UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 2019
PARALLAX HEALTH SCIENCES, INC.
(Exact name of Company as specified in its charter)
Nevada |
000-52534 |
46-4733512 |
(State or other jurisdiction |
(Commission File Number) |
(IRS Employer |
of Incorporation) |
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Identification Number) |
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1327 Ocean Avenue, Suite B Santa Monica, CA 90401 (Address of principal executive offices)
310-899-4442 (Registrant ’ s Telephone Number) |
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Copy of all Communications to : Peter V. Hogan Buchalter 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017 (213) 891-0700
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions: |
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
As used in this current report and unless otherwise indicated, the terms "we", "us", "our", “ Company ” , and “ Parallax ” mean Parallax Health Sciences, Inc., a Nevada corporation, and its subsidiaries, unless otherwise indicated.
ITEM 1.01
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The disclosures set forth in Item 2.03 are incorporated by into this Item 1.01 by reference.
ITEM 2.03
CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
On February 27, 2019, Parallax Health Sciences, Inc., a Nevada corporation (the “ Company ” ), issued a 12% convertible promissory note (the “ Note ” ) in the aggregate principal sum of $111,000, pursuant to that certain Securities Purchase Agreement (the “ Securities Purchase Agreement). The Note matures November 27, 2019 ( “ Maturity Date ” ), and contains a repayment provision for the holder of the Note the right, at its option, to convert the principal sum and any accrued interest, in whole or part, into shares of the Company ’ s common stock at any time on or before the Maturity Date at a conversion rate of the lower of (i) $0.12 per share; or (ii) 70% of the second lowest sale price during the twenty (20 consecutive trading days on which at least 100 shares of common stock were traded immediately preceding the conversion date. The proceeds from the Note were received on March 11, 2019, the closing date.
As part of the Securities Purchase Agreement, the noteholder was issued Warrants to purchase 300,000 shares of the Company ’ s common stock at an exercise price of $0.15 per share for a period of five (5) years.
A form of the Note, the Securities Purchase Agreement and the Warrant is attached to this Current Report as exhibits 4.1 , 10.1 , and 10. 2 , respectively, and incorporated herein by reference. The disclosure set forth in this Section 2.03 is intended to be a summary only and is qualified in its entirety by reference to the exhibits.
ITEM 3.02
UNREGISTERED SALES OF EQUITY SECURITIES
The disclosures set forth in Item 2.03 are incorporated by into this Item 3.02 by reference. The issuance of the Notes and Warrants were made in reliance on exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, on the basis that the Registrant had a pre-existing relationship with the investor and there was no public offering.
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit Number |
Description of Exhibit |
Filing Reference |
Filed herewith |
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Form of S ecurities Purchase Agreement dated February 27, 2019 |
Filed herewith |
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Filed herewith |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PARALLAX HEALTH SCIENCES, INC. |
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Dated: March 15, 2019 |
/s/ Calli R. Bucci |
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Calli R. Bucci |
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Chief Financial Officer |
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NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
Principal Amount: $111,000.00
Issue Date: February 27, 2019
12% CONVERTIBLE NOTE
FOR VALUE RECEIVED , PARALLAX HEALTH SCIENCES, INC., a Nevada
corporation ( “ Borrower ” or “ Company ” ), hereby promises to pay to the order of EMA
FINANCIAL, LLC, a Delaware limited liability company, or its registered assigns (the “ Holder ” ),
on November 27, 2019, (subject to extension as set forth below, the “ Maturity Date ” ), the sum of
$111,000.00 as set forth herein, together with interest on the unpaid principal balance hereof at the
rate of twelve percent (12%) per annum (the “ Interest Rate ” ) from the date of issuance hereof until
this Note plus any and all amounts due hereunder are paid in full, and any additional amounts set
forth herein, including without limitation any Additional Principal (as defined herein). Interest shall
be computed on the basis of a 365-day year and the actual number of days elapsed. Any amount of
principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty-
four (24%) per annum from the due date thereof until the same is paid ( “ Default Interest ” ). All
payments due hereunder shall be made in lawful money of the United States of America. All
payments shall be made at such address as the Holder shall hereafter give to the Borrower by
written notice made in accordance with the provisions of this Note. Whenever any amount
expressed to be due by the terms of this Note is due on any day which is not a business day, the
same shall instead be due on the next succeeding day which is a business day and, in the case of any
interest payment date which is not the date on which this Note is paid in full, the extension of the
due date thereof shall not be taken into account for purposes of determining the amount of interest
due on such date. As used in this Note, the term “ business day ” shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of New York, New York are
authorized or required by law or executive order to remain closed. Each capitalized term used
herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities
Purchase Agreement entered into by and between the Company and Holder dated on or about the
date hereof, pursuant to which this Note was originally issued (the “ Purchase Agreement ” ). The
Holder may, by written notice to the Borrower at least five (5) days before the Maturity Date (as
may have been previously extended), extend the Maturity Date to up to one (1) year following the
date of the original Maturity Date hereunder.
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This Note is free from all taxes, liens, claims and encumbrances with respect to the issue
thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the
Borrower and will not impose personal liability upon the holder thereof.
The following terms shall apply to this Note:
ARTICLE I. CONVERSION RIGHTS
1.1.
Conversion Right. The Holder shall have the right, in its sole and absolute
discretion, at any time from time to time, to convert all or any part of the outstanding amount due
under this Note (such outstanding amount includes but is not limited to the principal, interest and/or
Default Interest accrued, plus any and all other amounts owed pursuant to the terms of this Note)
into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the
Issue Date, or any shares of capital stock or other securities of the Borrower into which such
Common Stock shall hereafter be changed or reclassified at the conversion price (the “ Conversion
Price ” ) determined as provided herein (a “ Conversion ” ); provided, however, that in no event shall
the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon
conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by
the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Notes or the unexercised or
unconverted portion of any other security of the Borrower subject to a limitation on conversion or
exercise analogous to the limitations contained herein) and (2) the number of shares of Common
Stock issuable upon the conversion of the portion of this Note with respect to which the
determination of this proviso is being made, would result in beneficial ownership by the Holder and
its affiliates of more than 4.9% of the outstanding shares of Common Stock. For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange
Act ” ), and Regulation 13D-G thereunder, except as otherwise provided in clause (1) of such
proviso, provided, further, however, that the limitations on conversion may be waived by the Holder
upon, at the election of the Holder, not less than 61 days ’ prior notice to the Borrower, and the
provisions of the conversion limitation shall continue to apply until such 61st day (or such later
date, as determined by the Holder, as may be specified in such notice of waiver). The number of
shares of Common Stock to be issued upon each Conversion of this Note ( “ Conversion Shares ” )
shall be determined by dividing the Conversion Amount (as defined below) by the applicable
Conversion Price then in effect on the date specified in the notice of conversion, in the form
attached hereto as Exhibit A (the “ Notice of Conversion ” ), delivered to the Borrower by the Holder
in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by
facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the
Borrower before 11:59 p.m., New York, New York time on such conversion date (the “ Conversion
Date ” ). The term “ Conversion Amount ” means, with respect to any Conversion of this Note, the
sum of (1) the principal amount of this Note to be converted in such Conversion, plus (2) accrued
and unpaid interest, if any, to be converted in such Conversion at the interest rates provided in this
Note to the Conversion Date, plus ( 3) at the Holder ’ s option, Default Interest, if any, on the amounts
referred to in the immediately preceding clauses (1) and/or (2), plus ( 4) any Additional Principal for
such Conversion, plus ( 5) at the Holder ’ s option, any amounts owed to the Holder pursuant to
Sections 1.2(c) and 1.4(g) hereof.
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1.2.
Conversion Price .
a)
Calculation of Conversion Price . The conversion price hereunder (the
“ Conversion Price ” ) shall equal the lower of: (i) $0.12, and (ii) 70% of either the second lowest sale
price for the Common Stock on the Principal Market during the twenty (20) consecutive Trading
Days on which at least 100 shares of Common Stock were traded including and immediately
preceding the Conversion Date. If an Event of Default under Section 3.9 of the Note has occurred,
Holder, in its sole discretion, may elect to use a Conversion Price which shall equal the lower of: (i)
the closing sale price of the Common Stock on the Principal Market on the Trading Day
immediately preceding the Closing Date; (ii) 70% of either the lowest sale price or the closing bid
price, whichever is lower for the Common Stock on the Principal Market during any Trading Day in
which the Event of Default has not been cured. If such Common Stock is not traded on the OTCBB,
OTCQB, NASDAQ or NYSE, then such sale price shall be the sale price of such security on the
principal securities exchange or trading market where such security is listed or traded or, if no sale
price of such security is available in any of the foregoing manners, the average of the closing bid
prices of any market makers for such security that are listed in the “ pink sheets ” by the National
Quotation Bureau, Inc. If such sale price cannot be calculated for such security on such date in the
manner provided above, such price shall be the fair market value as mutually determined by the
Borrower and the Holder. If the Borrower ’ s Common stock is chilled for deposit at DTC, becomes
chilled at any point while this Note remains outstanding or deposit or other additional fees are
payable due to a Yield Sign, Stop Sign or other trading restrictions, or if the closing sale price at any
time falls below $0.0275 (as appropriately and equitably adjusted for stock splits, stock dividends,
stock contributions and similar events), then an additional 15% discount will be attributed to the
Conversion Price for any and all Conversions submitted thereafter Additionally, the Borrower
acknowledges that it will take all reasonable steps necessary or appropriate, including providing a
board of directors resolution authorizing the issuance of common stock to Holder. So long as the
requested sale may be made pursuant to Rule 144, the Company agrees to accept an opinion of
counsel to the Holder confirming the rights of the Holder to sell shares of Common Stock issuable
or issued to Holder on conversion of this Note pursuant to Rule 144 as promulgated by the SEC
( “ Rule 144 ” ) (or if applicable pursuant to Rule 4(a)(1) ( “ 4(a)(1) ” ), as promulgated by the SEC), or
at the Holder ’ s option, Company shall immediately and without delay provide an opinion of counsel
to the Holder confirming the rights of the Holder to sell shares of Common Stock pursuant to Rule
144, or Rule 4(a)(1), if applicable, as such Rule 144 may be in effect from time to time, which
opinion will be issued at the Company ’ s expense and the conversion dollar amount will be reduced
by $500.00 to cover the cost of such legal opinion. “ Trading Day ” shall mean any day on which the
Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or
other securities market on which the Common Stock is then being traded. Additionally, if the
Company ceases to be a reporting company pursuant to the 1934 Act or if the Note cannot be
converted into free trading shares after 181 days from the issuance date, an additional 15% discount
will be attributed to the Conversion Price for any and all Conversions submitted thereafter.
b)
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 the Conversion Price
hereunder shall equal such par value for such Conversion and the Conversion Amount for such
Conversion shall 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
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Conversion Shares as would have been issued had the Conversion Price not been subject to the
minimum price set forth in this Section 1.2(b).
c)
Without in any way limiting the Holder ’ s right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the
free trading shares of Common Stock issuable upon conversion of this Note is not delivered by the
Deadline (as defined below) the Borrower shall pay to the Holder $250.00 per day in cash, for each
day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount
shall be paid to Holder by the fifth day of the month following the month in which it has accrued or,
at the option of the Holder, shall be added to the principal amount of this Note, in which event
interest shall accrue thereon in accordance with the terms of this Note and such additional principal
amount shall be convertible into Common Stock in accordance with the terms of this Note. The
Borrower agrees that the right to convert this Note is a valuable right to the Holder. The damages
resulting from a failure, attempt to frustrate, or interference with such conversion right are difficult
if not impossible to quantify. Accordingly, the parties acknowledge that the liquidated damages
provision contained in this Section are justified.
1.3.
