NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE 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...
Note: October 23, 2019
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE 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: October 23, 2019
Principal Sum: $300,000
THIS NOTE 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 due
April 23, 2020 (“Maturity Date”) in the face amount of $300,000 (the “Note”).
FOR VALUE RECEIVED, the Company hereby promises to pay to the order of ███████
██████████████ or its registered assigns or successors-in-interest (the “Holder”) the
Principal Sum of $300,000 (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. The sum of $250,000 shall
be remitted and delivered to the Company, and $50,000 shall be retained by the Holder through
an original issue discount (the “OID”) for due diligence and legal bills related to this transaction.
The Company covenants that within
months of the Effective Date of the Note, it shall
utilize approximately $250,000 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 Xxxxxx.
In addition to the “guaranteed” interest referenced above, and upon the occurrence of an
Event of Default (as defined in Section 3.00(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 (collectively, the “Exhibits”), and the Irrevocable
Transfer Agent Instructions (the “Date of Execution”) and delivery of the initial payment of
consideration by the Holder (the “Effective Date”). The Company acknowledges and agrees the
Exhibits are material provisions of this Note.
As an investment incentive, the Company will issue to the Holder 5-year cashless
warrants, exercisable at $0.10 per share for an aggregate of up to 2,500,000 warrant shares.
For purposes hereof the following terms shall have the meanings ascribed to them below:
“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.
“Fixed Conversion Price” shall be equal to $0.10 per share.
“Principal Amount” shall refer to the sum of (i) the original principal amount of this
Note (including the original issue discount, prorated if the Note has not been funded in full),
(ii) all guaranteed and other accrued but unpaid interest hereunder, (iii) any fees due hereunder,
(iv) liquidated damages, and (v) 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 or trading platform 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
Repayment.
(a)
The Company may pay this Note, in whole or in part, in cash or in other
good funds, according to the following schedule:
Days Since Effective Date
Payment Amount
Under 90
120% of Principal Amount so paid
91-135
130% of Principal Amount so paid
136-180
140% of Principal Amount so paid
(b)
After 180 days from the Effective Date, the Company may not pay this
Note, in whole or in part, in cash or in other good funds, without prior written consent from
Holder, which consent may be withheld, delayed, denied, or conditioned in Xxxxxx’s sole and
absolute discretion. Whenever any amount expressed to be due by the terms of this Note is due
on any day that is not a Business Day, the same shall instead be due on the next succeeding day
that is a Business Day. Upon the occurrence of an Event of Default, the Company may not pay
the Note, in whole or in part, in cash or in other good funds without written consent of the
Holder, which consent may be withheld, delayed, denied, or conditioned in Xxxxxx’s sole and
absolute discretion. Further, the Company shall provide the Holder with two weeks’ prior
written notice of the Company’s determination to pay any or all of its obligations hereunder.
During such two-week period, the Holder may exercise any or all of its conversion rights
hereunder. In the event that the Holder does not exercise its conversion rights in respect of any
or all of such noticed, prospective payment, the Company shall tender the full amount set forth in
such notice (less any amount in respect of which the Holder has exercised its conversion rights)
to the Holder within 2 Business Days following the Holder’s exercise (or notification to the
Company of non-exercise) of the Holder’s conversion rights in respect of the amount set forth in
such notice. Any such payment by the Company in connection with this provision shall be
deemed to have been made on the date that the Holder first receives the above-referenced notice.
Section 2.00
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 at the Conversion Price (defined below),
but not to exceed the Restricted Ownership Percentage, as defined in Section 2.00(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
Xxxxxx’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 Depository Trust Company’s (“DTC”) Fast Automated
Securities Transfer (“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 Deposits and Withdrawal at Custodian (“DWAC”) program
(provided that the same time periods herein as for stock certificates shall apply).
(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 2.00, 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
3.00(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 Xxxxxx’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 2.00(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 2.00(c), 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.
(h)
Shorting and Hedging. Holder may not engage in any “shorting” or
“hedging” transaction(s) in the Common Stock of the Company 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 3.00
Defaults and Remedies.
