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 18, 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 March 18, 2019, Parallax Health Sciences, Inc., a Nevada corporation (the “ Company ” ), issued a 12% fixed convertible promissory note (the “ Note ” ) in the maximum aggregate principal sum of $260,000, with a maximum aggregate of $250,000 in proceeds disbursed to the Company after an original issue discount ( “ OID ” ) of $10,000. The Note matures six months from the effective date each payment of disbursed proceeds is made ( “ 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 price of $0.10 per share.
In addition, the holder of the Note was issued Warrants to purchase 1,300,000 shares of the Company ’ s common stock at an initial exercise price of $0.20 per share for a period of five (5) years.
A form of the Note and the Warrant are attached to this Current Report as Exhibits 4.1 , and 10.1 , 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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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 22, 2019 |
/s/ Calli R. Bucci |
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Calli R. Bucci |
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Chief Financial Officer |
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EXHIBIT A
Note: March 18, 2019
NEITHER THESE SECURITI ES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION 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.
THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE
EVENT OF A PARTIAL REDEMPTION OR CONVERSION.
AS A RESULT,
FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS
NOTE, THE OUTSTANDING PRINCIPAL SUM REPRESENTED BY THIS NOTE MAY
BE LESS THAN THE PRINCIPAL SUM AND ACCRUED INTEREST SET FORTH
BELOW.
12% FIXED CONVERTIBLE PROMISSORY NOTE
OF
PARALLAX HEALTH SCIENCES, INC.
Issuance Date: March 18, 2019
Total Face Value of Note: $260,000
Initial Consideration: $125,000
Initial Original Issue Discount: $5,000
Initial Principal Sum Due: $130,000
T HIS N OTE is a duly authorized Fixed Convertible Promissory Note of Parallax Health
Sciences, Inc., a corporation duly organized and existing under the laws of the State of Nevada
(the “ Company ” ), designated as the Company's 12% Fixed Convertible Promissory Note in the
principal amount of $260,000 (the “ Note ” ). This Note will become effective only upon
execution by both parties and delivery of the first payment of consideration by the Holder,
defined below, (the “ Effective Date ” ).
F OR V ALUE R ECEIVED , the Company hereby promises to pay to the order of Harbor
Gates Capital, LLC or its registered assigns or successors-in-interest (the “ Holder ” ) the
principal sum of $260,000 (the “ Principal Sum ” ) and to pay “ guaranteed ” interest on the
principal balance hereof at an amount equivalent to 12% of the Principal Sum, to the extent such
Principal Sum and “ guaranteed ” interest and any other interest, fees, liquidated damages and/or
items due to Holder herein have not been repaid or converted into the Company's Common Stock
(the “ Common Stock ” ), in accordance with the terms hereof. Upon the execution of this Note
the sum of $125,000 (the “ Initial Consideration ” ) shall be remitted and delivered to the
Company, and $5,000 (the “ Initial Original Issue Discount ” ) shall be retained by the Holder
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through an original issue discount (the “ OID ” ) for due diligence and legal bills related to this
transaction. The OID is set at $10,000 on all money funded, and shall be prorated based on the
Consideration, defined below, actually paid by the Holder. The Company covenants that within 1
month(s) of the Effective Date of the Note, it shall utilize approximately $125,000 of the
proceeds in the manner set forth on Schedule 1, attached hereto (the “ Use of Proceeds ” ), and
shall promptly provide evidence thereof to Holder, in sufficient detail as reasonably requested by
Holder.
For a period of twenty-one (21) calendar days, the Holder may pay additional
consideration (each, a “ Consideration ” ) to the Company in such amounts and at such dates
(each, an “ Additional Consideration Date ” ) as Holder may choose in its sole discretion. The
Principal Sum due to Holder shall be prorated based on the Consideration actually paid by
Holder (plus the “ guaranteed ” interest and the prorated OID, both which are prorated based on
the Consideration actually paid by the Holder, as well as any other interest or fees) such that the
Company is only required to repay the amount funded and the Company is not required to repay
any unfunded portion of this Note. The Maturity Date is six months from the Effective Date of
each payment (the “ Maturity Date ” ) and is the date upon which the Principal Amount of this
Note, as well as any unpaid interest and other fees, shall be due and payable.
In addition to the “ guaranteed ” interest referenced above, and in the Event of Default
pursuant to Section 2.00(a), additional interest will accrue from the date of the Event of Default
at the rate equal to the lower of 22% per annum or the highest rate permitted by law (the
“ Default Rate ” ).
This Note will become effective only upon the execution by both parties, including the
execution of Exhibits B, C, D, E, Schedule 1, and the Irrevocable Transfer Agent Instructions
(the “ Date of Execution ” ) and delivery of the initial payment of consideration by the Holder (the
“ Effective Date ” ).
This Note may be prepaid by the Company, in whole or in part, according to the
following schedule:
Days Since Effective Date
Prepayment Amount
Under 90
110% of Principal Amount
91-135
120% of Principal Amount
136-180
140% of Principal Amount
After 180 days from the Effective Date this Note may not be prepaid without written
consent from Holder, which consent may be withheld, delayed or denied in Holder ’ s sole and
absolute discretion. Whenever any amount expressed to be due by the terms of this Note is due
on any day which is not a Business Day (as defined below), the same shall instead be due on the
next succeeding day which is a Business Day. If the Note is in default, per Section 2.00(a)
below, the Company may not prepay the Note without written consent of the Holder.
For purposes hereof the following terms shall have the meanings ascribed to them below:
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Business Day shall mean any day other than a Saturday, Sunday or a day on which
commercial banks in the City of New York are authorized or required by law or executive order
to remain closed.
Conversion Price shall be fixed at a price per share equal to $.10.
“ Principal Amount ” shall refer to the sum of (i) the original principal sum of this Note
(including the original issue discount, prorated if the Note has not been funded in full), (ii) any
additional payments made by the Holder towards the Principal Sum (iii) all guaranteed and other
accrued but unpaid interest hereunder, (iv) any fees due hereunder, (v) liquidated damages, and
(vi) any default payments owing under the Note, in each case previously paid or added to the
Principal Amount.
“ Principal Market ” shall refer to the primary exchange on which the Company ’ s
common stock is traded or quoted.
