
or
political
subdivision
or
an
agency or instrumentality thereof.
"
Principal
Market"
shall
mean
any
of
the
national
exchanges
(i.e.
NYSE,
NYSE
AMEX,
Nasdaq),
or
principal
quotation
systems
(i.e.
OTCQX,
OTCQB,
OTC
Pink,
the
OTC
Bulletin
Board),
or
other
principal
exchange
or
recognized
quotation
system
which
is
at
the
time the principal trading platform or market for the Common Stock.
"
Purchase
Price"
shall
mean
88%
of
the
Market
Price
on
such
date
on
which
the
Purchase Price is calculated in accordance with the terms and conditions of this Agreement.
"
Put"
shall mean the
right of the Company to require the
Investor to purchase shares
of Common Stock, subject to the terms and conditions of this Agreement.
"
Put
Date"
shall
mean
any
Trading
Day
during
the
Commitment
Period
that
a
Put
Notice is deemed delivered pursuant to Section 2.2(b).
"
Put
Notice
"
shall
mean
a
written
notice,
substantially
in
the
form
of
Exhibit
A
hereto,
to
Investor
setting
forth
the
Put
Shares
which
the
Company intends
to
require
Investor
to purchase pursuant to the terms of this Agreement.
"
Put
Shares"
shall
mean
all
shares
of
Common
Stock
issued,
or
that
the
Company
shall
be
entitled
to
issue,
per
any
applicable
Put
Notice
in
accordance
with
the
terms
and
conditions of this Agreement.
"
Registration Statement
" shall have the meaning specified in Section 6.4.
"
Regulation D"
shall mean Regulation D promulgated under the Securities Act.
4
“
Required Minimum
”
shall mean, as of any date, the maximum aggregate number of
shares of
Common
Stock
then
issued
or
potentially
issuable
in
the
future
pursuant to the
Transaction Documents, including any Commitment Shares.
"
Rule
144"
shall
mean
Rule
144
under
the
Securities
Act
or
any
similar
provision
then in force under the Securities Act.
"
SEC"
shall mean the United States Securities and Exchange Commission.
“
SEC Documents
”
shall have the meaning specified in Section 4.5.
“
Securities"
means, collectively, the Put Shares and Commitment Shares.
"
Securities Act"
shall mean the Securities Act of 1933, as amended.
“
Short
Sales
”
shall
mean
all
“
short
sales
”
as
defined
in
Rule
200
of
Regulation
SHO under the Exchange Act.
“
Subsidiary
”
means
any
Person
the
Company
wholly-owns
or
controls,
or
in
which
the
Company,
directly
or
indirectly,
owns
a
majority
of
the
voting
stock
or
similar
voting
interest,
in
each
case
that
would
be
disclosable
pursuant
to
Item
601(b)(21)
of
Regulation
S-K
promulgated under the Securities Act.
"
Third Party Claim
" shall have the meaning specified in Section 9.3(a).
“
Trading
Day
”
shall
mean
a
day
on
which
the
Principal
Market
shall
be
open
for
business.
“
Transaction Documents
”
shall mean this Agreement, the registration rights
agreement of even date, and all schedules and exhibits hereto and thereto.
"
Transfer Agent"
shall mean Action Stock Transfer Corporation, the current transfer
agent
of
the
Company,
with
a
mailing
address
of
2469
E.
Fort
Union
Blvd.,
Suite
214,
Salt
Lake City, UT 84121, and any successor transfer agent of the Company.
"
Valuation
Period
"
shall
mean
the
period
of
seven
(7)
Trading
Days
immediately
following the Clearing Date associated with the applicable Put Notice during which the
Purchase
Price
of
the
Common
Stock
is
valued.
The
Valuation
Period
shall
begin
on
the
first
Trading Day following the Clearing Date.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1
PUTS.
Upon the terms and conditions set forth herein (including,
without
limitation,
the
provisions
of
Article
VII),
the
Company
shall
have
the
right,
but
not
the
obligation, to direct the Investor, by its delivery to the Investor of a Put Notice from time to time,
5
to purchase Put Shares (i) in a
minimum amount
not less than $20,000.00
and (ii)
in a
maximum
amount up to the lesser of (a) $250,000.00 or (b) 200% of the Average Daily Trading Value.
Section 2.2
MECHANICS.
(a)
PUT NOTICE.
At any time and from time to time during the
Commitment
Period,
except
as
provided
in
this
Agreement,
the
Company
may
deliver
a
Put
Notice to Investor, subject to satisfaction of the conditions set forth in Section 7.2 and
otherwise
provided
herein.
The
initial
price
per
share
identified
in
the
respective
Put
Notice
shall
be
equal
to
the
Initial
Purchase
Price,
subject
to
adjustment
during
the
Valuation
Period
as
provided
in
this
Agreement.
The
Company
shall
deliver,
or
cause
to
be
delivered,
the
Put
Shares as DWAC Shares to the Investor within two (2) Trading Days following the Put Date.
(b)
DATE
OF
DELIVERY
OF
PUT
NOTICE.
A
Put
Notice
shall
be
deemed
delivered
on
(i)
the
Trading
Day it
is
received
by
email
by the
Investor
if
such
notice
is received on or prior to 9:00 a.m. New York time or (ii) the immediately succeeding Trading
Day if
it
is
received
by email
after
9:00
a.m.
New
York
time
on
a
Trading
Day or
at
any time
on a day which is not a Trading Day. The Company shall not deliver another Put Notice to the
Investor within ten (10) Trading Days of a prior Put Notice.
Section 2.3
CLOSINGS.
At the end of the Valuation Period, the Purchase Price for
the
respective
Put
Shares
shall
be
established
as
provided
in
this
Agreement.
If
the
value
of
the
Put
Shares
delivered
to
the
Investor
causes
the
Company
to
exceed
the
Maximum
Commitment
Amount,
then
immediately
after
the
Valuation
Period
the
Investor
shall
return
to
the
Company
the surplus amount of Put Shares
associated with such Put and the Purchase Price with respect to
such
Put
shall
be
reduced
by
any
Clearing
Costs
related
to
the
return
of
such
Put
Shares.
The
Closing
of
a
Put
shall
occur
within
three
(3)
Trading
Days
following
the
end
of
the
Valuation
Period,
whereby
the
Investor
shall
deliver
the
Investment
Amount
by
wire
transfer
of
immediately available funds to an account designated by the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section
3.1
INTENT.
The
Investor
is
entering
into
this
Agreement
for
its
own
account
and
the
Investor
has
no
present
arrangement
(whether
or
not
legally
binding)
at
any
time
to
sell
the
Securities
to
or
through
any
Person
in
violation
of
the
Securities
Act
or
any
applicable state securities laws;
provided,
however,
that the Investor reserves the right to
dispose of the Securities at any
time in accordance with federal and state securities laws
applicable to such disposition.
Section
3.2
NO
LEGAL
ADVICE
FROM
THE
COMPANY
.
The
Investor
acknowledges
that
it
has
had
the
opportunity
to
review
this
Agreement
and
the
transactions
contemplated
by
this
Agreement
with
its
own
legal
counsel
and
investment
and
tax
advisors.
The
Investor
is
relying
solely
on
such
counsel
and
advisors
and
not
on
any
statements
or
6
representations of the Company or any of its representatives or agents for legal, tax or
investment advice with
respect to this investment, the transactions
contemplated by this
Agreement or the securities laws of any jurisdiction.
Section
3.3
ACCREDITED
INVESTOR.
