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EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (the “Agreement”) is made as of the 31st day of December
and effective November 14, 2018, by and between, Parallax Health Sciences, Inc.,
a Nevada corporation, (the “Company”) and _______________ (the “Investor”).

 

WHEREAS, the Investor has previously acquired various securities from the
Company in the form of convertible notes with various dates of issuance as set
forth on Schedule I (the “Notes”).

 

WHEREAS, the Company has authorized a new series of convertible debenture due
February 29, 2019, in the form of Exhibit A hereto, which will be convertible
into shares of the Company’s Common Stock, par value $0.001.

 

WHEREAS, subject to the satisfaction of the conditions set forth herein, the
Company and the Investor desire to enter into a transaction wherein the Company
shall issue the Investor the debenture in the amount of $_______________ (the
“Debenture”) in exchange for each of the Notes as set forth on Schedule I (the
“Exchange”).

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

 

1.Exchange.  The closing of the Exchange (the “Closing”) will occur on or before
December 31, 2018 (or such later date as the parties hereto may agree) following
the satisfaction or waiver of the conditions set forth herein (such date, the
“Closing Date”). On the Closing Date, subject to the terms and conditions of
this Agreement, the Investor shall, and the Company shall, pursuant to Section
3(a)(9) of the Securities Act of 1933 (the “Securities Act”), exchange the Notes
for the Debenture. At the Closing, the following transactions shall occur (such
transactions in this Section 1, the “Exchange”): 

 

1.1.On the Closing Date, the Company shall issue the Debenture to the Investor.
Promptly after the Closing Date, the Company shall deliver an executed original
Debenture to the Investor. On the Closing Date, the Investor shall be deemed for
all corporate purposes to have become the holder of record of the Debenture and
shall have the right to convert the Debenture, irrespective of the date the
Company delivers the Debenture to the Investor.  

 

1.2.Upon receipt of the Debenture in accordance with Section 1.1, all of the
Investor’s rights under the Notes shall be extinguished (including, without
limitation, the rights to receive, as applicable, any premium, make-whole
amount, accrued and unpaid interest or dividends thereon or any other shares of
Common Stock with respect thereto (whether upon in connection with a fundamental
transaction, event of default or otherwise)). 

 

1.3.The Company and the Investor shall execute and/or deliver such other
documents and agreements as are customary and reasonably necessary to effectuate
the Exchange. 

 

1.4.If the Closing has not occurred on or prior to November 30, 2018, the
Investor shall have the right, by delivery of written notice to the Company to
terminate this Agreement (such date, the “Termination Date”). From the date
hereof until the earlier of (x) the Closing Date (as defined below) and (y) the
Termination Date, the Investor shall forbear from taking any actions with
respect to the Notes not explicitly set forth herein, including, without
limitation, conversions, exercises, redemptions, exchanges or delivery of
written notice to the Company to require the conversion, exercise, redemption or
exchange of any of the Notes.  

 

1.5.It shall be a condition to the obligation of the Investor on the one hand
and the Company on the other hand, to consummate the Exchange contemplated
hereunder that the other party’s representations and warranties contained herein
are true and correct on the Closing Date with the same effect as though made on
such date, unless waived in writing by the party to whom such representations
and warranties are made.  

 

1.6.At or before the Closing, the Investor shall deliver or cause to be
delivered to Buchalter Law Firm, as counsel to the Company, (i) the executed
Agreement and (ii) other items required to effectuate the Exchange. 

 

2.Representations and Warranties of the Company.  The Company hereby represents
and warrants to the Investor that: 

 

2.1.Concerning the Debenture.Except as listed on Schedule 2.1, there are no
preemptive rights of any person or entity, rights of first refusal,
participation rights, or other rights to acquire the Debenture. 

 

2.2.Organization, Good Standing and Qualification.  The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada.  The Company 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 (as defined below) on its business or properties.  As
used in this Agreement, “Material Adverse Effect” means any material adverse
effect on the business, properties, assets, liabilities, operations, results of
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries, if any, individually or taken as a whole, or on the
transactions contemplated hereby or on the Exchange (as defined below) or by the
agreements and instruments to be entered into (or entered into) in connection
herewith or therewith, or on the authority or ability of the Company to perform
its obligations under this Agreement or the Exchange.  

 

2.3.Authorization.  All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the performance of all obligations of the
Company hereunder and thereunder, and the authorization of the Exchange, the
issuance (and reservation for issuance) of the Debenture have been taken on or
prior to the date hereof.  

