Exhibit 10.5

 

SETTLEMENT AGREEMENT AND GENERAL RELEASE

 

THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE (this “Agreement”), dated December
23, 2016 (the “Effective Date”), is executed by and between CDx, Inc., a
Delaware corporation and a wholly owned subsidiary of MyDx, Inc., a Nevada
corporation, (the “Company”), and Daniel R. Yazbeck (“Yazbeck”). The Company and
Yazbeck are each respectively referred to herein as a “Party” and collectively
as “the Parties.”

 

WHEREAS, at all times hereinafter mentioned, Yazbeck was and remains the Chief
Executive Officer, Chief Financial Officer and Chairman of the Board of
Directors for the Company;

 

WHEREAS, on October 15, 2014, the Company and Yazbeck entered into an employment
agreement (the “Employment Agreement”) for the initial term of five (5) years
whereby Yazbeck was to serve as the Company’s Chief Executive Officer in
exchange for the initial base salary is $180,000 per year;

 

WHEREAS, the Employment Agreement provides that for each fiscal year during the
employment agreement, Mr. Yazbeck shall be eligible for performance based cash
incentive bonus of up to one hundred percent (100%) of his annual base salary
and his performance objectives shall be set such that one hundred percent (100%)
completion of his objectives shall entitle him to at least seventy-five percent
(75%) of the bonus;

 

WHEREAS, beginning in the second year of the Employment Agreement, the bonus
amount was to be based on the following factors: (1) the financial performance
of the Company as determined and measured by the Company’s Board of Directors,
and (2) Yazbeck’s achievement of management targets and goals as set by the
Company;

 

WHEREAS, the bonus amount was and is intended to reward contribution to the
Company’s performance over an entire fiscal year, and on the basis of
continuing, cumulative contribution, and consequently was to be paid only if
Yazbeck remained employed and in good standing at the time of bonus payments,
which were to occur each quarter;

 

WHEREAS, from the period beginning August 6, 2015, through December 31, 2016,
the Company accrued certain base salary and bonus obligations due and owing to
Yazbeck as wages, with said base salary and bonus obligations remaining unpaid
and/or deferred in an amount not less than $321,000, as represented on Schedule
1 attached hereto;

 

WHEREAS, in lieu of receiving cash compensation for the base salary and bonus
monies due and owing to Yazbeck from the Company for the above referenced
period, Yazbeck has agreed to accept compensation in the form of the Company’s
common stock, preferred stock, and warrants to purchase same, in exchange for
Yazbeck’s release of any and all claims arising from the cash compensation
remaining due and owing to Yazbeck under the Employment Agreement; and

 

WHEREAS, the Parties desire to fully and finally settle all claims between them
with respect to the base salary and bonus compensation detailed in Schedule A
that remains due and owing to Yazbeck from the Company under the Employment
Agreement;

 

 

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, and for other good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, it is stipulated and agreed, by and
among the undersigned, that any claims arising from the base salary and bonus
compensation detailed in Schedule A that remains due and owing to Yazbeck from
the Company under the Employment Agreement (the “Settled Claims”) are fully and
finally settled upon the following terms and conditions:

 

Section 1. Settlement. In exchange for Yazbeck’s settlement and release of the
Settled Claims, the Company shall issue to Yazbeck or his affiliate, YCIG, Inc.,
common stock of the Company and warrants to purchase same (the “Settlement
Amount”) and where Section 1(b)(c)(d) are further defined in the Securities
Purchase Agreement (the “SPA”) attached hereto as Exhibit A, as follows:

 

(a)Fifty-One (51) shares of the Company’s Series A Voting Preferred Stock,
$0.001 par value per share (the “Series A Preferred”);

 

(b)Three Hundred Thousand (300,000) at $1.00 per shares of the Company’s Series
B Preferred Stock, $0.001 par value per share (the “Series B Preferred”);

 

(c)Warrant for fifteen percent (15%) of the common shares of the Company issued
and outstanding as of January 3, 2017, at an exercise price of $0.01 per share
(the “Warrant”), in form attached hereto as Exhibit B; and

 

(d)Thirty Million (30,000,000) shares of the Company’s Restricted Common Stock,
$0.001 par value per share (the “Common Stock”).

 

The approval and issuance of the Settlement Amount shall be made within a
reasonable time subsequent to the Effective Date, but in no case later than the
due date of the Company’s next periodic filing on Form 10-Q.  

 

Section 2. Default. In the event that the Company defaults in the performance of
its obligations to approve and issue the Settlement Amount and such default
continues, following notice, for a period of ten (10) business days (“Cure
Period”), then an amount equal to the total of accrued wages/liabilities related
to Yazbeck, as listed on Schedule A, (less any payments or share issuances
received by Yazbeck pursuant to the terms of this Agreement or otherwise) shall
immediately become due and payable as liquidated damages to Yazbeck or his
affiliate, YCIG, Inc.

 

 - 2 - 

 

 

Section 3. Release by Yazbeck. Upon execution of this Agreement, Yazbeck, on his
own behalf, and on behalf of his respective past, present or future parent
entities, divisions, affiliates, subsidiaries, related business entities,
shareholders, members, partners, limited partners, present and former directors,
managing directors, managers, officers, control persons, shareholders,
employees, agents, attorneys, administrators, heirs, executors, trustees,
beneficiaries, representatives, successors and assigns (collectively, the
“Yazbeck Releasing Parties”), hereby absolutely, unconditionally and irrevocably
RELEASE and FOREVER DISCHARGE the Company, its subsidiaries, and each of its
respective past, present or future parent entities, divisions, affiliates,
subsidiaries, related business entities, shareholders, members, partners,
limited partners, directors, managing directors, managers, officers, control
persons, employees, agents, attorneys, administrators, representatives,
successors and assigns (collectively, the “Company Released Parties”) from any
and all claims, actions, causes of action, suits, debts, liabilities,
obligations, sums of money, accounts, covenants, contracts, controversies,
agreements, promises, damages, judgments, executions, claims and demands,
whether known or unknown, suspected or unsuspected, absolute or contingent,
direct or indirect or nominally or beneficially possessed or claimed by any of
the Yazbeck Releasing Parties, whether the same be at law, in equity or mixed,
which such Yazbeck Releasing Party ever had, now has, or hereafter can, shall or
may have against any or all of the Company Released Parties, in respect of or
arising from the Settled Claims, (collectively the “Yazbeck Released Claims”);
provided, however, that nothing contained in this Agreement shall be construed
to prohibit Yazbeck from bringing appropriate proceedings to enforce the
obligations of the Company set forth under Section 1 or to fulfill its
obligations hereunder, none of which are released hereby until Yazbeck’s receipt
of the Settlement Amount.

 

Section 5. Release by the Company. Upon the execution of this Agreement, the
Company, on its own behalf, and on behalf of its respective past, present or
future parent entities, divisions, affiliates, subsidiaries, related business
entities, shareholders, members, partners, limited partners, present and former
directors, managing directors, managers, officers, control persons,
shareholders, employees, agents, attorneys, administrators, heirs, executors,
trustees, beneficiaries, representatives, successors and assigns (collectively,
the “Company Releasing Parties”), hereby absolutely, unconditionally and
irrevocably RELEASE and FOREVER DISCHARGE each of Yazbeck, his respective
affiliates and each of his respective past, present or future entities,
divisions, affiliates, subsidiaries, related business entities, shareholders,
members, partners, limited partners, directors, managing directors, managers,
officers, control persons, employees, independent contractors, agents,
attorneys, administrators, representatives, successors and assigns
(collectively, the “Yazbeck Released Parties”) from any and all claims, actions,
causes of action, suits, debts, liabilities, obligations, sums of money,
accounts, covenants, contracts, controversies, agreements, promises, damages,
judgments, executions, claims and demands, whether known or unknown, suspected
or unsuspected, absolute or contingent, direct or indirect or nominally or
beneficially possessed or claimed by any of the Company Releasing Parties,
whether the same be at law, in equity or mixed, which such Company Releasing
Party ever had, now has, or hereafter can, shall or may have against any or all
of the Yazbeck Released Parties, in respect of or arising from the Settled
Claims, (collectively the “Company Released Claims” and together with the
Yazbeck Released Claims, the “Released Claims”); provided, however, that nothing
contained in this Agreement shall be construed to prohibit the Company from
bringing appropriate proceedings to enforce the obligations of Yazbeck
hereunder, none of which are released hereby until Yazbeck’s receipt of the
Settlement Amount.