The
Investor
is
an
accredited
investor
as defined in Rule 501(a)(3) of Regulation D, and the Investor has such experience in business
and
financial
matters
that
it
is
capable
of
evaluating
the
merits
and
risks
of
an
investment
in
the
Securities.
The
Investor
acknowledges
that
an
investment
in
the
Securities
is
speculative
and involves a high degree of risk.
Section
3.4
AUTHORITY.
The
Investor
has
the
requisite
power
and
authority to
enter
into
and
perform
its
obligations
under
this
Agreement
and
the
other
Transaction
Documents
and
to
consummate the
transactions
contemplated
hereby and
thereby.
The
execution and delivery of this Agreement and the other Transaction Documents and the
consummation by
it of the transactions contemplated hereby and thereby have been duly
authorized
by
all
necessary
action
and
no
further
consent
or
authorization
of
the
Investor
is
required.
Each
Transaction
Document
to
which
it
is
a
party
has
been
duly
executed
by
the
Investor, and
when
delivered by the
Investor in accordance with the
terms hereof, will
constitute
the valid
and
binding obligation
of the
Investor
enforceable
against
it
in
accordance
with
its
terms,
subject
to
applicable
bankruptcy,
insolvency,
or
similar
laws
relating
to,
or
affecting
generally
the
enforcement
of,
creditors'
rights
and
remedies
or
by
other
equitable
principles of general application.
Section
3.5
NOT
AN
AFFILIATE.
The
Investor
is
not
an
officer,
director
or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the Company.
Section 3.6
ORGANIZATION AND STANDING.
The
Investor is an entity duly
incorporated or formed, validly existing and in good standing under the laws of the jurisdiction
of
its
incorporation
or
formation
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 the other Transaction Documents.
Section
3.7
ABSENCE
OF
CONFLICTS.
The
execution
and
delivery
of
this
Agreement
and
the
other
Transaction
Documents,
and
the
consummation
of
the
transactions
contemplated
hereby
and
thereby
and
compliance
with
the
requirements
hereof
and
thereof,
will not (a) violate any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the
Investor, (b) violate any provision of any indenture, instrument or agreement to
which
the
Investor
is
a
party
or
is
subject,
or
by
which
the
Investor
or
any
of
its
assets
is
bound,
or
conflict
with
or
constitute
a
material
default
thereunder,
(c)
result
in
the
creation
or
imposition of any lien pursuant to the terms of any such indenture, instrument or agreement, or
constitute a breach of any fiduciary duty owed by the Investor to any third party, or (d) require
the
approval
of
any
third-party
(that
has
not
been
obtained)
pursuant
to
any
material
contract,
instrument,
agreement,
relationship
or
legal
obligation
to
which
the
Investor
is
subject
or
to
which any of its assets, operations or management may be subject.
7
Section
3.8
DISCLOSURE;
ACCESS
TO
INFORMATION
.
The
Investor
had
an
opportunity
to
review
copies
of
the
SEC
Documents
filed
on
behalf
of
the
Company
and
has had access to all publicly available information with respect to the Company.
Section
3.9
MANNER
OF SALE.
At
no
time
was
the
Investor
presented
with
or
solicited
by
or
through
any
leaflet,
public
promotional
meeting,
television
advertisement
or
any other form of general solicitation or advertising.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company
represents
and
warrants
to
the
Investor
that,
except
as
disclosed
in
the
SEC Documents or except as set forth in the disclosure schedules hereto:
Section
4.1
ORGANIZATION
OF
THE
COMPANY.
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,
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
nor
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
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.
Section
4.2
AUTHORITY.
The
Company has
the
requisite
corporate
power
and
authority
to
enter
into
and
perform
its
obligations
under
this
Agreement
and
the
other
Transaction
Documents. The
execution
and
delivery
of
this
Agreement
and
the
other
Transaction Documents by the Company and the consummation by it of the transactions
contemplated
hereby
and
thereby
have
been
duly
authorized
by
all
necessary
corporate
action
and
no
further
consent
or
authorization
of
the
Company
or
its
Board
of
Directors
or
stockholders
is
required. Each
of
this
Agreement
and
the
other
Transaction
Documents
has
been
duly executed
and
delivered
by the
Company and
constitutes
a
valid
and
binding
obligation
of
the
Company
enforceable
against
the
Company
in
accordance
with
its
terms,
except
as
such
enforceability
may
be
limited
by
applicable
bankruptcy,
insolvency,
or
similar
laws
relating to,
or
affecting generally the
enforcement
of,
creditors' rights
and
remedies
or
by
other equitable principles of general application.
Section
4.3
CAPITALIZATION.
Except
as
set
forth
on
Schedule
4.3,
the
Company
has
not
issued
any
capital
stock
since
its
most
recently
filed
periodic
report
under
the
Exchange
Act,
other
than
pursuant
to
the
exercise
of
employee
stock
options
under
the
Company
’
s
stock
option
plans,
the
issuance
of
shares
of
Common
Stock
to
employees
8
pursuant
to
the
Company
’
s
employee
stock
purchase
plans
and
pursuant
to
the
conversion
and/or
exercise
of
Common
Stock
Equivalents
outstanding
as
of
the
date
of
the
most
recently
filed periodic report under the Exchange Act. No Person has any right of first refusal,
preemptive
right,
right
of
participation,
or
any
similar
right
to
participate
in
the
transactions
contemplated
by
the
Transaction
Documents.
Except
as
set
forth
on
Schedule
4.3
a
nd
except
as a result of the purchase and sale of the Securities, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating
to,
or
securities,
rights
or
obligations
convertible
into
or
exercisable
or
exchangeable
for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or
contracts,
commitments,
understandings
or
arrangements
by which
the
Company or
any
Subsidiary
is
or
may
become
bound
to
issue
additional
shares
of
Common
Stock
or
Common
Stock
Equivalents.
The
issuance
and
sale
of
the
Securities
will
not
obligate
the
Company
to
issue
shares
of
Common
Stock
or
other
securities
to
any
Person
(other
than
the
Investor)
and
will
not
result
in
a
right
of
any
holder
of
Company
securities
to
adjust
the
exercise,
conversion,
exchange
or
reset
price
under
any
of
such
securities. There
are
no
stockholders
agreements,
voting
agreements
or
other
similar
agreements
with
respect
to
the
Company
’
s
capital
stock
to
which
the
Company
is
a
party or,
to
the
knowledge
of
the
Company,
between
or among any of the Company
’
s stockholders.
Section
4.4
LISTING
AND
MAINTENANCE
REQUIREMENTS.
The
Common
Stock
is
registered
pursuant
to
Section
12(b)
or
12(g)
of
the
Exchange
Act,
and
the
Company
has
taken
no
action
designed
to,
or
which
to
its
knowledge
is
likely
to
have
the
effect
of,
terminating
the
registration
of
the
Common
Stock
under
the
Exchange
Act
nor
has
the
Company
received
any
notification
that
the
SEC
is
contemplating
terminating
such
registration.
The
Company
has
not,
in
the
twelve
(12)
months
preceding
the
date
hereof,
received notice from the Principal Market on which the Common Stock is or has been listed or
quoted
to
the
effect
that
the
Company
is
not
in
compliance
with
the
listing
or
maintenance
requirements
of
such
Principal
Market.
The
Company
is,
and
has
no
reason
to
believe
that
it
will not in the foreseeable future continue to be, in compliance with all such listing
and
maintenance requirements.
Section
4.5
SEC
DOCUMENTS;
DISCLOSURE.