(a)
Events of Default. An “Event of Default” is: (i) a default in payment of
any amount due hereunder; (ii) a default in the timely issuance of underlying shares upon and in
accordance with terms of Section 2.00, 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 5.00(i); (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) any representation or
warranty of the Company in this Note that is found to have been incorrect in any material respect
when made, including, without limitation, the Exhibits; (vi) failure of the Company to remain
compliant with DTC, thus incurring a “chilled” status with DTC; (vii) 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; (viii) if the Company is subject to any Bankruptcy Event; (ix)
any failure of the Company to satisfy its “filing” obligations under Securities Exchange Act of
1934, as amended (the “1934 Act”) and the rules and guidelines issued by OTC Markets News
Service, XXXXxxxxxx.xxx and their affiliates; (x) failure of the Company to remain in good
standing under the laws of its state of domicile; (xi) 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 Xxxxxx; (xii) failure by the Company to maintain the Required Reserve in accordance with the
terms of Section 2.00(e); (xiii) failure of Company’s Common Stock to maintain a closing bid
price in its Principal Market for more than 3 consecutive Trading Days; (xiv) any delisting from
a Principal Market for any reason; (xv) failure by Company to pay any of its transfer agent fees
in excess of $2,000 or to maintain a transfer agent of record; (xvi) failure by Company to notify
Holder of a change in transfer agent within 24 hours of such change; (xvii) 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; (xviii) 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; (xix) 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 (xx) failure of
the Company to abide by the terms of the right of first refusal contained in Section 5.00(k).
(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
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 3.00(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 Company’s failure to
timely deliver certificates representing shares of Common Stock upon conversion of the Note as
required pursuant to the terms hereof.
(c)
Variable Conversion Price. If the Note is not retired on or before the
Maturity Date, then at any time and from time to time after the Maturity Date, and 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 Variable Conversion Price. The
“Variable Conversion Price” (together with the Fixed Conversion Price, the “Conversion
Price”) shall be equal to the lower of: (a) the Fixed 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 Variable 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 4.00 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
Xxxxxx 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. Xxxxxx 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 Xxxxxx. 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 Xxxxxx 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 5.00
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.
(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, including 3(a)(9) and 3(a)(10) transactions, with any party
other than the Holder for a period of 30 Trading Days following the Effective Date. The
Company agrees that this is a material term of this Note and any breach of this will result in a
default of the Note.
(e)
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, terms addressing maturity, conversion look
back periods, interest rates, original issue discount percentages and warrant coverage.
(f)
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 Xxxx, Puerto Rico or in the federal courts of the United
States of America located in San Xxxx, 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
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.
(g)
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.
(h)
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.
(i)
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 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 5.00(i) will result in a default of the Note.
(j)
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
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) a “par value” 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.
(k) 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
convertible 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
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. In the event that the Company does enter
into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(10)
Transaction while this note is outstanding, without giving Right of First Refusal to the Holder, a
liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less
than $25,000, will be assessed and will become immediately due and payable to the Holder at its
election in the form of cash payment or addition to the balance of this Note. 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.
[Signature Page to Follow.]
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.
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: CEO
Email: xxxx@xxxxxxxxxxxx.xxx
Address: 0000 Xxxxx Xxx., Xxxxx X
Santa Monica, CA 90401
This Fixed Convertible Promissory Note of October 23, 2019 is accepted this ___ day of
,
2019 by
███████████████████████
By:
Name:
Title:
EXHIBIT A
FORM OF CONVERSION NOTICE
(To be executed by the Holder in order to convert all or part of that certain $300,000 Fixed Convertible
Promissory Note identified as the “Note”)
DATE:
____________________________
FROM:
██████████████████
Re:
$300,000 Fixed Convertible Promissory Note originally issued by Parallax Health Sciences,
Inc., a Nevada corporation, to ████████████████ on October 23, 2019.
The undersigned, on behalf of ██████████████████, hereby elects to convert
$_______________________ of 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 of Principal Amount Being Converted
Remaining Principal Balance
Number of Shares of Common Stock to be Issued
Applicable Conversion Price
Signature
Name
Address
EXHIBIT B
WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF
PARALLAX HEALTH SCIENCES, INC.