 

Section 6. No Suits or Actions. Except as provided for herein with respect to
the Company’s failure to timely pay the Settlement Amount, each of the Releasing
Parties hereby irrevocably covenants to refrain from asserting any claim or
demand, or commencing, instituting or causing to be commenced, any proceeding of
any kind against any Yazbeck Released Party (in such capacity, each a “Released
Party””), as applicable, based upon any Party’s Released Claim. If any of the
Releasing Parties brings any claim, suit, action or manner of action against the
Released Parties (or any of them) in administrative proceedings, in arbitration,
at law, in equity, or mixed, with respect to any Released Claim, then such
Releasing Party shall indemnify the Released Parties (or any of them) in the
amount or value of any final judgment or settlement (monetary or other) and any
related cost (including without limitation reasonable legal fees) entered
against, paid or incurred by the Released Parties (or any of them).

 

 - 3 - 

 

 

Section 7. Power, Authority and Capacity. Each Party represents and warrants to
the other Party that it has the power, authority and capacity to enter into this
Agreement.

 

Section 8. Preparation of Agreement. Each Party represents to the other that its
counsel have negotiated and participated in the drafting of, and are legally
authorized to negotiate and draft, this Agreement. Each Party to this Agreement
acknowledges that this Agreement was drafted jointly by the Parties hereto and
each Party has contributed substantially and materially to the preparation of
this Agreement. The Agreement shall be construed as having been made and entered
into as the result of arms-length negotiations, entered into freely and without
coercion or duress, between parties of equal bargaining power. The language in
this Agreement and any documents executed in connection therewith shall be
interpreted as to its fair meaning and not strictly for or against any Party.

 

Section 9. No Assignment of Released Claims. Each Releasing Party represents and
warrants to the Released Parties that there has been no assignment or other
transfer of any interest in any Released Claim.

 

Section 10. Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part of degree will remain in
full force and effect to the extent not held invalid or unenforceable.

 

Section 11. Amendment; Governing Law. This Agreement may not be amended,
modified or supplemented except in a writing signed by the Parties. This
Agreement shall be governed by and construed under the laws of the State of New
York without regard to principles of conflicts of law.

 

Section 12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

Section 13. Waiver. No delay in exercising any right hereunder shall be deemed a
waiver thereof, and no waiver shall be deemed to have any application to any
future default or exercise of rights hereunder.

 

Section 14. Entire Agreement.  This Agreement constitutes the entire agreement
between the Parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all Parties hereto.  No Party has relied
on any representations not contained within or referred to in this Agreement and
the documents delivered herewith.

 

Section 15. Captions.  The captions of the various sections and paragraphs of
this Agreement have been inserted only for the purposes of convenience; such
captions are not a part of this Agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the provisions of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

 - 4 - 

 

  

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
date first above written.

 

  CDx, Inc.       Date: 12/23/16 By:

/s/ Daniel Yazbeck

    Name:     Title:         MyDx, Inc.       Date: 12/23/16 By:

/s/ Daniel Yazbeck

    Name:     Title:       Date: 12/23/16 By:

/s/ Daniel Yazbeck

    Daniel R. Yazbeck

 

 - 5 - 

 

 

SCHEDULE 1

 

CDx, Inc. Accrued Liabilities – Accrued Wages/Compensation Due Yazbeck

(08/06/2015 – 12/31/2016)

 

Accrued Wages: 08/06/2015 – 12/31/2016 - $141,000

 

Performance Milestone Bonus Outstanding: $180,000

 

Total Annual Bonus Comp Available  $180,000   Estimated Timing Bonus 1
Delivery of Beta Unit for
OrganaDx Sensors  $45,000   Q4-16 Bonus 2
Delivery of Beta Unit for AquaDx Sensors  $45,000   Q4-16 Bonus 3
Delivery of Beta Unit for
AeroDx Sensor  $45,000   Q4-16 Bonus 4
Delivery of Beta Unit for
MyDx 2  $45,000     Q4-16 Bonus 1
Delivery of Organa Production Units (500+)  $45,000     Q4-17 Bonus 2
Delivery of AquaDx Production Units (500+)  $45,000     Q4-17 Bonus 3
Delivery of AeroDx Production Units (500+)  $45,000     Q4-17 Bonus 4
Delivery of MyDx 2 Production Units (500+)  $45,000     Q4-17

 

 - 6 - 

 

 

EXHIBIT A

  

SECURITIES PURCHASE AGREEMENT

 

THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is made as of December 23, 2016,
by and among MyDx, Inc., a Nevada corporation (the “Company”), and YCIG, Inc. or
its designees (“Subscriber”).

 

WHEREAS, the Company and the Subscriber are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2) and/or Regulation D (“Regulation D”) as
promulgated under the Securities Act of 1933, as amended (the “1933 Act”); and

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Subscriber, and the
Subscribers shall purchase, (a) 300,000 shares of Series B Preferred Stock, par
value $.001 per share of the Company, (the “Preferred Stock”), at a purchase
price of $1.00 per share, pursuant to a Certificate of Designation to be
approved by the Company and filed with the Secretary of State of Nevada
designating the rights and privileges of the Preferred Stock, substantially in
the form as annexed hereto as Exhibit A (the “Certificate”), (b) Warrants to
purchase up to fifteen percent of the Company’s common stock, par value $0.001
(the “Common Stock”) of the Company (the “Warrant Shares”), at an exercise price
of $0.001 per share, subject to adjustment (the “Exercise Price”), in
substantially the form as annexed hereto as Exhibit B (the “Investor Warrants”),
and (c) 30,000,000 restricted shares (the “Restricted Shares”) of Common Stock
(all such transactions, collectively, the “Offering”). The Preferred Stock, the
Investor Warrants, the Restricted Shares and the Warrant Shares are collectively
referred to herein as the “Securities”; and

 

WHEREAS, simultaneously with the Closing, the Company’s is delivering an Escrow
Agreement substantially in the form annexed hereto as Exhibit C (the “Escrow
Agreement”);

 

NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Subscribers hereby agree as
follows:

 

1. Purchase and Sale of Preferred Stock.

 

1.1. Sale and Issuance of Preferred Stock.

 

(a) The Company shall adopt and file with the Secretary of State of the State of
Nevada on or before the Initial Closing (as defined below) the Certificate in
the form of Exhibit A attached to this Agreement.

 

(b) Subject to the terms and conditions of this Agreement, Subscriber agrees to
purchase at the Closing and the Company agrees to sell and issue to each
Subscriber at the Closing units consisting of 300,000 shares of Preferred Stock,
the Restricted Shares and Investor Warrants, at a purchase price of $1.00 per
share of Preferred Stock (or an aggregate of $300,000). At Closing, the Company
shall deliver to each Subscriber, among other closing documents mentioned
herein, a certificate representing the Preferred Stock being purchased by such
Subscriber at such Closing against payment of the purchase price therefore by
check payable to the Company, by wire transfer to a bank account designated by
the Company.

 

1.2. Use of Proceeds. In accordance with the directions of the Company’s Board
of Directors, the Company shall use the proceeds from the sale of the Preferred
Shares in accordance with Schedule 1.2 annexed hereto, other general corporate
purposes.

 

 Ex A-1 

 

 

2. Closing. The consummation of the transactions contemplated herein (the
“Closing”) shall take place at the offices of Lucosky Brookman 101 Wood Avenue
South, Woodbridge New Jersey 08830, upon the satisfaction of all conditions to
Closing set forth in this Agreement, at a date and time acceptable to the
parties (the date on which the actual Closing takes place shall be referred to
as the “Closing Date”).

 

2.1 Closing Deliveries by Company. At Closing or immediately thereafter, if any
requests are initiated, the Company shall have approved and filed the
Certificate with the State of Nevada and delivered those closing documents and
instruments required by Section 10 below.

 

2.2 Closing Deliveries by Executive. At each Closing, the Escrow and Warrant
Agreement executed and delivered with respect to no less than 3,500,000,000
shares shall be delivered into Escrow to the Company’s Transfer Agent, all, duly
authorized, approved, executed and delivered as set forth in Section 10 below.

 

2.3 Closing Deliveries by Subscriber. At each Closing, Subscriber shall deliver
to the Company its respective portion of the Purchase Price in immediately
available funds and this Agreement.

 

3. Subscriber’s Representations and Warranties. Subscribers hereby represents
and warrants to and agrees with the Company, severally and not jointly, only as
to such Subscriber that:

 

(a) Organization and Standing of the Subscribers. If the Subscriber is an
entity, such Subscriber is a corporation, partnership or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization.

 

(b) Authorization and Power. Such Subscriber has the requisite power and
authority to enter into and perform this Agreement and to purchase the
Securities being sold to it hereunder. The execution, delivery and performance
of this Agreement by such Subscriber and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate or partnership action on the part of the Subscribers, and no
further consent or authorization of such Subscriber or its board of directors,
stockholders, partners, members or managers, as the case may be, is required.