Except
as
set
forth
on
Schedule 4.5
, 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
one
(1)
year
preceding
the
date
hereof
(or
such
shorter
period
as
the
Company
was
required
by
law
or
regulation
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
Documents
”
)
on a
timely basis or has received a
valid extension of such time of filing and
has
filed
any
such
SEC
Documents
prior
to
the
expiration
of
any
such
extension.
As
of
their
respective
dates,
the
SEC
Documents
complied
in
all
material
respects
with
the
requirements
of
the
Securities
Act
and
the
Exchange
Act,
as
applicable,
and
other
federal
laws,
rules
and
regulations
applicable
to
such
SEC
Documents,
and
none
of
the
SEC
Documents
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
light
of
the
circumstances
under
which
they
were
made,
not
misleading.
The
financial
statements
of
the
9
Company
included
in
the
SEC
Documents
comply
as
to
form
and
substance
in
all
material
respects
with
applicable
accounting
requirements
and
the
published
rules
and
regulations
of
the
SEC
or
other
applicable
rules
and
regulations
with
respect
thereto.
Such
financial
statements
have
been
prepared
in
accordance
with
generally
accepted
accounting
principles
applied
on
a
consistent
basis
during
the
periods
involved
(except
(a)
as
may
be
otherwise
indicated
in
such
financial
statements
or
the
notes
thereto
or
(b)
in
the
case
of
unaudited
interim statements,
to
the
extent they
may
not include
footnotes or
may
be
condensed or
summary
statements)
and
fairly
present
in
all
material
respects
the
financial
position
of
the
Company
as
of
the
dates
thereof
and
the
results
of
operations
and
cash
flows
for
the
periods
then
ended
(subject,
in
the
case
of
unaudited
statements,
to
normal,
immaterial, year-end
audit
adjustments).
Except
with
respect
to
the
material
terms
and
conditions
of
the
transactions
contemplated
by
the
Transaction
Documents,
the
Company
confirms
that
neither
it
nor
any
other
Person
acting
on
its
behalf
has
provided
the
Investor
or
its
agents
or
counsel
with
any
information
that
it
believes
constitutes
or
might
constitute
material,
non-public
information.
The
Company
understands
and
confirms
that
the
Investor
will
rely
on
the
foregoing
representation in effecting transactions in securities of the Company.
Section
4.6
VALID
ISSUANCES.
The
Securities
are
duly
authorized
and,
when
issued and paid for in accordance with the applicable Transaction Documents, will be duly and
validly
issued, fully
paid, and non-assessable, free and clear of all Liens imposed by
the
Company other than restrictions on transfer provided for in the Transaction Documents.
Section
4.7
NO
CONFLICTS.
The
execution,
delivery
and
performance
of
this
Agreement
and
the
other
Transaction
Documents
by
the
Company
and
the
consummation
by
the
Company
of
the
transactions
contemplated
hereby
and
thereby,
including,
without
limitation, the
issuance
of
the
Put Shares
and
the
Commitment Shares,
do not
and
will
not: (a)
result
in
a
violation
of
the
Company
’
s
or
any
Subsidiary
’
s
certificate
or
articles
of
incorporation, by-laws or other organizational or charter documents, (b) conflict with, or
constitute
a
material
default
(or
an
event
that
with
notice
or
lapse
of
time
or
both
would
become
a
material
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 of, any agreement, indenture, instrument or any
"lock-up"
or
similar
provision
of
any
underwriting
or
similar
agreement
to
which
the
Company or
any Subsidiary is
a
party,
or
(c)
result
in
a
violation
of
any
federal,
state
or
local
law, rule, regulation, order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any
Subsidiary
is bound or affected (except for such conflicts, defaults,
terminations,
amendments,
accelerations,
cancellations
and
violations
as
would
not,
individually
or
in
the
aggregate,
have
a
Material
Adverse
Effect)
nor
is
the
Company
otherwise
in
violation
of,
conflict
with
or
in
default
under
any
of
the
foregoing.
The
business
of the Company is not being conducted
in violation of
any law,
ordinance
or regulation of
any
governmental entity, except for possible violations that either singly or in the aggregate do not
and
will
not
have
a
Material
Adverse
Effect.
The
Company is
not
required
under
federal,
state
or
local
law,
rule
or
regulation
to
obtain
any
consent,
authorization
or
order
of,
or
make
any
filing
or
registration
with,
any court
or
governmental
agency in
order
for
it
to
execute,
deliver
or
perform
any
of
its
obligations
under
this
Agreement
or
the
other
Transaction
Documents
10
(other
than
any SEC,
FINRA
or
state
securities
filings
that
may be
required
to
be
made
by the
Company
subsequent
to
any
Closing
or
any
registration
statement
that
may
be
filed
pursuant
hereto);
provided
that,
for
purposes
of
the
representation
made
in
this
sentence,
the
Company
is
assuming
and
relying
upon
the
accuracy
of
the
relevant
representations
and
agreements
of
Investor herein.
Section
4.8
NO
MATERIAL
ADVERSE
CHANGE.
No
event
has
occurred
that
would
have
a
Material
Adverse
Effect
on
the
Company that
has
not
been
disclosed
in
subsequent SEC filings.
Section
4.9
LITIGATION
AND
OTHER
PROCEEDINGS.
Except
as
disclosed
in
the
SEC
Documents
or
as
set
forth
on
Schedule
4.9,
there
are
no
actions,
suits,
investigations,
inquiries
or
proceedings
pending
or,
to
the
knowledge
of
the
Company,
threatened
against
or
affecting
the
Company,
any
Subsidiary
or
any
of
their
respective
properties,
nor
has
the
Company
received
any
written
or
oral
notice
of
any
such
action,
suit,
proceeding,
inquiry or
investigation, which
would have
a Material Adverse Effect.
No
judgment,
order,
writ,
injunction
or
decree
or
award
has
been
issued
by
or,
to
the
knowledge
of
the
Company,
requested
of
any court,
arbitrator
or
governmental
agency which
would
have
a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the SEC involving the Company, any
Subsidiary or any current or former director or officer of the Company or any Subsidiary.
Section
4.10
REGISTRATION
RIGHTS.
Except
as
set
forth
on
Schedule
4.10,
no
Person
(other
than
the
Investor)
has
any
right
to
cause
the
Company
to
effect
the
registration under the Securities Act of any securities of the Company or any Subsidiary.
ARTICLE V
COVENANTS OF INVESTOR
Section
5.1
COMPLIANCE
WITH LAW;
TRADING
IN
SECURITIES.
The
Investor's
trading
activities
with
respect
to
shares
of
Common
Stock
will
be
in
compliance
with
all
applicable
state
and
federal
securities
laws
and
regulations
and
the
rules
and
regulations of FINRA and the Principal Market.
Section
5.2
SHORT
SALES
AND
CONFIDENTIALITY.
Neither
the
Investor,
nor
any
affiliate
of
the
Investor
acting
on
its
behalf
or
pursuant
to
any
understanding
with
it,
will
execute
any Short
Sales
during the
period
from
the
date
hereof
to
the
end
of
the
Commitment
Period.
For
the
purposes
hereof,
and
in
accordance
with
Regulation
SHO,
the
sale
after
delivery
of
a
Put
Notice
of
such
number
of
shares
of
Common
Stock
reasonably
expected
to
be
purchased
under
a
Put
Notice
shall
not
be
deemed
a
Short
Sale.
The
Investor
shall,
until
such
time
as
the
transactions
contemplated
by
this
Agreement
are
publicly
disclosed by
the Company
in accordance with the terms of this Agreement, maintain the
confidentiality
of
the
existence
and
terms
of
this
transaction
and
the
information
included
in
the Transaction Documents.