Authorized Shares. The Borrower covenants that the Borrower will at all
times while this Note is outstanding reserve from its authorized and unissued Common Stock a
sufficient number of shares, free from preemptive rights, to provide for the issuance of Common
Stock upon the full conversion or adjustment of this Note. The Borrower is required at all times to
have authorized and reserved seven (7) times the number of shares that is actually issuable upon full
conversion or adjustment of this Note (based on the Conversion Price of the Notes in effect from
time to time)(the “ Reserved Amount ” ). Initially, the Company will instruct the Transfer Agent to
reserve ten million one hundred thousand (10,100,000) shares of common stock in the name of the
Holder for issuance upon conversion hereof. The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower
shall issue any securities or make any change to its capital structure which would change the
number of shares of Common Stock into which this Note shall be convertible at the then current
Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there
shall be a sufficient number of shares of Common Stock authorized and reserved, free from
preemptive rights, for conversion of this Note in full. So long as this Note is outstanding the
Borrower shall instruct the Transfer Agent that upon Holder ’ s request it shall furnish to the Holder
the then current number of common shares issued and outstanding, the then current number of
common shares authorized, the then current number of unrestricted shares, and the then current
number of shares reserved for third parties. The Borrower (i) acknowledges that it has irrevocably
instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of
this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers
and agents who are charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock in accordance with the terms and conditions of
this Note.
If, at any time the Borrower does not maintain the Reserved Amount it will
be considered an Event of Default under Section 3.2 of the Note.
1.4.
Method of Conversion.
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a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be
converted by the Holder in whole or in part at any time and from time to time after the Issue Date,
by submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 11:59 p.m., New York, New
York time).
b)
Book Entry upon Conversion. Notwithstanding anything to the
contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to the Borrower unless the entire
unpaid balance of this Note is so converted. The Holder and the Borrower shall maintain records
showing the principal amount so converted and the dates of such conversions or shall use such other
method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical
surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and determinative in the absence of
manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid,
the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the
Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a
new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of
this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by
reason of the provisions of this paragraph, following conversion of a portion of this Note, the
unpaid and unconverted principal amount of this Note represented by this Note may be less than the
amount stated on the face hereof.
c)
Payment of Taxes. The Borrower shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue and delivery of shares of
Common Stock or other securities or property on conversion of this Note in a name other than that
of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such
shares or other securities or property unless and until the person or persons (other than the Holder or
the custodian in whose street name such shares are to be held for the Holder ’ s account) requesting
the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has been paid.
d)
Delivery of Common Stock upon Conversion. Upon receipt by the
Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of
communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon
the order of the Holder certificates for the Common Stock issuable upon such conversion within
three (3) business days after such receipt or such an event (the “ Deadline ” ) (and, solely in the case
of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance
with the terms hereof and the Purchase Agreement.
e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by
the Borrower of a duly and properly executed Notice of Conversion, the Holder shall be deemed to
be the holder of record of the Common Stock issuable upon such conversion, the outstanding
principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to
reflect such conversion or adjustment, and, unless the Borrower defaults on its obligations under
this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
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terminate except the right to receive the Common Stock or other securities, cash or other assets, as
herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as
provided herein, the Borrower ’ s obligation to issue and deliver the certificates for Common Stock
shall be absolute and unconditional, irrespective of the absence of any action by the Holder to
enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any
judgment against any person or any action to enforce the same, any failure or delay in the
enforcement of any other obligation of the Borrower to the holder of record, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder
of any obligation to the Borrower, and irrespective of any other circumstance which might
otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.
The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as
the Notice of Conversion is received by the Borrower before 11:59 p.m., New York, New York
time, on such date.
f)
Delivery of Common Stock by Electronic Transfer . In lieu of
delivering physical certificates representing the Common Stock issuable upon conversion, provided
the Borrower is participating in the Depository Trust Company ( “ DTC ” ) Fast Automated Securities
Transfer ( “ FAST ” ) program, upon request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its
transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder
by crediting the account of Holder ’ s Prime Broker with DTC through its Deposit Withdrawal Agent
Commission ( “ DWAC ” ) system. In the event that the shares of the Borrower ’ s Common Stock are
not deliverable via DWAC following the conversion of any amount hereunder, an additional 5%
discount will be attributed to the Conversion Price.
g)
Failure to Deliver Common Stock Prior to Deadline . Without in any
way limiting the Holder ’ s right to pursue other remedies, including actual damages and/or equitable
relief, the parties agree that if delivery of the Common Stock issuable upon conversion or
adjustment of this Note is not delivered by the Deadline, the Borrower shall pay to the Holder
$250.00 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such
Common Stock to the Holder. Such cash amount shall be paid to Holder by the fifth day of the
month following the month in which it has accrued or, at the option of the Holder, shall be added to
the principal amount of this Note, in which event interest shall accrue thereon in accordance with
the terms of this Note and such additional principal amount shall be convertible into Common Stock
in accordance with the terms of this Note. The Borrower agrees that the right to convert and/or
receive shares in the event of an adjustment is a valuable right to the Holder. The damages resulting
from a failure, attempt to frustrate, or interference with such conversion or adjustment right are
difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated
damages provision contained in this Section 1.4(g) are justified.
h)
The Borrower acknowledges that it will take all reasonable steps
necessary or appropriate, including accepting an opinion of counsel to Holder confirming the rights
of Holder to sell shares of Common Stock issued to Holder on conversion or adjustment of the Note
pursuant to Rule 144 as promulgated by the SEC ( “ Rule 144"), as such Rule may be in effect from
time to time. So long as the requested sale may be made pursuant to Rule 144 the Borrower agrees
to accept an opinion of counsel to the Holder which opinion will be issued at the Borrower ’ s
expense.
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i)
Charges and Expenses. Issuance of Common Stock to Holder, or any
of its assignees, upon the conversion of this Note shall be made without charge to the Holder for
any issuance fee, transfer tax, legal opinion and related charges, postage/mailing charge or any other
expense with respect to the issuance of such Common Stock. Company shall pay all Transfer Agent
fees incurred from the reservation and issuance of the Common Stock to Holder, as well as any and
all other fees and charges required by the Transfer Agent as a condition to effectuate such
issuance. That notwithstanding, the Holder may in the interest of securing issuance and/or delivery
of Common Stock before the Deadline, at any time from time to time, in its sole discretion elect to
pay any such fees or charges upfront, and Company agrees that any such fees or charges as noted in
this Section that are paid by the Holder (whether from the Company ’ s delays, outright refusal to
pay, Holder ’ s interest in securing issuance and/or delivery of Common Stock before the
Deadline, or otherwise), will be at Company ’ s expense, and the conversion amount will
automatically be reduced by that dollar amount to cover the cost of the fees or charges as noted in
this Section.
1.5.
Restricted Securities. The shares of Common Stock issuable upon conversion
or adjustment of this Note may not be sold or transferred unless (i) such shares are sold pursuant to
an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have
been furnished with an opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold
or transferred may be sold or transferred pursuant to an exemption from such registration or (iii)
such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) ( “ Rule
144 ” ) or (iv) such shares are transferred to an “ affiliate ” (as defined in Rule 144) of the Borrower
who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who
is an Accredited Investor (as defined in the Purchase Agreement). Any legend set forth on any
stock certificate evidencing any Conversion Shares shall be removed and the Borrower shall issue
to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer
agent shall have received an opinion of counsel form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such
Common Stock may be made without registration under the Act, which opinion shall be reasonably
acceptable to the Company, or (ii) in the case of the Common Stock issued or issuable upon
conversion of this Note, such security is registered for sale by the Holder under an effective
registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can then be immediately
sold.
1.6.
Effect of Certain Events.
a)
Effect of Merger, Consolidation, Etc . At the option of the Holder, the
sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the
effectuation by the Borrower of a transaction or series of related transactions in which more than
50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other
business combination of the Borrower with or into any other Person (as defined below) or Persons
when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as
defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon
the consummation of and as a condition to such transaction an amount equal to the Default Amount
(as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “ Person ” shall mean
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any individual, corporation, limited liability company, partnership, association, trust or other entity
or organization.
b)
Adjustment Due to Merger, Consolidation, Etc . If, at any time when
this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which shares of Common Stock of the Borrower shall be changed into the same or a
different number of shares of another class or classes of stock or securities of the Borrower or
another entity, or in case of any sale or conveyance of all or substantially all of the assets of the
Borrower other than in connection with a plan of complete liquidation of the Borrower, then the
Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the
basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder
would have been entitled to receive in such transaction had this Note been converted in full
immediately prior to such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect to the rights and
interests of the Holder of this Note to the end that the provisions hereof (including, without
limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable
upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in
relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower
shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent
practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior
written notice) of the record date of the special meeting of shareholders to approve, or if there is no
such record date, the consummation of, such merger, consolidation, exchange of shares,
recapitalization, reorganization or other similar event or sale of assets (during which time, for
clarification, the Holder shall be entitled to convert this Note) and (b) the resulting successor or
acquiring entity assumes by written instrument the obligations of this Section 1.6(b). The above
provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share
exchanges.
c)
Adjustment Due to Distribution . If the Borrower shall declare or make
any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a
dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or
distribution to the Borrower ’ s shareholders in cash or shares (or rights to acquire shares) of capital
stock of a subsidiary (i.e., a spin-off)) (a “ Distribution ” ), then the Holder of this Note shall be
entitled, upon any conversion of this Note as of or after (in the event of a stock dividend) the date of
record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock
issuable upon such conversion had such Holder been the holder of such shares of Common Stock on
the record date for the determination of shareholders entitled to such Distribution. Such assets shall
be held in escrow by the Company pending any such conversion
d)
Purchase Rights. If, at any time when any Notes are issued and
outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants,
securities or other property (the “ Purchase Rights ” ) pro rata to the record holders of any class of
Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if
such Holder had held the number of shares of Common Stock acquirable upon complete conversion
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of this Note (without regard to any limitations on conversion contained herein) immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no
such record is taken, the date as of which the record holders of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights.
e)
Stock Dividends and Stock Splits. If the Company, at any time while
this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions
payable in shares of Common Stock on shares of Common Stock or any securities convertible into
or exercisable for Common Stock; (B) subdivides outstanding shares of Common Stock into a
larger number of shares; (C) combines (including by way of a reverse stock split) outstanding shares
of Common Stock into a smaller number of shares; or (D) issues, in the event of a reclassification of
shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price
(and each sale or bid price used in determining the Conversion Price) shall be subject to equitable
adjustments for such events.
f)
Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the effective date in the case
of a subdivision, combination or re-classification.
g)
Notice of Adjustments . Upon the occurrence of each adjustment or
readjustment of the Conversion Price as a result of the events described in this Section 1.6, the
Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and
furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the
written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i)
such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number
of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.
1.7.
Revocation. If any Conversion Shares are not received by the Deadline, the
Holder may revoke the applicable Conversion pursuant to which such Conversion Shares were
issuable. This Note shall remain convertible after the Maturity Date hereof until this Note is repaid
or converted in full.
1.8.
Prepayment. Notwithstanding anything to the contrary contained in this Note,
subject to the terms of this Section, at any time during the period beginning on the Closing Date and
ending on the date which is six (6) months following the Issue Date ( “ Prepayment Termination
Date ” ), Borrower shall have the right, exercisable on not less than five (5) Trading Days prior
written notice to the Holder of this Note, to prepay up to the outstanding balance on this Note
(principal and accrued interest), in full, in accordance with this Section. Any notice of prepayment
hereunder (an “ Optional Prepayment Notice ” ) shall be delivered to the Holder of the Note at its
registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note,
and (2) the date of prepayment which shall be not more than fifteen (15) Trading Days from the
date of the Optional Prepayment Notice; and (3) the amount (in dollars) that the Borrower is paying.