Trading Day shall mean a day on which there is trading or quoting for any security on
the Principal Market.
Underlying Shares means the shares of common stock into which the Note is
convertible (including interest, fees, liquidated damages and/or principal payments in common
stock as set forth herein) in accordance with the terms hereof.
The following terms and conditions shall apply to this Note:
Section 1.00 Conversion .
(a)
Conversion Right. Subject to the terms hereof and restrictions and
limitations contained herein, the Holder shall have the right, at the Holder's sole option, at any
time and from time to time to convert in whole or in part the outstanding and unpaid Principal
Amount under this Note into shares of Common Stock as per the Conversion Price, but not to
exceed the Restricted Ownership Percentage, as defined in Section 1.00(f). The date of any
conversion notice ( “ Conversion Notice ” ) hereunder shall be referred to herein as the
“ Conversion Date ” . The Conversion Price shall be equitably adjusted in the event of a forward
split, stock dividend, or the like, but shall not be adjusted in the event of a reverse split,
recombination, or the like.
(b)
Stock Certificates or DWAC . The Company will deliver to the Holder, or
Holder ’ s authorized designee, no later than 2 Trading Days after the Conversion Date, a
certificate or certificates (which certificate(s) shall be free of restrictive legends and trading
restrictions if the shares of Common Stock underlying the portion of the Note being converted
are eligible under a resale exemption pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) of the
Securities Act of 1933, as amended) representing the number of shares of Common Stock being
acquired upon the conversion of this Note. In lieu of delivering physical certificates representing
the shares of Common Stock issuable upon conversion of this Note, provided the Company's
transfer agent is participating in DTC ’ s FAST program, the Company shall instead use
commercially reasonable efforts to cause its transfer agent to electronically transmit such shares
issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder ’ s
(or such designee ’ s) broker with DTC through its DWAC program (provided that the same time
periods herein as for stock certificates shall apply).
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(c)
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 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.
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, or otherwise), will be automatically added to the
Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.
(d)
Delivery Timeline. If the Company fails to deliver to the Holder such
certificate or certificates (or shares through the DWAC program) pursuant to this Section (free of
any restrictions on transfer or legends, if eligible) prior to 3 Trading Days after the Conversion
Date, the Company shall pay to the Holder as liquidated damages an amount equal to $2,000 per
day, until such certificate or certificates are delivered. The Company acknowledges that it would
be extremely difficult or impracticable to determine the Holder ’ s actual damages and costs
resulting from a failure to deliver the Common Stock and the inclusion herein of any such
additional amounts are the agreed upon liquidated damages representing a reasonable estimate of
those damages and costs. Such liquidated damages will be automatically added to the Principal
Sum of the Note and tack back to the Effective Date for purposes of Rule 144.
(e)
Reservation of Underlying Securities. The Company covenants that it will
at all times reserve and keep available for Holder, out of its authorized and unissued Common
Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive
rights or any other actual contingent purchase rights of persons other than the Holder, five times
the number of shares of Common Stock as shall be issuable (taking into account the adjustments
under this Section 1.00, but without regard to any ownership limitations contained herein) upon
the conversion of this Note (consisting of the Principal Amount) under the formula in Section
2.00(c) below to Common Stock (the “ Required Reserve ” ). The Company covenants that all
shares of Common Stock that shall be issuable will, upon issue, be duly authorized, validly
issued, fully-paid, non-assessable and freely-tradable (if eligible). If the amount of shares on
reserve in Holder ’ s name at the Company ’ s transfer agent for this Note shall drop below the
Required Reserve, the Company will, within 2 Trading Days of notification from Holder, instruct
the transfer agent to increase the number of shares so that the Required Reserve is met. In the
event that the Company does not instruct the transfer agent to increase the number of shares so
that the Required Reserve is met, the Holder will be allowed, if applicable, to provide this
instruction as per the terms of the Irrevocable Transfer Agent Instructions attached to this Note.
The Company agrees that the maintenance of the Required Reserve is a material term of this
Note and any breach of this Section 1.00(e) will result in a default of the Note.
(f)
Conversion Limitation . The Holder will not submit a conversion to the
Company that would result in the Holder beneficially owning more than 9.99% of the then total
outstanding shares of the Company ( “ Restricted Ownership Percentage ” ).
(g)
Conversion Delays. If the Company fails to deliver shares in accordance
with the timeframe stated in Section 1.00(b), the Holder, at any time prior to selling all of those
shares, may rescind any portion, in whole or in part, of that particular conversion attributable to
the unsold shares. The rescinded conversion amount will be returned to the Principal Sum with
the rescinded conversion shares returned to the Company, under the expectation that any
returned conversion amounts will tack back to the Effective Date.
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(h)
Shorting and Hedging. Holder may not engage in any “ shorting ” or
“ hedging ” transaction(s) in the Common Stock prior to conversion.
(i)
Conversion Right Unconditional . If the Holder shall provide a Conversion
Notice as provided herein, the Company's obligations to deliver Common Stock shall be absolute
and unconditional, irrespective of any claim of setoff, counterclaim, recoupment, or alleged
breach by the Holder of any obligation to the Company.
Section 2.00 Defaults and Remedies .