11
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1
[Intentionally Omitted.]
Section
6.2
LISTING
OF
COMMON
STOCK
.
The
Company
shall
promptly
secure
the
listing
of
all
of
the
Put
Shares
and
Commitment
Shares
to
be
issued
to
the
Investor
hereunder on
the Principal Market (subject
to
official notice
of issuance)
and shall use
commercially
reasonable
best
efforts
to
maintain,
so
long
as
any
shares
of
Common
Stock
shall
be
so
listed,
the
listing of
all
such
Put
Shares
and
Commitment
Shares
from
time
to
time
issuable
hereunder. The
Company
shall
use
its
commercially
reasonable
efforts
to
continue
the
listing
and
trading
of
the
Common
Stock
on
the
Principal Market (including,
without
limitation,
maintaining
sufficient
net
tangible
assets)
and
will
comply
in
all
respects
with
the
Company's
reporting,
filing and
other
obligations
under
the
bylaws
or
rules
of
FINRA
and
the
Principal Market.
Section
6.3
OTHER
EQUITY
LINES.
So
long
as
this
Agreement
remains
in
effect,
the
Company covenants
and
agrees
that
it
will
not,
without
the
prior
written
consent
of
the
Investor,
enter
into
any
other
equity
line
of
credit
agreement
with
any
other
party.
For
the
avoidance
of
doubt,
nothing
contained
in
the
Transaction
Documents
shall
restrict,
or
require
the
Investor's
consent
for,
any
agreement
providing
for
the
issuance
or
distribution
of
any
equity securities of the Company pursuant to any agreement or arrangement that is not covered
in this Section 6.3.
Section 6.4
FILING OF CURRENT REPORT AND REGISTRATION
STATEMENT
. The Company agrees that it shall file a Current Report on Form 8-K, including
the
Transaction
Documents
as
exhibits
thereto,
with
the
SEC
within
the
time
required
by
the
Exchange
Act,
relating
to
the
transactions
contemplated
by,
and
describing
the
material
terms
and
conditions
of,
the
Transaction
Documents
(the
“
Current
Report
”
).
The
Company
shall
permit the Investor to review and comment upon the final pre-filing draft version of the
Current
Report
at
least
one
(1)
Trading Day prior
to
its
filing with
the
SEC,
and
the
Company
shall give reasonable
consideration to all such comments. The
Investor shall use its reasonable
best efforts to comment upon the final pre-filing draft version of the Current Report within one
(1) Trading Day from the date the Investor receives it from the Company.
The Company shall
also file with the SEC, within thirty (30) calendar days from the date hereof, a new registration
statement
(the
“
Registration
Statement
”
)
covering
only
the
resale
of
the
Put
Shares
and
the
Commitment
Shares.
The
Company
shall
use
its
reasonable
best
efforts
to
have
the
Registration
Statement
declared
effective
by
the
SEC
within
ninety
(90)
calendar
days
from
the
date
hereof
(or
at
the
earliest
possible
date
if
prior
to
ninety
(90)
calendar
days
from
the
date hereof).
ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING
12
Section
7.1
CONDITIONS
PRECEDENT
TO
THE
RIGHT
OF
THE
COMPANY
TO
ISSUE
AND
SELL
PUT
SHARES.
The
right
of
the
Company
to
issue
and
sell
the
Put
Shares to the Investor is subject to the satisfaction of each of the conditions set forth below:
(a)
ACCURACY OF INVESTOR'S REPRESENTATIONS AND
WARRANTIES.
The representations and warranties of the Investor shall be true and correct in
all
material
respects
as
of
the
date
of
this
Agreement
and
as
of
the
date
of
each
Closing
as
though made at each such time.
(b)
PERFORMANCE BY
INVESTOR.
Investor shall have performed,
satisfied
and
complied
in
all
respects
with
all
covenants,
agreements
and
conditions
required
by
this
Agreement
to
be
performed,
satisfied
or
complied
with
by
the
Investor
at
or
prior
to
such Closing.
(c)
PRINCIPAL
MARKET
REGULATION.
The
Company
shall
not
issue
any
Put
Shares,
and
the
Investor
shall
not
have
the
right
to
receive
any
Put
Shares,
if
the
issuance
of
such
Put
Shares
would
exceed
the
aggregate
number
of
shares
of
Common
Stock
which
the
Company
may
issue
without
breaching
the
Company
’
s
obligations
under
the
rules
or regulations of the Principal Market (the
“
Exchange Cap
”
).
Section 7.2
CONDITIONS PRECEDENT
TO
THE
OBLIGATION
OF
INVESTOR
TO
PURCHASE
PUT
SHARES.
The
obligation
of
the Investor
hereunder
to
purchase Put Shares is subject to the satisfaction of each of the following conditions:
(a)
EFFECTIVE
REGISTRATION
STATEMENT
.
The
Registration
Statement,
and
any
amendment
or
supplement
thereto,
shall
remain
effective
for
the
resale
by
the Investor of the Put Shares and the Commitment Shares and (i) neither the Company nor the
Investor shall have received notice that the SEC has issued or intends to issue a stop order with
respect
to
such
Registration
Statement
or
that
the
SEC
otherwise
has
suspended
or
withdrawn
the
effectiveness
of
such
Registration
Statement,
either
temporarily or
permanently,
or
intends
or
has
threatened
to
do
so
and
(ii)
no
other
suspension
of
the
use
of,
or
withdrawal
of
the
effectiveness of, such Registration Statement or related prospectus shall exist.
(b)
ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES.
The
representations
and
warranties
of
the
Company shall
be
true
and
correct
in
all
material
respects
as
of
the
date
of
this
Agreement
and
as
of
the
date
of
each
Closing
(except for representations and warranties specifically made as of a particular date).
(c)
PERFORMANCE BY THE COMPANY.
The Company shall have
performed,
satisfied
and
complied
in
all
material
respects
with
all
covenants,
agreements
and
conditions
required
by
this
Agreement
to
be
performed,
satisfied
or
complied
with
by
the
Company.
(d)
NO
INJUNCTION
.
No
statute,
rule,
regulation,
executive
order,
decree,
ruling
or
injunction
shall
have
been
enacted,
entered,
promulgated
or
adopted
by
any
court
or
governmental
authority
of
competent
jurisdiction
that
prohibits
or
directly
and
13
materially
adversely
affects any
of the transactions contemplated by
the Transaction
Documents, and no proceeding shall have been commenced that may have the effect of
prohibiting or materially adversely affecting any of the transactions contemplated by the
Transaction Documents.
(e)
ADVERSE CHANGES.
Since the
date
of filing of the
Company's most
recent
SEC
Document,
no
event
that
had
or
is
reasonably
likely
to
have
a
Material
Adverse
Effect has occurred.
(f)
NO SUSPENSION
OF TRADING
IN
OR DELISTING
OF COMMON
STOCK.
The
trading
of
the
Common
Stock
shall
not
have
been
suspended
by
the
SEC,
the
Principal
Market
or
FINRA,
or
otherwise
halted
for
any
reason,
and
the
Common
Stock
shall
have
been
approved
for
listing
or
quotation
on
and
shall
not
have
been
delisted
from
the
Principal
Market.
In
the
event
of
a
suspension,
delisting,
or
halting
for
any
reason,
of
the
trading
of
the
Common
Stock,
as
contemplated
by
this
Section
7.2(f),
the
Investor
shall
have
the
right
to
return
to
the
Company
any
remaining
amount
of
Put
Shares
associated
with
such
Put, and the Purchase Price with respect to such Put shall be reduced accordingly.