Notwithstanding Holder ’ s receipt of the Optional Prepayment Notice the Holder may convert, or
continue to convert the Note in whole or in part until the Optional Prepayment Amount (as defined
herein) is paid to the Holder. On the date fixed for prepayment (the “ Optional Prepayment Date ” ),
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the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or
upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1)
business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay
the Note, the Borrower shall make payment to the Holder of an amount in cash (the “ Optional
Prepayment Amount ” ) equal to the Prepayment Factor (as defined below), multiplied by the sum of:
(w) the then outstanding principal amount of this Note plus ( x) accrued and unpaid interest on the
unpaid principal amount of this Note to the Optional Prepayment Date plus ( y) Default Interest, if
any, on the amounts referred to in clauses (w) and (x) plus ( z) any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice
and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2)
business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to
prepay the Note pursuant to this Section. After the Prepayment Termination Date, the Borrower
shall have no right to prepay this Note. For purposes hereof, the “ Prepayment Factor ” shall equal
the percentage set forth below with respect to each Optional Prepayment Date beside such
Prepayment Factor:
The Prepayment Factor is:
If the Optional Prepayment Date occurs:
110%
1-90 days after the Issue Date
120%
91-120 days after the Issue Date
140%
121-180 days after the Issue Date
ARTICLE II. CERTAIN COVENANTS
2.1.
Distributions on Capital Stock. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder ’ s written consent (a) pay,
declare or set apart for such payment, any dividend or other distribution (whether in cash, property
or other securities) on shares of capital stock other than dividends on shares of Common Stock
solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any
subsidiary make any other payment or distribution in respect of its capital stock except for
distributions pursuant to any shareholders ’ rights plan which is approved by a majority of the
Borrower ’ s disinterested directors.
2.2.
Restriction on Stock Repurchases. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder ’ s written consent redeem,
repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or
otherwise) in any one transaction or series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire any such shares.
2.3.
[Intentionally Omitted].
2.4.
Sale of Assets. So long as the Borrower shall have any obligation under this
Note, the Borrower shall not, without the Holder ’ s written consent, sell, lease or otherwise dispose
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of any significant portion of its assets outside the ordinary course of business. Any consent to the
disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
2.5.
Advances and Loans. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder ’ s written consent, lend money, give
credit or make advances to any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans,
credits or advances in existence or committed on the date hereof and which the Borrower has
informed Holder in writing prior to the date hereof.
2.6.
Charter. So long as the Borrower shall have any obligations under this Note,
the Borrower shall not amend its charter documents, including without limitation its certificate of
incorporation and bylaws, in any manner that materially and adversely affects any rights of the
Holder.
2.7.
Transfer Agent. The Borrower shall not change its transfer agent without the
prior written consent of the Holder. Any replacement of the transfer agent by the Borrower, or
resignation by the transfer agent without a replacement transfer agent consented to by the Holder
prior to such replacement taking effect shall constitute an Event of Default hereunder.
2.8.
Section 3(a)(9) or 3(a)(10) Transaction. S o long as this Note is outstanding,
the Borrower 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 Borrower does enter into, or makes any issuance of Common Stock related to a
3(a)(9) Transaction or a 3(a)(10) Transaction while this Note is outstanding, a liquidated damages
charge of 25% of the outstanding principal balance of this Note, but not less than Fifteen Thousand
Dollars $15,000, 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.
ARTICLE III. EVENTS OF DEFAULT
Any one or more of the following events which shall occur and/or be continuing shall
constitute an event of default (each, an “ Event of Default ” ):
3.1.
Failure to Pay Principal or Interest. The Borrower fails to pay the principal
hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or
otherwise.
3.2.
Conversion and the Shares. The Borrower fails to issue shares of Common
Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so
at any time following the execution hereof or) upon exercise by the Holder of the conversion rights
of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to
transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock
issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by
this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its
transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for
shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this
Note as and when required by this Note, or fails to remove (or directs its transfer agent not to
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Convertible Note – PRLX, T1, 2019-02-27
remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend
(or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of
Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and
when required by this Note (or makes any written announcement, statement or threat that it does not
intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be
rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of
Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer
agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or
frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder,
the Holder advances any funds to the Borrower ’ s transfer agent in order to process a conversion,
such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a
demand from the Holder.
3.3.
Breach of Covenants. The Borrower breaches any material covenant or other
material term or condition contained in this Note and any collateral documents including but not
limited to the Purchase Agreement and such breach continues for a period of three (3) days after
written notice (via email) thereof to the Borrower from the Holder.
3.4.
Breach of Representations and Warranties. Any representation or warranty of
the Borrower made herein or in any agreement, statement, certificate, or any other document given
in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase
Agreement, and/or the due diligence questionnaire provided by the Borrower to the Holder on or
around the Issue Date), shall be false or misleading in any material respect when made and/ or the
breach of which has (or with the passage of time will have) a material adverse effect on the rights of
the Holder with respect to this Note or the Purchase Agreement.
3.5.
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall
make an assignment for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or business, or such a receiver or
trustee shall otherwise be appointed.
3.6.
Judgments. Any money judgment, writ or similar process shall be entered or
filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets
for more than $50,000.00, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably
withheld.
3.7.
Bankruptcy . Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or
any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of
the Borrower.
3.8.
Delisting of Common Stock. The Borrower shall fail to maintain the listing of
the Common Stock on at least one of the OTCBB, or OTCQB, or an equivalent replacement
exchange, NASDAQ, the NYSE or AMEX.
3.9.
Failure to Comply with the Exchange Act. The Borrower shall fail to comply
in any material respect with the reporting requirements of the Exchange Act; and/or the Borrower
shall cease to be subject to the reporting requirements of the Exchange Act.
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3.10. Liquidation. Any dissolution, liquidation, or winding up of Borrower or any
substantial portion of its business.
3.11. Cessation of Operations. Any cessation of operations by Borrower or
Borrower admits it is otherwise generally unable to pay its debts as such debts become due,
provided, however, that any disclosure of the Borrower ’ s ability to continue as a “ going concern ”
shall not be an admission that the Borrower cannot pay its debts as they become due.
3.12. Maintenance of Assets. The failure by Borrower, during the term of this
Note, to maintain any material intellectual property rights, personal, real property or other assets
which are necessary to conduct its business (whether now or in the future).
3.13. Financial Statement Restatement. The restatement of any financial
statements filed by the Borrower with the SEC for any date or period from two years prior to the
Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement
would, by comparison to the unrestated financial statement, have constituted a material adverse
effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.14. Reverse Splits. The Borrower effectuates a reverse split of its Common Stock
without twenty (20) days prior written notice to the Holder.
3.15. Replacement of Transfer Agent. In the event that the Borrower proposes to
replace its transfer agent, the Borrower fails to provide, prior to the effective date of such
replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to the Purchase Agreement (including but not limited to the provision to
irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor
transfer agent to Borrower and the Borrower.
3.16. Cross-Default. Notwithstanding anything to the contrary contained in this
Note or the other related or companion documents, a breach or default by the Borrower of any
covenant or other term or condition contained in any of the Other Agreements, after the passage of
all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a
default under this Note and the Other Agreements, in which event the Holder shall be entitled (but
in no event required) to apply all rights and remedies of the Holder under the terms of this Note and
the Other Agreements by reason of a default under said Other Agreement or hereunder. “ Other
Agreements ” means, collectively, all agreements and instruments between, among or by: (1) the
Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including,
without limitation, promissory notes; provided, however, the term “ Other Agreements ” shall not
include the related or companion documents to this Note. Each of the loan transactions will be
cross-defaulted with each other loan transaction and with all other existing and future debt of
Borrower to the Holder.
Upon the occurrence and during the continuation of any Event of Default specified in Article III of
the Note exercisable through the delivery of written notice to the Borrower by such Holders (the
“ Default Notice ” ), the Note shall become immediately due and payable and the Borrower shall pay
to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i)
200% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note to the date of payment (the “ Mandatory
Repayment Date ” ) plus ( y) Default Interest, if any, on the amounts referred to in clauses (w) and/or
(x) plus ( z) any amounts owed to the Holder pursuant to Section and 1.4(g) hereof (the then
outstanding principal amount of this Note to the date of payment plus t he amounts referred to in
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Convertible Note – PRLX, T1, 2019-02-27
clauses (x), (y) and (z) shall collectively be known as the “ Default Sum ” ) or (ii) the “ parity value ”
of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of
Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in
accordance with Article I, treating the Trading Day immediately preceding the Mandatory
Repayment Date as the “ Conversion Date ” for purposes of determining the lowest applicable
Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific
Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied
by (b) the highest Closing Price for the Common Stock during the period beginning on the date of
first occurrence of the Event of Default and ending one day prior to the Mandatory Repayment Date
(the “ Default Amount ” ) and all other amounts payable hereunder shall immediately become due and
payable, all without demand, presentment or notice, all of which hereby are expressly waived,
together with all costs, including, without limitation, legal fees and expenses, of collection, and the
Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
If the Borrower fails to pay the Default Amount within five (5) business days of written notice that
such amount is due and payable, then the Holder shall have the right at any time, so long as the
Borrower remains in default (and so long and to the extent that there are sufficient authorized
shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount
divided by the Conversion Price then in effect. The Holder may still convert any amounts due
hereunder, including without limitation the Default Sum, until such time as this Note has been
repaid in full.
3.17. Inside Information. The Borrower or its officers, directors, and/or affiliates
attempt to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the
Borrower or its officers, directors, and/or affiliates of, material non-public information concerning
the Borrower, to the Holder or its successors and assigns, which is not immediately cured by
Borrower ’ s filing of a Form 8-K pursuant to Regulation FD on that same date.
3.18 Bid Price . The Borrower shall lose the “ bid ” price for its Common Stock
($0.0001 on the “ Ask ” with zero market makers on the “ Bid ” per Level 2) and/or a market
(including the OTC Pink, OTCQB or an equivalent replacement exchange).
3. 19 Market Loss. If at any time while this Note is outstanding the Borrower ’ s
Common Stock trades below $0.01 for five (5) consecutive Trading Days, the principal amount of
the Note shall automatically and without further action increase by twenty-five thousand dollars
($25,000.00), and at the sole option of the Holder, the Company shall within fifteen (15) calendars
days from Holder ’ s direction to so, obtain the necessary shareholder and board of director approvals
(if applicable), and file the requisite documents with FINRA, to effectuate a reverse split.
ARTICLE IV. MISCELLANEOUS
4.1.
Failure or Indulgence Not Waiver. No failure or delay on the part of the
Holder in the exercise of any power, right or privilege 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 privileges. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2.
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 (i) personally served, (ii) deposited in the mail, registered or certified, return receipt
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requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram, email or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder shall be deemed effective (a)
upon hand delivery or delivery by facsimile or email, with accurate confirmation generated by the
transmitting facsimile machine or computer, at the address, email or number designated in the
Purchase Agreement (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 (b) on the
second business day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
4.3.
Amendments. This Note and any provision hereof may only be amended by
an instrument in writing signed by the Borrower and the Holder. The term “ Note ” and all reference
thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued
pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented,
then as so amended or supplemented.
4.4.
Assignability . This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns.
Each transferee of this Note must be an “ accredited investor ” (as defined in Rule 501(a) of the 1933
Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement.
4.5.
Cost of Collection . If default is made in the payment of this Note, the
Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys ’ fees.
4.6.
Governing Law . This Note shall be governed by and construed in accordance
with the laws of the State of Nevada without regard to conflicts of laws principles that would result
in the application of the substantive laws of another jurisdiction. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement must be brought only
in the civil or state courts of New York or in the federal courts located in the State and county of
New York. Both parties and the individual signing this Agreement on behalf of the Borrower agree
to submit to the jurisdiction of such courts. 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 Note
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 unenforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Borrower in any other jurisdiction to collect on
the Borrower ’ s obligations to Holder, to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other decision in favor of the Holder. This Note shall be
deemed an unconditional obligation of Borrower for the payment of money and, without
limitation to any other remedies of Holder, may be enforced against Borrower by summary
proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar
rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or
statute, any other document or agreement to which Holder and Borrower are parties or which
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Borrower delivered to Holder, which may be convenient or necessary to determine Holder ’ s
rights hereunder or Borrower ’ s obligations to Holder are deemed a part of this Note, whether
or not such other document or agreement was delivered together herewith or was executed
apart from this Note.
4.7.