 

2.4.Valid Issuance of the Debenture.  The Debenture when issued and delivered in
accordance with the terms of this Agreement, for the consideration expressed
herein, and the Common Stock when issued in accordance with the terms of the
Debenture, for the consideration expressed therein, will be duly and validly
issued, fully paid and non-assessable.  Upon conversion of the Debenture, the
Common Stock shall be freely tradable and may be sold under Rule 144 subject to
the Company having filed all applicable Form 10-Qs and the required Form 10-K.
The Company agrees to take all actions, including, without limitation, the
issuance by its legal counsel of any necessary legal opinions, necessary to
issue unrestricted Common Stock pursuant to Section 3(a)(9) of the Securities
Act and Rule 144 thereunder in connection with which Common Stock issued upon
conversion of the Debenture issued in exchange for the Debenture, the Common
Stock will be freely tradable without restriction and not containing any
restrictive legend without the need for any action by the Investor other than as
required by Rule 144(i) and execution of the applicable representation letters.
 Within 60 days of the Closing, the Company shall have reserved from its duly
authorized capital stock not less than 700% of the maximum number of shares of
Common Stock issuable upon conversion of the Debenture.  

 

2.5.Compliance With Laws.  The Company has not violated any law or any
governmental regulation or requirement which violation has had or would
reasonably be expected to have a Material Adverse Effect, and the Company has
not received written notice of any such violation.  

2.6.Consents; Waivers.  No consent, waiver, approval or authority of any nature,
or other formal action, by any Person, not already obtained, is required in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions provided for herein and
therein. 

 

2.7.Acknowledgment Regarding Investor’s Purchase of Debenture.  The Company
acknowledges and agrees that the Investor is acting solely in the capacity of
arm’s length purchaser with respect to this Agreement and Exchange and the
transactions contemplated hereby and thereby and that the Investor is not (i) an
officer or director of the Company, (ii) an “affiliate” of the Company (as
defined in Rule 144 promulgated under the Securities Act), or (iii) to the
knowledge of the Company, a “beneficial owner” of 10% or more of the shares of
Common Stock (as defined for purposes of Rule 13d-3 under the Securities
Exchange Act of 1934(the “Exchange Act”).  The Company further acknowledges that
the Investor is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Exchange and the transactions
contemplated hereby and thereby, and any advice given by the Investor or any of
its representatives or agents in connection with the Exchange and the
transactions contemplated hereby and thereby is merely incidental to the
Investor’s acceptance of the Debenture. The Company further represents to the
Investor that the Company’s decision to enter into the Exchange has been based
solely on the independent evaluation by the Company and its representatives. 

 

2.8.Absence of Litigation.  To the knowledge of the Company, there is no action,
suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, the
Common Stock, the Notes, the Debenture or any of the Company’s officers or
directors in their capacities as such, other than what is disclosed in the
Company’s public filings. 

 

2.9.Validity; Enforcement; No Conflicts.  This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Company and shall
constitute the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.  The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of the Company or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party or by which it is bound, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities or “blue sky” laws) applicable to the
Company, except in the case of clause (ii) above, for such conflicts, defaults
or rights which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.  

 

2.10.Authorized Capital. Schedule 2.10 sets forth all capital stock and
derivative securities of the Company that are authorized for issuance and that
are issued and outstanding. All issued and outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable.  The Company has sufficient authorized and unissued shares of
Common Stock as may be necessary to effect the issuance of the shares issuable
upon conversion of the Debenture (the “Shares”), assuming the prior issuance and
exercise, exchange or conversion, as the case may be, of all derivative
securities authorized, as indicated in Schedule 2.10, (subject to a 60 day grace
from Closing).   

 

2.11.Disclosure.  The Company confirms that neither it nor any other person
acting on its behalf has provided the Investor or its agents or counsel with any
information that constitutes or could reasonably be expected to constitute
material, nonpublic information.  The Company understands and confirms that the
Investor will rely on the foregoing representations in effecting transactions in
securities of the Company. 

 

2.12. Except as listed on Schedule 2.12 hereto, the Company does not have any
indebtedness other than Permitted Liens. “Permitted Liens” shall have the same
meaning as in the Debenture. 

 

3.Representations and Warranties of the Investor.  The Investor hereby
represents, warrants and covenants that: 

 

3.1.Authorization.  The Investor has full power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and has taken all action necessary to authorize
the execution and delivery of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby. 

 

3.2.Accredited Investor Status; Investment Experience.  The Investor is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D.
 The Investor can bear the economic risk of its investment in the Debenture, and
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Debenture. 

 

3.3.No Governmental Review.  The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Debenture or the
fairness or suitability of the investment in the Debenture nor have such
authorities passed upon or endorsed the merits of the offering of the Debenture
 

 

3.4.Validity; Enforcement; No Conflicts.  This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Investor and shall
constitute the legal, valid and binding obligations of the Investor enforceable
against the Investor in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies. 

 

3.5.Ownership of Securities.  The Investor owns and holds, beneficially and of
record, the entire right, title, and interest in and to the Notes free and clear
of all rights and liens (other than pledges or security interests (x) arising by
operation of applicable securities laws and (y) that the Investor may have
created in favor of a prime broker under and in accordance with its prime
brokerage agreement with such broker). The Investor has full power and authority
to transfer and dispose of the Notes to the Company free and clear of any right
or lien.  Other than the transactions contemplated by this Agreement, there is
no outstanding, plan, pending proposal, or other right of any Person to acquire
all or any part of the Notes or any shares of Common Stock issuable upon
conversion of the Debenture. 

 

4.Additional Covenants 

 

4.1.Disclosure.  The Company shall, on or before 8:30 a.m., New York New York
time, within four business days after the date of this Agreement, file with the
Securities and Exchange Commission a Current Report on Form 8-K disclosing all
material terms of the transactions contemplated hereby and attaching the form of
this Agreement and the Debenture as exhibits thereto (collectively with all
exhibits attached thereto, the “8-K Filing”).  From and after the issuance of
the 8-K Filing the Investor shall not be in possession of any material,
nonpublic information received from the Company or any of its Subsidiaries or
any of their respective officers, directors, employees, affiliates or agents,
that is not disclosed in the 8-K Filing.  The Company shall not, and shall cause
its officers, directors, employees, affiliates and agents, not to, provide the
Investor with any material, nonpublic information regarding the Company from and
after the filing of the 8-K Filing without the express written consent of the
Investor.  To the extent that the Company delivers any material, non-public
information to the Investor without the Investor’s express prior written
consent, the Company hereby covenants and agrees that the Investor shall not
have any duty of confidentiality to the Company, any of its subsidiaries or any
of their respective officers, directors, employees, affiliates or agent with
respect to, or a duty to the Company, any of its subsidiaries or any of their
respective officers, directors, employees, affiliates or agent or not to trade
on the basis of, such material, non-public information.  The Company shall not
disclose the name of the Investor in any filing, announcement, release or
otherwise, unless such disclosure is required by law or regulation.  In
addition, effective upon the filing of the 8-K Filing, the Company acknowledges
and agrees that any and all confidentiality or similar obligations under any
agreement, whether written or oral, between the Company, any of its subsidiaries
or any of their respective officers, directors, affiliates, employees or agents,
on the one hand, and the Investor or any of its affiliates, on the other hand,
shall terminate and be of no further force or effect.  The Company understands
and confirms that the Investor will rely on the foregoing representations in
effecting transactions in securities of the Company. 

 

4.2.Holding Period.  For the purposes of Section 3(a)(9) and Rule 144 of the
Securities Act, the Company acknowledges that (i) the holding period of the
Notes may be tacked onto the holding period of the Debenture as long as no
payment is made in connection with any conversion, and (ii) the holding period
of the Debenture may be tacked onto the holding period of the Shares, and the
Company agrees not to take a position contrary to this Section 4.2. 

 

4.3.Blue Sky.    The Company shall make all filings and reports relating to the
Exchange required by Regulation D under the Securities Act and under applicable
securities or “Blue Sky” laws of the states of the United States following the
date hereof. 

 

4.4.Fees and Expenses. Except as otherwise set forth above, each party to this
Agreement shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of
this Agreement. 

 

5.Miscellaneous 

 

5.1.Successors and Assigns.  Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and the respective successors and assigns of the parties.
 Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. 

 

5.2.Governing Law; Exclusive Jurisdiction.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state or federal courts
sitting in New York County, New York, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each of the parties hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. 

 

5.3.Notices. All notices, offers, acceptance and any other acts under this
Agreement (except payment) shall be in writing, and shall be sufficiently given
if delivered to the addressees in person, by FedEx or similar overnight next
business day delivery, or by email followed by overnight next business day
delivery, to the address as provided for on the signature page to this
agreement. 

 

5.4.Amendments and Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. 

 

5.5.Severability.  If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its terms
so long as this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties.  The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s). 

 

5.6.Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. 

 

5.7.Survival.  The representations, warranties and covenants of the Company and
the Investor contained herein shall survive the Closing and delivery of the
Debenture  

 

 

[SIGNATURES ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date provided above.

 

 

COMPANY:

 

PARALLAX HEALTH SCIENCES, INC.

 

 

 

By:   _____________________________________

Name:  Paul Arena

Title:    Chief Executive Officer

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date provided above.

 

 

INVESTOR:

 

 

___________________________________

By: ________________________________

Its: ________________________________

 

 

 

By: ________________________________

Name: ______________________________

Title: _______________________________

 

 

 

Address for Notices:

 

___________________________________

___________________________________

___________________________________

Email: _____________________________

SSN#: _____________________________

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EXHIBIT A

Debenture

 

[See attached]

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Schedule I

 

Note

Issuance Date

Amount

Amount of Debenture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 2.12

 

Lien Holder

Issuance Date

Principal Amount

Amount of

Interest/Penalties

As of 9-30-18

Shahla Melamed*

August 14, 2015

$20,550,000

$2,278,281

Internal Revenue Service*

Pending

$     658,921

$   298,908

State of California, EDD*

January 29, 2018

$     125,399

$     65,583

 

 

 

 

 

 

 

 

 

*Related to RoxSan Pharmacy, Inc. subsidiary

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