(g)
BENEFICIAL
OWNERSHIP
LIMITATION
.
The
number
of
Put
Shares
then
to
be
purchased
by
the
Investor
shall
not
exceed
the
number
of
such
shares
that,
when
aggregated
with
all
other
shares
of
Common
Stock
then
owned
by
the
Investor
beneficially or deemed
beneficially owned by the
Investor, would result in the Investor
owning
more
than
the
Beneficial
Ownership
Limitation
(as
defined
below),
as
determined
in
accordance
with
Section
16
of
the
Exchange
Act
and
the
regulations
promulgated
thereunder.
For
purposes
of
this
Section
7.2(g),
in
the
event
that
the
amount
of
Common
Stock
outstanding, as determined in accordance with Section 16 of the Exchange Act and the
regulations
promulgated
thereunder,
is
greater
on
a
Closing
Date
than
on
the
date
upon
which
the
Put
Notice
associated
with
such
Closing
Date
is
given,
the
amount
of
Common
Stock
outstanding on such Closing Date shall govern for purposes of determining whether the
Investor,
when
aggregating all
purchases
of
Common
Stock made
pursuant
to this
Agreement,
would
own
more
than
the
Beneficial
Ownership
Limitation
following
such
Closing
Date. The
“
Beneficial
Ownership
Limitation
”
shall
be
4.99%
of
the
number
of
shares
of
the
Common
Stock
outstanding
immediately
after
giving
effect
to
the
issuance
of
shares
of
Common
Stock
issuable pursuant to a Put Notice.
(h)
PRINCIPAL
MARKET
REGULATION.
The
issuance
of
the
Put
Shares shall not exceed the Exchange Cap.
(i)
NO
KNOWLEDGE.
The
Company
shall
have
no
knowledge
of
any
event
more
likely
than
not
to
have
the
effect
of
causing
the Registration
Statement
to
be
suspended
or
otherwise
ineffective
(which
event
is
more
likely
than
not
to
occur
within
the
fifteen
(15)
Trading
Days
following
the
Trading
Day
on
which
such
Put
Notice
is
deemed
delivered).
14
(j)
NO
VIOLATION
OF
SHAREHOLDER
APPROVAL
REQUIREMENT.
The
issuance
of
the
Put
Shares
shall
not
violate
the
shareholder
approval
requirements of the Principal Market.
(k)
OFFICER
’
S CERTIFICATE
. On the date of delivery of each Put Notice,
the
Investor shall have received the Closing Certificate executed by an executive officer of the
Company
and
to
the
effect
that
all
the
conditions
to
such
Closing
shall
have
been
satisfied
as
of the date of each such certificate.
(l)
DWAC
ELIGIBLE.
The
Common
Stock
must
be
DWAC
Eligible
and
not subject to a
“
DTC chill.
”
(m)
SEC
DOCUMENTS.
All
reports,
schedules,
registrations,
forms,
statements, information and other documents required to have been filed by the Company with
the SEC pursuant to the reporting requirements of the Exchange Act shall have been filed with
the
SEC
within
the
applicable
time
periods
prescribed
for
such
filings
under
the
Exchange
Act.
(n)
RESERVE
.
The
Company
shall
have
reserved
300%
of
the
Required
Minimum for the Investor
’
s benefit under this Agreement, and satisfied the reserve
requirements with respect to all other contracts between the Company and Investor.
(o)
MINIMUM PRICING.
The lowest traded price
of the Common Stock in
the
ten
(10)
Trading
Days
immediately
preceding
the
respective
Put
Date
must
exceed
$0.01
per share (the
“
Minimum Pricing
”
).
ARTICLE VIII
LEGENDS
Section
8.1
NO
RESTRICTIVE
STOCK
LEGEND.
No
restrictive
stock
legend
shall be placed on the share certificates representing the Put Shares.
Section 8.2
INVESTOR'S COMPLIANCE.
Nothing
in this Article VIII shall
affect
in
any
way
the
Investor's
obligations
hereunder
to
comply
with
all
applicable
securities
laws upon the sale of the Common Stock.
ARTICLE IX
NOTICES; INDEMNIFICATION
Section
9.1
NOTICES.
All
notices,
demands,
requests,
consents,
approvals,
and
other
communications
required
or
permitted
hereunder
shall
be
in
writing
and,
unless
otherwise
specified
herein,
shall
be
(a)
personally
served,
(b)
deposited
in
the
mail,
registered
or
certified,
return
receipt
requested,
postage
prepaid,
(c)
delivered
by
reputable
air
courier
service with charges prepaid, or (d) transmitted by hand delivery, telegram, or email as a PDF,
addressed
as
set
forth
below
or
to
such
other
address
as
such
party
shall
have
specified
most
15
recently
by
written
notice
given
in
accordance
herewith.
Any
notice
or
other
communication
required
or
permitted
to
be
given
hereunder
shall
be
deemed
effective
(i)
upon
hand
delivery
or
delivery
by
email
at
the
address
designated
below
(if
delivered
on
a
business
day
during
normal business hours
where such notice
is to be
received), or the
first business day following
such
delivery
(if
delivered
other
than
on
a
business
day
during
normal
business
hours
where
such
notice
is
to
be
received)
or
(ii)
on
the
second
business
day
following
the
date
of
mailing
by express courier service or on the fifth business day after deposited in the mail, in each case,
fully
prepaid,
addressed
to
such
address,
or
upon
actual
receipt
of
such
mailing,
whichever
shall first occur.
The addresses for such communications shall be:
If to the Company:
Parallax Health Sciences, Inc.
1327 Ocean Avenue, Suite B
Santa Monica, CA 90401
Email: info@parallaxhealthsciences.com
Attention: Paul Arena
If to the Investor:
Peak One Opportunity Fund, L.P.
333 South Hibiscus Drive
Miami Beach, FL 33139
E-mail: JGoldstein@PeakOneInvestments.com
Attention: Jason Goldstein
Either
party
hereto
may
from
time
to
time
change
its
address
or
email
for
notices
under
this
Section
9.1
by giving
at
least
ten
(10)
days'
prior
written
notice
of
such
changed
address
to
the
other party hereto.
Section
9.2
INDEMNIFICATION.
Each
party
(an
“
Indemnifying
Party
”
)
agrees
to
indemnify
and
hold
harmless
the
other
party
along
with
its
officers,
directors,
employees,
and
authorized
agents,
and
each
Person
or
entity,
if
any,
who
controls
such
party
within
the
meaning
of
Section
15
of
the
Securities
Act
or
Section
20
of
the
Exchange
Act
(an
“
Indemnified Party
”
) from and against any Damages, joint or several, and any action in
respect
thereof
to
which
the
Indemnified
Party
becomes
subject
to,
resulting
from,
arising
out
of or relating to (i)
any misrepresentation, breach of warranty or nonfulfillment of or failure to
perform
any
covenant
or
agreement
on
the
part
of
the
Indemnifying
Party
contained
in
this
Agreement,
(ii)
any
untrue
statement
or
alleged
untrue
statement
of
a
material
fact
contained
in
the
Registration
Statement
or
any
post-effective
amendment
thereof
or
supplement
thereto,
or the omission or alleged omission therefrom of a material fact required to be stated therein or
necessary
to
make
the
statements
therein
not
misleading,
(iii)
any
untrue
statement
or
alleged
untrue statement of
a material fact contained
in any preliminary prospectus or contained in the
16
final prospectus (as amended or supplemented, if the Company files any amendment thereof or
supplement
thereto
with
the
SEC)
or
the
omission
or
alleged
omission
to
state
therein
any
material
fact
necessary
to
make
the
statements
made
therein,
in
the
light
of
the
circumstances
under which the statements therein were made, not misleading, or
(iv) any violation or alleged
violation
by the
Company
of
the
Securities
Act,
the
Exchange
Act,
any
state
securities
law
or
any
rule
or
regulation
under
the
Securities
Act,
the
Exchange
Act
or
any
state
securities
law,
as
such
Damages
are
incurred,
except
to
the
extent
such
Damages
result
primarily
from
the
Indemnified Party's failure to perform any covenant or agreement contained in this Agreement
or
the
Indemnified
Party's
negligence,
recklessness
or
bad
faith
in
performing
its
obligations
under
this
Agreement;
provided
,
however,
that
the
foregoing
indemnity
agreement
shall
not
apply to
any Damages of
an
Indemnified Party to
the extent, but only to the extent, arising out
of
or
based
upon
any
untrue
statement
or
alleged
untrue
statement
or
omission
or
alleged
omission
made
by
an
Indemnifying
Party
in
reliance
upon
and
in
conformity
with
written
information
furnished
to
the
Indemnifying Party by the
Indemnified
Party
expressly for
use
in
the
Registration
Statement,
any
post-effective
amendment
thereof
or
supplement
thereto,
or
any preliminary prospectus or final prospectus (as amended or supplemented).