Certain Amounts. Whenever pursuant to this Note the Borrower is required to
pay an amount in excess of the outstanding principal amount (or the portion thereof required to be
paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the
Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash
payment on this Note may be difficult to determine and the amount to be so paid by the Borrower
represents stipulated damages and not a penalty and is intended to compensate the Holder in part for
loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common
Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares
pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated
damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash
payment without the opportunity to convert this Note into shares of Common Stock.
4.8.
Disclosure . Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Note, unless the Company has in good faith determined that the
matters relating to such notice do not constitute material, non-public information relating to the
Company or any of its Subsidiaries, the Company shall within four (4) Trading Day after any such
receipt or delivery, publicly disclose such material, non-public information on a Current Report on
Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-
public information relating to the Company or any of its Subsidiaries, the Company so shall indicate
to such Holder contemporaneously with delivery of such notice, and in the absence of any such
indication, the Holder shall be allowed to presume that all matters relating to such notice do not
constitute material, non-public information relating to the Company or its Subsidiaries.
4.9.
Notice of Corporate Events. Except as otherwise provided below, the Holder
of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it
converts this Note into Common Stock. The Borrower shall provide the Holder with prior
notification of any meeting of the Borrower ’ s shareholders (and copies of proxy materials and other
information sent to shareholders). In the event of any taking by the Borrower of a record of its
shareholders for the purpose of determining shareholders who are entitled to receive payment of any
dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including
by way of merger, consolidation, reclassification or recapitalization) any share of any class or any
other securities or property, or to receive any other right, or for the purpose of determining
shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of
all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or
winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20)
days prior to the record date specified therein (or thirty (30) days prior to the consummation of the
transaction or event, whichever is earlier), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief statement regarding the
amount and character of such dividend, distribution, right or other event to the extent known at such
time. The Borrower shall make a public announcement of any event requiring notification to the
Holder hereunder substantially simultaneously with the notification to the Holder in accordance
with the terms of this Section 4.9.
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Convertible Note – PRLX, T1, 2019-02-27
4.10. Remedies. The Borrower acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law
for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach
or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be
entitled, in addition to all other available remedies at law or in equity, and in addition to the
penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any
breach of this Note and to enforce specifically the terms and provisions thereof, without the
necessity of showing economic loss and without any bond or other security being required.
4.11. Usury . This Note shall be subject to the anti-usury limitations contained in
the Purchase Agreement.
(Remainder of Page intentionally left blank)
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Convertible Note – PRLX, T1, 2019-02-27
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly
authorized officer as of the Issue Date first set forth above.
PARALLAX HEALTH SCIENCES, INC.
By:
Name: Paul R. Arena
Title: CEO
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Convertible Note – PRLX, T1, 2019-02-27
EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 12% Convertible Note of PARALLAX HEALTH
SCIENCES, INC., a Nevada corporation (the Company ” ), into shares of common stock (the “ Common Stock ” ), of the
Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued
in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any. By the
delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the
Common Stock does not exceed the amounts specified under Section 1.1 of this Note, as determined in accordance with
Section 13(d) of the Exchange Act. The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock pursuant to any
prospectus.
Conversion calculations:
Issue Date of Note:
Date to Effect Conversion:
Conversion Price:
Principal Amount of Note to be Converted:
Less applicable fees under the Note:
Amount of Note to be Converted:
Interest Amount to be Converted:
Less applicable fees under the Note:
Amount of Note to be Converted:
Additional Principal on Account of Conversion
Pursuant to Section 1.2(b) of the Note:
Number of shares of Common Stock to be issued:
Remaining Principal Balance of Note:
Signature:
Name:
Address for Delivery of Common Stock Certificates:
Or
DWAC Instructions:
DTC No:
Account No:
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Convertible Note – PRLX, T1, 2019-02-27
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “ Agreement ” ), dated as of February
27, 2019, is entered into by and between PARALLAX HEALTH SCIENCES, INC., a Nevada
corporation (the “ Company ” ), and EMA Financial, LLC, a Delaware limited liability company
(the “ Purchaser ” ).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ” or “ 1933 Act ” ),
and Rule 506 promulgated thereunder by the United States Securities and Exchange Commission
(the “ SEC ” ), the Company desires to issue and sell to the Purchaser, and the Purchaser desires to
purchase from the Company a 12% Convertible Note of the Company, in the form attached hereto
as Exhibit A, in the principal amount of $111,000.00 (together with any note(s) issued in
replacement thereof or as interest thereon or otherwise with respect thereto in accordance with the
terms thereof, the “ Note ” ), convertible into shares ( “ Conversion Shares ” ) of common stock,
$0.001 par value per share (the “ Common Stock ” ), of the Company, upon the terms and subject to
the limitations and conditions set forth in such Note.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Purchaser agree as follows:
1. Purchase and Sale of Note.
a)
Purchase of Note . On the Closing Date (as defined below), the Company
shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, the
Note for an aggregate purchase price of $104,340.00 ( “ Purchase Price ” ). Further, Company shall
issue warrants to Buyer to purchase 300,000 shares of common stock (the “ Warrant ” ).
b)
Form of Payment. On the Closing Date (i) the Purchaser shall pay the
Purchase Price by wire transfer of immediately available funds to the Company, in accordance
with the Company ’ s written wiring instructions, simultaneously with delivery of the Note, and
(ii) the Company shall deliver such Note duly executed on behalf of the Company to the
Purchaser, simultaneously with delivery of such Purchase Price.
c)
Closing Date . Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 8 and Section 9 below, the closing of the transactions
contemplated by this Agreement (the “ Closing ” ) shall occur on the first business day following
the date hereof or such other mutually agreed upon time (the “ Closing Date ” )
2. Purchaser ’ s Representations and Warranties. T he Purchaser represents and
warrants to the Company that:
a)
Investment Purpose . Purchaser is acquiring the Note, the Warrant, and the
Conversion Shares (collectively, the “ Securities ” ) for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution thereof in violation of
applicable securities laws; provided, however, by making the representations herein, Purchaser
does not agree, or make any representation or warranty, to hold any of the Securities for any
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minimum or other specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under the 1933 Act. The
Purchaser is acquiring the Securities hereunder in the ordinary course of its business. The
Purchaser does not presently have any agreement or understanding, directly or indirectly, with
any person to distribute any of the Securities in violation of applicable securities laws.
b)
Accredited Investor Status. The Purchaser is an “ accredited investor ” as that
term is defined in Rule 501(a) of Regulation D (an “ Accredited Investor ” ).
3. Representations and Warranties of the Company . Except as disclosed by the
Company in the publicly filed SEC Documents the Company represents and warrants to the
Purchaser, as of the date hereof and the Closing Date, that:
a)
Organization and Qualification. The Company and each of its Subsidiaries
(as defined below), if any, is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry on its business as
and where now owned, leased, used, operated and conducted. The SEC Documents set forth a list
of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated The
Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and
is in good standing in every jurisdiction in which its ownership or use of property or the nature of
the business conducted by it makes such qualification necessary except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect. “ Material Adverse
Effect ” means any material adverse effect on the business, operations, assets, financial condition
or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be entered into in connection
herewith. “ Subsidiaries ” means any corporation or other organization, whether incorporated or
unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership
interest.
b)
Authorization; Enforcement. (i) The Company has all requisite corporate
power and authority to enter into and perform this Agreement, the Note, and the Warrant and to
consummate the transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement,
the Note, and the Warrant by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance of the Note, and
Warrant and the issuance and reservation for issuance of the Conversion Shares, and Warrant
Shares (as defined in the Warrant) issuable upon conversion and exercise thereof) have been duly
authorized by the Company ’ s Board of Directors and no further consent or authorization of the
Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been
duly executed and delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign this Agreement and the
other documents executed in connection herewith and bind the Company accordingly, and (iv)
this Agreement constitutes, and upon execution and delivery by the Company of the Note,
Warrant, and each of such instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
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c)
Capitalization . As of the date hereof, the authorized capital stock of the
Company, and number of shares issued and outstanding, is as set forth in the Company ’ s most
recent periodic report filed with the SEC. Except as disclosed in the SEC Documents no shares
are reserved for issuance pursuant to the Company ’ s stock option plans. Except as disclosed in
the SEC Documents no shares are reserved for issuance pursuant to securities exercisable for, or
convertible into or exchangeable for shares of Common Stock. All of such outstanding shares of
capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-
assessable. No shares of capital stock of the Company are subject to preemptive rights or any
other similar rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. As of the effective date of this Agreement,
and except as disclosed in the SEC Documents, (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims
or other commitments or rights of any character whatsoever relating to, or securities, notes or
rights convertible into or exchangeable for any shares of capital stock of the Company or any of
its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may
become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries,
(ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there
are no anti-dilution or price adjustment provisions contained in any security issued by the
Company (or in any agreement providing rights to security holders) that will be triggered by the
issuance of any of the Securities. The Company has furnished to the Purchaser true and correct
copies of the Company ’ s Certificate or Articles of Incorporation as in effect on the date hereof
( “ Formation Documents ” ), the Company ’ s By-laws, as in effect on the date hereof (the “ By-
laws ” ), and the terms of all securities convertible into or exercisable for Common Stock of the
Company and the material rights of the holders thereof in respect thereto.
d)
Issuance of Shares. The Conversion Shares, and Warrant Shares (as defined
in the Warrant) are duly authorized and reserved for issuance and, upon conversion of the Note,
and exercise of the Warrant respectively, as the case may be, in accordance with their respective
terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights
or other similar rights of shareholders of the Company and will not impose personal liability upon
the holder thereof.
e)
Acknowledgment of Dilution. The Company ’ s executive officers and
directors understand the nature of the Securities being sold hereby and recognize that the issuance
of the Securities will have a potential dilutive effect on the equity holdings of other holders of the
Company ’ s equity or rights to receive equity of the Company. The Board of Directors of the
Company has concluded, in its good faith business judgment that the issuance of the Securities is
in the best interests of the Company. The Company specifically acknowledges that its obligation
to issue the Conversion Shares upon conversion of the Notes is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership interests of other
stockholders of the Company or parties entitled to receive equity of the Company.
f)
No Conflicts. The execution, delivery and performance of this Agreement,
the Note, and the Warrant by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the issuances and
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SPA – PRLX, T1, 2019-02-27
reservations for issuance of the Conversion Shares, and Warrant Shares) will not (i) conflict with
or result in a violation of any provision of the Formation Documents or By-laws, or (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a default (or an event which
with notice or lapse of time or both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent
license or instrument to which the Company or any of its Subsidiaries is a party and that is not
filed as an SEC Document or other document filed with the SEC, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and state securities laws
and regulations and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries 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). Neither the
Company nor any of its Subsidiaries is in violation of its Formation Documents, By-laws or other
organizational documents and neither the Company nor any of its Subsidiaries is in default (and
no event has occurred which with notice or lapse of time or both could put the Company or any
of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party or by which any property or assets of the Company
or any of its Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company
and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the
Purchaser owns any of the Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with, any court,
governmental agency, regulatory agency, self-regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations under this Agreement and
the Note in accordance with the terms hereof or thereof or to issue and sell the Securities in
accordance with the terms hereof and thereof and to issue the Conversion Shares. All consents,
authorizations, orders, filings and registrations which the Company is required to obtain pursuant
to the preceding sentence have been obtained or effected on or prior to the date hereof. The
Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board
(the “ OTCBB ” ), or OTCQB, and does not reasonably anticipate that the Common Stock will be
delisted by the OTCBB, or OTCQB, in the foreseeable future. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to any of the foregoing.
g)
SEC Documents; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with the SEC (all of
the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such documents)
incorporated by reference therein, being hereinafter referred to herein as the “ SEC Documents ” ).