(a)
Events of Default. An “ Event of Default ” is: (i) a default in payment of
any amount due hereunder which default continues for more than 5 Trading Days after the due
date; (ii) a default in the timely issuance of underlying shares upon and in accordance with terms
of Section 1.00, which default continues for 2 Trading Days after the Company has failed to
issue shares or deliver stock certificates within the 3rd Trading Day following the Conversion
Date; (iii) if the Company does not issue the press release or file the Current Report on Form 8-
K, in each case in accordance with the provisions and the deadlines referenced Section 4.00(j);
(iv) failure by the Company for 3 days after notice has been received by the Company to comply
with any material provision of this Note; (v) failure of the Company to remain compliant with
DTC, thus incurring a “ chilled ” status with DTC; (vi) any default of any mortgage, indenture or
instrument which may be issued, or by which there may be secured or evidenced any
indebtedness, for money borrowed by the Company or for money borrowed the repayment of
which is guaranteed by the Company, whether such indebtedness or guarantee now exists or
shall be created hereafter; (vii) if the Company is subject to any Bankruptcy Event; (viii) any
failure of the Company to satisfy its “ filing ” obligations under the Securities Exchange Act of
1934, as amended (the “ 1934 Act ” ) and the rules and guidelines issued by OTC Markets News
Service, OTCMarkets.com and their affiliates; (ix) failure of the Company to remain in good
standing with its state of domicile; (x) any failure of the Company to provide the Holder with
information related to its corporate structure including, but not limited to, the number of
authorized and outstanding shares, public float, etc. within 1 Trading Day of request by Holder;
(xi) failure by the Company to maintain the Required Reserve in accordance with the terms of
Section 1.00(e); (xii) failure of Company ’ s Common Stock to maintain a closing bid price in its
Principal Market for more than 3 consecutive Trading Days; (xiii) any delisting from a Principal
Market for any reason; (xiv) failure by Company to pay any of its Transfer Agent fees in excess
of $2,000 or to maintain a Transfer Agent of record; (xv) failure by Company to notify Holder of
a change in Transfer Agent within 24 hours of such change; (xvi) any trading suspension
imposed by the United States Securities and Exchange Commission (the “ SEC ” ) under Sections
12(j) or 12(k) of the 1934 Act; (xvii) failure by the Company to meet all requirements necessary
to satisfy the availability of Rule 144 to the Holder or its assigns, including but not limited to the
timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC,
requirements for XBRL filings, and requirements for disclosure of financial statements on its
website; (xviii) failure of the Company to abide by the Use of Proceeds or failure of the Company to
inform the Holder of a change in the Use of Proceeds; or (xix) failure of the Company to abide by
the terms of the right of first refusal contained in Section 4.00(l).
(b)
Remedies. If an Event of Default occurs, the outstanding Principal
Amount of this Note owing in respect thereof through the date of acceleration, shall become, at
the Holder's election, immediately due and payable in cash at the “ Mandatory Default
Amount ” . The Mandatory Default Amount means 40% of the outstanding Principal Amount of
this Note, will be automatically added to the Principal Sum of the Note and tack back to the
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Effective Date for purposes of Rule 144. Commencing 5 days after the occurrence of any Event
of Default that results in the eventual acceleration of this Note, this Note shall accrue additional
interest, in addition to the Note ’ s “ guaranteed ” interest, at a rate equal to the lesser of 22% per
annum or the maximum rate permitted under applicable law. In connection with such
acceleration described herein, the Holder need not provide, and the Issuer hereby waives, any
presentment, demand, protest or other notice of any kind, and the Holder may immediately and
without expiration of any grace period enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such acceleration may be rescinded
and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all
rights as a holder of the note until such time, if any, as the Holder receives full payment pursuant
to this Section 2.00(b). No such rescission or annulment shall affect any subsequent event of
default or impair any right consequent thereon. Nothing herein shall limit the Holder's right to
pursue any other remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the Issuer's failure to
timely deliver certificates representing shares of Common Stock upon conversion of the Note as
required pursuant to the terms hereof.
(c)
Maturity Default Conversion Right . At any time and from time to time
after a default occurs solely due to the fact the Note is not retired on or before the Maturity Date
( “ Maturity Default ” ), subject to the terms hereof and restrictions and limitations contained
herein, the Holder shall have the right, at the Holder's sole option, to convert in whole or in part
the outstanding and unpaid Principal Amount under this Note into shares of Common Stock at
the Maturity Default Conversion Price. The Maturity Default Conversion Price shall be
equal to the lower of: (a) the Conversion Price or (b) 70% of the second lowest trading price of
the Company ’ s common stock during the 20 consecutive Trading Days prior to the date on
which Holder elects to convert all or part of the Note. For the purpose of calculating the
Maturity Default Conversion Price only, any time after 4:00 pm Eastern Time (the closing time
of the Principal Market) shall be considered to be the beginning of the next Business Day. If the
Company is placed on “ chilled ” status with the DTC, the discount shall be increased by 10%,
i . e ., from 30% to 40%, until such chill is remedied. If the Company is not DWAC eligible
through their Transfer Agent and DTC ’ s FAST system, the discount will be increased by 5%,
i . e ., from 30% to 35%. In the case of both, the discount shall be a cumulative increase of 15%,
i . e ., from 30% to 45%.
Section 3.00 Representations and Warranties of Holder.
Holder hereby represents and warrants to the Company that:
(a)
Holder is an “ accredited investor, ” as such term is defined in Regulation D
of the Securities Act of 1933, as amended (the “ 1933 Act ” ), and will acquire this Note and the
Underlying Shares (collectively, the “ Securities ” ) for its own account and not with a view to a
sale or distribution thereof as that term is used in Section 2(a)(11) of the 1933 Act, in a manner
which would require registration under the 1933 Act or any state securities laws. Holder has such
knowledge and experience in financial and business matters that such Holder is capable of
evaluating the merits and risks of the Securities. Holder can bear the economic risk of the
Securities, has knowledge and experience in financial business matters and is capable of bearing
and managing the risk of investment in the Securities. Holder recognizes that the Securities have
not been registered under the 1933 Act, nor under the securities laws of any state and, therefore,
cannot be resold unless the resale of the Securities is registered under the 1933 Act or unless an
exemption from registration is available. Holder has carefully considered and has, to the extent
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Holder believes such discussion necessary, discussed with its professional, legal, tax and
financial advisors, the suitability of an investment in the Securities for its particular tax and
financial situation and its advisers, if such advisors were deemed necessary, and has determined
that the Securities are a suitable investment for it. Holder has not been offered the Securities by
any form of general solicitation or advertising, including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine, or other similar
media or television or radio broadcast or any seminar or meeting where, to Holders ’ knowledge,
those individuals that have attended have been invited by any such or similar means of general
solicitation or advertising. Holder has had an opportunity to ask questions of and receive
satisfactory answers from the Company, or any person or persons acting on behalf of the
Company, concerning the terms and conditions of the Securities and the Company, and all such
questions have been answered to the full satisfaction of Holder. The Company has not supplied
Holder any information regarding the Securities or an investment in the Securities other than as
contained in this Agreement, and Holder is relying on its own investigation and evaluation of the
Company and the Securities and not on any other information.