Section
9.3
METHOD
OF
ASSERTING INDEMNIFICATION
CLAIMS.
All
claims
for
indemnification
by
any
Indemnified
Party
under
Section
9.2
shall
be
asserted
and
resolved as follows:
(a)
In
the
event
any
claim
or
demand
in
respect
of
which
an
Indemnified
Party
might
seek
indemnity
under
Section
9.2
is
asserted
against
or
sought
to
be
collected
from
such
Indemnified
Party
by
a
Person
other
than
a
party
hereto
or
an
affiliate
thereof
(a
"
Third
Party
Claim"
),
the
Indemnified
Party
shall
deliver
a
written
notification,
enclosing
a
copy
of
all
papers
served,
if
any,
and
specifying
the
nature
of
and
basis
for
such
Third
Party
Claim
and
for
the
Indemnified
Party's
claim
for
indemnification
that
is
being
asserted
under
any provision of Section 9.2 against an Indemnifying Party, together with the amount or, if not
then
reasonably
ascertainable,
the
estimated
amount,
determined
in
good
faith,
of
such
Third
Party
Claim
(a
"Claim
Notice")
with
reasonable
promptness
to
the
Indemnifying
Party.
If
the
Indemnified
Party
fails to
provide
the
Claim Notice
with reasonable
promptness after
the
Indemnified
Party receives
notice
of
such
Third
Party Claim,
the
Indemnifying Party shall
not
be
obligated
to
indemnify the
Indemnified
Party with
respect
to
such
Third
Party Claim
to
the
extent
that
the
Indemnifying
Party's
ability
to
defend
has
been
prejudiced
by
such
failure
of
the
Indemnified
Party.
The
Indemnifying
Party
shall
notify
the
Indemnified
Party
as
soon
as
practicable
within
the
period
ending
thirty
(30)
calendar
days
following
receipt
by
the
Indemnifying
Party
of
either
a
Claim
Notice
or
an
Indemnity
Notice
(as
defined
below)
(the
"Dispute
Period")
whether
the
Indemnifying
Party
disputes
its
liability
or
the
amount
of
its
liability to the Indemnified Party under Section 9.2 and whether the Indemnifying Party
desires,
at
its
sole
cost
and
expense,
to
defend
the
Indemnified
Party
against
such
Third
Party
Claim.
(i)
If
the
Indemnifying
Party
notifies
the
Indemnified
Party
within
the
Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with
respect
to
the
Third
Party
Claim
pursuant
to
this
Section
9.3(a),
then
the
Indemnifying
Party
shall have the right to defend, with counsel reasonably satisfactory to the
Indemnified Party, at
17
the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which
proceedings
shall
be
vigorously
and
diligently
prosecuted
by
the
Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying
Party
(but
only
with
the
consent
of
the
Indemnified
Party
in
the
case
of
any
settlement
that
provides
for
any
relief
other
than
the
payment
of
monetary
damages
or
that
provides
for
the
payment
of
monetary
damages
as
to
which
the
Indemnified
Party
shall
not
be
indemnified
in
full
pursuant
to
Section
9.2).
The
Indemnifying
Party
shall
have
full
control
of
such
defense
and
proceedings,
including any compromise
or
settlement
thereof;
provided
,
however
,
that
the
Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior
to the
Indemnifying Party's delivery of
the notice
referred
to in the first sentence of
this clause
(i),
file
any
motion,
answer
or
other
pleadings
or
take
any
other
action
that
the
Indemnified
Party
reasonably
believes
to
be
necessary
or
appropriate
to
protect
its
interests;
and
provided,
further,
that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost
and
expense
of
the
Indemnifying
Party,
provide
reasonable
cooperation
to
the
Indemnifying
Party
in
contesting
any
Third
Party
Claim
that
the
Indemnifying
Party
elects
to
contest.
The
Indemnified
Party
may
participate
in,
but
not
control,
any
defense
or
settlement
of
any
Third
Party
Claim
controlled
by
the
Indemnifying
Party
pursuant
to
this
clause
(i),
and
except
as
provided
in
the
preceding sentence,
the
Indemnified
Party shall
bear
its
own
costs
and
expenses
with
respect
to
such
participation.
Notwithstanding
the
foregoing,
the
Indemnified
Party may takeover
the control of the defense or
settlement of a
Third Party Claim at
any time
if
it
irrevocably
waives
its
right
to
indemnity
under
Section
9.2
with
respect
to
such
Third
Party Claim.
(ii)
If
the
Indemnifying Party fails to
notify the
Indemnified
Party
within
the
Dispute
Period
that
the
Indemnifying
Party desires
to
defend
the
Third
Party Claim
pursuant to Section 9.3(a), or if the
Indemnifying Party gives such notice but fails to prosecute
vigorously
and
diligently
or
settle
the
Third
Party
Claim,
or
if
the
Indemnifying
Party
fails
to
give
any
notice
whatsoever
within
the
Dispute
Period,
then
the
Indemnified
Party
shall
have
the
right
to
defend,
at
the
sole
cost
and
expense
of
the
Indemnifying
Party,
the
Third
Party
Claim
by
all
appropriate
proceedings,
which
proceedings
shall
be
prosecuted
by
the
Indemnified
Party in
a
reasonable
manner
and
in
good
faith
or
will
be
settled
at
the
discretion
of
the
Indemnified
Party(with
the
consent
of
the
Indemnifying
Party,
which
consent
will
not
be
unreasonably
withheld).
The
Indemnified
Party
will
have
full
control
of
such
defense
and
proceedings, including any compromise or settlement thereof; provided, however, that if
requested
by
the
Indemnified
Party,
the
Indemnifying
Party
will,
at
the
sole
cost
and
expense
of
the
Indemnifying
Party,
provide
reasonable
cooperation
to
the
Indemnified
Party
and
its
counsel in contesting any Third Party Claim which the
Indemnified Party is contesting.