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 ████████████████
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 $300,000 with
████████████████.
The documents agreed to and dated October 23, 2019 are as follows:
12% Fixed Convertible Promissory Note of Parallax Health Sciences, Inc.
Irrevocable Transfer Agent Instructions
Certificate of Corporate Secretary
Disbursement Instructions
Schedule 1 – Use of Proceeds
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.
IN WITNESS WHEREOF, the undersign member(s) of the board of the Company executed this
unanimous written consent as of October 23, 2019.
_________________________________
By:
Its:
EXHIBIT C
NOTARIZED CERTIFICATE OF CORPORATE SECRETARY OF
PARALLAX HEALTH SCIENCES, INC.
(Two Pages)
The undersigned, Xxxxx X. Xxxxx, is the duly elected Corporate Secretary 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 convertible promissory note dated October 23, 2019
(the “Note Issuance Date”) issued to ████████████████ (the “Holder”)
in the stated original principal amount of $300,000 (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 October 23, 2019;
(F)
Mark the appropriate selection:
___ 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 April 1, 2009, it has no longer been a shell company, as so defined, and
(iii) on April 7, 2009, it provided Form 10-type information in a filing with the
United States Securities and Exchange Commission.
(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 ████████████████ 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:
____________________________________
Title: ___________________
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS ________ DAY OF
____________________ 2019.
Commission Expires:______________
____________________________________
Notary Public
EXHIBIT D
TO:
████████████████
FROM:
Parallax Health Sciences, Inc.
DATE:
October 23, 2019
RE:
Disbursement of Funds
Pursuant to that certain Fixed Convertible Promissory Note between the parties listed above and
dated October 23, 2019, a disbursement of funds will take place in the amount and manner
described below:
Please disburse to:
Amount to disburse:
$250,000
Form of distribution
Wire
Name
Parallax Health Sciences, Inc.
Company Address
0000 Xxxxx Xxx., Xxxxx X
Santa Monica, CA 90401
Wire Instructions:
Bank: ████████████
ABA Routing Number: ██████
Account Number: ██████
SWIFT Code:
Account Name: Parallax Health Sciences, Inc.
Phone: 000-000-0000
TOTAL: $250,000
For: Parallax Health Sciences, Inc.
By: /s/ Xxxx X. Xxxxx
Dated: October 23, 2019
Name: Xxxx X. Xxxxx
Its:
CEO
EXHIBIT E
COMPANY CAPITALIZATION TABLE AS OF OCTOBER 23, 2019
COMMON STOCK AND COMMON STOCK EQUIVALENTS
ISSUED, OUTSTANDING AND RESERVED
DESCRIPTION
AMOUNT
Authorized Common Stock
500,000,000
Authorized Capital Stock
Authorized Common Stock
Issued Common Stock
220,149.711
Outstanding Common Stock
220,149,711
Treasury Stock
*Authorized, but unissued
Authorized Preferred Stock
10,000,000
Issued Preferred Stock
1,013,691
Reserved for Equity Incentive Plans
30,000,000
Reserved for Convertible Debt (includes 45,000,000 to
90,000,000
████████████████)
Reserved for Options and Warrants
57,313,000
Reserved for Other Purposes
TOTAL COMMON STOCK AND COMMON
397,462,711
STOCK EQUIVALENTS OUTSTANDING
* This number includes all shares reserved for Convertible Debt
Note: If not applicable, enter “n/a” or “zero” in Column 2.
SCHEDULE 1
USE OF PROCEEDS
Pursuant to that certain Fixed Convertible Promissory Note between the parties listed above and
dated October 23, 2019, the Company covenants that it will within,
month(s) of the
Effective Date of the Note, it shall use approximately $250,000 of the proceeds in the manner set
forth below (the “Use of Proceeds”):
Pay other convertible debt
PARALLAX HEALTH SCIENCES, INC.
By: /s/ Xxxx X. Xxxxx
Dated: October 23, 2019
Name: Xxxx X. Xxxxx
Title: CEO