(b)
The Holder is a limited liability company duly organized, validly existing
and in good standing under the laws of the state of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted. The Holder is duly
qualified to transact business and is in good standing in each jurisdiction in which the failure to
so qualify would have a material adverse effect on its business or properties.
(c)
All limited liability company action has been taken on the part of the
Holder, its officers, directors, managers and members necessary for the authorization, execution
and delivery of this Note. The Holder has taken all limited liability company action required to
make all of the obligations of the Holder reflected in the provisions of this Note, valid and
enforceable obligations.
(d)
Each certificate or instrument representing Securities will be endorsed
with the following legend (or a substantially similar legend), unless or until registered under the
1933 Act or exempt from registration:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Section 4.00 General.
(a)
Payment of Expenses. The Company agrees to pay all reasonable charges
and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in
successfully enforcing this Note and/or collecting any amount due under this Note.
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(b)
Assignment, Etc. The Holder may assign or transfer this Note to any
transferee at its sole discretion. This Note shall be binding upon the Company and its successors
and shall inure to the benefit of the Holder and its successors and permitted assigns.
(c)
Amendments. This Note may not be modified or amended, or any of the
provisions of this Note waived, except by written agreement of the Company and the Holder.
(d)
Funding Window . The Company agrees that it will not enter into a
convertible debt financing transaction with any party other than the Holder for a period of 30
Trading Days following the Effective Date and each Additional Consideration Date, as relevant.
The Company agrees that this is a material term of this Note and any breach of this Section
4.00(d) will result in a default of the Note.
(e)
Piggyback Registration Rights . The Company shall include on the next
registration statement that the Company files with the SEC (or on the subsequent registration
statement if such registration statement is withdrawn) all shares issuable upon conversion of this
Note. Failure to do so will result in liquidated damages of 30% of the outstanding Principal Sum
of this Note, but not less than $20,000, being immediately due and payable to the Holder at its
election in the form of a cash payment or an addition to the Principal Sum of this Note.
(f)
Terms of Future Financings. So long as this Note is outstanding, upon any
issuance by the Company or any of its subsidiaries of any convertible debt security (whether
such debt begins with a convertible feature or such feature is added at a later date) with any term
more favorable to the holder of such security or with a term in favor of the holder of such
security that was not similarly provided to the Holder in this Note, then the Company shall notify
the Holder of such additional or more favorable term and such term, at the Holder's option, shall
become a part of this Note and its supporting documentation. The types of terms contained in the
other security that may be more favorable to the holder of such security include, but are not
limited to, terms addressing conversion discounts, conversion look back periods, interest rates,
original issue discount percentages and warrant coverage.
(g)
Governing Law; Jurisdiction .
(i)
Governing Law. This Note will be governed by, and construed and
interpreted in accordance with, the laws of the Commonwealth of Puerto Rico without regard to
any conflicts of laws or provisions thereof that would otherwise require the application of the
law of any other jurisdiction.
(ii)
Jurisdiction and Venue . Any dispute, claim, suit, action or other
legal proceeding arising out of or relating to this Note or the rights and obligations of each of the
parties shall be brought only in the San Juan, Puerto Rico or in the federal courts of the United
States of America located in San Juan, Puerto Rico.
(iii) No Jury Trial . The Company hereto knowingly and voluntarily
waives any and all rights it may have to a trial by jury with respect to any litigation based on, or
arising out of, under, or in connection with, this Note.
(iv)
Delivery of Process by the Holder to the Company . In the event of
an action or proceeding by the Holder against the Company, and only by the Holder against the
Company, service of copies of summons and/or complaint and/or any other process that may be
served in any such action or proceeding may be made by the Holder via U.S. Mail, overnight
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delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise
delivering a copy of such process to the Company at its last known attorney as set forth in its
most recent SEC filing.
(v)
Notices . Any notice required or permitted hereunder (including
Conversion Notices) must be in writing and either personally served, sent by facsimile or email
transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the
time of transmission if by facsimile or email, and if by overnight courier the business day after
such notice is deposited with the courier service for delivery.
(h)
No Bad Actor. No officer or director of the Company would be
disqualified under Rule 506(d) of the Securities Act of 1933, as amended, on the basis of being a
“ bad actor ” as that term is established in the September 13, 2013 Small Entity Compliance Guide
published by the SEC.
(i)
Usury. If it shall be found that any interest or other amount deemed
interest due hereunder violates any applicable law governing usury, the applicable rate of interest
due hereunder shall automatically be lowered to equal the maximum rate of interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully do so) that it
will not seek to claim or take advantage of any law that would prohibit or forgive the Company
from paying all or a portion of the principal, fees, liquidated damages or interest on this Note.
(j)
Securities Laws Disclosure; Publicity . The Company shall (a) by 9:30
a.m. Eastern Time on the Trading Day immediately following the Date of Execution, issue a
press release disclosing the material terms of the transactions contemplated hereby, and (b) file a
Current Report on Form 8-K, including a copy of this Note as an exhibit thereto, with the SEC
within the time required by the 1934 Act. From and after the filing of such press release, the
Company represents to the Holder that it shall have publicly disclosed all material, non-public
information delivered to the Holder by the Company, or any of its officers, directors, employees,
or agents in connection with the transactions contemplated by this Note. The Company and the
Holder shall consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor the Holder shall issue any such
press release nor otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of the Holder, or without the prior consent of the
Holder, with respect to any press release of the Company, none of which consents shall be
unreasonably withheld, delayed, denied, or conditioned except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Holder, or include the name of the Holder in any filing with the
SEC or any regulatory agency or Principal Market, without the prior written consent of the
Holder, except to the extent such disclosure is required by law or Principal Market regulations, in
which case the Company shall provide the Holder with prior notice of such disclosure permitted
hereunder.
The Company agrees that this is a material term of this Note and any breach of
this Section 4.00(j) will result in a default of the Note.