Upon written request the Company will deliver to the Purchaser true and complete copies of the
SEC Documents, except for such exhibits and incorporated documents. As of their respective
dates, the SEC Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended ( “ 1934 Act ” or “ Exchange Act ” ), and none of the
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SPA – PRLX, T1, 2019-02-27
SEC Documents, at the time they were filed with the SEC, 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. None of the statements made in any such SEC Documents is, or has been, required
to be amended or updated under applicable law (except for such statements as have been amended
or updated in subsequent filings prior the date hereof). As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and regulations of the
SEC with respect thereto. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles, consistently applied, during the periods
involved and fairly present in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the financial statements
of the Company included in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of business, and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or operating results of
the Company. The Company is subject to the reporting requirements of the 1934 Act.
h)
Absence of Certain Changes. Except as disclosed in the SEC filings, there
has been no material adverse change and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of operations, prospects or 1934 Act
reporting status of the Company or any of its Subsidiaries.
i)
Absence of Litigation. Except as disclosed in the SEC filings, there is no
action, suit, claim, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company or any of its
Subsidiaries, or their officers or directors in their capacity as such, that could have a Material
Adverse Effect. The public filings contain a complete list and summary description of any pending
or, to the knowledge of the Company, threatened proceeding against or affecting the Company or
any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The
Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.
j)
Patents, Copyrights, etc . The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service
names, trade names and copyrights ( “ Intellectual Property ” ) necessary to enable it to conduct its
business as now operated (and, as presently contemplated to be operated in the future); there is
no claim or action by any person pertaining to, or proceeding pending, or to the Company ’ s
knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect
to any Intellectual Property necessary to enable it to conduct its business as now operated (and,
as presently contemplated to be operated in the future); to the best of the Company ’ s knowledge,
the Company ’ s or its Subsidiaries ’ current and intended products, services and processes do not
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SPA – PRLX, T1, 2019-02-27
infringe on any Intellectual Property or other rights held by any person and/or entity; and the
Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
The Company and each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.
k)
No Materially Adverse Contracts, Etc. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company ’ s officers has or is expected in
the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
a party to any contract or agreement which in the judgment of the Company ’ s officers has or is
expected to have a Material Adverse Effect.
l)
Disclosure . No event or circumstance has occurred or exists with respect to
the Company or any of its Subsidiaries or its or their business, properties, prospects, operations
or financial conditions, which, under applicable law, rule or regulation, requires public disclosure
or announcement by the Company but which has not been so publicly announced or disclosed.
m)
Brokers. The Company hereby represents and warrants that it has not hired,
retained or dealt with any broker, finder, consultant, person, firm or corporation ( “ Broker ” ) in
connection with the negotiation, execution or delivery of this Agreement or the transactions
contemplated hereunder. The Company covenants and agrees that should any claim be made
against Purchaser for any commission or other compensation by the Broker, based upon the
Company ’ s engagement of such person in connection with this transaction, the Company shall
indemnify, defend and hold Purchaser harmless from and against any and all damages, expenses
(including attorneys ’ fees and disbursements) and liability arising from such claim. The Company
shall pay the commission of the Broker, to the attention of the Broker, pursuant to their separate
agreement(s) between the Company and the Broker.
n)
Permits; Compliance . The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted (collectively, the “ Company
Permits ” ), and there is no action pending or, to the knowledge of the Company, threatened
regarding suspension or cancellation of any of the Company Permits. Neither the Company nor
any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits,
except for any such conflicts, defaults or violations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. Since December 31, 2017, neither
the Company nor any of its Subsidiaries has received any notification with respect to possible
conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts,
defaults or violations, which conflicts, defaults or violations would not have a Material Adverse
Effect.
o)
Insurance . The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such coverage, amounts
as are prudent and customary in the businesses in which the Company is engaged, including,
but not limited to, directors and officer ’ s insurance coverage with coverage amounts that are at
least equal to the aggregate Purchase Price. Neither the Company nor any Subsidiary has any
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SPA – PRLX, T1, 2019-02-27
reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.
p)
No “ Shell ” . As of the date of this Agreement the Company is an operating
company and, either (i) is not or has never been a “ shell issuer ” as defined in Rule 144(i)(2) or (ii)
at least 12 months have passed since the Company filed Form 10 Type information indicating it is
not a “ shell issuer ” (and supporting the claim that it is no longer a shell company), filed all
required reports for at least twelve consecutive months after the filing of the respective Form 10
information, and has therefore complied with Rule 144(i)(2).
q)
Bad Actor. No officer or director of the Company would be disqualified
under Rule 506(d) of the Securities Act as amended on the basis of being a “ bad actor ” .
r)
Acknowledgement
Regarding
Purchaser ’ s
Trading
Activity .
Notwithstanding anything in this Agreement or elsewhere to the contrary it is understood and
acknowledged by the Company that: (i) the Purchaser has not been asked by the Company to agree,
nor has any Purchaser agreed, to desist from purchasing or selling, securities of the Company, or
“ derivative ” securities based on securities issued by the Company or to hold the Securities for any
specified term; (ii) each Purchaser shall not be deemed to have any affiliation with or control over
any arm ’ s length counter-party in any “ derivative ” transaction.
s) Sarbanes-Oxley Act. The Company and each Subsidiary is in material compliance with all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and all applicable rules and regulations promulgated by the SEC thereunder that
are effective as of the date hereof.
4. COVENANTS.
a)
Best Efforts. The parties shall use their best efforts to satisfy timely each of
the conditions described in Section 6 and 7 of this Agreement.
b)
Form D; Blue Sky Laws. The Company agrees when applicable to timely
file a Form D with respect to the Securities as required under Regulation D and to provide a
copy thereof to the Purchaser promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is necessary to
qualify the Securities for sale to the Purchaser at the applicable closing pursuant to this
Agreement under applicable securities or “ blue sky ” laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of any such action
so taken to the Purchaser on or prior to the Closing Date.
c)
Use of Proceeds. The Company shall use the proceeds from the sale of the
Securities for general corporate and administrative purposes.
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d)
Financial Information . Upon written request of the Purchaser, the Company
agrees to within (3) three days of the written request send or make available the following
reports filed with the SEC or OTC Markets Group to the Purchaser: a copy of its Annual Report
and its Quarterly Reports and any Supplemental Reports; (ii) copies of all press releases issued
by the Company or any of its Subsidiaries; and (iii) copies of any notices or other information
the Company makes available or gives to such shareholders. Notwithstanding the foregoing,
the Company shall not disclose any material nonpublic information to the Purchaser without its
consent unless such information is disclosed to the public prior to or promptly following such
disclosure to the Purchaser.
e)
Listing . The Company will obtain and, so long as the Purchaser owns any
of the Securities, maintain the listing and trading of its Common Stock on the OTCBB, and
OTCQB, or any equivalent replacement exchange, the NASDAQ Stock Market ( “ NASDAQ ” ),
the New York Stock Exchange ( “ NYSE ” ), or the NYSE MKT, f/k/a American Stock Exchange
( “ AMEX ” ), and will comply in all respects with the Company ’ s reporting, filing and other
obligations under the bylaws or rules of the Financial Industry Regulatory Authority ( “ FINRA ” )
and such exchanges, as applicable. The Company shall promptly provide to the Purchaser
copies of any notices it receives from the SEC, OTC Markets Group and any other exchanges
or quotation systems on which the Common Stock is then listed regarding the continued
eligibility of the Common Stock for listing on such exchanges and quotation systems, provided
that it shall not provide any notices constituting material nonpublic information. If at any time
while the Note is outstanding the Company fails to maintain the listing and trading and of its
Common Stock, or fails in any way to comply with the Company ’ s reporting/ filing obligations
such failure(s) will result in liquidated damages of fifteen thousand dollars ($15,000), being
immediately due and payable to Holder at its election in the form of cash payment or addition
to the balance of the Note.
f)
Corporate Existence. So long as the Purchaser beneficially owns any
Securities, the Company shall maintain its corporate existence and shall not sell all or
substantially all of the Company ’ s assets, except in the event of a merger or consolidation or
sale of all or substantially all of the Company ’ s assets, where the surviving or successor entity
in such transaction (i) assumes the Company ’ s obligations hereunder and under the agreements
and instruments entered into in connection herewith and (ii) is a publicly traded corporation
whose Common Stock is listed for trading on NASDAQ, NYSE or AMEX.
g)
No Integration. The Company shall not make any offers or sales of any
security (other than the Securities) under circumstances that would require registration of the
Securities being offered or sold hereunder under the 1933 Act or cause the offering of the
Securities to be integrated with any other offering of securities by the Company for the purpose
of any stockholder approval provision applicable to the Company or its securities.
h)
Securities Laws Disclosure; Publicity . The Company shall comply with
applicable securities laws by filing a Current Report on Form 8-K, within four (4) Trading Days
following the date hereof, disclosing all the material terms of the transactions contemplated hereby.
i)
Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by this Agreement, the Company covenants and agrees
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that neither it nor any other person acting on its behalf will provide the Purchaser or its agents or
counsel with any information that the Company believes constitutes material non-public
information, unless prior thereto the Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and confirms that the
Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the
Company.
j)
Subsidiaries. So long as the Note remains outstanding, the Company shall
not transfer any assets or rights to any of its subsidiaries or permit any of its subsidiaries to engage
in any significant business or operations, whether such subsidiaries are currently existing or
hereafter created.
k)
Insurance . So long as the Note remains outstanding, the Company and its
Subsidiaries shall maintain in full force and effect insurance reasonably believed by the Company
to be adequate coverage (a) on all assets and activities, covering property loss or damage and loss
of income by fire or other hazards or casualty, and (b) against all liabilities, claims and risks for
which it is customary for companies similarly situated to the Company to insure, including without
limitation applicable product liability insurance, required workmen ’ s compensation insurance, and
other insurance covering injury or damage to persons or property, but excluding directors and
officers insurance coverage. The Company shall promptly furnish or cause to be furnished
evidence of such insurance to the Purchaser, in form and substance reasonably satisfactory to the
Purchaser
l)
ROFR. At any time while the Note is outstanding, the Company desires to
borrow funds, raise additional capital and/or issue additional promissory notes convertible into
shares of securities of the Company (a “ Prospective Financing ” ), the Purchaser shall have the right
of first refusal to participate in the Prospective Financing, and the Company shall provide written
notice containing the terms of such Prospective Financing (the “ ROFR Notice ” ) to the Purchaser
prior to effectuating any such transaction . The ROFR Notice shall specify all of the key terms of
the Prospective Financing, including, but not limited to, the proposed investment amount, the
proposed rate of interest, the proposed conversion price, the proposed term of the investment, the
type and number of securities to be sold and any and all other relevant terms, each as applicable.
Upon Purchaser ’ s receipt of the ROFR Notice, Purchaser shall have the exclusive right to
participate in such Prospective Financing(s), upon the terms specified in the ROFR Notice, by
sending written notice to the Company within seven (7) business days after Purchaser ’ s receipt of
the ROFR Notice. In the event Purchaser fails to exercise its right of first refusal with respect to
an ROFR Notice within the time set forth above, Purchaser shall be deemed to have waived its
right of first refusal with respect to such Prospective Financing, provided that it shall retain such
right with respect to any future Prospective Financing. Notwithstanding anything contained
herein, the Company shall not furnish any material non-public information concerning the
Company without the Purchaser ’ s prior written consent, and shall initially only indicate to the
Purchaser that the Company contemplates a financing. Notwithstanding anything contained
herein, in no event shall the Purchaser be entitled to purchase any securities which would cause
the sum of (1) the number of shares of Common Stock beneficially owned by the Purchaser and
its affiliates (other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Note or the unexercised or unconverted
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portion of any other security of the Company subject to a limitation on conversion or exercise
analogous to the limitations contained herein) and (2) the number of shares of directly or indirectly
purchasable under this Section, to exceed 4.9% of the outstanding shares of Common Stock ( or
9.99% of the total issued Common Stock of the Company if specified by Purchaser and
accompanied with applicable documentation such as any Amendment made to this Agreement or
the Note).