 

(c) No Conflicts. The execution, delivery and performance of this Agreement and
the consummation by such Subscriber of the transactions contemplated hereby, do
not conflict with such Subscriber’s charter documents or bylaws or other
organizational documents. Subscriber is not required to obtain any consent,
authorization or order of, or make any filing, notice filing or registration
with, any court or governmental agency or creditor in order for it to execute,
deliver or perform any of its obligations under this Agreement.

 

(d) Information on Company. Such Subscriber has reviewed and relied upon the
accuracy of the “SEC Documents” (as defined in Section 5(h) hereof) and has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Securities and the merits and risks
of investing in the Securities; (ii) access to information about the Company and
the “Subsidiaries” (as defined in Section 5(u) hereof) and their respective
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate the investment in the Securities;
and (iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Subscriber or its representatives or counsel shall modify,
amend or affect such Subscriber’s right to rely on the truth, accuracy and
completeness of the SEC Documents (subject to a re-audit of the Company’s
financial statements currently being conducted) and the Company’s
representations and warranties contained in this Agreement.

 

 Ex A-2 

 

 

(e) Information on Subscriber. The Subscriber is an “accredited investor”, as
such term is defined in Regulation D promulgated under the 1933 Act, is
experienced in investments and business matters, and, with its representatives,
has such knowledge and experience in financial, tax and other business matters
as to enable the Subscriber to utilize the information made available by the
Company to evaluate the merits and risks of and to make an informed investment
decision with respect to the proposed purchase of the Securities. The
information set forth on the signature page hereto regarding the Subscriber is
accurate. Such Subscriber is not a registered broker-dealer under Section 15 of
the Securities Exchange Act of 1934, as amended (the “1934 Act”).

 

(f) Investment Intent. Such Subscriber is acquiring the Securities as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Subscriber’s right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws. Subject to the immediately preceding
sentence, nothing contained herein shall be deemed a representation or warranty
by such Subscriber to hold the Securities for any period of time.

 

(g) Legends. Each Subscriber understands that the certificates or other
instruments representing the Securities shall bear a restrictive legend in
substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

 

The legend set forth above shall be removed and the Company shall, within five
(5) business days, issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if, unless otherwise required by state
securities laws, (i) in connection with a sale transaction, provided the
Securities are registered under the 1933 Act or (ii) in connection with a sale
transaction, after such holder provides the Company with an opinion of counsel,
which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale, assignment
or transfer of the Securities may be made without registration under the 1933
Act.

 

(h) Communication of Offer. The offer to sell the Securities was directly
communicated to such Subscriber by the Company and/or its agents. At no time was
such Subscriber presented with or solicited by any leaflet, newspaper or
magazine article, spam or “mass” email, radio or television advertisement, or
any other form of general advertising or solicited or invited to attend a
promotional meeting otherwise than in connection and concurrently with such
communicated offer. Notwithstanding anything to the contrary contained in this
Agreement, the Company acknowledges and agrees that such Subscriber may transfer
the Securities to its Affiliates (as defined below) provided that each such
Affiliate is an “accredited investor” under Regulation D and such Affiliate
agrees to be bound by the terms and conditions of this Agreement and Security
Agreements. For the purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity. For purposes of this definition, “control” means the power to direct the
management and policies of such person or firm, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.

 

 Ex A-3 

 

 

(i) Enforceability. This Agreement has been duly authorized and executed by such
Subscriber and, when delivered by the Subscriber, will become Subscriber’s valid
and binding agreement enforceable against Subscriber in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights generally and to general principles of equity.

 

(j) Group. Subscriber, together with any other shareholders or affiliates of
Subscriber, is not part of a “Group” (as defined in Schedule 13 and Section 13
of the 1934 Act) and is not acting in concert with any person or persons as part
of a Group with respect to the acquisition or holding of the Securities or any
other securities of the Company, and does not have any agreement or
understanding with any other person relating to the sale or voting of securities
held by Subscriber or such other persons. In each case, a Group for the
foregoing purposes shall only be deemed to exist if said Group beneficially owns
or controls 5% or more (as defined in Rule 13(d) of the 1934 Act) of the voting
securities of the Company.

 

(k) Funds.  The Subscriber has taken such measures as are required by law to
assure that the funds used to pay to the Company the purchase price as set forth
on the signature pages hereto are derived: (i) from transactions that do not
violate United States law nor, to the extent such funds originate outside the
United States, do not violate the laws of the jurisdiction in which they
originated; and (ii) from permissible sources under United States law and to the
extent such funds originate outside the United States, under the laws of the
jurisdiction in which they originated.

 

(l) Patriot Act and No Prohibited Investment.  The Subscriber is in compliance
with any and all applicable provisions of the Patriot Act including, without
limitation, amendments to the Bank Secrecy Act. If the Subscriber is a Financial
Institution, it has established and is in compliance with all procedures
required by the Subscriber and the Bank Secrecy Act. Subscriber hereby
represents and warrants that the proposed investment in the Company is being
made on its own behalf and does not directly or indirectly contravene United
States federal, state, local or international laws or regulations applicable to
Subscriber, including anti-money laundering laws (a "Prohibited Investment"). 
Federal regulations and Executive Orders administered by the U.S. Treasury
Department's Office of Foreign Assets Control ("OFAC") prohibit, among other
things, the engagement in transactions with, and the provision of services to,
certain foreign countries, territories, entities and individuals. The lists of
OFAC prohibited countries, territories, persons and entities can be found on the
OFAC website at <www.treas.gov/ofac>. Subscriber hereby represents and warrants
that it is not a country, territory, person or entity named on an OFAC list, nor
is Subscriber a natural person or entity with whom dealings are prohibited under
any OFAC regulations.

 

4. Company Representations and Warranties. Except as set forth in the Schedule
of Exceptions attached hereto as Schedule 4 (the “Schedule of Exceptions”), the
Company represents and warrants to and agrees with each Subscriber that:

 

(a) Due Incorporation. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, and has the
requisite corporate power to own its properties and to carry on its business as
disclosed in the Latest SEC Documents (as defined in Section 4(h)). The Company
is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have or be reasonably
likely to have a Material Adverse Effect. For purpose of this Agreement, a
“Material Adverse Effect” shall mean any of (i) a material and adverse effect on
the legality, validity or enforceability of any of this Agreement (ii) a
material and adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company’s
ability to perform on a timely basis its obligations under this Agreement.

 

 Ex A-4 

 

 

(b) Capitalization. The authorized capital stock of the Company, other than the
Conversion Shares (as defined in Section 10 below), consists of 10,000,000,000
shares of Common Stock, par value $0.001 per share, of which as of December 31,
2016, 575,000,000 shares are issued and outstanding as of the date hereof, and
10,000,000 shares of “blank check” preferred stock of which 51 shares have been
designated as “Series A Preferred Stock” and issued, and 300,000 shares have
been designated as “Series B Preferred Stock” and reserved for issuance to
Subscriber hereby in one or more series. In addition, at Closing or immediately
after but no later than (the following business day), the Certificate will have
been duly authorized and filed. Except as disclosed in the Latest SEC Documents
(as defined in Section 4(h)), no shares of Common Stock or Preferred Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company or, the existence of any such
rights will be waived prior to Closing. Except as disclosed in the SEC
Documents, as of the date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act and (iv) except as set forth on Schedule
4(b), there are no outstanding registration statements and there are no
outstanding comment letters from the Securities and Exchange Commission (the
“Commission”) or any other regulatory agency. There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of any of the Securities as described in this
Agreement (except, to the extent, if any, that such rights are understood prior
to Closing). The Company has reserved for issuance all of the Conversion Shares
upon conversion of the Preferred Stock.

 

(c) Authorization, Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement and to issue the Preferred Stock and Investor Warrants,
and, upon conversion or exercise thereof, the Conversion Shares and Warrant
Shares, respectively, in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement by the Company (or any subsidiary) to
which it is a party and the consummation by it or them of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Preferred Stock, the Conversion Shares, the Investor Warrants and the
Warrant Shares and the reservation for issuance and the issuance of the
Conversion Shares and Warrant Shares issuable upon conversion or exercise
thereof (whether in the event of a mandatory redemption of Preferred Stock or
otherwise), have been duly authorized by the Company’s Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) on or before the Closing Date, this
Agreement will have been duly executed and delivered by the Company, (iv) this
Agreement will, when executed and delivered constitute the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors’ rights and remedies.