(k)
Attempted Below-par Issuance. In the event that the Holder delivers a
Conversion Notice to the Company and, if as of such date, (i) the Conversion Price would be less
than par value of the Company ’ s Common Stock and (ii) within three business days of the
9
delivery of the Conversion Notice, the Company shall not have reduced its par value such that all
of the requested conversion transaction may then be accomplished, then the Company and the
Holder shall utilize the following conversion protocol for Par Value Adjustment. The Holder
shall transmit to the Company: (X) a “ preliminary ” Conversion Notice for the full number of
shares of Common Stock that would be issued at the Conversion Price without regard to any
below-par value conversion issues; followed by (Y)* 〄 䀀 》 々 〄 䀅 倀 々 逄 䀄 耄 • ” Conversion Notice for the
number of shares of Common Stock with the Conversion Price increased from the “ preliminary ”
Conversion Price to a Conversion Price at par value; and, finally, (Z) a “ liquidated damages ”
Conversion Notice for that number of shares of Common Stock that represents the difference
between the “ preliminary ” Conversion Notice full number of shares and the “ par value ”
Conversion Notice limited number of shares. The Conversion Price of such “ liquidated damages
Common Shares ” would be the par value of the Common Stock. Accordingly, through this
protocol, the Company would issue, in two transactions, an amount of shares of its Common
Stock equivalent to the full number of shares of Common Stock that would have been issued in
accordance with the “ preliminary ” Conversion Notice without regard to any below-par value
conversion issues. In the event that the Holder is precluded from exercising any or all of its
conversion rights hereunder as a result of a proposed “ below par ” conversion, the Company
agrees that, in lieu of actual damages for such failure, liquidated damages may be assessed and
recovered by the Holder without being required to present any evidence of the amount or
character of actual damages sustained by reason thereof. The amount of such liquidated
damages shall be an amount equivalent to the trading price utilized in the “ preliminary ”
Conversion Notice multiplied by the number of shares calculated on the “ liquidated damages ”
Conversion Notice. Such amount shall be assessed and become immediately due and payable to
the Holder (at its election) in the form of a (i) cash payment, (ii) an addition to the Principal Sum
of this Note, or (iii) the immediate issuance of that number of shares of Common Stock as
calculated on the “ liquidated damages ” Conversion Notice. Such liquidated damages are
intended to represent estimated actual damages and are not intended to be a penalty, but, by
virtue of their genesis and subject to the election of the Holder (as set forth in the immediately
preceding sentence), will be automatically added to the Principal Sum of the Note and tack back
to the Effective Date for purposes of Rule 144, as the Company ’ s failure to maintain the par
value of its Common Stock at an amount that would not result in a “ below par ” conversion
failure is equivalent to a default as of the Issuance Date of the Note.
(l)
Right of First Refusal . From and after the date of this Note and at all
times hereafter while the Note is outstanding, the Parties agree that, in the event that the
Company receives any written or oral proposal (the “ Proposal ” ) containing one or more offers
to provide additional capital or equity or debt financing (the “ Financing Amount ” ), the
Company agrees that it shall provide a copy of all documents received relating to the Proposal
together with a complete and accurate description of the Proposal to the Holder and all
amendments, revisions, and supplements thereto (the “ Proposal Documents ” ) no later than 3
business days from the receipt of the Proposal Documents. Following receipt of the Proposal
Documents from the Company, the Holder shall have the right (the “ Right of First Refusal ” ),
but not the obligation, for a period of 5 business days thereafter (the “ Exercise Period ” ), to
invest, at similar or better terms to the Company, an amount equal to or greater than the
Financing Amount, upon written notice to the Company that the Holder is exercising the Right
of First Refusal provided hereby. In furtherance of the Right of First Refusal, the Company
agrees that it will cooperate and assist the Holder in conducting a due diligence investigation of
the Company and its corporate and financial affairs and promptly provide the Holder with
information and documents that the Holder may reasonably request so as to allow the Holder to
make an informed investment decision. However, the Company and the Holder agree that the
10
Holder shall have no more than 5 business days from and after the expiration of the Exercise
Period to exercise its Right of First Refusal hereunder. This Right of First Refusal shall extend
to all purchases of debt held by, or assigned to or from, current stockholders, vendors, or
creditors, all transactions under Sections 3(a)9 and/or 3(a)10 or the Securities Act of 1933, as
amended, and all equity line-of-credit transactions.
[Signature Page to Follow.]
11
IN WITNESS WHEREOF , the Company has caused this Fixed Convertible Promissory Note to
be duly executed on the day and in the year first above written.
PARALLAX HEALTH SCIENCES, INC.
Name: Paul R. Arena
Title: Chief Executive Officer
Email: paul@parallaxcare.com
Address: 1327 Ocean Ave., Suite M
Santa Monica, CA 90401
This Fixed Convertible Promissory Note of March 18, 2019 is accepted this 19th day of March, 2019, by
HARBOR GATES CAPITAL, LLC
By:
Name:
Title: Manager
EXHIBIT A
12
FORM OF CONVERSION NOTICE
(To be executed by the Holder in order to convert all or part of that certain $260,000 Fixed Convertible
Promissory Note identified as the Note)
DATE:
__
FROM:
Harbor Gates Capital, LLC (the “ Holder ” )
Re:
$260,000 Fixed Convertible Promissory Note (this “ Note ” ) originally issued by Parallax
Health Sciences, Inc., a Nevada corporation, to Harbor Gates Capital, LLC on March
18, 2019.
The undersigned on behalf of Harbor Gates Capital, LLC, hereby elects to convert
$ _______________________ o f the aggregate outstanding Principal Amount (as defined in the Note)
indicated below of this Note into shares of Common Stock, $0.001 par value per share, of Parallax
Health Sciences, Inc. (the “ Company ” ), according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than 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. The undersigned represents as of
the date hereof that, after giving effect to the conversion of this Note pursuant to this Conversion Notice,
the undersigned will not exceed the “ Restricted Ownership Percentage ” contained in this Note.
Conversion information:
Date to Effect Conversion
Aggregate Principal Sum of Note Being Converted
Aggregate Interest/Fees Being Converted
Remaining Principal Balance
Number of Shares of Common Stock to be Issued
Applicable Conversion Price
Signature
Name
Address
13
EXHIBIT B
WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF
PARALLAX HEALTH SCIENCES, INC.
(Two Pages)
The undersigned, being directors of Parallax Health Sciences, Inc., a Nevada corporation (the
“ Company ” ), acting pursuant to the Bylaws of the Corporation, do hereby consent to, approve
and adopt the following preamble and resolutions:
Convertible Note with Harbor Gates Capital, LLC
The board of directors of the Company has reviewed and authorized the following documents
relating to the issuance of a Fixed Convertible Promissory Note in the amount of $260,000 with
Harbor Gates Capital, LLC.