m)
Future Financings: Except for sales or issuances to Company employees,
and members of the Company ’ s board of directors, from the date hereof until such time as the
Purchaser no longer holds any of the Securities, in the event the Company issues or sells any shares
of Common Stock or securities directly or indirectly convertible into or exercisable for Common
Stock ( “ Common Stock Equivalents ” ) or amends the transaction documents relating to any sale or
issuance of Common Stock or Common Stock Equivalents, and the Purchaser reasonably believes
that the terms and conditions thereunder are more favorable to such investors as the terms and
conditions granted under this Agreement, Note or any document provided by the Purchaser to the
Company relating to any sale or issuance of Common Stock (the “ Transaction Documents ” ), upon
notice to the Company by such Purchaser, the Transaction Documents shall be deemed
automatically amended so as to give the Purchaser the benefit of such more favorable terms or
conditions. Promptly following a request to the Company the Company shall provide Purchaser
with all executed transaction documents relating to any such sale or issue of Common Stock or
Common Stock Equivalents. Company shall deliver acknowledgment of such automatic
amendment to the Transaction Documents to Purchaser in form and substance reasonably
satisfactory to the Purchaser (the “ Acknowledgment ” ) within three (3) business days of
Company ’ s receipt of request from Purchaser (the “ Deadline ” ), provided that Company ’ s failure
to timely provide the Acknowledgement shall not affect the automatic amendments contemplated
hereby. If the Acknowledgement is not delivered by the Deadline, Company shall pay to the
Purchaser $1000.00 per day in cash, for each day beyond the Deadline that the Company fails to
deliver such Acknowledgement such cash amount shall be paid to Holder by the first day of the
month following the month in which it has accrued or, at the option of the Holder, shall be added
to the principal amount of the Note, in which event interest shall accrue thereon in accordance with
the terms of the Note and such additional principal amount shall be convertible into Common
Stock in accordance with the terms of the Note.
n)
Piggyback Registration Rights . Borrower shall include on the: (i) next
registration statement Borrower files with the SEC; or (ii) on the subsequent registration statement
if such registration statement is withdrawn), or, (iii) amend a registration statement previously
filed, but not effective as of the Issue Date all shares issuable upon conversion of the Note. Failure
to do so will result in liquidated damages of fifty percent (50%) of the outstanding principal amount
of the Note, but not less than twenty-five thousand dollars ($25,000), being immediately due and
payable to Holder at its election in the form of cash payment or addition to the balance of the Note.
o)
Subsequent Financings. N otwithstanding anything contained herein, if at
any time while this Note is outstanding the Company enters into any capital raising transaction,
including without limitation an equity line transaction, a loan transaction or the sale of shares of
Common Stock or securities convertible into or exercisable or exchangeable for Common Stock,
whether or not permitted under the Transaction Documents ( “ Subsequent Financing ” ), then
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following the closing of each such Subsequent Financing the Holder in its sole and absolute
discretion may compel the Company to redeem up to the entire outstanding balance of the Note
from the gross proceeds therefrom ( “ Redemption Amount ” ), provided however (a) if the Holder
is holding other convertible notes similar to this Note whether issued prior or after the Issue Date
of this Note (collectively with this Note, the “ Notes ” ), the Redemption Amount may be applied to
redeem any or all of the Notes specified by the Holder, (b) the Holder shall be notified in writing
of the closing of each such Subsequent Financing within one (1) day following such closing, and
(c) the Holder may elect not to exercise its right to such redemption in whole or in part, in which
case the Company may not redeem any Notes in connection with such Subsequent Financing to
the extent so rejected (for clarification, if the holder elects to reject any redemption in any instance,
such rejection shall not affect the Holder ’ s redemption rights hereunder in the future). Further, in
the event that the Holder demands redemption of a portion or the full balance of the Note within
the first six (6) months from Note ’ s Issue Date, such Redemption Amount shall subject to then
then applicable Prepayment Factor, as defined in the Note shall be applied). To the extent the
Company is obligated to redeem any portion of the Notes pursuant to this Section but fails to do
so, such default shall constitute an Event of Default under all the Notes.
p)
Additional Investment Right. Purchaser shall have the right at any time from
time to time, as of the date hereof, and until such date when the Note is no longer outstanding, to
in its sole and absolute discretion purchase an additional convertible promissory note, or additional
convertible promissory notes, from the Company for up to a principal amount equal to the amount
of the Note purchased hereunder (each a “ Subsequent Note ” and collectively the “ Subsequent
Notes ” ) on the same terms and conditions as applicable to the purchase and sale of the Note
purchased on the date hereof by Purchaser, and in substantially the same form and substance as
the Note issued pursuant to this Agreement, mutatis mutandis , (each a “ Subsequent Note Purchase ”
and collectively “ Subsequent Note Purchases ” ). For Purchaser to exercise such Subsequent Note
Purchase right, Purchaser shall deliver written notice, to the Company (for clarity notice sent via
electronic mail shall satisfy such written notice requirement) electing to exercise such Subsequent
Note Purchase right, which notice shall specify the principal amount of the Additional Note to be
purchased by such Purchaser ( “ Subsequent Note Amount ” ) and the date on which such purchase
and sale shall occur ( “ Subsequent Note Closing ” ), which Subsequent Note Closing shall occur
within five (5) days following such notice by such Purchaser, or such other date mutually agreed
upon by the Purchaser and Company. The terms and conditions of any Subsequent Note Purchase
shall be identical to the terms and conditions set forth in this Agreement applicable to the sale of
the Note on the date hereof, including without limitation each Subsequent Note will be in the form
of the Note issued hereto, provided that the Maturity Date thereunder shall be on ninth (9
th ) month
from the Subsequent Note ’ s issue date. Further, if a warrant to purchase Company ’ s common stock
was issued pursuant to this Agreement then Purchaser shall receive a warrant in the form as the
same form and substance as the warrant issued pursuant to this Agreement ( “ Subsequent
Warrant ” ), provided that the Termination Date of the Additional Warrant shall be the fifth (5 th )
anniversary from the issue date of the Subsequent Warrant. On or prior to any Subsequent Note
Closing(s), the Company and the Purchaser shall, upon Purchaser ’ s request, execute and deliver a
new securities purchase agreement with respect to the Subsequent Note Purchase(s) in the same
form and substance as this Agreement (each a “ Subsequent Purchase Agreement and collectively
“ Subsequent Purchase Agreements ” ), mutatis mutandis , and all the representations, warrants,
covenants, indemnities and conditions set forth herein shall be included and incorporated with
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respect to such Note Purchase, mutatis mutandis . Purchaser may assign its Subsequent Note
Purchase right hereunder to any affiliate of such Purchaser.
q)
Subsequent Financings. Notwithstanding anything contained herein if at
any time while this Note is outstanding the Company enters into any capital raising transaction,
including without limitation an equity line transaction, a loan transaction or the sale of shares of
Common Stock or securities convertible into or exercisable or exchangeable for Common Stock,
whether or not permitted under the Transaction Documents ( “ Subsequent Financing ” ), no more
than five (5) Trading Days following the closing of each such Subsequent Financing in Holder ’ s
sole and absolute discretion at least 50% of the gross proceeds therefrom ( “ Redemption Amount ” )
shall be paid to the Holder to redeem a portion of the Note ’ s balance, provided however (a) if the
Holder is holding other convertible notes similar to this Note issued by the Company (collectively
with this Note, the “ Notes ” ), the Redemption Amount shall be applied to redeem the Note specified
by the Holder, (b) the Holder shall be notified in writing of the closing of each such Subsequent
Financing within one (1) day following such closing, and (c) the Holder may elect to reject any
such redemption in whole or in part, in which case the Company may not redeem any Notes in
connection with such Subsequent Financing to the extent so rejected (for clarification, if the Holder
elects to reject any redemption in any instance, such rejection shall not affect the Holder ’ s
redemption rights hereunder in the future). To the extent the Company is obligated to redeem any
portion of the Notes pursuant to this Section but fails to do so, such default shall constitute an
Event of Default under all the Notes.
5. Transfer Agent Instructions . Upon receipt of a duly executed Notice of Conversion,
the Company shall issue irrevocable instructions to its transfer agent to issue certificates,
registered in the name of the Purchaser or its nominee, for the Conversion Shares in such
amounts as specified from time to time by the Purchaser to the Company upon conversion of
the Note, or any part thereof, in accordance with the terms thereof (the “ Irrevocable Transfer
Agent Instructions ” ). In the event that the Company proposes to replace its transfer agent, the
Company shall provide, prior to the effective date of such replacement, a fully executed
Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this
Agreement and the Securities (including but not limited to the provision to irrevocably reserve
shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the
successor transfer agent (to the Company) and the Company. Prior to registration of the
Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold
pursuant to Rule 144 without any restriction as to the number of Securities as of a particular
date that can then be immediately sold, all such certificates shall bear the restrictive legend
specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer
instructions to give effect to hereof (in the case of the Conversion Shares, prior to registration
of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may
be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a
particular date that can then be immediately sold), will be given by the Company to its transfer
agent and that the Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct
its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring
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(or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be
issued to the Purchaser upon conversion of or otherwise pursuant to the Note as and when
required by the Note and this Agreement; and (iii) it will not fail to remove (or direct its transfer
agent not to remove or impair, delay, and/or hinder its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any
certificate for any Conversion Shares issued to the Purchaser upon conversion of or otherwise
pursuant to the Note as and when required by the Note and this Agreement. Nothing in this
Section shall affect in any way the Purchaser ’ s obligations and agreement set forth in Section
2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale
of the Securities. If the Purchaser provides the Company with (i) an opinion of counsel in form,
substance and scope customary for opinions in comparable transactions, to the effect that a
public sale or transfer of such Securities may be made without registration under the 1933 Act
and such sale or transfer is effected or (ii) the Purchaser provides reasonable assurances that the
Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and in such denominations as specified
by the Purchaser. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Purchaser, by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this Section, that
the Purchaser shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. Injunction Posting of Bond. In the event the Purchaser shall elect to convert the
Note or any parts thereof, the Company may not refuse conversion or exercise based on any
claim that Purchaser or anyone associated or affiliated with Purchaser has been engaged in any
violation of law, or for any other reason. In connection with any injunction sought or attempted
by the Company, the Company shall be required to post a bond at least equal to the greater of
either: (i) the outstanding principal amount of the Note; and (ii) the market value of the
Conversion Shares sought to be converted, exercised or issued, based on the sale price per share
of Common Stock on the principal market on which it is traded.
7. Delivery of Unlegended Shares.
a)
Within three (3) business days (such third business day being the
“ Unlegended Shares Delivery Date ” ) after the business day on which the Company has
received (i) a notice that Conversion Shares, or any other Common Stock held by the Purchaser
has been sold pursuant to a registration statement or Rule 144 under the 1933 Act, (ii) a
representation that the prospectus delivery requirements, or the requirements of Rule 144, as
applicable and if required, have been satisfied, (iii) the original share certificates representing
the shares of Common Stock that have been sold, and (iv) in the case of sales under Rule 144,
customary representation letters of the Purchaser and, if required, Purchaser ’ s broker regarding
compliance with the requirements of Rule 144, the Company at its expense, (y) shall deliver,
and shall cause legal counsel selected by the Purchaser to deliver to its transfer agent (with
copies to Purchaser) an appropriate instruction and opinion of such counsel, directing the
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SPA – PRLX, T1, 2019-02-27
delivery of shares of Common Stock without any legends including the legend set forth in
Section 4(h) above (the “ Unlegended Shares ” ); and (z) cause the transmission of the
certificates representing the Unlegended Shares together with a legended certificate
representing the balance of the submitted Common Stock certificate, if any, to the Purchaser at
the address specified in the notice of sale, via express courier, by electronic transfer or otherwise
on or before the Unlegended Shares Delivery Date.
b)
The Company understands that a delay in the delivery of the Unlegended
Shares later than the Unlegended Shares Delivery Date could result in economic loss to the
Purchaser. As compensation to Purchaser for such loss, the Company agrees to pay late
payment fees (as liquidated damages and not as a penalty) to the Purchaser for late delivery of
Unlegended Shares in the amount of $250.00 per business day after the Unlegended Shares
Delivery Date. If during any three hundred and sixty (360) day period, the Company fails to
deliver Unlegended Shares as required by this Section for an aggregate of thirty (30) days, then
Purchaser or assignee holding Securities subject to such default may, at its option, require the
Company to redeem all or any portion of the shares subject to such default at a price per share
equal to the greater of (i) 200% of the most recent closing price of the Common Stock or (ii)
the parity value of the Default Sum to be paid (as defined in Section 3.16 of the Note)
( “ Unlegended Redemption Amount ” ). The Company shall pay any payments incurred under
this Section in immediately available funds upon demand.