Notwithstanding
the
foregoing
provisions
of
this
clause
(ii),
if
the
Indemnifying
Party
has
notified
the
Indemnified
Party
within
the
Dispute
Period
that
the
Indemnifying
Party
disputes
its
liability
or
the
amount
of
its
liability
hereunder
to
the
Indemnified
Party
with
respect
to
such
Third
Party
Claim
and
if
such
dispute
is
resolved
in
favor
of
the
Indemnifying
Party
in
the
manner
provided
in
clause
(iii)
below,
the
Indemnifying
Party
will
not
be
required
to
bear
the
costs
and
expenses
of
the
Indemnified
Party's
defense
pursuant
to
this
clause
(ii)
or
of
the
Indemnifying
Party's
participation
therein
at the Indemnified Party's request,
and the
Indemnified
Party
shall
reimburse
the
Indemnifying
Party
in
full
for
all
reasonable
costs
and
expenses
incurred
by
the
Indemnifying
Party
in
connection
with
such
litigation.
The
18
Indemnifying Party may participate in, but not control, any defense or settlement controlled by
the
Indemnified
Party
pursuant
to
this
clause
(ii),
and
the
Indemnifying
Party
shall
bear
its
own costs and expenses with respect to such participation.
(iii)
If
the
Indemnifying
Party notifies
the
Indemnified
Party that
it
does
not
dispute
its
liability
or
the
amount
of
its
liability
to
the
Indemnified
Party
with
respect
to
the
Third
Party
Claim
under
Section
9.2
or
fails
to
notify
the
Indemnified
Party
within
the
Dispute Period whether the Indemnifying Party disputes its liability
or the amount of its
liability
to the Indemnified Party with respect to such Third Party Claim, the amount of
Damages
specified
in
the
Claim
Notice
shall be
conclusively deemed
a
liability of
the
Indemnifying
Party
under
Section
9.2
and
the
Indemnifying
Party
shall
pay
the
amount
of
such
Damages
to
the
Indemnified
Party
on
demand.
If
the
Indemnifying
Party
has
timely
disputed
its
liability or
the
amount
of
its
liability with
respect
to
such
claim,
the
Indemnifying
Party
and
the
Indemnified
Party
shall
proceed
in
good
faith
to
negotiate
a
resolution
of
such
dispute;
provided,
however,
that
if
the
dispute
is
not
resolved
within
thirty
(30)
days
after
the
Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems
appropriate.
(b)
In
the
event
any
Indemnified
Party
should
have
a
claim
under
Section
9.2
against
the
Indemnifying Party that
does
not
involve
a
Third
Party Claim,
the
Indemnified
Party shall
deliver
a
written
notification
of
a
claim
for
indemnity under
Section
9.2
specifying
the
nature
of
and
basis
for
such
claim,
together
with
the
amount
or,
if
not
then
reasonably
ascertainable,
the
estimated
amount,
determined
in
good
faith,
of
such
claim
(an
"
Indemnity
Notice
") with reasonable promptness to the Indemnifying Party. The failure by
any
Indemnified
Party
to
give
the
Indemnity
Notice
shall
not
impair
such
party's
rights
hereunder
except
to
the
extent
that
the
Indemnifying
Party
demonstrates
that
it
has
been
irreparably
prejudiced
thereby.
If
the
Indemnifying
Party
notifies
the
Indemnified
Party
that
it
does
not
dispute
the
claim
or
the
amount
of
the
claim
described
in
such
Indemnity
Notice
or
fails
to
notify the
Indemnified
Party within
the
Dispute
Period
whether
the
Indemnifying
Party
disputes
the
claim
or
the
amount
of
the
claim
described
in
such
Indemnity
Notice,
the
amount
of
Damages
specified
in
the
Indemnity
Notice
will
be
conclusively
deemed
a
liability
of
the
Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such
Damages
to
the
Indemnified
Party
on
demand.
If
the
Indemnifying
Party
has
timely
disputed
its liability or the amount of its liability with respect to such claim, the Indemnifying Party and
the
Indemnified
Party
shall
proceed
in
good
faith
to
negotiate
a
resolution
of
such
dispute;
provided,
however,
that
if
the
dispute
is
not
resolved
within
thirty
(30)
days
after
the
Claim
Notice, the Indemnifying
Party
shall be entitled
to institute
such
legal action
as it deems
appropriate.
(c)
The
Indemnifying
Party
agrees
to
pay
the
Indemnified
Party,
promptly
as
such
expenses
are
incurred
and
are
due
and
payable,
for
any
reasonable
legal
fees
or
other
reasonable
expenses
incurred
by
them
in
connection
with
investigating
or
defending
any
such
Claim.
19
(d)
The
indemnity
provisions
contained
herein
shall
be
in
addition
to
(i)
any
cause
of
action
or
similar
rights
of
the
Indemnified
Party
against
the
Indemnifying
Party
or others, and (ii) any liabilities the Indemnifying Party may be subject to.
ARTICLE X
MISCELLANEOUS
Section
10.1
GOVERNING
LAW;
JURISDICTION
.
This
Agreement
shall
be
governed by and interpreted in accordance with the laws of the State of Nevada without regard
to
the
principles
of
conflicts
of
law.
Each
of
the
Company
and
the
Investor
hereby
submits
to
the exclusive jurisdiction of the United States federal and state courts located in Florida,
County
of
Miami-Dade,
with
respect
to
any
dispute
arising
under
the
Transaction
Documents
or the transactions contemplated thereby.
Section 10.2
[Intentionally Omitted.]
Section
10.3
ASSIGNMENT.
This
Agreement
shall
be
binding
upon
and
inure
to
the
benefit
of
the
Company
and
the
Investor
and
their
respective
successors. Neither
this
Agreement nor any rights of the Investor or the Company hereunder may be assigned by either
party to any other Person.
Section 10.4
NO THIRD PARTY BENEFICIARIES.
This Agreement is intended
for
the
benefit
of
the
Company and
the
Investor
and
their
respective
successors,
and
is
not
for
the
benefit
of,
nor
may
any
provision
hereof
be
enforced
by,
any
other
Person,
except
as
set
forth in Section 9.3.
Section
10.5
TERMINATION
.
The
Company may terminate
this
Agreement
at
any
time
by
written
notice
to
the
Investor,
except
during
any
Valuation
Period
or
at
any
time
that
the
Investor
holds
any
of
the
Put
Shares.
In
addition,
this
Agreement
shall
automatically
terminate at the end of the Commitment Period.
Section
10.6
ENTIRE
AGREEMENT
.
The
Transaction
Documents,
together
with
the
exhibits
and
schedules
thereto,
contain
the
entire
understanding
of
the
Company
and
the
Investor
with
respect
to
the
matters
covered
herein
and
therein
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 10.7
FEES AND EXPENSES.
Except as expressly set forth in the
Transaction
Documents
or
any
other
writing
to
the
contrary,
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. The
Company
shall
pay
all
Transfer
Agent
fees
(including,
without
limitation,
any
fees
required
for
same-day
processing
of
any
instruction
letter
delivered
by
the
Company),
stamp
taxes
and
other
taxes
and
duties
levied
in
connection
with
the
delivery of
any Securities
to
the
Investor.
Upon
execution
of
this
Agreement,
the
Company
shall
issue
the
Commitment
Shares
(400,000
of
which
shall
be
issued
to
Investor
20
and
400,000
of
which
shall
be
issued
to
Investments)
for
its
commitment
to
enter
into
this
Agreement. The Commitment Shares shall be earned in full upon the execution of this
Agreement, and the Commitment Shares are not contingent upon any other
event or condition,
including
but
not
limited
to
the
effectiveness
of
the
Registration
Statement
or
the
Company
’
s
submission of a Put Notice to the Investor.
Section
10.8
COUNTERPARTS.