The documents agreed to and dated March 18, 2019, are as follows:
12% Fixed Convertible Promissory Note of Parallax Health Sciences, Inc.
Exhibit A - Form of Conversion Notice
Exhibit C - Notarized Certificate of Chief Executive Officer
Exhibit D - Disbursement Instructions
Exhibit E - Company Capitalization Table & Current Debt and Liabilities Table
Schedule 1 – Use of Proceeds
Irrevocable Transfer Agent Instructions
The board of directors further agree to authorize and approve the issuance of shares to the Holder
at Conversion prices that are below the Company ’ s then current par value.
(The rest of this page left intentionally blank)
14
IN WITNESS WHEREOF, the undersigned member(s) of the board of directors of the Company
executed this unanimous written consent as of March 18, 2019.
Paul R. Arena, Director
Calli R. Bucci, Director
John L. Ogden, Director
Nathaniel T. Bradley, Director
E. William Withrow Jr., Director
15
EXHIBIT C
NOTARIZED CERTIFICATE OF CHIEF FINANCIAL OFFICER OF
PARALLAX HEALTH SCIENCES, INC.
(Two Pages)
The undersigned, Calli R. Bucci, is the duly elected Chief Financial Officer of Parallax
Health Sciences, Inc., a Nevada corporation (the “ Company ” ).
I hereby warrant and represent that I have undertaken a complete and thorough review of
the Company ’ s corporate and financial books and records, including, but not limited to, the
Company ’ s records relating to the following:
(A)
The issuance of that certain Fixed Convertible Promissory Note dated March 18,
2019 (the “ Note Issuance Date ” ) issued to Harbor Gates Capital, LLC (the
“ Holder ” ) in the stated original principal amount of $260,000 (the “ Note ” );
(B)
The Company ’ s Board of Directors duly approved the issuance of the Note to the
Holder;
(C)
The Company has not received and does not contemplate receiving any new
consideration from any persons in connection with any later conversion of the
Note and the issuance of the Company ’ s Common Stock upon any said
conversion;
(D)
To my best knowledge and after completing the aforementioned review of the
Company ’ s stockholder and corporate records, I am able to certify that the Holder
(and the persons affiliated with the Holder) are not officers, directors, or directly
or indirectly, ten percent (10.00%) or more stockholders of the Company and
none of said persons has had any such status in the one hundred (100) days
immediately preceding the date of this Certificate;
(E)
The Company ’ s Board of Directors have approved duly adopted resolutions
approving the Irrevocable Instructions to the Company ’ s Stock Transfer Agent
dated March 18, 2019;
(F)
Mark the appropriate selection:
_ X _ The Company represents that it is not a “ shell company, ” as that term is
defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended, and
has never been a shell company, as so defined; or
___ The Company represents that (i) it was a “ shell company, ” as that term is
defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended,
(ii) since ______, 201__, it has no longer been a shell company, as so defined,
and (iii) on _______, 201__, it provided Form 10-type information in a filing with
the Securities and Exchange Commission.
16
(G)
I understand the constraints imposed under Rule 144 on those persons who are or
may be deemed to be “ affiliates, ” as that term is defined in Rule 144(a)(1) of the
Securities Act of 1933, as amended.
(H)
I understand that all of the representations set forth in this Certificate will be
relied upon by counsel to Harbor Gates Capital, LLC in connection with the
preparation of a legal opinion.
I hereby affix my signature to this Notarized Certificate and hereby confirm the
accuracy of the statements made herein.
Signed:
Date:
Name:
Calli R. Bucci
T itle: Chief Financial Officer
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS ________ DAY OF
MARCH, 2019.
____________________________________
Commission Expires:______________
Notary Public
17
EXHIBIT D
TO:
Harbor Gates Capital, LLC
FROM:
Parallax Health Sciences, Inc.
DATE:
March 18, 2019
RE:
Disbursement of Funds
Pursuant to that certain Fixed Convertible Promissory Note between the parties listed above and
dated March 18, 2019, a disbursement of funds will take place in the amount and manner
described below:
Please disburse to:
Amount to disburse:
$125,000
Form of distribution
Wire
Name
Parallax Health Sciences, Inc.
Company Address
1327 Ocean Avenue, Suite B
Santa Monica, CA 90401
Wire Instructions:
Bank: City National Bank, an RBC Company
ABA Routing Number:
6
Account Number:
SWIFT Code:
Account Name: Parallax Health Sciences, Inc.
Phone: 310-264-2924
TOTAL: $125,000
For: Parallax Health Sciences, Inc.
By:
_
_______________
Dated: March 18, 2019
Name: Paul R. Arena
Its:
Chief Executive Officer
18
EXHIBIT E
COMPANY CAPITALIZATION TABLE AS OF MARCH 18, 2019
COMMON STOCK AND COMMON STOCK EQUIVALENTS
ISSUED, OUTSTANDING AND RESERVED
(Two pages)
* This number includes all shares reserved for Convertible Debt
Note: If not applicable, enter “ n/a ” or “ zero ” in Column 2.
19
CURRENT DEBT AND LIABILITIES TABLE
CONVERTIBLE PROMISSORY NOTE BALANCES AND PROMISSORY NOTE
BALANCES
Note: If not applicable, enter “ n/a ” or “ zero ” in Column 2.
To my best knowledge and after completing the aforementioned review of the
Company ’ s stockholder and corporate records, I am able to certify the accuracy of the
statements made herein.
PARALLAX HEALTH SCIENCES, INC.
Dated: March 18, 2019
Name: Paul R. Arena
Title: Chief Executive Officer
20
SCHEDULE 1
USE OF PROCEEDS
Pursuant to that certain Fixed Convertible Promissory Note between the parties listed above and
dated March 18, 2019, the Company covenants that it will within, 1 month(s) of the Effective
Date of the Note, it shall use approximately $125,000 of the proceeds in the manner set forth
below (the “ Use of Proceeds ” ):
$50,000 Technology Development
$50,000 Professional Fees
$25,000 General & Administrative
PARALLAX HEALTH SCIENCES, INC.