 

 Ex A-5 

 

 

(d) Consents. No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company,
or any of its Affiliates, or FINRA, the SEC, or the OTC Bulletin Board market
system or the Company’s stockholders, is required for the execution by the
Company of this Agreement to which it is a party and compliance and performance
by the Company of its covenants and obligations under this Agreement, including,
without limitation, the issuance and sale of the Securities.

 

(e) No Violation or Conflict. Assuming the representations and warranties of the
Subscriber in Section 3 are true and correct (except with respect to Section
3(c)), neither the issuance and sale of the Securities nor the performance of
the Company’s obligations under this Agreement will: (i) violate, conflict with,
result in a breach of, or constitute a default (or an event which with the
giving of notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the Articles of Incorporation of the Company as
in effect on the date hereof, including the Certificate (the “Certificate of
Incorporation”), the Bylaws of the Company as in effect on the date hereof (the
“Bylaws”) or other organizational documents of the Company, (B) any decree,
judgment, order, law, treaty, rule, regulation or determination applicable to
the Company of any court, governmental agency or body, or arbitrator having
jurisdiction over the Company or over the properties or assets of the Company or
any of its Affiliates, (C) the terms of any bond, debenture, note or any other
evidence of indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to which the
Company or any of its Affiliates is a party, by which the Company or any of its
Affiliates is bound, or to which any of the properties of the Company or any of
its Affiliates is subject, or (D) the terms of any “lock-up” or similar
provision of any underwriting or similar agreement to which the Company, or any
of its Affiliates is a party except the violation, conflict, breach, or default
of which would not have or be reasonably likely to have a Material Adverse
Effect; or (ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company or any of
its Affiliates; or (iii) result in the activation of any anti-dilution rights or
a reset or repricing of any debt or security instrument of any other creditor or
equity holder of the Company, nor result in the acceleration of the due date of
any obligation of the Company; or (iv) result in the activation of any
piggy-back registration rights of any person or entity holding securities of the
Company or having the right to receive securities of the Company.

 

(f) Issuance of the Securities. The Securities upon issuance: (i) are free and
clear of any security interests, liens, claims or other encumbrances, subject to
restrictions upon transfer under the 1933 Act and any applicable state
securities laws; (ii) have been duly and validly authorized and on the date
exercise of the Investor Warrants, the Warrant Shares will be duly and validly
issued, fully paid and non-assessable or if registered pursuant to the 1933 Act,
and if resold pursuant to an effective registration statement, will be freely
tradable without any restriction whatsoever; (iii) will not have been issued or
sold in violation of any pre-emptive or other similar rights of the holders of
any securities of the Company; and (iv) will not subject the holders thereof to
personal liability by reason of being such holders.

 

(g) Litigation. There is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates that would affect the execution by the Company or the
performance by the Company of its obligations under the Transaction Documents to
which it is a party. Except as disclosed Schedule 4(g) to the Schedule of
Exceptions or as disclosed in the Latest SEC Documents (as defined in Section
4(h)), there is no pending or, to the best knowledge of the Company, basis for
or threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates which litigation if adversely determined would have or
be reasonably likely to have a Material Adverse Effect.

 

 Ex A-6 

 

 

(h) SEC Documents: Financial Statements. Since September 30, 2016 the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the Commission under the 1934 Act (all of the foregoing
filed prior to the date hereof or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the “SEC
Documents” and any of the foregoing filed prior to the date hereof for periods
ending on or after December 31, 2006 or amended after the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to as
the “Latest SEC Documents”). As of their respective dates, the financial
statements of the Company disclosed in the SEC Documents (the “Financial
Statements”) are the subject of a re-audit by the Company’s current principal
auditors. The Company has not, in the past two years, received any notice from
FINRA, the NASD, the Pink Sheets quotation system or the SEC, advising the
Company that it is in danger of having its securities de-listed, or that any
late filings of SEC reports by it in the future would endanger the eligibility
of its common stock to remain quoted on the Pink Sheets or any other quotations
service.

 

(i) No Market Manipulation. The Company has not taken, and will not take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Securities or affect
the price at which the Securities may be issued or resold.

 

(j) Information Concerning Company. The Subscriber has not been provided with
any material non-public information concerning the Company, except (i) as the
terms and conditions of the transactions contemplated hereby may constitute such
information, or (ii) pursuant to non-disclosure agreements or documents of
similar purpose. The Company understands and confirms that the Subscriber will
rely on the representations and covenants herein effecting transactions in
securities of the Company. All disclosure provided to the Subscriber regarding
the Company, its business and the transactions contemplated hereby, furnished by
or on behalf of the Company (including the Company’s representations and
warranties set forth in this Agreement) are true and correct in all material
respects as of the date thereof and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The SEC Documents contain all material information
relating to the Company and its operations and financial condition as of their
respective dates which information is required to be disclosed therein, (subject
to a re-audit as disclosed in certain SEC Documents) and disclosed in the Latest
SEC Documents which are subject to audit.

 

(k) Stop Transfer. The Securities, when issued, will be restricted securities.
The Company will not issue any stop transfer order or other order impeding the
sale, resale or delivery of any of the Securities, except as may be required by
any applicable federal or state securities laws and unless contemporaneous
notice of such instruction is given to the Subscriber.

 

(l) Defaults. The Company is not in violation of its Certificate of
Incorporation or Bylaws. The Company is (i) not in default under or in violation
of any agreement or instrument to which it is a party or by which it or any of
its properties are bound or affected, which default or violation would have or
be reasonably likely to have a Material Adverse Effect or which default has not
been waived for purposes of allowing the issuance of the Preferred Stock and
entry into this Agreement, (ii) not in default with respect to any order of any
court, arbitrator or governmental body or subject to or party to any order of
any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) not in
violation of any statute, rule or regulation of any governmental authority which
violation would have or be reasonably likely to have a Material Adverse Effect.

 

 Ex A-7 

 

 

(m) No Integrated Offering. Neither the Company, nor any of its Affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would cause the offer of the Securities pursuant to
this Agreement to be integrated with prior offerings by the Company for purposes
of the 1933 Act or any applicable stockholder approval provisions. Neither the
Company nor any of its Affiliates will take any action or steps that would cause
the offer or issuance of the Securities to be integrated with other offerings.

 

(n) No General Solicitation; Private Placement. Neither the Company, nor any of
its Affiliates, nor to its knowledge, any person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D under the 1933 Act) in connection with the offer or
sale of the Securities. Assuming the accuracy of the Subscribers’
representations and warranties set forth in Sections 3(d)-(f), no registration
under the 1933 Act is required for the offer and sale of the Securities by the
Company to the Subscribers under this Agreement.

 

(o) Listing. The Company has not received any oral or written notice that its
Common Stock is not eligible or will become ineligible for quotation on the Pink
Sheets or OTC Bulletin Board, and there have been no FINRA or similar hearings
relating to the listing or quotation of the Company’s securities on such market
or any other market in the past two years, or that its Common Stock does not
meet all requirements for the continuation of such quotation, and the Company
satisfies all the requirements for the continued listing of its Common Stock on
the Pink Sheets or OTC Bulletin Board.

 

(p) No Undisclosed Liabilities. The Company has no liabilities or obligations
which are material, individually or in the aggregate, which are not disclosed as
of the respective dates as of which the information is given in the SEC
Documents, other than those incurred in the ordinary course of the Company’s
businesses since October 31, 2016 and which, individually or in the aggregate,
would not reasonably be expected to have or be reasonably likely to have a
Material Adverse Effect.

 

(q) No Undisclosed Events or Circumstances.   Since December 31, 2015, no event
or circumstance has occurred or exists with respect to the Company or its
businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed in the SEC Documents.

 

(r) Acknowledgment Regarding Subscribers’ Purchase of the Securities. The
Company acknowledges and agrees that the Subscribers are acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Subscribers are not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Subscribers or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Subscribers’
purchase of the Securities. The Company further represents to the Subscribers
that the Company’s decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.

 

(s) No Disagreements with Accountants and Lawyers. There are no disagreements of
any kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants (other than those specified designates
with the independent auditors or the Company’s financial statements which have
already been disclosed in the SEC Reports), and lawyers formerly or presently
employed by the Company, including but not limited to disputes or conflicts over
payment owed to such accountants and lawyers.

 

 Ex A-8 

 

 

(t) Omitted.

 

(u) Title to Assets. Except as set forth in the Latest SEC Documents, the
Company and its subsidiaries have good and marketable title in fee simple to all
real property owned by them that is material to their respective businesses and
good and marketable title in all personal property owned by them that is
material to their respective businesses, in each case free and clear of all
liens, except for liens as do not materially affect the actual value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and its Subsidiaries. Any real property and
facilities held under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company and its
Subsidiaries are in compliance, except as could not, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect.