8. Conditions to the Company ’ s Obligation to Sell. The obligation of the Company
hereunder to issue and sell the Note to the Purchaser at the Closing is subject to the satisfaction,
at or before the Closing Date of each of the following conditions provided that these conditions
are for the Company ’ s sole benefit and may be waived by the Company at any time in its sole
discretion:
a)
The Purchaser shall have executed this Agreement and delivered the same
to the Company.
b)
The Purchaser shall have delivered the Purchase Price to the Company.
c)
The representations and warranties of the Purchaser shall be true and correct
in all material respects as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific date), and the
Purchaser shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by the Purchaser at or prior to the Closing Date.
d)
No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
9. Conditions to The Purchaser ’ s Obligation to Purchase . The obligation of the
Purchaser hereunder to purchase the Note at the Closing is subject to the satisfaction, at or
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SPA – PRLX, T1, 2019-02-27
before the Closing Date of each of the following conditions, provided that these conditions are
for the Purchaser ’ s sole benefit and may be waived by the Purchaser at any time in its sole
discretion:
a)
The Company shall have executed this Agreement and delivered the same
to the Purchaser.
b)
The Company shall have delivered to the Purchaser the duly executed Note
(in such denominations as the Purchaser shall request) in accordance with Section 1 above.
c)
The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Purchaser, shall have been delivered to and acknowledged in writing by the
Company ’ s Transfer Agent (a copy of which written acknowledgment shall be provided to
Purchaser prior to Closing).
d)
The representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing Date as though made at
such time (except for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. The Purchaser shall have
received a certificate or certificates reasonably requested by the Purchaser including, but not
limited to certificates with respect to the Company ’ s Formation Documents, By-laws, and
Board of Directors ’ resolutions relating to the transactions contemplated hereby.
e)
No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
f)
No event shall have occurred which could reasonably be expected to have
a Material Adverse Effect on the Company including but not limited to a change in the 1934
Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act
reporting obligations.
g)
The Conversion Shares shall have been authorized for quotation on the
OTCBB, OTCQB, and OTC Pink and trading of the Common Stock on the OTCBB, OTCQB,
and OTC Pink shall not have been suspended by the SEC or the OTC Markets Group.
10. Governing Law; Miscellaneous.
a)
Governing Law . This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to principles of conflicts of laws
thereof or any other State. Any action brought by any party against any other party hereto
concerning the transactions contemplated by this Agreement shall be brought only in the state
courts of New York or in the federal courts located in the state and county of New York. The
parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of
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any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. The parties executing this Agreement and other
agreements referred to herein or delivered in connection herewith on behalf of the
Company agree to submit to the in personam jurisdiction of such courts and hereby
irrevocably waive trial by jury. 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
Agreement 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 hereto 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 contemplated hereby 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.
b)
Removal of Restrictive Legends. In the event that Purchaser has any shares
of the Company ’ s Common Stock bearing any restrictive legends, and Purchaser, through its
counsel or other representatives, submits to the Transfer Agent any such shares for the removal
of the restrictive legends thereon in connection with a sale of such shares pursuant
to any exemption to the registration requirements under the Securities Act, and the Company
and or its counsel refuses or fails for any reason (except to the extent that such refusal or failure
is based solely on applicable law that would prevent the removal of such restrictive legends) to
render an opinion of counsel or any other documents or certificates required for the removal of
the restrictive legends, then the Company hereby agrees and acknowledges that the Purchaser
is hereby irrevocably and expressly authorized to have counsel to the Purchaser render any and
all opinions and other certificates or instruments which may be required for purposes of
removing such restrictive legends, and the Company hereby irrevocably authorizes and directs
the Transfer Agent to, without any further confirmation or instructions from the Company, issue
any such shares without restrictive legends as instructed by the Purchaser, and surrender to a
common carrier for overnight delivery to the address as specified by the Purchaser, certificates,
registered in the name of the Purchaser or its designees, representing the shares of Common
Stock to which the Purchaser is entitled, without any restrictive legends and otherwise freely
transferable on the books and records of the Company.
c)
Filing Requirements . From the date of this Agreement until the Notes are
no longer outstanding, the Company will timely and voluntarily comply with all reporting
requirements that are applicable to an issuer with a class of shares registered pursuant to Section
12(g) of the 1934 Act, whether or not the Company is then subject to such reporting
requirements, and comply with all requirements related to any registration statement filed
pursuant to this Agreement. The Company will use reasonable efforts not to take any action or
file any document (whether or not permitted by the 1933 Act or the 1934 Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said acts until the Notes are no longer outstanding. The Company
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will maintain the quotation or listing of its Common Stock on the OTCBB, OTCQB, NYSE, or
NASDAQ Stock Market (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock (the “ Principal Market ” ), and will comply in all
respects with the Company ’ s reporting, filing and other obligations under the bylaws or rules
of the Principal Market, as applicable. The Company will provide Purchaser with copies of all
notices it receives notifying the Company of the threatened and actual delisting of the Common
Stock from any Principal Market. As of the date of this Agreement and the Closing Date, the
OTCQB, is the Principal Market. Until the Note is no longer outstanding, the Company will
continue the listing or quotation of the Common Stock on a Principal Market and will comply
in all respects with the Company ’ s reporting, filing and other obligations under the bylaws or
rules of the Principal Market.
d)
Fees and Expenses. On or prior to the Closing, the Company shall pay or
reimburse to Purchaser a non-refundable, non-accountable sum equal to $4,440.00 as and for
the fees, costs and expenses (including without limitation legal fees and disbursements and due
diligence and administrative expenses) incurred by the Purchaser in connection with the
Purchaser ’ s due diligence and negotiation, preparation and execution of the Transaction
Documents and consummation of the Transactions. The Purchaser may withhold and offset the
balance of such amount from the payment of its Purchase Price otherwise payable hereunder at
Closing, which offset shall constitute partial payment of such Purchase Price in an amount equal
to such offset. Except as expressly set forth in this Agreement or the Note 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, stamp taxes and other taxes and duties levied in connection with the delivery of any
Securities to the Purchaser.
e)
Usury . To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to
be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought
by the Purchaser in order to enforce any right or remedy under the Note. Notwithstanding any
provision to the contrary contained in herein or under the Note, it is expressly agreed and
provided that the total liability of the Company under the Note for payments in the nature of
interest shall not exceed the maximum lawful rate authorized under applicable law (the
“ Maximum Rate ” ), and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the nature of interest
that the Company may be obligated to pay under the Note or herein exceed such Maximum
Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable
to the Note is increased or decreased by statute or any official governmental action subsequent
to the date hereof, the new maximum contract rate of interest allowed by law will be the
Maximum Rate applicable to the Note from the effective date forward, unless such application
is precluded by applicable law. If under any circumstances whatsoever, interest in excess of
the Maximum Rate is paid by the Company to the Purchaser with respect to indebtedness
evidenced by the Note, such excess shall be applied by the Purchaser to the unpaid principal
balance of any such indebtedness or be refunded to the Company, the manner of handling such
excess to be at the Purchaser ’ s election.
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f)
Headings. The headings of this Agreement are for convenience of reference
only and shall not form part of, or affect the interpretation of, this Agreement.
g)
Severability . In the event that any provision of this Agreement 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 provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision hereof.
h)
Entire Agreement; Amendments . This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or therein, neither the
Company nor the Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended other than
by an instrument in writing signed by the Purchaser.
i)
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: (i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with
charges prepaid, or (iv) transmitted by hand delivery, telegram, email or facsimile, addressed
as set forth below or to such other address as such party shall have specified most recently by
written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by email or facsimile with accurate
confirmation generated by the transmitting facsimile machine or computer, at the address, email
address or facsimile number 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 (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications shall be:
Purchaser:
EMA Financial, LLC
40 Wall Street, 17 th Floor
New York, NY 10005
Attn: Jamie Beitler
jbeitler@emafin.com
Company:
Parallax Health Sciences, Inc.
1327 Ocean Ave, Suite B
Santa Monica, CA 90401
Attn: Paul R. Arena, CEO
Email: ________________
Fax: ________________
Each party shall provide notice to the other party of any change in address.
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SPA – PRLX, T1, 2019-02-27
j)
Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Neither the Company nor the
Purchaser shall assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the
Purchaser may assign its rights hereunder to any person that purchases Securities in a private
transaction from the Purchaser or to any of its “ affiliates, ” as that term is defined under the 1934
Act, without the consent of the Company.
k)
Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.
l)
Survival. The representations and warranties of the Company and the
agreements and covenants set forth in this Agreement shall survive the Closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of the Purchaser.
The Company agrees to indemnify and hold harmless the Purchaser and all their officers,
directors, employees and agents for loss or damage arising as a result of or related to any breach
or alleged breach by the Purchaser of any of its representations, warranties and covenants set
forth in this Agreement or any of its covenants and obligations under this Agreement, including
advancement of expenses as they are incurred.
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.
n)
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.
o)
Remedies. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Purchaser by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Agreement will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this Agreement,
that the Purchaser shall be entitled, in addition to all other available remedies at law or in equity,
and in addition to the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement and to enforce specifically the terms and
provisions hereof, without the necessity of showing economic loss and without any bond or
other security being required.
p)
Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be an original
and all of which together shall be deemed to be one and the same agreement. Any signature
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SPA – PRLX, T1, 2019-02-27
transmitted by facsimile, e-mail, or other electronic means shall be deemed to be an original
signature.
[Remainder of Page Intentionally Left Blank]
20
SPA – PRLX, T1, 2019-02-27
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
PARALLAX HEALTH SCIENCES, INC.
By:
Name: Paul R. Arena
Title: CEO
EMA FINANCIAL, LLC
By:
Name: Jamie Beitler
Title: Authorized Signatory
GUARANTY
Each of the undersigned subsidiaries of the Company jointly and severally, absolutely,
unconditionally and irrevocably, guarantees to the Purchaser and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and performance by the
Company when due (whether at the stated maturity, by acceleration or otherwise) of all amounts
due under, and all other obligations under, the Note. Each such subsidiary ’ s liability under this
Guaranty shall be unlimited, open and continuous for so long as this Guaranty remains in force.
PARALLAX HEALTH MANAGEMENT, PARALLAX COMMUNICATIONS,
INC.
INC.
By:
By:
Print Name:
Print Name:
Title:
Title:
PARALLAX BEHAVIORAL HEALTH, INC. PARALAX DIAGNOSTICS, INC.
By:
By:
Print Name:
Print Name:
Title:
Title:
ROXSAN PHARMACY, INC
By:
Print Name:
Title:
21
SPA – PRLX, T1, 2019-02-27
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE 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. 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
Issue Date: February 27, 2019
THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ” ) certifies that, for value
received, EMA Financial, LLC, a Delaware limited liability company (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 Issue Date (as defined above) and on or prior to the close of business on the fifth (5 th ) anniversary of
the Issue Date (the “ Expiration Date ” ) but not thereafter, to subscribe for and purchase from PARALLAX
HEALTH SCIENCES, INC., a Nevada corporation (the “ Company ” ), up to 300,000 shares (the “ Warrant
Shares ” ) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this
Warrant) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be
equal to the Exercise Price, as defined in Section 2(b), subject to adjustment herein. This Warrant is issued
by the Company as of the date hereof in connection with that certain securities purchase agreement dated
February 27, 2019 by and among the Company and the Holder.
Section 1.
Definitions . Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ” ), dated on or
about the date hereof, among the Company and the Holder, among others, pursuant to which this Warrant is
being issued.
Section 2.
Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may
be made, in whole or in part, at any time and from time to time on or after the Issue Date and on or
before the Expiration
b)
Date by delivery to the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the address of the Holder appearing on
the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form
annexed hereto ( “ Notice of Exercise ” ) (which delivery may be made in any manner set forth in the
Purchase Agreement, including without limitation by email); and, within three (3) Trading Days of
the date said Notice of Exercise is delivered to the Company, the Company shall have received
payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier ’ s
check drawn on a United States bank, unless payment is being made by cashless exercise as provided
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Warrant – PRLX, T1, 2019-02-27
in Section 2(c) below. Notwithstanding anything herein to the contrary, the Holder shall not be
required to physically surrender this Warrant to the Company until the Holder has purchased all of
the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case the
Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of
the date the final Notice of Exercise is delivered to the Company. 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. The Holder and the Company
shall maintain records showing the number of Warrant Shares purchased and the date of such
purchases. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that,
by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time
may be less than the amount stated on the face hereof.
c)
Exercise Price. The exercise price per share of the Common Stock under this Warrant
shall be $0.15 subject to adjustment hereunder (the “ Exercise Price ” ).
d)
Cashless Exercise. In the event that the shares underlying this Warrant are not
registered for resale with the Securities and Exchange Commission under an effective registration
statement with a current prospectus, then this Warrant may also be exercised by means of a “ cashless
exercise ” in which the Holder shall be entitled to receive a certificate for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (B), where:
(A) = the Market Price (as defined below);
(B) = the Exercise Price of this Warrant (as adjusted); and
(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance
with the terms of this Warrant by means of a cash exercise rather than a cashless
exercise.
“ Market Price ” shall mean the closing sale price per share of Common Stock on the principal
market where the Common Stock is traded on the Trading Day immediately preceding delivery of the
Notice of Exercise or the Closing Date, whichever is greater. Notwithstanding anything herein to the
contrary, on the Expiration Date, this Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
e)
Holder ’ s Restrictions . 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, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the
applicable Notice of Exercise, the Holder (together with the Holder ’ s Affiliates, and any other person
or entity 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 (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any rights or securities convertible into or exercisable for Common
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Warrant – PRLX, T1, 2019-02-27
Stock ( “ Common Stock Equivalents ” )) subject to a limitation on conversion or 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 Section 2(d), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. To the extent that the limitation contained in this Section 2(d) 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. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), 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 (x) the Company ’ s most recent periodic or
annual report, as the case may be, (y) a more recent public announcement by the Company or (z) any
other notice by the Company or the Company ’ s Transfer Agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within
two Trading Days confirm orally and in writing 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 4.9% 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. By written notice to the Company,
the Holder may at any time and from time to time increase or decrease the Beneficial Ownership
Limitation to any other percentage specified in such notice (or specify that the Beneficial Ownership
Limitation shall no longer be applicable), provided, however, that (A) any such increase (or
inapplicability) shall not be effective until the sixty-first (61st) day after such notice is delivered to
the Company, and (B) any such increase or decrease shall apply only to the Holder and not to any
other holder of Warrants. The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Warrant.
f)
Mechanics of Exercise .
i. Delivery of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the transfer agent of the Company to the Holder by
crediting the account of the Holder ’ s prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission ( “ DWAC ” ) system if
the Company is a participant in such system and either (x) there is an effective
registration statement permitting the resale of the Warrant Shares by the Holder, or (y)
such shares may be sold pursuant to Rule 144, and otherwise by physical delivery to
the address specified by the Holder in the Notice of Exercise, within 3 Trading Days
from the delivery to the Company of the Notice of Exercise Form, surrender of this
Warrant (if required) and payment of the aggregate Exercise Price as set forth above
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Warrant – PRLX, T1, 2019-02-27
( “ Warrant Share Delivery Date ” ). This Warrant shall be deemed to have been
exercised on the date the Exercise Price is received by the Company. The Warrant
Shares shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of record of
such shares for all purposes, as of the date the Warrant has been exercised by payment
to the Company of the Exercise Price (or by cashless exercise) and all taxes required
to be paid by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of
such shares, have been paid. If the Company fails for any reason to deliver to the
Holder the Warrant Shares or certificates evidencing the Warrant Shares subject to a
Notice of Exercise by the Warrant Share Delivery Date the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, $1,000.00 per Trading
Day (increasing to $2,000.00 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant Share
Delivery Date until such shares or certificates are delivered.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights . If the Company fails to cause its transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant Shares (or
otherwise transmit such shares via DWAC to the Holders DTC account) pursuant to
this Section 2(e) by the Warrant Share Delivery Date, then the Holder will have the
right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the Holder, if the Company fails
to cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares (or otherwise transmit such shares via DWAC to the
Holders DTC account) pursuant to an exercise on or before the Warrant Share
Delivery Date and if after such date the Holder is required by its broker to purchase (in
an open market transaction or otherwise) or the Holder ’ s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder
of the Warrant Shares which the Holder anticipated receiving upon such exercise (a
“ Buy-In ” ), then the Company shall (1) pay in cash to the Holder the amount by which
(x) the Holder ’ s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (B) the price at
which the sell order giving rise to such purchase obligation was executed, and (2) at
the option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver to the
Holder the number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000.00 to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such purchase obligation of
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Warrant – PRLX, T1, 2019-02-27
$10,000.00, under clause (1) of the immediately preceding sentence the Company
shall be required to pay the Holder $1,000.00. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder ’ s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company ’ s failure to timely
deliver the Warrant Shares or certificates representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction
of a share which Holder would otherwise be entitled to purchase upon such exercise,
the Company shall at its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise Price or round
up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in the
name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that in the event certificates for Warrant Shares are to be issued in
a name other than the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly executed by the
Holder; and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
Section 3.
Certain Adjustments .
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (B) subdivides outstanding shares of Common Stock into a
larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price
of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination or re-classification.
b)
Subsequent Equity Sales. Except for Dilutive Issuances (as defined below) issued to
Company employees, and members of the Company ’ s board of directors 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
5
Warrant – PRLX, T1, 2019-02-27
any offer, sale, grant or any option to purchase or other disposition) any Common Stock or securities
entitling any Person to acquire shares of Common Stock (upon conversion, exercise or otherwise), 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 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 3(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 3(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.
c)
Subsequent Rights Offerings. If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to
Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less
than the closing price at the record date mentioned below, then the Exercise Price shall be multiplied
by a fraction, of which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the numerator shall be the number
of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of shares issued (assuming
receipt by the Company in full of all consideration payable upon exercise of such rights, options or
warrants) would purchase at such closing price. Such adjustment shall be made whenever such rights
or warrants are issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or warrants.
d)
Pro Rata Distributions . If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or
purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in
each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the closing price determined as of the
record date mentioned above, and of which the numerator shall be such closing price on such record
date less the then per share fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the adjustments shall be described
in a statement provided to the Holder of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock. Such adjustment
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Warrant – PRLX, T1, 2019-02-27
shall be made whenever any such distribution is made and shall become effective immediately after
the record date mentioned above.
e)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the
Company effects any merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (D) 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 (each “ Fundamental
Transaction ” ), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to
receive, for each Warrant Share that would have been issuable upon such exercise immediately prior
to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation, and any
additional consideration (the “ Alternate Consideration ” ) receivable as a result of such 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. For purposes of any such exercise,
the 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 to the Company or surviving 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. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this Section 3(e) and insuring that
this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction. Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “ Rule 13e-3 transaction ”
as defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended, or (3) a
Fundamental Transaction involving a person or entity not traded on a national securities exchange,
the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the
Company or any successor entity shall pay at the Holder ’ s option, exercisable at any time
concurrently with or within 30 days after the consummation of the Fundamental Transaction, an
amount of cash equal to the value of this Warrant as determined in accordance with the Black Scholes
Option Pricing Model obtained from the “ OV ” function on Bloomberg L.P. using (i) a price per share
of Common Stock equal to the closing price of the Common Stock for the Trading Day immediately
preceding the date of consummation of the applicable Fundamental Transaction, (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this
Warrant as of the date of consummation of the applicable Fundamental Transaction and (iii) an
expected volatility equal to the 100 day volatility obtained from the “ HVT ” function on Bloomberg
L.P. determined as of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction.
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Warrant – PRLX, T1, 2019-02-27
f)
Calculations . All calculations under this Section 3 shall be made to the nearest two
decimal places or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
g)
Notice to Holder .
i. Adjustment to Exercise Price . Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall promptly mail to the
Holder a notice setting forth the Exercise Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder . If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock; (B) the
Company shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock; (C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or
property; (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company; then, in each case, the
Company shall cause to be mailed to the Holder at its last address as it shall appear
upon the Warrant Register of the Company, at least 7 business days prior to the
applicable record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to exchange their shares of
the Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange; provided that
the failure to mail such notice or any defect therein or in the mailing thereof shall not
affect the validity of the corporate action required to be specified in such notice. The
Holder is entitled to exercise this Warrant during the period commencing on the date
of such notice to the effective date of the event triggering such notice.
Section 4.
Transfer of Warrant.
a)
Transferability . Subject to compliance with any applicable securities laws and the
conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
Agreement, this Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of
the Company or its designated agent, together with a written assignment of this Warrant substantially
in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if
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required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new
Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a written notice specifying
the names and denominations in which new Warrants are to be issued, signed by the Holder or its
agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be
identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “ Warrant Register ” ), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
d)
Transfer Restrictions. If, at the time of the surrender of this Warrant in connection
with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an
effective registration statement under the Securities Act and under applicable state securities or blue
sky laws or eligible for resale under Rule 144, the Company may require, as a condition of allowing
such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the
provisions of Section 5.7 of the Purchase Agreement.
Section 5.
Miscellaneous.
a)
No Rights as Shareholder Until Exercise . This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set
forth in Section 2(e)(i).
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such
Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall not be a Business Day, then such
action may be taken or such right may be exercised on the next succeeding Business Day.
d)
Authorized Shares.
The Company covenants that during the from the Issue Date herein it will
reserve from its authorized and unissued Common Stock, the number of shares of Common
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Warrant – PRLX, T1, 2019-02-27
Stock equal to 700% of the total shares of Common Stock issuable upon the full exercise of
this Warrant (without regard to the beneficial ownership limitations contained herein). The
Company further covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action as may be necessary to
assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the trading market upon which the
Common Stock may be listed. The Company covenants that all Warrant Shares which may
be issued upon the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall
not by any action, including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger, 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, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (a) not increase the par
value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
e)
Jurisdiction . All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase
Agreement.
f)
Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and
federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder ’ s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on
the Expiration Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder
such amounts as shall be sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys ’ fees, including those of appellate proceedings, incurred by Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
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Warrant – PRLX, T1, 2019-02-27
h)
Notices. Any notice, request or other document required or permitted to be given or
delivered to the Holder by the Company shall be delivered in accordance with the notice provisions
of the Purchase Agreement.
i)
Limitation of Liability . No provision hereof, in the absence of any affirmative action
by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the
rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j)
Remedies. Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive
and not to assert the defense in any action for specific performance that a remedy at law would be
adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the
rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder. The provisions of
this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.
m)
Severability . Wherever possible, each provision of this Warrant shall be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this Warrant
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.
o)
Signatures. Any signature transmitted by facsimile, e-mail, or other electronic means
shall be deemed to be an original signature.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto
duly authorized as of the date first above indicated.
PARALLAX HEALTH SCIENCES, INC.
By:__________________________________________
Name: Paul R. Arena
Title: CEO
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Warrant – PRLX, T1, 2019-02-27
NOTICE OF EXERCISE
TO: PARALLAX HEALTH SCIENCES, INC.
RE: Warrant originally issued on or about February 27, 2019 to EMA Financial, LLC for 300,000
Warrant Shares.
(1) The undersigned hereby elects to purchase _______________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith
payment of the exercise price in full, together with all applicable transfer taxes, if any. Total shares of
common stock to be issued:
.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with respect to
the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a
certificate to:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor . The undersigned is an “ accredited investor ” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Warrant Holder: ________________________________________________________________________
Signature of Authorized Signatory of Warrant Holder : _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
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Warrant – PRLX, T1, 2019-02-27
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, _______
Holder ’ s Signature: _____________________________
Holder ’ s Address:
_____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of
the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank
or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
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