Dated: March 18, 2019
Name: Paul R. Arena
Title: Chief Executive Officer
21
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE UNITED STATES 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: 1,300,000
Initial Exercise Date: March 18, 2019
THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ” ) certifies
that, for value received, Harbor Gates Capital, LLC, a Wyoming corporation, or its assigns (the
“ Holder ” ) is entitled, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ” ) and on
or prior to 5 PM New York City Time on March 18, 2024 (the “ Termination Date ” ) but not
thereafter, to subscribe for and purchase from Parallax Health Sciences, Inc., a Nevada
corporation (the “ Company ” ), up to 1,300,000 shares (as subject to adjustment hereunder, the
“ Warrant Shares ” ) 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 1.00(b).
Section 1.00 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 or times on or after the Initial
Exercise Date and on or before the Termination 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 (or e-mail attachment) of the Notice of
Exercise in the form annexed hereto and within five (5) 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 or, if available, pursuant to the cashless
exercise procedure specified in Section 1.00(c) below. No ink-original Notice of Exercise
shall be required, nor shall any medallion guarantee (or other type of guarantee or
notarization) of any Notice of Exercise form be required. Notwithstanding anything
1
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 five (5) 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 Company shall deliver any objection to any Notice of Exercise within one (1)
Business Day of receipt of such notice. 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.
b)
Exercise Price. The exercise price per share of the Common Stock under
this Warrant shall initially be $0.20, subject to adjustment hereunder (the “ Exercise
Price ” ).
c)
Cashless Exercise . If at any time after the six month anniversary of the
Initial Exercise Date, there is no effective Registration Statement registering, or no
current prospectus available for, the resale of the Warrant Shares by the Holder, then this
Warrant may only be exercised, in whole or in part, at such time by means of a “ cashless
exercise ” in which the Holder shall be entitled to receive a number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a “ cashless exercise, ” as
set forth in the applicable Notice of Exercise;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this
Warrant in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge
and agree that in accordance with Section 3.00(a)(9) of the Securities Act, the Warrant
Shares shall take on the characteristics of the Warrants being exercised, and the holding
period of the Warrants being exercised may be tacked on to the holding period of the
Warrant Shares. The Company agrees not to take any position contrary to this Section
2.00(c).
Trading Day shall mean a day on which there is trading or quoting for any
security on the Principal Market.
2
VWAP means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is
not a Trading Market, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on OTCQB or OTCQX as appli cable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if
prices for the Common Stock are then reported in the “ Pink Sheets ” published by OTC
Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
Notwithstanding anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise pursuant to this Section
1.00(c).
d)
Mechanics of Exercise .
i. Delivery of Warrant Shares Upon Exercise. Warrant Shares
purchased hereunder shall be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder ’ s or its designee ’ s balance
account with The Depository Trust Company through its Deposit or
Withdrawal at Custodian system ( “ DWAC ” ) if the Company is then a
participant in such system and either (A) there is an effective registration
statement permitting the issuance of the Warrant Shares to or resale of
the Warrant Shares by the Holder or (B) the Warrant Shares are eligible
for resale by the Holder without volume or manner-of-sale limitations
pursuant to Rule 144, and otherwise by physical delivery of a certificate,
registered in the Company ’ s share register in the name of the Holder or
its designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the Holder
in the Notice of Exercise by the date that is five (5) Trading Days after
the delivery to the Company of the Notice of Exercise (such date, the
“ Warrant Share Delivery Date ” ).
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, with payment to the Company of the Exercise Price (or
by cashless exercise, if permitted) and all taxes required to be paid by
the Holder, if any, pursuant to Section 1.00(d)(vi) prior to the issuance
of such shares, having been paid.
3
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, at the time of delivery of the
Warrant Shares, deliver to the Holder a new Warrant evidencing the
rights of the 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 the
Transfer Agent to transmit to the Holder the Warrant Shares pursuant to
Section 1.00(d)(i) by the Warrant Share Delivery Date, then the Holder
will have the right to rescind such exercise.
iv.
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 the 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.
v.
Charges, Taxes and Expenses . Issuance of 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 Warrant Shares,
all of which taxes and expenses shall be paid by the Company, and such
Warrant Shares 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 that 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. The Company shall pay all Transfer Agent fees
required for same-day processing of any Notice of Exercise and all fees
to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.
vi.
Closing of Books . The Company will not close its
stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.
e)
Holder ’ s Exercise Limitations . The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2.00 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
4
other Persons acting as a group together with the Holder or any of the Holder ’ s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be
issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other
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 1.00(e), beneficial ownership shall be calculated in accordance with
Section 1.003(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
1.003(d) of the Exchange Act and the Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent that the
limitation contained in this Section 1.00(e) 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 1.003(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section
1.00(e), in determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock as
reflected in (A) the Company ’ s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by
the Company or (C) a more recent written notice by the Company or the 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
9.99% of the number of shares of the Common Stock outstanding immediately
5
after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon notice to the Company, may increase
or decrease the Beneficial Ownership Limitation provisions of this Section
2.00(e), provided that the Beneficial Ownership Limitation in no event exceeds
9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section 1.00(e) shall
continue to apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61 st day after such notice is delivered to the Company. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 1.00(e) 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.
Section 2.00 Certain Adjustments.