This
Agreement
may
be
executed
in
multiple
counterparts, each of which may
be executed by
less than all of the
parties and shall be
deemed
to
be
an
original
instrument
which
shall
be
enforceable
against
the
parties
actually
executing such counterparts and all of which together shall constitute one and the same
instrument. This Agreement may be delivered
to the other
parties hereto by email of
a
copy of
this Agreement bearing the signature of the parties so delivering this Agreement.
Section 10.9
SEVERABILITY
. In the event that any provision of this
Agreement
becomes
or
is
declared
by
a
court
of
competent
jurisdiction
to
be
illegal,
unenforceable
or
void,
this
Agreement
shall
continue
in
full
force
and
effect
without
said
provision; provided that such severability shall be ineffective if it materially changes the
economic benefit of this Agreement to any party.
Section
10.10
FURTHER
ASSURANCES
.
Each
party
shall
do
and
perform,
or
cause
to
be
done
and
performed,
all
such
further
acts
and
things,
and
shall
execute
and
deliver
all
such
other
agreements,
certificates,
instruments
and
documents,
as
the
other
party
may
reasonably request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
Section 10.11
NO STRICT CONSTRUCTION.
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.
Section 10.12
EQUITABLE RELIEF
. The Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under this Agreement,
any
remedy
at
law
may
prove
to
be
inadequate
relief
to
the
Investor.
The
Company
therefore
agrees
that
the
Investor
shall
be
entitled
to
temporary
and
permanent
injunctive
relief
in
any
such case without the necessity of proving actual damages.
Section
10.13
TITLE
AND
SUBTITLES
.
The
titles
and
subtitles
used
in
this
Agreement
are
used
for
the
convenience
of
reference
and
are
not
to
be
considered
in
construing or interpreting this Agreement.
Section
10.14
AMENDMENTS;
WAIVERS.
No
provision
of
this
Agreement
may
be amended or waived by the parties from and after the date that is one (1) Trading Day
immediately
preceding
the
initial
filing
of
the
Registration
Statement
with
the
SEC.
Subject
to
the
immediately
preceding
sentence,
(i)
no
provision
of
this
Agreement
may
be
amended
other
than by a written instrument signed by both parties hereto and (ii) no provision of this Agreement
may be
waived
other
than in a
written instrument
signed
by the
party against whom enforcement
of
such
waiver
is
sought.
No
failure
or
delay
in
the
exercise
of
any
power,
right
or
privilege
21
hereunder
shall
operate
as
a
waiver
thereof,
nor
shall
any
single
or
partial
exercise
of
any
such
power, right or privilege preclude other or further exercise thereof or of any other right, power or
privilege.
Section
10.15
PUBLICITY.
The
Company
and
the
Investor
shall
consult
with
each
other
in
issuing
any
press
releases
or
otherwise
making
public
statements
with
respect
to
the transactions contemplated hereby and no party shall issue any such press release or
otherwise
make
any
such
public
statement,
other
than
as
required
by
law,
without
the
prior
written consent of
the other
parties,
which
consent shall not be
unreasonably
withheld or
delayed,
except
that
no
prior
consent
shall
be
required
if
such
disclosure
is required
by law,
in
which
such
case
the
disclosing
party
shall
provide
the
other
party
with
prior
notice
of
such
public
statement.
Notwithstanding the
foregoing,
the
Company shall
not
publicly disclose
the
name
of
the
Investor
without
the
prior
written
consent
of
the
Investor,
except
to
the
extent
required by law. The
Investor acknowledges that this Agreement and
all or part of the
Transaction
Documents
may
be
deemed
to
be
"material
contracts,"
as
that
term
is
defined
by
Item
601(b)(10)
of
Regulation
S-K,
and
that
the
Company
may
therefore
be
required
to
file
such
documents
as
exhibits
to
reports
or
registration
statements
filed
under
the
Securities
Act
or
the
Exchange Act. The Investor further
agrees that the
status of
such
documents and
materials
as
material
contracts
shall
be
determined
solely
by
the
Company,
in
consultation
with its counsel.
[Signature Page Follows]
22
IN
WITNESS
WHEREOF
,
the
parties
have
caused
this
Agreement
to
be
duly executed
by their respective officers thereunto duly authorized as of the day and year first above written.
THE COMPANY:
PARALLAX HEALTH SCIENCES, INC.
By:______________________
Name: Paul Arena
Title: Chief Executive Officer
INVESTOR:
PEAK ONE OPPORTUNITY FUND, L.P.
By: Peak One Investments, LLC,
General Partner
By: ___________________________________
Name: Jason Goldstein
Title: Managing Member
[Signature Page to equity purchase agreement]
23
DISCLOSURE SCHEDULES TO
EQUITY PURCHASE AGREEMENT
Schedule 4.3
–
Capitalization
None.
Schedule 4.5
–
SEC Documents
None.
Schedule 4.9
–
Litigation
None.
Schedule 4.10
–
Registration Rights
None.
EXHIBIT A
FORM OF PUT NOTICE
TO: PEAK ONE OPPORTUNITY FUND, L.P.
DATE: ____________________
We
refer
to
the
equity purchase
agreement,
dated
November
14,
2018 (the
“
Agreement
”
), entered into by
and between Parallax Health Sciences, Inc. and you.
Capitalized
terms
defined
in
the
Agreement
shall,
unless
otherwise
defined
herein,
have
the
same meaning when used herein.
We hereby:
1) Give you notice that we require you to purchase
Put Shares at an initial
purchase price per share of ____________; and
2)
Certify
that,
as
of
the
date
hereof,
the
conditions
set
forth
in
Section
7.2
of
the
Agreement
are satisfied.
PARALLAX HEALTH SCIENCES, INC.
By: _______________________
Name:
Paul Arena
Title:
Chief Executive Officer
EXHIBIT B
FORM OF OFFICER
’
S CERTIFICATE
OF PARALLAX HEALTH SCIENCES, INC.
Pursuant
to
Section
7.2(k)
of
that
certain
equity
purchase
agreement,
dated
November
14,
2018
(the
“
Agreement
”
),
by
and
between
Parallax
Health
Sciences,
Inc.
(the
“
Company
”
)
and
Peak
One
Opportunity
Fund,
L.P.
(the
“
Investor
”
),
the
undersigned,
in
his
capacity as Chief Executive Officer of the Company, and not in his individual capacity, hereby
certifies, as of the date hereof (such date, the
“
Condition Satisfaction Date
”
), the following:
1.
The representations and warranties of the Company are true and correct in
all
material
respects
as
of
the
Condition
Satisfaction
Date
as
though
made
on
the
Condition
Satisfaction
Date
(except
for
representations
and
warranties
specifically
made
as
of
a
particular
date)
with
respect
to
all
periods,
and
as
to
all
events
and
circumstances
occurring or
existing
to
and
including
the
Condition
Satisfaction
Date,
except
for
any
conditions
which
have
temporarily
caused
any
representations
or
warranties
of
the
Company
set
forth
in
the
Agreement
to
be
incorrect
and
which
have
been
corrected
with
no
continuing
impairment
to
the Company or the Investor; and
2.
All
of
the
conditions
precedent
to
the
obligation
of
the
Investor
to
purchase
Put
Shares
set
forth
in
the
Agreement,
including but
not
limited
to
Section
7.2
of
the
Agreement, have been satisfied as of the Condition Satisfaction Date.
Capitalized
terms
used
herein
shall
have
the
meanings
set
forth
in
the
Agreement
unless otherwise defined herein.
IN WITNESS WHEREOF
, the undersigned has hereunto affixed his hand as of the
________, 20__.
By: _______________________
Name:
Paul Arena
Title:
Chief Executive Officer