 

(v) Patents and Trademarks. The Company and its subsidiaries have, or have
rights to use, in accordance with applicable U.S. or foreign laws where it
transacts business, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the Latest SEC Documents and which the
failure to so have could, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any person.
To the knowledge of the Company, there is no existing infringement by another
person of any of the Intellectual Property Rights.

 

(w) Solvency. Based on the financial condition of the Company as of the Closing
Date (and assuming that the Closing shall have occurred), (i) the Company’s fair
saleable value of its assets exceeds the amount that will be required to be paid
on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof, and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company will not incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt).

 

(x) Compliance with Law. The Company and its subsidiaries are conducting
business in all material respects in compliance with all applicable laws and
orders. The Company and the Subsidiaries hold all permits of all governmental
authorities that by the nature of the operations of the business conducted by it
or the ownership of the assets owned by it are permits required to conduct the
operation and ownership thereof in the manner currently conducted or to use such
assets in the manner currently utilized in the business, except for such
permits, if any, as to which the failure to hold are not reasonably likely to
have a Material Adverse Effect.

 

(y) Environmental Laws. The Company and its subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval. The Company and its
Subsidiaries have not been notified by any governmental authority that any such
environmental permits will be modified, suspended or revoked or cannot be
renewed in the ordinary course of business consistent with past practice. There
are no present or past environmental conditions at any property owned, leased or
used by the Company or any Subsidiary. There is no pending or, to the best
knowledge of the Company, threatened environmental claim against the Company or
any Subsidiary relating to their business or the properties owned, leased or
used thereby, or against any entity relating to the business of the Company or
such properties, for which the Company or any Subsidiary may have any liability.
There are no hazardous materials or other conditions at, under or emanating
from, and there has been no release at, on or adjoining, any real property
currently or formerly owned, operated or leased by the Company or any Subsidiary
or their respective predecessors in interest that would reasonably be expected
to give rise to an environmental claim against or liability of any of the
foregoing under any Environmental Law. Neither the Company nor any Subsidiary
has assumed, contractually or by operation of applicable law, any liabilities of
any third party under any Environmental Law.

 

 Ex A-9 

 

 

(z) Tax Status.   Except as set forth in the SEC Documents, the Company and each
of its Subsidiaries has made and filed through December 31, 2015 (and has valid
extensions for all applicable periods thereafter) all federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject and (unless and only to the extent that the Company and
each of its Subsidiaries has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) has paid all taxes
and other governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply, in each case,
except where the failure to make such filing or payment or set aside such amount
would not, individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect.

 

(aa) Certain Transactions. Except as set forth in the Latest SEC Documents, and
except for arm’s length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties and other than the grant of stock
options disclosed in the Latest SEC Documents, none of the officers, directors,
or employees of the Company or any Subsidiary is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director trustee or partner.

 

5. Exempt Offering. The offer and issuance of the Securities to the Subscribers
is being made pursuant to the exemption from the registration provisions of the
1933 Act afforded by Section 4(2) of the 1933 Act and/or Rule 506 of Regulation
D promulgated thereunder. The Company will provide, at the Company’s expense,
such legal opinions in the future as are reasonably necessary for the issuance
and resale of the Warrant Shares issuable upon the due exercise of the Investor
Warrants.

 

6. Broker/Legal Fees. The Company on the one hand, and each Subscriber (for
itself only) on the other hand, agree to indemnify the other against and hold
the other harmless from any and all liabilities to any persons claiming
brokerage commissions or finder’s fees on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby and arising out of such
party’s actions.

 

 Ex A-10 

 

 

7. Covenants of the Company. The Company covenants and agrees with the
Subscriber as follows:

 

(a) Listing. The Company will maintain the listing of its Common Stock on the
OTC Bulletin board or any other national exchange or listing system, whichever
of the foregoing is at the time the principal trading exchange or market for the
Common Stock (the “Principal Market”), and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Principal Market, as applicable.

 

(b) Market Regulations. The Company shall notify the Commission of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to the
Subscribers and promptly provide copies thereof to Subscriber.

 

(c) Reservation. The Company undertakes to reserve from its authorized but
unissued shares of Common Stock (i) 50% of the number of Warrant Shares as are
issuable upon exercise of the Investor Warrants and (ii) 100% of the maximum
number of Conversion Shares as may be issued upon conversion in the event of a
mandatory conversion. Failure to have sufficient shares reserved pursuant to
this Section 9(d) for three (3) consecutive business days or ten (10) days in
the aggregate shall be a material default of the Company’s obligations under
this Agreement and the Preferred Stock.

 

(d) Books and Records. From the date of this Agreement and until the later of
(i) two (2) years after the Closing Date, or (ii) until all the Preferred Stock
have been converted and Conversion Shares resold or transferred by all
Subscriber or are eligible for resale pursuant Rule 144, without regard to
volume limitations, the Company will keep true records and books of account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.

 

(e) Reasonable Best Efforts. Each party shall use its reasonable best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
Sections 11 and 12 of this Agreement.

 

(f) Restricted Shares Guaranteed Return. The Company has guaranteed the
Subscriber shall receive a net sales price, minus sales commissions and fees, of
$25,500 from the eventual sale of the Restricted Shares.

 

8. Covenants of the Company Regarding Indemnification.

 

(a) The Company agrees to indemnify, hold harmless, reimburse and defend the
subscriber, the subscriber’s officers, directors, agents, Affiliates, control
persons, and principal stockholders or, equity holders, against any actual:
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the Subscriber
or any such person which results, arises out of or is based upon (i) any
material misrepresentation by Company or breach of any warranty made by the
Company in this Agreement or in any Exhibits or Schedules attached hereto or
(ii) after any applicable notice and/or cure periods, any breach or default in
performance by the Company of any covenant or undertaking to be performed by the
Company hereunder.

 

 Ex A-11 

 

 

9. Conditions to the Company’s Obligation to Sell. The obligation of the Company
hereunder to issue and sell the Preferred Stock, if any are requested to be
purchased, Investor Warrants and Restricted Shares to the Subscriber at any
Closing, is subject to the satisfaction, on or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Company’s benefit and may be waived by the Company at any time in its sole
discretion:

 

(a) The Subscriber(s) shall have executed this Agreement and any of the other
transaction documents to which it is a party, and delivered it to the Company.

 

(b) The Subscriber shall have delivered to the Company the Purchase Price and by
wire transfer of immediately available U.S. funds pursuant to the wire
instructions provided by the Company.

 

(c) The representations and warranties of the Subscriber(s) shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Subscriber shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Subscriber on or before the Closing Date.

 

10. Conditions to the Subscribers’ Obligation to Purchase. The obligation of the
Subscriber hereunder to subscribe for the Preferred Stock to be sold at the
Initial Closing or any subsequent closing, Restricted Shares and Investor
Warrants to be sold at Initial Closing or any subsequent closing is subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions, any which may be waived at Subscriber’s sole and absolute
discretion:

 

(a) The Certificate shall have been duly authorized and approved and filed with
the State of Nevada, and in full force and effect;

 

(b) Certificates representing the Preferred Stock shall be executed and
delivered to each Subscriber,

 

(c) The Company shall have approved, authorized executed and delivered:

 

(i) the Escrow Agreement to the agent for the Subscriber set forth therein (the
“Agent”) along with the 3,500,000,000 shares of Common Stock for issuance upon
conversion of the Preferred Stock, based on the adjusted Conversion Price (as
defined in the Certificate) and shall have reserved such shares plus any other
shares that may be issuable upon conversion of the Preferred Stock for issuance
thereon (the “Conversion Shares”),

 

(ii) Investor Warrants to purchase such number of Warrant Shares as equals the
number of Conversion Shares into which the Preferred Stock issued is convertible
into, all duly authorized, approved, executed and delivered by the Company, and
a as well as a legal opinion from counsel to the Company, as reasonably approved
by the Subscriber’s, which shall contain customary opinions relating to
enforceability, validity, due authority, no conflicts of laws of all agreements
and securities issued as well as the valid and fully paid issuance of Preferred
Stock and all other securities contemplated hereby (the “Opinion”).

 

(d) The Common Stock shall be authorized for quotation on the Pink Sheets and
trading in the Common Stock shall not have been suspended for any reason.

 

(e) The representations and warranties of the Company shall be true and correct
in all material respects (except to the extent that any of such representations
and warranties is already qualified as to materiality, in which case, such
representations and warranties shall be true and correct without further
qualification) as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company on or
prior to the Closing Date. If requested by the Subscribers, the Subscribers
shall have received a certificate, executed by the President and the Treasurer
of the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by the Subscribers.

 

 Ex A-12 

 

 

(f) Omitted

 

(g) The Company shall have reserved out of its authorized and unissued Common
Stock, solely for the purpose of effecting exercise of the Investor Warrants,
that number of shares of Common Stock as shall be equal to 50% of the number of
shares of Common Stock required to effect the exercise of all the Investor
Warrants to be outstanding immediately following the Closing Date.

 

(h) The Subscriber shall have received the Opinion.

 

(i) The Subscriber shall have completed a due diligence review of the Company to
their sole satisfaction.

 

The Company covenants that as of the foregoing which haven’t been delivered (or
actions taken) at closing shall be delivered for the requisite action taken
within two (2) business days of the closing date unless otherwise indicated
herein.

 

11. Miscellaneous.

 

(a) Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, confirmed email (with a hard copy by
mail or fax) or facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (i) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be: if to the
Company, to: MyDX, Inc., Att: CEO and/or CFO, and (ii) if to the Subscribers, to
the one or more addresses and telecopier numbers indicated on the signature
pages hereto.

 

(b) Entire Agreement; Assignment. This Agreement and other documents delivered
in connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof. No right or obligation of the Company
shall be assigned without prior notice to and the written consent of the
Subscriber.

 

 Ex A-13 

 

 

(c) Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived or amended except in a written instrument signed by the
Company and the Subscribers (or transferees of Securities) holding a majority in
interest of the Preferred Stock, or upon execution hereof by Existing Investors
desiring to exercise their Participation Rights. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

 

(d) Counterparts/Execution. This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile signature and delivered by facsimile transmission.

 

(e) Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York. The parties and the individuals executing this
Agreement and other agreements referred to herein or delivered in connection
herewith on behalf of the Company agree to submit to the jurisdiction of such
courts and waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

 

(f) Specific Enforcement, Consent to Jurisdiction. The Company and Subscriber
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to one or more preliminary and final injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity. Subject to
Section 13(e) hereof, each of the Company, Subscriber and any signatory hereto
in his personal capacity hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction in New York of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Nothing in this Section shall affect or limit any right
to serve process in any other manner permitted by law.

 

(g) Independent Nature of Subscribers. The Company acknowledges that the
obligations of each Subscriber under this Agreement are several and not joint
with the obligations of any other Subscriber, and no Subscriber shall be
responsible in any way for the performance of the obligations of any other
Subscriber under this Agreement. The Company acknowledges that each Subscriber
has represented that the decision of each Subscriber to purchase Securities has
been made by such Subscriber independently of any other Subscriber or other
person of entity and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
other Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges that
nothing contained in this Agreement, and no action taken by any Subscriber
pursuant hereto or thereto shall be deemed to constitute the Subscribers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Subscribers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement. The Company acknowledges that each Subscriber shall be entitled
to independently protect and enforce its rights, including without limitation,
the rights arising out of this Agreement, and it shall not be necessary for any
other Subscriber to be joined as an additional party in any proceeding for such
purpose. The Company and each Subscriber acknowledges that it has elected to
provide all Subscribers with the same terms and this Agreement for the
convenience of the Company and not because Company was required or requested to
do so by the Subscribers. The Company acknowledges that such procedure with
respect to this Agreement in no way creates a presumption that the Subscribers
are in any way acting in concert or as a group with respect to this Agreement or
the transactions contemplated hereby.

 

(h) Business/Calendar Days. Unless otherwise indicated, references to days in
this Agreement will refer to calendar days.

 

(i) Termination. In the event that the Closing shall not have occurred with
respect to the on or before ten (10) business days from the date hereof due to
the Company’s or the Subscribers’ failure to satisfy the conditions set forth in
Sections 11 and 12 above (and the non-breaching party’s failure to waive such
unsatisfied condition(s)), the non-breaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party.

 

[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

 

 Ex A-14 

 

 

LIST OF EXHIBITS & SCHEDULES

 

Exhibits

 

Exhibit A   Certificate of Designation Exhibit B   Form of Investor Warrant
Exhibit C   {Omitted} Exhibit D   Escrow Agreement       Schedule 1.2   Use of
Proceeds

 

 Ex A-15 

 

 

COMPANY SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

 

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

 

  MYDX, INC.,        

By:

/s/ Daniel Yazbeck   Name: Daniel Yazbeck   Title: Chief Executive Officer      
  SUBSCRIBER:         (By Counterpart Signature Pages)

 

 Ex A-16 

 

 

SUBSCRIBER COUNTER-SIGNATURE PAGE

(For Individual Subscribers Pursuant to Subscription Agreement of MyDx, Inc.

Series B Preferred Stock and Warrants, December 2016)

 

This Subscription Agreement is hereby executed and entered into by the below
Subscriber.

 

Purchase Price and Principal Amount Subscribed For:           Signature
(Individual)       $_300,000       Name (Print)               Street address    
          City, State and Zip Code               Tax Identification or Social
Security Number           (            )     Telephone Number          
(            )     Facsimile Number           Address to Which Correspondence
Should Be Directed (if different from above)              

c/o Name

             

Street Address

              City, State and Zip Code           (              )     Telephone
Number           (              )     Facsimile Number

 

 Ex A-17 

 

 

SUBSCRIBER COUNTER-SIGNATURE PAGE

(for Corporation, Partnership, Pursuant to Subscription Agreement of MyDx, Inc.,

Series B Preferred Stock and Warrants December 2016)

 

This Subscription Agreement (including the Questionnaire) is hereby executed and
entered into by the below Subscriber:

 

Purchase Price and Principal Amount Subscribed For:

 

    Name of Entity       $_____________________________         Type of Entity
(i.e., corporation, partnership, etc.)              

Tax Identification or Social Security Number

           

State of Formation of Entity

                Name of Signatory Typed or Printed               Its:    

Title

          Address to Which Correspondence Should Be Directed (if different from
above)               c/o Name          

 

 

Street Address

           

City, State and Zip Code

          (            )     Telephone Number           (            )    
Facsimile Number

 

*If Preferred Stock and Warrants are being subscribed for by an entity, the
Certificate of Signatory that follows must also be completed.

 

 Ex A-18 

 

 

CERTIFICATE OF SIGNATORY

 

To be completed if Preferred Stock and Investor Warrants are being subscribed
for by an entity.

 

I, Daniel Yazbeck am the President of YCIG, Inc. (the “Entity”).

 

I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement relating to the sale of
Preferred Stock and Investor Warrants of MyDx, Inc. and to purchase and hold the
said Securities. The Subscription Agreement has been duly and validly executed
on behalf of the Entity and constitutes a legal and binding obligation of the
Entity.

 

IN WITNESS WHEREOF, I have hereto set my hand this 23 day of December, 2016.

 

  /s/ Daniel Yazbeck  

Signature

 

 Ex A-19 

 

 

Schedule 1.2

 

Use of Proceeds

 

USE OF PROCEEDS 

AMOUNT

     $  PAYROLL December 31, 2016  $     $     $     $     $     $ 

TOTAL

$321,000 

  

 Ex A-20 

 

 

EXHIBIT B

  

WARRANT

 

COMMON STOCK PURCHASE WARRANT

 

VOID AFTER 5:00 P.M., EASTERN TIME ON JANUARY 3, 2019

 

For the Purchase of Fifteen Percent (15%) of the

Issued and Outstanding Shares of Common Stock, $0.001 Value

of

MyDx, Inc.

a Nevada corporation

 

THIS CERTIFIES THAT, for value received, YCIG, INC (the “Holder”), as registered
owner of this Common Stock Purchase Warrant (“Warrant”), is entitled to, at any
time at or before the Expiration Date (as defined below), but not thereafter, to
subscribe for, purchase and receive fifteen percent (15%) of the common shares
issued and outstanding as of January 3, 2017, of the fully paid and non
assessable shares of common stock (the “Common Stock”), of MyDx, Inc., a Nevada
corporation (the “Company”), at $.001 per share (the “Exercise Price”), upon
presentation and surrender of this Warrant and upon payment by cashier’s check,
wire transfer or credit of the Exercise Price for such Common Stock to the
Company at the principal office of the Company; provided, however, that upon the
occurrence of any of the events specified in the Statement of Rights of Warrant
Holder, a copy of which is attached as Annex 1 hereto, and by this reference
made a part hereof, the rights granted by this Warrant shall be adjusted as
therein specified.

 

Upon exercise of this Warrant, the form of election must be duly executed and
the instructions for registration of the Shares acquired by such exercise must
be completed.

 

The term Expiration Date (the “Expiration Date”) means the earliest of (i) the
first anniversary of the date hereof, (ii) immediately prior to the sale of all
of substantially all of the Company’s assets, or (iii) immediately prior to a
merger or consolidation in which securities possessing more than 50% of the
total combined voting power of the Company’s outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction; provided, that the Company
shall give notice to the Holder at least ten (10) days prior to the events set
forth in clauses (i), (ii) and (iii) above.

 

If the subscription rights represented hereby are not exercised at or before the
Expiration Date, this Warrant shall become void, and all rights represented
hereby shall cease and expire.

 

This Warrant may be exercised in accordance with its terms in whole or in part.
In the event of the exercise or assignment hereof in part only, the Company
shall cause to be delivered to the Holder a new Warrant of like tenor to this
Warrant in the name of the Holder, evidencing the right of the Holder to
purchase the number of Shares purchasable hereunder as to which this Warrant has
not been exercised or assigned.

 

In no event shall this Warrant (or the Shares issuable, upon full or partial
exercise hereof) be offered or sold except in conformity with the Securities Act
of 1933; as amended.

 

 Ex B-1 

 

 

COMMON STOCK PURCHASE WARRANT

SIGNATURE PAGE

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer this January 3, 2017.

 

  MyDx, Inc.       By:

/s/ Daniel Yazbeck

    Daniel Yazbeck     Chief Executive Officer

 

 Ex B-2 

 

 

Form to be used to exercise Warrant:

 

TO: MyDx, Inc. DATE: _______________

 

The Undersigned hereby elects, irrevocably, to exercise the Warrant and to
purchase ________ shares of Common Stock of the Company, and hereby makes
payment by cashier’s check of $________________ (at $____) in payment of the
Exercise Price pursuant thereto. Please issue the Shares as to which this
Warrant is exercised in the name of:

__________________________________

(Name)

 __________________________________

(Address)

 __________________________________

(Taxpayer Number)

 

and if said number of Warrants exercised shall not be all the Warrants evidenced
by the within Warrant Certificate, issue a new Warrant Certificate for the
remaining balance of Warrants to the undersigned at the address stated below.

 

Name of Holder: ______________________________________________     (Please
Print)         Signature:  ______________________________________________      
    ______________________________________________      (Address)  

 

NOTICE:The signature to exercise must correspond with the name as written upon
the face of the Warrant in every particular without alteration or enlargement or
any change whatsoever.

 

 Ex B-3 

 

 

Form to be used to transfer Warrants:

 

TO: MyDx, Inc.     DATE: ___________________________

 

For value received, _______________________ hereby sells, assigns and transfers
unto __________________________ (Tax ID No._____________________) the attached
Warrant, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint the Secretary of the Company attorney, to
transfer said Warrant Certificate on the books of the company, with full power
of substitution in the premises.

 

Name of Holder: ______________________________________________     (Please
Print)         Signature:  ______________________________________________      
    ______________________________________________      (Address)  

 

NOTICE:The signature to transfer must correspond with the name as written upon
the face of the Warrant in every particular without alteration or enlargement or
any change whatsoever.

 

 Ex B-4 

 

 

ANNEX 1 TO MyDx, INC.

COMMON STOCK PURCHASE WARRANT

 

STATEMENT OF RIGHTS OF WARRANT HOLDER

 

1. Exercise of Warrant. This Warrant may be exercised in whole or in part at any
time at or before the Expiration Date (as defined in the Warrant), by
presentation and surrender hereof to the Company, with the Exercise Form annexed
hereto duly executed and accompanied by payment by cashier’s check or wire
transfer of the Exercise Price for the number of shares specified in such form,
together with all federal and state taxes applicable upon such exercise. If this
Warrant should be exercised in part only, the Company shall, upon surrender of
this Warrant for cancellation, execute and deliver a new Warrant evidencing the
right of the Holder to purchase the balance of the shares purchasable hereunder.
Upon receipt by the Company of this Warrant and the Exercise Price at the office
or agency of the Company, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the common stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such common stock shall not
then be actually delivered to the Holder.

 

2. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to
any rights of a member in the Company, either at law or equity, and the rights
of the Holder are limited to those expressed in the Warrant and are not
enforceable against the Company except to the extent set forth herein.

 

3. Adjustment in Number of Shares.

 

(A) Adjustment for Reclassifications. In case at any time or from time to time
after January 3, 2017 (“Issue Date”) the holders of the Common Stock of the
Company (or any shares or other securities at the time receivable upon the
exercise of this Warrant) shall have received, or, on or after the record date
fixed for the determination of eligible members, shall have become entitled to
receive, without payment therefore, other or additional shares or other
securities or property (other than cash) by way of share-split, spinoff,
reclassification, combination of shares or similar corporate rearrangement
(exclusive of any dividend of its or any subsidiary’s shares), then and in each
such case, the Holder of this Warrant, upon the exercise hereof as provided in
Section 1, shall be entitled to receive the amount of securities and property
which such Holder would hold on the date of such exercise if on the Issue Date
he had been the holder of record of the number of common stock shares of the
Company called for on the face of this Warrant and had thereafter, during the
period from the Issue Date, to and including the date of such exercise, retained
such shares and/or all other or additional securities and property receivable by
him as aforesaid during such period, giving effect to all adjustments called for
during such period.

 

(B) Adjustment for Reorganization, Consolidation, Merger. In case of any
reorganization of the Company (or any other company the securities of which are
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other company) shall
consolidate with or merge into another company or convey all, or substantially
all, of its assets to another company, then and in each such case the Holder of
this Warrant, upon the exercise hereof as provided in Section 1 at any time
after the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the securities and property
receivable upon the exercise of this Warrant prior to such consummation, the
securities or property to which such Holder would be entitled had the Holder
exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided herein; in each such case, the terms of this Warrant
shall be applicable to the shares or other securities or property receivable
upon the exercise of this Warrant after such consummation.

 

 Ex B-5 

 

 

3.5 Adjustment in Exercise Price. Under no circumstances shall the Exercise
Price of the Warrant change. Therefore, in the case of a reverse stock split or
recapitalization or any other event, subsequent to any such event, the Exercise
Price shall remain $0.001.

 

4. Notices to Warrant Holders. So long as this Warrant shall be outstanding and
unexercised if the Company shall take any action which would trigger an
adjustment (as set forth in Section 3), then, in any such case, the Company
shall cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance; lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their common stock for securities or other property deliverable upon
such reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.

 

5. Officer’s Certificate. Whenever the number of common stock issuable upon
exercise of this Warrant or the Exercise Price shall be adjusted as required by
the provisions hereof, the Company shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office, and with its stock
transfer agent, if any, an officer’s certificate showing the adjusted number of
common stock or Exercise Price determined as herein provided and setting forth
in reasonable detail the facts requiring such adjustment. Each such officer’s
certificate shall be made available at all reasonable times for inspection by
the Holder and the Company shall, forthwith after each such adjustment, deliver
a copy of such certificate to the Holder. Such certificate shall be conclusive
as to the correctness of such adjustment.

 

6. Restrictions on Transfer. The Holder of this Warrant, by acceptance thereof;
agrees that, absent an effective registration statement, under the Securities
Act of 1933 (the “Act”), covering the disposition of this Warrant or the Common
Stock issued or issuable upon exercise hereof, such Holder will not sell or
transfer any or all of this Warrant or such Common Stock without first providing
the Company with an opinion of counsel reasonably satisfactory to the Company to
the effect that such sale or transfer will be exempt from the registration and
prospectus delivery requirements of the Act. The certificates evidencing the
Warrant and Common Stock which will be delivered to such Holder by the Company
shall bear substantially the following legend:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER. PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES (UNLESS THE
COMPANY DETERMINES IN ITS SOLE DISCRETION TO USE ITS OWN COUNSEL), WITH ANY SUCH
COUNSEL AND OPINION OF COUNSEL TO BE REASONABLY ACCEPTABLE TO THE ISSUER, TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

 

 Ex B-6 

 

 

Each Holder of this Warrant, at the time all or a portion of such Warrant is
exercised, agrees to make such written representations to the Company as counsel
for the Company may reasonably request, in order that the Company may be
reasonably satisfied that such exercise of the Warrant and consequent issuance
of Common Stock will not violate the registration and prospectus delivery
requirements of the Act, or other applicable state securities laws.

 

7. Piggyback Registration Rights. If, at any time after the Issue Date and
expiring on the Expiration Date, the Company proposes to register any of its
securities under the Act either for its own account or for the account of
others, in connection with the public offering of such equity securities solely
for cash, on a registration form that would also permit the registration of the
common stock issuable upon exercise of this Warrant (“Warrant Shares”), the
Company shall promptly give the Holder written notice of such proposal. Within
thirty (30) days after the notice is given, the Holder shall give notice as to
the number of Warrant Shares, if any, which have vested and which the Holder
requests be registered simultaneously with such registration by the Company. The
Company shall use its best efforts to include such Warrant Shares in such
registration statement (or in a separate registration statement concurrently
filed) which the Holder requests to be so included and to cause such
registration statement to become effective with respect to such shares in
accordance with the registration procedures set forth in Section 8 hereof. If at
any time after giving written notice of its intention to register equity
securities and before the effectiveness of the registration statement filed in
connection with such registration, the Company determines for any reason either
not to effect such registration or to delay such registration, the Company may,
at its election, by delivery of written notice to the Holder, (i) in the case of
a determination not to effect registration, relieve itself of a reasonably
necessary portion of its obligation to register the Warrant Shares under this
Section 7 in connection with such registration, or (ii) in the case of a
determination to delay registration, delay the registration of the Warrant
Shares under this Section 7 for the same period as the delay in the registration
of such other equity securities. Each Holder of Warrant Shares requesting
inclusion in a registration pursuant to this Section 7 may, at any time before
the effective date of the registration statement relating to such registration,
revoke such request by delivering written notice of such revocation to the
Company (which notice shall be effective only upon receipt by the Company);
provided, however, that if the Company, in consultation with its financial and
legal advisors, determines that such revocation would require a recirculation of
the prospectus contained in the registration statement, then such Holder of
Warrant Shares shall have no right to revoke its request.

 

 Ex B-7 

 

 

8. Expenses and Procedures.

 

(A) Expenses of Registration. All registration expenses (exclusive of
underwriting discounts and commissions) shall be borne by the Company; provided,
however, that if a Holder revokes a registration request pursuant to the last
sentence of Section 7, the registration expenses in connection with such revoked
registration shall be borne by such Holder. Each Holder of Warrant Shares shall
bear all underwriting discounts, selling commissions, sales concessions and
similar expenses applicable to the sale of the Warrant Shares sold by such
Holder.

 

(B) Registration Procedures. In the case of the registration, qualification or
compliance effected by the Company pursuant to Section 7 hereof, the Company
will keep the Holders of Warrant Shares advised as to the initiation of
registration, qualification and compliance and as to the completion thereof. At
its expense, the Company will furnish such number of prospectuses and other
documents incident thereto as the Holders or underwriters from time to time may
reasonably request.

 

(C) Information. The Company may require each seller of Warrant Shares as to
which any registration is being effected to furnish such information regarding
the distribution of such Warrant Shares as the Company may from time to time
reasonably request and the Company may exclude from such registration the
Warrant Shares of any seller who unreasonably fails to furnish such information
after receiving such request.

 

(D) Blue Sky. The Company will, as expeditiously as possible, use its best
efforts to register or qualify the Warrant Shares covered by a registration
statement at the expense of the Company in such jurisdictions as the holders of
such Warrant Shares or, in the case of an underwritten public offering, the
managing underwriter shall reasonably request at the expense of the Holders of
the Warrant Shares being registered provided that the Company shall not be
required in connection with any such registration or qualification or as a
condition thereto to qualify to do business in any jurisdiction where it is not
so qualified or to take any action which would subject it to taxation or service
of process in any jurisdiction where it is not otherwise subject to such
taxation or service of process.

 

(E) Notification of Material Events. The Company will, as expeditiously as
possible, immediately notify each holder of Warrant Shares under a registration
statement, at any time when a prospectus relating thereto is required to be
delivered under the Act, of the happening of any event as a result of which the
prospectus contained in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and, as expeditiously
as possible, amend or supplement such prospectus to eliminate the untrue
statement or the omission.

 

 Ex B-8 

 

 

9. Indemnification.

 

(A) Indemnification by Company. The Company shall, without limitation as to
time, indemnify and hold harmless, to the full extent permitted by law, each
holder of Warrant Shares, its officers, directors, agents and employees, each
person who controls such holder (within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended, hereinafter the
“Exchange Act”), and the officers, directors, agents or employees of any such
controlling person, from and against all losses, claims, damages, liabilities,
costs (including, without limitation, all reasonable attorneys’ fees) and
expenses (collectively “Loss” or “Losses”), as incurred, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made (in the case of any prospectus) not misleading, except
insofar as the same are based solely upon information furnished to the Company
by such holder for use therein; provided, however, that the Company shall not be
liable in any such case to the extent that any such Loss arises out of or is
based upon an untrue statement or alleged untrue statement or omission made in
any preliminary prospectus or prospectus if (i) such holder failed to send or
deliver a copy of the prospectus or prospectus supplement with or prior to the
delivery of written confirmation of the sale of Warrant Shares and (ii) the
prospectus or prospectus supplement would have corrected such untrue statement
or omission. If requested, the Company shall also indemnify underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers, directors, agents and
employees and each person who controls such persons (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders of Warrant
Shares. It is agreed that the indemnity agreement contained in this Section 9(A)
shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of the Company (which consent has not
been unreasonably withheld).

 

(B) Conduct of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation or inquiry) shall be brought or any
claim shall be asserted against any person entitled to indemnity hereunder (an
“Indemnified Party”), such indemnified party shall promptly notify the party
from which such indemnity is sought (the “Indemnifying Party”) in writing, and
the indemnifying party shall assume the defense thereof including the employment
of counsel reasonably satisfactory to the indemnified party and the payment of
all fees and expenses incurred in connection with the defense thereof. All such
fees and expenses (including any fees and expenses incurred in connection with
investigation or preparing to defend such action or proceeding) shall be paid to
the indemnified party, as incurred, within 20 days of written notice thereof to
the indemnifying party; provided, however, that if, in accordance with this
Section 9, the indemnifying party is not liable to the indemnified party, such
fees and expenses shall be returned promptly to the indemnifying party. Any such
indemnified party shall have the right to employ separate counsel in any such
action, claim or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be the expense of such indemnified party
unless (a) the indemnifying party has agreed to pay such fees and expenses, (b)
the indemnifying party shall have failed promptly to assume the defense of such
action, claim or proceeding and to employ counsel reasonably satisfactory to the
indemnified party in any such action, claim or proceeding, or (c) the named
parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying party (in which case, if such indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action, claim or
proceeding on behalf of such indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action,
claim or proceeding or separate but substantially similar or related actions,
claims or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all such indemnified parties, unless in the opinion of
counsel for such indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
action, claim or proceeding, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel or counsels).
No indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the release
of such indemnified party from all liability in respect to such claim or
litigation without the written consent (which consent will not be unreasonably
withheld) of the indemnified party. No indemnified party shall consent to entry
of any judgment or enter into any settlement without the written consent (which
consent will not be unreasonably withheld) of the indemnifying party from which
indemnify or contribution is sought.

 

 Ex B-9 

 

 

(C) Contribution. If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under Section 9(A) or 9(B) hereof (other
than by reason of exceptions provided in those Sections) in respect of any
Losses, then each applicable indemnifying party in lieu of indemnifying such
indemnified party shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions, statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether any action in question,
including any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or made by, or
relates to information supplied by such indemnifying party or indemnified party,
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in Section 9(B), any legal or other fees or
expenses reasonably incurred by such party in connection with any action, suit,
claim, investigation or proceeding.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 9(C) were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.

 

10. Loss or Mutilation. Upon receipt by the Company of evidence satisfactory to
it (in the exercise of reasonable discretion) of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and (in the case of loss, theft
or destruction) of indemnity satisfactory to it (in the exercise of reasonable
discretion), and (in the case of mutilation) upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof a new Warrant of
like tenor.

 

11. Reservation of Shares. The Company shall at all times reserve and keep
available for issue upon the exercise of Warrants such number of its authorized
but unissued common stock as will be sufficient to permit the exercise in full
of all outstanding Warrants.

 

 Ex B-10 

 

 

12. Notices. All notices and other communications from the Company to the Holder
of this Warrant shall be mailed by first class registered or certified mail,
postage prepaid, to the address furnished to the Company in writing by the last
Holder of this Warrant who shall have furnished an address to the Company in
writing.

 

13. Change; Waiver. Neither this Warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.

 

14. Law Governing. This Warrant shall be construed and enforced in accordance
with and governed by the laws of the State of Nevada.

 

DATED: January 3, 2017

 

  MyDx, Inc.   A Nevada corporation       By:

/s/ Daniel Yazbeck

    Daniel Yazbeck     Chief Executive Officer

 

 

Ex B-11