a)
Stock Dividends and Splits . If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise makes 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), (ii) subdivides outstanding shares of Common Stock into a larger number of
shares, (iii) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares or (iv) 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 (excluding treasury shares, if any) 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 2.00(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 Rights Offerings . In addition to any adjustments pursuant to
Section 2.00(a) above, if at any time the Company grants, issues or sells any Common
Stock Equivalents or rights to purchase stock, warrants, securities or other property pro
rata to the record holders of any class of shares of Common Stock (the “ Purchase
Rights ” ), then the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if
the Holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations on exercise hereof, including
6
without limitation, the Beneficial Ownership Limitation) 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 shares of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights (provided,
however, to the extent that the Holder ’ s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership Limitation, then the
Holder shall not be entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the
Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions . During such time as this Warrant is outstanding, if
the Company shall declare or make any dividend or other distribution of its assets (or
rights to acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at
any time after the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such Distribution, or, if no
such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the participation in such Distribution ( provided, however, to the
extent that the Holder's right to participate in any such Distribution would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be
entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent) and the
portion of such Distribution shall be held in abeyance for the benefit of the Holder until
such time, if ever, as its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
d)
Fundamental Transaction . If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its assets in one or a series of
related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more
related transactions effects any reclassification, reorganization or recapitalization 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, or (v) the
7
Company, directly or indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another
Person or group of Persons whereby such other Person or group acquires more than 50%
of the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share purchase agreement or
other business combination) (each a “ 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, at the option of the Holder (without regard
to any limitation in Section 1.00(e) on the exercise of this Warrant), 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 Fundamental Transaction by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in
Section 1.00(e) on the exercise of this Warrant). 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. Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, the Company or any
Successor Entity (as defined below) shall, at the Holder ’ s option, exercisable at any time
concurrently with, or within 30 days after, the consummation of the Fundamental
Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of
cash equal to the Black Scholes Value of the remaining unexercised portion of this
Warrant on the date of the consummation of such Fundamental Transaction. “ Black
Scholes Value ” means the value of this Warrant based on the Black and Scholes Option
Pricing Model obtained from the “ OV ” function on Bloomberg, L.P. ( “ Bloomberg ” )
determined as of the day of consummation of the applicable Fundamental Transaction for
pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Termination Date, (B) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT
function on Bloomberg as of the Trading Day immediately following the public
announcement of the applicable Fundamental Transaction, (C) the underlying price per
share used in such calculation shall be the sum of the price per share being offered in
cash, if any, plus the value of any non-cash consideration, if any, being offered in such
Fundamental Transaction and (D) a remaining option time equal to the time between the
date of the public announcement of the applicable Fundamental Transaction and the
8
Termination Date. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “ Successor Entity ” ) to
assume in writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section 3.00(e)
pursuant to written agreements in form and substance reasonably satisfactory to the
Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant which is
exercisable for a corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on the
exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise
price which applies the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such number of
shares of capital stock and such exercise price being for the purpose of protecting the
economic value of this Warrant immediately prior to the consummation of such
Fundamental Transaction), and which is reasonably satisfactory in form and substance to
the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other Transaction
Documents referring to the “ Company ” shall refer instead to the Successor Entity), and
may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant and the other Transaction Documents
with the same effect as if such Successor Entity had been named as the Company herein.
e)
Calculations . All calculations under this Section 2.00 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 2.00, 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.
f)
Notice to Holder.
i. Adjustment to Exercise Price . Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 2.00, the Company shall
promptly mail to the Holder a notice setting forth the Exercise Price after
such adjustment and any resulting adjustment to the number of Warrant
Shares 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
9
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, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (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 20 calendar 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. To
the extent that any notice provided in this Warrant constitutes, or contains,
material, non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Holder shall
remain 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 except as may otherwise be expressly set forth herein.
Section 3.00 Transfer of Warrant.
a)
Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Section 3.00(d) hereof, this Warrant and all rights
hereunder are transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, togeth er 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 required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, 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. Notwithstanding anything herein to the contrary, the Holder shall not be
10
required to physically surrender this Warrant to the Company unless the Holder has
assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the
Company within three (3) Trading Days of the date the Holder delivers an assignment
form to the Company assigning this Warrant full. The Warrant, if properly assigned in
accordance herewith, 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
3.00(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
either (i) registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws or (ii) eligible for resale
without volume or manner-of-sale restrictions or current public information requirements
pursuant to 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, make usual and
customary representations as to investment intent to the Company
e)
Representation by the Holder . The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise hereof,
will acquire the Warrant Shares issuable upon such exercise, for its own account and not
with a view to or for distributing or reselling such Warrant Shares or any part thereof in
violation of the Securities Act or any applicable state securities law, except pursuant to
sales registered or exempted under the Securities ò 䀄 怅 瀁 က M
Section 4.00 Miscellaneous.
a)
No Rights as Stockholder Until Exercise . This Warrant does not entitle
the Holder to any voting rights, dividends or other rights as a stockholder of the Company
prior to the exercise hereof as set forth in Section 1.00(d)(i), except as expressly set forth
in Section 2.00.
11
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 period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of issuing the necessary 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
and payment for such Warrant Shares in accordance herewith, 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
(i) 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, (ii)
take all such action as may be necessary or appropriate in order that the Company
12
may validly and legally issue fully paid and nonassessable Warrant Shares upon
the exercise of this Warrant and (iii) 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.
Before taking any action which would result in an adjustment in the
number of Warrant Shares for which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.
e)
Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
laws of the Commonwealth of Puerto Rico as they are applied to contracts executed,
delivered and to be wholly performed within the Commonwealth of Puerto Rico.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered and if the Holder does not utilize
cashless exercise, 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 the Holder ’ s rights, powers or remedies, notwithstanding the fact
that all rights hereunder terminate on the Termination 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 the 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 the
Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
h)
Notices. Any notice, request or other document required or permitted to
be given or delivered to the either party to the other shall be delivered in by recognized
overnight courier, facsimile or email as follows:
If to the Investor:
Harbor Gates Capital, LLC
Caribe Plaza Office Building 6th Floor
Palmeras St. #53
San Juan, PR 00901
Email: admin@tangierscapital.com
If to the Company: Parallax Health Sciences, Inc.
1327 Ocean Avenue, Suite B
Santa Monica, CA 90401
Email: paul@parallaxcare.com
13
i)
Limitation of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and
no enumeration herein of the rights or privileges of the Holder, shall give rise to any
liability of the 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)
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 and permitted assigns of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to be for
the benefit of any Holder from time to time of this Warrant and shall be enforceable by
the Holder or holder of Warrant Shares.
k)
Amendment . This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.
l)
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.
m)
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.
********************
[Signature Page to Follow.]
14
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:
Chief Executive Officer
15
NOTICE OF EXERCISE
TO: PARALLAX HEALTH SCIENCES, INC.
(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.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subSection 1.00(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 1.00(c).
(3) Please issue 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:
_______________________________
_______________________________
_______________________________
(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 Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity : ________________________________________________ô M
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ____________________________________________ô
=_______________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this
form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name:
(Please Print)
Address:
(Please Print)
Dated: _______________ __, ______
Holder ’ s Signature:
Holder ’ s Address: