PARALLAX HEALTH SCIENCES, INC. - FORM 8-K - EX-3 - EX 3.1 CERTIFICATE OF DESIGNATION-SERIES B1

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8-K - CURRENT REPORT - PARALLAX HEALTH SCIENCES, INC.	20200212form8k.htm

STATE OF NEVADA

BARBARA K. CEGAVSKE

^CommercialRecordingsDivision

Secretary of State

202 N. Carson Street

Carson City, NV 89701

Telephone (775) 684-5708

Fax (775) 684-7138

KIMBERLEY PERONDI

•

North Las Vegas City Hall

Deputy Secretary for

2250 Las Vegas Blvd North, Suite 400

OFFICE OF THE

Commercial Recordings

North Las Vegas, NV 89030

SECRETARY OF STATE

^{Telephone (702) 486-2880}

Fax (702) 486-2888

Business Entity - Filing Acknowledgement

02/12/2020

Work Order Item Number:

W2020021201055- 406454

Filing Number:

20200478067

Filing Type:

Certificate of Designation

Filing Date/Time:

02/12/2020 13:31:27 PM

Filing Page(s):

Indexed Entity Information:

Entity ID: E0427292005-7

Entity Name: PARALLAX HEALTH

SCIENCES, INC.

Entity Status: Active

Expiration Date: None

Commercial Registered Agent

PARACORP INCORPORATED

318 N CARSON ST #208, Carson City, NV 89701, USA

The attached document(s) were filed with the Nevada Secretary of State, Commercial

Recording Division. The filing date and time have been affixed to each document,

indicating the date and time of filing. A filing number is also affixed and can be used to

reference this document in the future.

Respectfully,

[ex31certofdesigserb13.gif]

BARBARA K. CEGAVSKE

Secretary of State

Page 1 of 1

Commercial Recording Division

202 N. Carson Street

BARBARA K. CEGAVSKE

Secretary of State

202 North Carson Street

Carson City, Nevada 89701-4201

(775) 684-5708

[ex31certofdesigserb14.jpg] • Website: www.nvsos.gov

www.nvsilverflume.gov

Certificate, Amendment or Withdrawal of Designation

NRS 78.1955, 78.1955(6)

Certificate of Designation

Certificate of Amendment to Designation - Before Issuance of Class or Series

Certificate of Amendment to Designation - After Issuance of Class or Series

Certificate of Withdrawal of Certificate of Designation

TYPE OR PRINT - USE DARK INK ONLY- DO NOT HIGHLIGHT

1. Entity information: Name of entity:

PARALLAX HEALTH SCIENCES, INC.

Entity or Nevada Business Identification Number (NVID): NV20051486592

2. Effective date and For Certificate of Designation or

Date:

Time:

time:

Amendment to Designation Only

(Optional):

(must not be later than 90 days after the certificate is filed)

3. Class or series of The class or series of stock being designated within this filing:

stock: (Certificate of

Designation only) SEE ATTACHED CERTIFICATE OF DESIGNATION- SERIES B1 PREFERRED STOCK

4. Information for

The original class or series of stock being amended within this filing:

amendment of class

or series of stock:

5. Amendment of

Certificate of Amendment to Designation- Before Issuance of Class or Series

class or series of

As of the date of this certificate no shares of the class or series of stock have been issued.

stock:

Certificate of Amendment to Designation- After Issuance of Class or Series

The amendment has been approved by the vote of stockholders holding shares in the corporation

entitling them to exercise a majority of the voting power, or such greater proportion of the voting

power as may be required by the articles of incorporation or the certificate of designation.

6.Resolution:

By resolution of the board of directors pursuant to a provision in the articles of incorporation this

(Certificate of Designation certificate establishes OR amends the following regarding the voting powers, designations,

and Amendment to

preferences, limitations, restrictions and relative rights of the following class or series of stock.*

Designation only)

7. Withdrawal:

Designation being

Date of

Withdrawn:

Designation:

No shares of the class or series of stock being withdrawn are outstanding.

The resolution of the board of directors authorizing the withdrawal of the certificate of

designation establishing the class or series of stock: *

8. Signature: (Required) X CALLI R BUCCI

Signature of Officer

Date:^02/12/2020

This form must be accompanied by appropriate fees._page1_{of 1}

Revised: 1/1/2019

PARALLAX HEALTH SCIENCES, INC.

CERTIFICATE OF DESIGNATION OF PREF

ERENCES,

RIGHTS AND LIMITATIONS

SERIES B1 10% CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 78.1955 OF THE

NEVADA REVISED STATUTES

The undersigned, Paul Arena and Calli Bucci, do hereby certify that:

1. They are the President and Secretary, respectively, of Parallax Health Sciences, Inc.,

a Nevada corporation (the “Corporation”).

2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, 977,352

of which have been issued.

3. The following resolutions were duly adopted by the board of directors of the

Corporation (the “Board of Directors”):

WHEREAS, the certificate of incorporation of the Corporation provides for a class of its

authorized stock known as preferred stock, consisting of 10,000,000 shares, $0.001 par value per

share, issuable from time to time in one or more series;

WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate,

voting rights, conversion rights, rights and terms of redemption and liquidation preferences of

any wholly unissued series of preferred stock and the number of shares constituting any series

and the designation thereof, of any of them; and

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid,

to fix the rights, preferences, restrictions and other matters relating to a series of the preferred

stock, which shall consist of, except as otherwise set forth in the Purchase Agreement, up to

1,000 shares of the preferred stock which the Corporation has the authority to issue, as follows:

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide

for the issuance of a series of preferred stock for cash or exchange of other securities, rights or

property and does hereby fix and determine the rights, preferences, restrictions and other matters

relating to such series of preferred stock as follows:

TERMS OF PREFERRED STOCK

Section 1.

Definitions. For the purposes hereof, the following terms shall

have the following meanings:

“Affiliate” means any Person that, directly or indirectly through one or more

intermediaries, controls or is controlled by or is under common control with a Person, as

such terms are used in and construed under Rule 405 of the Securities Act.

“Alternate Consideration” shall have the meaning set forth in Section 7(e).

“Base Conversion Price” shall have the meaning set forth in Section 7(b).

“Beneficial Ownership Limitation” shall have the meaning set forth in Section

6(d).

“Business Day” means any day except any Saturday, any Sunday, any day which

is a federal legal holiday in the United States or any day on which banking institutions in

the State of New York are authorized or required by law or other governmental action to

close.

“Buy-In” shall have the meaning set forth in Section 6(c)(iv).

“Change of Control Transaction” means the occurrence after the date hereof of

any of (a) an acquisition after the date hereof by an individual or legal entity or “group”

(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective

control (whether through legal or beneficial ownership of capital stock of the

Corporation, by contract or otherwise) of in excess of 33% of the voting securities of the

Corporation (other than by means of conversion or exercise of Preferred Stock and the

Securities issued together with the Preferred Stock), (b) the Corporation merges into or

consolidates with any other Person, or any Person merges into or consolidates with the

Corporation and, after giving effect to such transaction, the stockholders of the

Corporation immediately prior to such transaction own less than 66% of the aggregate

voting power of the Corporation or the successor entity of such transaction, (c) the

Corporation sells or transfers all or substantially all of its (and all of its Subsidiaries,

taken as a whole) assets to another Person and the stockholders of the Corporation

immediately prior to such transaction own less than 66% of the aggregate voting power

of the acquiring entity immediately after the transaction, (d) a replacement at one time or

within a one year period of more than one-half of the members of the Board of Directors

which is not approved by a majority of those individuals who are members of the Board

of Directors on the Original Issue Date (or by those individuals who are serving as

members of the Board of Directors on any date whose nomination to the Board of

Directors was approved by a majority of the members of the Board of Directors who are

members on the Original Issue Date), or (e) the execution by the Corporation of an

agreement to which the Corporation is a party or by which it is bound, providing for any

of the events set forth in clauses (a) through (d) above.

“Closing” means the closing of the purchase and sale of the Securities pursuant to

Section 2.1 of the Purchase Agreement.

“Closing Date” means the Trading Day on which all of the Transaction

Documents have been executed and delivered by the applicable parties thereto and all

conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and

(ii) the Corporation’s obligations to deliver the Securities have been satisfied or waived.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the Corporation’s common stock, par value $0.001 per

share, and stock of any other class of securities into which such securities may hereafter

be reclassified or changed.

“Common Stock Equivalents” means any securities of the Corporation or the

Subsidiaries which would entitle the holder thereof to acquire at any time Common

Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or

other instrument that is at any time convertible into or exercisable or exchangeable for, or

otherwise entitles the holder thereof to receive, Common Stock.

“Conversion Amount” means the sum of the Stated Value at issue.

“Conversion Date” shall have the meaning set forth in Section 6(a).

“Conversion Price” shall have the meaning set forth in Section 6(b).

“Conversion Shares” means, collectively, the shares of Common Stock issuable

upon conversion of the shares of Preferred Stock in accordance with the terms hereof.

“Conversion Shares Registration Statement” means a registration statement that

registers the resale of all of the Conversion Shares by the Holders, which shall be named

as “selling stockholders” therein, and meets the requirements of the Registration Rights

Agreement.

“Dilutive Issuance” shall have the meaning set forth in Section 7(b).

“Dilutive Issuance Notice” shall have the meaning set forth in Section 7(b).

“Dividend Conversion Rate” means the lesser of (a) the Conversion Price then in

effect or (b) 70% of the arithmetic average of the two lowest VWAPs during the 20

consecutive Trading Days ending on the Trading Day that is immediately prior to the

applicable Dividend Payment Date.

“Dividend Conversion Shares” shall have the meaning set forth in Section 3(a).

“Dividend Notice Period” shall have the meaning set forth in Section 3(a).

“Dividend Payment Date” shall have the meaning set forth in Section 3(a).

“Dividend Share Amount” shall have the meaning set forth in Section 3(a).

“Effective Date” means the date that the Conversion Shares Registration

Statement filed by the Corporation pursuant to the Registration Rights Agreement is first

declared effective by the Commission.

“Equity Conditions” means, during the period in question, (a) the Corporation

shall have duly honored all conversions scheduled to occur or occurring by virtue of one

or more Notices of Conversion of the applicable Holder on or prior to the dates so

requested or required, if any, (b) the Corporation shall have paid all liquidated damages

and other amounts owing to the applicable Holder in respect of the Preferred Stock, (c)(i)

there is an effective Conversion Shares Registration Statement pursuant to which the

Holders are permitted to utilize the prospectus thereunder to resell all of the shares of

Common Stock issuable pursuant to the Transaction Documents (and the Corporation

believes, in good faith, that such effectiveness will continue uninterrupted for the

foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to the

Transaction Documents (and shares issuable in lieu of cash payments of dividends) may

be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current

public information requirements as determined by the counsel to the Corporation as set

forth in a written opinion letter to such effect, addressed and acceptable to the Transfer

Agent and the affected Holders, (d) the Common Stock is trading on a Trading Market

and all of the shares issuable pursuant to the Transaction Documents are listed or quoted

for trading on such Trading Market (and the Corporation believes, in good faith, that

trading of the Common Stock on a Trading Market will continue uninterrupted for the

foreseeable future), (e) there is a sufficient number of authorized, but unissued and

otherwise unreserved, shares of Common Stock for the issuance of all of the shares then

issuable pursuant to the Transaction Documents, (f) the issuance of the shares in question

(or, in the case of a redemption, the shares issuable upon conversion in full of the

redemption amount) to the applicable Holder would not violate the limitations set forth in

Section 6(d) herein, (g), other than in connection with a Forced Conversion, there has

been no public announcement of a pending or proposed Fundamental Transaction or

Change of Control Transaction that has not been consummated, (h) the applicable Holder

is not in possession of any information provided by the Corporation, any of its

Subsidiaries, or any of their officers, directors, employees, agents or Affiliates, that

constitutes, or may constitute, material non-public information.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and

the rules and regulations promulgated thereunder.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options

to employees, officers or directors of the Corporation pursuant to any stock or option plan

duly adopted by a majority of the non-employee members of the Board of Directors of

the Corporation or a majority of the members of a committee of non-employee directors

established for such purpose, (b) securities upon the exercise or exchange of or

conversion of any securities issued pursuant to the Purchase Agreement and/or other

securities exercisable or exchangeable for or convertible into shares of Common Stock

issued and outstanding on the date of the Purchase Agreement, provided that such

securities have not been amended since the date of the Purchase Agreement to increase

the number of such securities or to decrease the exercise price, exchange price or

conversion price of any such securities or to extend the term of such securities, (c)

securities issued pursuant to acquisitions or strategic transactions approved by a majority

of the disinterested directors of the Corporation, provided that such securities are issued

as “restricted securities” (as defined in Rule 144) and carry no registration rights that

require or permit the filing of any registration statement in connection therewith during,

and provided that any such issuance shall only be to a Person (or to the equityholders of a

Person) which is, itself or through its subsidiaries, an operating company or an owner of

an asset in a business synergistic with the business of the Corporation and shall provide

to the Corporation additional benefits in addition to the investment of funds, but shall not

include a transaction in which the Corporation is issuing securities primarily for the

purpose of raising capital or to an entity whose primary business is investing in securities

and, (d) an amount of Preferred Stock and warrants up to $4,500,000 in cash, on the same

terms and conditions and prices as pursuant to the Purchase Agreement, with investors

executing definitive agreements for the purchase of such securities for the purchase of

such securities and such transactions having closed on or before May __¹, 2020.

“Forced Conversion Amount” means the sum of (a) 100% of the aggregate Stated

Value then outstanding, (b) accrued but unpaid dividends and (c) all liquidated damages

and other amounts due in respect of the Preferred Stock.

“Forced Conversion Date” shall have the meaning set forth in Section 8(a).

“Forced Conversion Notice” shall have the meaning set forth in Section 8(a).

“Forced Conversion Notice Date” shall have the meaning set forth in Section 8(a).

“Fundamental Transaction” shall have the meaning set forth in Section 7(e).

“GAAP” means United States generally accepted accounting principles.

“Holder” shall have the meaning given such term in Section 2.

¹ Insert the date that is the 90 day anniversary of the Closing Date.

“Junior Securities” means the Common Stock and all other Common Stock

Equivalents of the Corporation other than those securities which are explicitly senior or

pari passu to the Preferred Stock in dividend rights or liquidation preference.

“Liquidation” shall have the meaning set forth in Section 5.

“Mandatory Conversion Date” shall mean February __², 2022.

“Market Price” shall have the meaning set forth in Section 6(b).

“New York Courts” shall have the meaning set forth in Section 9(d).

“Notice of Conversion” shall have the meaning set forth in Section 6(a).

“Optional Redemption” shall have the meaning set forth in Section 8(b).

“Optional Redemption Amount” means the sum of (a) 120% of the aggregate

Stated Value then outstanding, (b) accrued but unpaid dividends, and (c) all liquidated

damages and other amounts due in respect of the Preferred Stock.

“Optional Redemption Date” shall have the meaning set forth in Section 8(b).

“Optional Redemption Notice” shall have the meaning set forth in Section 8(b).

“Optional Redemption Notice Date” shall have the meaning set forth in Section

8(b).

“Original Issue Date” means the date of the first issuance of any shares of the

Preferred Stock regardless of the number of transfers of any particular shares of Preferred

Stock and regardless of the number of certificates which may be issued to evidence such

Preferred Stock.

“Person” means an individual or corporation, partnership, trust, incorporated or

unincorporated association, joint venture, limited liability company, joint stock company,

government (or an agency or subdivision thereof) or other entity of any kind.

“Preferred Stock” shall have the meaning set forth in Section 2.

“Purchase Agreement” means the Securities Purchase Agreement, dated as of the

Original Issue Date, among the Corporation and the original Holders, as amended,

modified or supplemented from time to time in accordance with its terms.

² Insert the date that is the 2 year anniversary of the issuance date.

“Registration Rights Agreement” means the Registration Rights Agreement, dated

as of the date of the Purchase Agreement, among the Corporation and the original

Holders, in the form of Exhibit B attached to the Purchase Agreement.

“Registration Statement” means a registration statement meeting the requirements

set forth in the Registration Rights Agreement and covering the resale of the Underlying

Shares by each Holder as provided for in the Registration Rights Agreement.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the

Securities Act, as such Rule may be amended from time to time, or any similar rule or

regulation hereafter adopted by the Commission having substantially the same effect as

such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the

Securities Act, as such Rule may be amended or interpreted from time to time, or any

similar rule or regulation hereafter adopted by the Commission having substantially the

same purpose and effect as such Rule.

“Securities” means the Preferred Stock, the Warrants, the Warrant Shares and the

Underlying Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and

regulations promulgated thereunder.

“Share Delivery Date” shall have the meaning set forth in Section 6(c).

“Stated Value” shall have the meaning set forth in Section 2, as the same may be

increased pursuant to Section 3.

“Subscription Amount” shall mean, as to each Holder, the aggregate amount to be

paid for the Preferred Stock purchased pursuant to the Purchase Agreement as specified

below such Holder’s name on the signature page of the Purchase Agreement and next to

the heading “Subscription Amount,” in United States dollars and in immediately

available funds.

“Subsidiary” means any subsidiary of the Corporation as set forth on Schedule

3.1(a) of the Purchase Agreement and shall, where applicable, also include any direct or

indirect subsidiary of the Corporation formed or acquired after the date of the Purchase

Agreement.

“Successor Entity” shall have the meaning set forth in Section 7(e).

“Trading Day” means a day on which the principal Trading Market is open for

business.

“Trading Market” means any of the following markets or exchanges on which the

Common Stock is listed or quoted for trading on the date in question: the NYSE

American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global

Select Market, the New York Stock Exchange, the OTCQB or the OTCQX (or any

successors to any of the foregoing).

“Transaction Documents” means this Certificate of Designation, the Purchase

Agreement, the Warrants, the Registration Rights Agreement, all exhibits and schedules

thereto and hereto and any other documents or agreements executed in connection with

the transactions contemplated pursuant to the Purchase Agreement.

“Transfer Agent” means Action Stock Transfer, the current transfer agent of the

Corporation with a mailing address of 2469 E. Fort Union Blvd., Suite 214, Salt Lake

City, UT 84121and a facsimile number of 801-274-1099, and any successor transfer

agent of the Corporation.

“Trigger Date” means each of: (i) August __, 2020, (ii) February __, 2021, and

(iii) August __, 2021.

“Trigger Date Adjustment Notice” shall have the meaning set forth in Section

6(b).

“Underlying Shares” means the shares of Common Stock issued and issuable

upon conversion of the Preferred Stock, upon exercise of the Warrants and issued and

issuable in lieu of the cash payment of dividends on the Preferred Stock in accordance

with the terms of this Certificate of Designation.

“Variable Rate Transaction” shall have the meaning ascribed to such term in

Section 4.12(a) of the Purchase Agreement.

“VWAP” means, for any date, the price determined by the first of the following

clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading

Market, the daily volume weighted average price of the Common Stock for such date (or

the nearest preceding date) on the Trading Market on which the Common Stock is then

listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.

(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is

not a Trading Market, the volume weighted average price of the Common Stock for such

date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the

Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if

prices for the Common Stock are then reported on The Pink Open Market (or a similar

organization or agency succeeding to its functions of reporting prices), the most recent

bid price per share of the Common Stock so reported, or (d) in all other cases, the fair

market value of a share of Common Stock as determined by an independent appraiser

selected in good faith by the Purchasers of a majority in interest of the Securities then

outstanding and reasonably acceptable to the Corporation, the fees and expenses of which

shall be paid by the Corporation.

“Warrants” means, collectively, the Common Stock purchase warrants delivered

to the Holder at the Closing in accordance with Section 2.2(a) of the Purchase

Agreement, which Warrants shall be exercisable immediately and have a term of exercise

equal to three (3) years, in the form of Exhibit C attached to the Purchase Agreement.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of

the Warrants.

Section 2.

Designation, Amount and Par Value. The series of preferred stock

shall be designated as its Series B1 10% Convertible Preferred Stock (the “Preferred

Stock”) and the number of shares so designated shall be up to 1,000 (which shall not be

subject to increase without the written consent of the holders of a majority of the then

outstanding shares of the Preferred Stock (each, a “Holder” and collectively, the

“Holders”)). Each share of Preferred Stock shall have a par value of $0.001 per share and

a stated value equal to $10,000, subject to increase set forth in Section 3 below (the

“Stated Value”).

Section 3.

Dividends.

Dividends in Cash or in Kind. Holders shall be entitled to receive, and the

Corporation shall pay, cumulative dividends at the rate per share (as a percentage of the

Stated Value per share) of 10% per annum, payable quarterly on January 1, April 1, July

1 and October 1, beginning on the first such date after the Original Issue Date and on

each Conversion Date (with respect only to Preferred Stock being converted) and on each

Optional Redemption Date (with respect only to Preferred Stock being redeemed) (each

such date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Trading

Day, the applicable payment shall be due on the next succeeding Trading Day) in cash,

or at the Corporation’s option, in duly authorized, validly issued, fully paid and non-

assessable shares of Common Stock as set forth in this Section 3(a), or a combination

thereof (the dollar amount to be paid in shares of Common Stock, the “Dividend Share

Amount”). The form of dividend payments to each Holder shall be determined in the

following order of priority: (i) if funds are legally available for the payment of dividends

and the Equity Conditions have not been met during the 20 consecutive Trading Days

immediately prior to the applicable Dividend Payment Date (the “Dividend Notice

Period”), in cash only, (ii) if funds are legally available for the payment of dividends and

the Equity Conditions have been met during the Dividend Notice Period, at the sole

election of the Corporation, in cash or shares of Common Stock which shall be valued at

the Dividend Conversion Rate, (iii) if funds are not legally available for the payment of

dividends and the Equity Conditions have been met during the Dividend Notice Period, in

shares of Common Stock which shall be valued at the Dividend Conversion Rate, (iv) if

funds are not legally available for the payment of dividends and the Equity Condition

relating to an effective Conversion Shares Registration Statement has been waived by

such Holder, as to such Holder only, in unregistered shares of Common Stock which shall

be valued at the Dividend Conversion Rate, and (v) if funds are not legally available for

the payment of dividends and the Equity Conditions have not been met during the

Dividend Notice Period, then, at the election of such Holder, such dividends shall accrue

to the next Dividend Payment Date or shall be accreted to, and increase, the outstanding

Stated Value. In addition, as a condition to paying dividends in shares of Common

Stock, as to such Dividend Payment Date, prior to such Dividend Notice Period (but not

more than five (5) Trading Days prior to the commencement of such Dividend Notice

Period), the Corporation shall have delivered to each Holder’s account with The

Depository Trust Company a number of shares of Common Stock to be applied against

such Dividend Share Amount equal to the quotient of (x) the applicable Dividend Share

Amount divided by (y) the Dividend Conversion Rate, assuming for such purposes that

the Dividend Payment Date is the Trading Day immediately prior to the commencement

of the Dividend Notice Period (the “Dividend Conversion Shares”). The Holders shall

have the same rights and remedies with respect to the delivery of any such shares as if

such shares were being issued pursuant to Section 6.

Corporation’s Ability to Pay Dividends in Cash or Kind. On the Closing

Date, the Corporation shall have notified the Holders whether or not it may legally pay

cash dividends as of the Closing Date. The Corporation shall promptly notify the

Holders at any time the Corporation shall become able or unable, as the case may be, to

legally pay cash dividends. If at any time the Corporation has the right to pay dividends

in cash or shares of Common Stock, the Corporation must provide the Holders with at

least 20 Trading Days’ notice of its election to pay a regularly scheduled dividend in

shares of Common Stock (the Corporation may indicate in such notice that the election

contained in such notice shall continue for later periods until revised by a subsequent

notice). If at any time the Corporation delivers a notice to the Holders of its election to

pay the dividends in shares of Common Stock, the Corporation shall timely file a

prospectus supplement pursuant to Rule 424 disclosing such election. The aggregate

number of shares of Common Stock otherwise issuable to a Holder on a Dividend

Payment Date shall be reduced by the number of shares of Common Stock previously

issued to such Holder in connection with such Dividend Payment Date. If any Dividend

Conversion Shares are issued to a Holder in connection with a Dividend Payment Date

and are not applied against a Dividend Share Amount, then such Holder shall promptly

return such excess shares to the Corporation.

Dividend Calculations. Dividends on the Preferred Stock shall be

calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods,

and shall accrue daily commencing on the Original Issue Date, and shall be deemed to

accrue from such date whether or not earned or declared and whether or not there are

profits, surplus or other funds of the Corporation legally available for the payment of

dividends. Payment of dividends in shares of Common Stock shall otherwise occur

pursuant to Section 6(c)(i) herein and, solely for purposes of the payment of dividends in

shares, the Dividend Payment Date shall be deemed the Conversion Date. Dividends

shall cease to accrue with respect to any Preferred Stock converted, provided that, the

Corporation actually delivers the Conversion Shares within the time period required by

Section 6(c)(i) herein. Except as otherwise provided herein, if at any time the

Corporation pays dividends partially in cash and partially in shares, then such payment

shall be distributed ratably among the Holders based upon the number of shares of

Preferred Stock held by each Holder on such Dividend Payment Date.

Late Fees. Any dividends, whether paid in cash or shares of Common

Stock, that are not paid within three Trading Days following a Dividend Payment Date

shall continue to accrue and shall entail a late fee, which must be paid in cash, at the rate

of 18% per annum or the lesser rate permitted by applicable law which shall accrue daily

from the Dividend Payment Date through and including the date of actual payment in

full.

Other Securities. So long as any Preferred Stock shall remain outstanding,

neither the Corporation nor any Subsidiary thereof shall redeem, purchase or otherwise

acquire directly or indirectly any Junior Securities. So long as any Preferred Stock shall

remain outstanding, neither the Corporation nor any Subsidiary thereof shall directly or

indirectly pay or declare any dividend or make any distribution upon (other than a

dividend or distribution described in Section 6 or dividends due and paid in the ordinary

course on preferred stock of the Corporation at such times when the Corporation is in

compliance with its payment and other obligations hereunder), nor shall any distribution

be made in respect of, any Junior Securities as long as any dividends due on the Preferred

Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase or

redemption (through a sinking fund or otherwise) of any Junior Securities or shares pari

passu with the Preferred Stock.

Section 4.

Voting Rights. Except as otherwise provided herein or as otherwise

required by law, the Preferred Stock shall have no voting rights. However, as long as any shares

of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the

Holders of a majority of the then outstanding shares of the Preferred Stock, (a) alter or change

adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this

Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends,

redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or

otherwise pari passu with, the Preferred Stock, (c) amend its certificate of incorporation or other

charter documents in any manner that adversely affects any rights of the Holders other than in

connection with the contemplated reverse split as set forth in the Corporation’s Proxy Statement

on Schedule 14A filed with the Commission on February 3, 2020, (d) increase the number of

authorized shares of Preferred Stock, or (e) enter into any agreement with respect to any of the

foregoing.

Section 5.

Liquidation. Upon any liquidation, dissolution or winding-up of

the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled

to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to

120% of the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or

liquidated damages then due and owing thereon under this Certificate of Designation, for each

share of Preferred Stock before any distribution or payment shall be made to the holders of any

Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such

amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among

the Holders in accordance with the respective amounts that would be payable on such shares if

all amounts payable thereon were paid in full. The Corporation shall mail written notice of any

such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

Section 6.

Conversion.

Conversions at Option of Holder. Each share of Preferred Stock shall be

convertible, at any time and from time to time from and after the Original Issue Date at

the option of the Holder thereof, into that number of shares of Common Stock (subject to

the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such

share of Preferred Stock by the Conversion Price. Holders shall effect conversions by

providing the Corporation with the form of conversion notice attached hereto as Annex A

(a “Notice of Conversion”). Each Notice of Conversion shall specify the number of

shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned

prior to the conversion at issue, the number of shares of Preferred Stock owned

subsequent to the conversion at issue and the date on which such conversion is to be

effected, which date may not be prior to the date the applicable Holder delivers by

facsimile such Notice of Conversion to the Corporation (such date, the “Conversion

Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion

Date shall be the date that such Notice of Conversion to the Corporation is deemed

delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall

any medallion guarantee (or other type of guarantee or notarization) of any Notice of

Conversion form be required. The calculations and entries set forth in the Notice of

Conversion shall control in the absence of manifest or mathematical error. To effect

conversions of shares of Preferred Stock, a Holder shall not be required to surrender the

certificate(s) representing the shares of Preferred Stock to the Corporation unless all of

the shares of Preferred Stock represented thereby are so converted, in which case such

Holder shall deliver the certificate representing such shares of Preferred Stock promptly

following the Conversion Date at issue. Shares of Preferred Stock converted into

Common Stock or redeemed in accordance with the terms hereof shall be canceled and

shall not be reissued.

Conversion Price. The conversion price for the Preferred Stock shall

equal $0.15, subject to adjustment herein (the “Conversion Price”). In addition, on each

Trigger Date, the Conversion Price shall be reduced, and only reduced, to the lesser of (i)

the Conversion Price then in effect and (ii) 70% of the arithmetic average of the two

lowest VWAPs during the 20 consecutive Trading Days ending on the Trading Day that

is immediately prior to the applicable Trigger Date (the “Market Price”, which shall

thereafter be the new Conversion Price, subject to further adjustment hereunder, and each

20 Trading Day period shall be referred to herein as a “Measurement Period”). The

Corporation shall notify each Holder of the applicable adjustment to the Conversion Price

as of such date (each notice, a “Trigger Date Adjustment Notice”). For purposes of

clarification, whether or not the Corporation provides a Trigger Date Adjustment Notice

pursuant to this Section 6(b), each Holder shall receive a number of Conversion Shares

and retain a number of shares of Preferred Stock based upon the Conversion Price as

adjusted pursuant to this Section, regardless of whether a Holder accurately refers to such

price or number of shares of Preferred Stock converted in any Notice of Conversion.

Any adjustment to the Conversion Price pursuant to this Section shall be effective

retroactively to the first Trading Day during each Measurement Period. Accordingly,

with respect to Notices of Conversion effected during the Measurement Period, in the

event the Conversion Price is reduced pursuant to this Section, within the 2 Trading Days

immediately following the end of each Measurement Period, the Corporation shall issue

the applicable Holder additional Conversion Shares based on a Conversion Price equal to

the Market Price with respect to such Notices of Conversion.

Mechanics of Conversion.

Delivery of Conversion Shares Upon Conversion. Not later than

the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days

comprising the Standard Settlement Period (as defined below) after each

Conversion Date (the “Share Delivery Date”), the Corporation shall deliver, or

cause to be delivered, to the converting Holder (A) the number of Conversion

Shares being acquired upon the conversion of the Preferred Stock (including, if

the Corporation has given continuous notice pursuant to Section 3(b) for payment

of dividends in shares of Common Stock at least 20 Trading Days prior to the date

on which the Notice of Conversion is delivered to the Corporation, shares of

Common Stock representing the payment of accrued dividends otherwise

determined pursuant to Section 3(a) but assuming that the Dividend Notice Period

is the 20 Trading Days period immediately prior to the date on which the Notice

of Conversion is delivered to the Corporation and excluding for such issuance the

condition that the Corporation deliver the Dividend Share Amount as to such

dividend payment prior to the commencement of the Dividend Notice Period)

which, on or after the earlier of (i) the six month anniversary of the Original Issue

Date or (ii) the Effective Date, shall be free of restrictive legends and trading

restrictions (other than those which may then be required by the Purchase

Agreement), and (B) a bank check in the amount of accrued and unpaid dividends

(if the Corporation has elected or is required to pay accrued dividends in cash).

On or after the earlier of (i) the six month anniversary of the Original Issue Date

or (ii) the Effective Date, the Corporation shall deliver the Conversion Shares

required to be delivered by the Corporation under this Section 6 electronically

through the Depository Trust Company or another established clearing

corporation performing similar functions. As used herein, “Standard Settlement

Period” means the standard settlement period, expressed in a number of Trading

Days, on the Corporation’s primary Trading Market with respect to the Common

Stock as in effect on the date of delivery of the Notice of Conversion.

ii.

Failure to Deliver Conversion Shares. If, in the case of any Notice

of Conversion, such Conversion Shares are not delivered to or as directed by the

applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect

by written notice to the Corporation at any time on or before its receipt of such

Conversion Shares, to rescind such Conversion, in which event the Corporation

shall promptly return to the Holder any original Preferred Stock certificate

delivered to the Corporation and the Holder shall promptly return to the

Corporation the Conversion Shares issued to such Holder pursuant to the

rescinded Notice of Conversion.

iii.

Obligation Absolute; Partial Liquidated Damages.

The

Corporation’s obligation to issue and deliver the Conversion Shares upon

conversion of Preferred Stock in accordance with the terms hereof are absolute

and unconditional, irrespective of any action or inaction by a Holder to enforce

the same, any waiver or consent with respect to any provision hereof, the recovery

of any judgment against any Person or any action to enforce the same, or any

setoff, counterclaim, recoupment, limitation or termination, or any breach or

alleged breach by such Holder or any other Person of any obligation to the

Corporation or any violation or alleged violation of law by such Holder or any

other person, and irrespective of any other circumstance which might otherwise

limit such obligation of the Corporation to such Holder in connection with the

issuance of such Conversion Shares; provided, however, that such delivery shall

not operate as a waiver by the Corporation of any such action that the Corporation

may have against such Holder. In the event a Holder shall elect to convert any or

all of the Stated Value of its Preferred Stock, the Corporation may not refuse

conversion based on any claim that such Holder or any one associated or affiliated

with such Holder has been engaged in any violation of law, agreement or for any

other reason, unless an injunction from a court, on notice to Holder, restraining

and/or enjoining conversion of all or part of the Preferred Stock of such Holder

shall have been sought and obtained, and the Corporation posts a surety bond for

the benefit of such Holder in the amount of 150% of the Stated Value of Preferred

Stock which is subject to the injunction, which bond shall remain in effect until

the completion of arbitration/litigation of the underlying dispute and the proceeds

of which shall be payable to such Holder to the extent it obtains judgment. In the

absence of such injunction, the Corporation shall issue Conversion Shares and, if

applicable, cash, upon a properly noticed conversion. If the Corporation fails to

deliver to a Holder such Conversion Shares pursuant to Section 6(c)(i) by the

Share Delivery Date applicable to such conversion, the Corporation shall pay to

such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000

of Stated Value of Preferred Stock being converted, $50 per Trading Day

(increasing to $100 per Trading Day on the third Trading Day and increasing to

$200 per Trading Day on the sixth Trading Day after such damages begin to

accrue) for each Trading Day after the Share Delivery Date until such Conversion

Shares are delivered or Holder rescinds such conversion. Nothing herein shall

limit a Holder’s right to pursue actual damages for the Corporation’s failure to

deliver Conversion Shares within the period specified herein and such Holder

shall have the right to pursue all remedies available to it hereunder, at law or in

equity including, without limitation, a decree of specific performance and/or

injunctive relief. The exercise of any such rights shall not prohibit a Holder from

seeking to enforce damages pursuant to any other Section hereof or under

applicable law.

iv.

Compensation for Buy-In on Failure to Timely Deliver Conversion

Shares Upon Conversion. In addition to any other rights available to the Holder, if

the Corporation fails for any reason to deliver to a Holder the applicable

Conversion Shares by the Share Delivery Date pursuant to Section 6(c)(i), and if

after such Share Delivery Date such Holder is required by its brokerage firm to

purchase (in an open market transaction or otherwise), or the Holder’s brokerage

firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a

sale by such Holder of the Conversion Shares which such Holder was entitled to

receive upon the conversion relating to such Share Delivery Date (a “Buy-In”),

then the Corporation shall (A) pay in cash to such Holder (in addition to any other

remedies available to or elected by such Holder) the amount, if any, by which (x)

such Holder’s total purchase price (including any brokerage commissions) for the

Common Stock so purchased exceeds (y) the product of (1) the aggregate number

of shares of Common Stock that such Holder was entitled to receive from the

conversion at issue multiplied by (2) the actual sale price at which the sell order

giving rise to such purchase obligation was executed (including any brokerage

commissions) and (B) at the option of such Holder, either reissue (if surrendered)

the shares of Preferred Stock equal to the number of shares of Preferred Stock

submitted for conversion (in which case, such conversion shall be deemed

rescinded) or deliver to such Holder the number of shares of Common Stock that

would have been issued if the Corporation had timely complied with its delivery

requirements under Section 6(c)(i). For example, if a Holder purchases shares of

Common Stock having a total purchase price of $11,000 to cover a Buy-In with

respect to an attempted conversion of shares of Preferred Stock with respect to

which the actual sale price of the Conversion Shares (including any brokerage

commissions) giving rise to such purchase obligation was a total of $10,000 under

clause (A) of the immediately preceding sentence, the Corporation shall be

required to pay such Holder $1,000. The Holder shall provide the Corporation

written notice indicating the amounts payable to such Holder in respect of the

Buy-In and, upon request of the Corporation, evidence of the amount of such loss.

Nothing herein shall limit a Holder’s right to pursue any other remedies available

to it hereunder, at law or in equity including, without limitation, a decree of

specific performance and/or injunctive relief with respect to the Corporation’s

failure to timely deliver the Conversion Shares upon conversion of the shares of

Preferred Stock as required pursuant to the terms hereof.

Reservation of Shares Issuable Upon Conversion. The Corporation

covenants that it will at all times reserve and keep available out of its authorized

and unissued shares of Common Stock for the sole purpose of issuance upon

conversion of the Preferred Stock and payment of dividends on the Preferred

Stock, each as herein provided, free from preemptive rights or any other actual

contingent purchase rights of Persons other than the Holder (and the other holders

of the Preferred Stock), not less than such aggregate number of shares of the

Common Stock as shall (subject to the terms and conditions set forth in the

Purchase Agreement) be issuable (taking into account the adjustments and

restrictions of Section 7) upon the conversion of the then outstanding shares of

Preferred Stock and payment of dividends hereunder. The Corporation covenants

that all shares of Common Stock that shall be so issuable shall, upon issue, be

duly authorized, validly issued, fully paid and nonassessable and, if the

Conversion Shares Registration Statement is then effective under the Securities

Act, shall be registered for public resale in accordance with such Conversion

Shares Registration Statement (subject to such Holder’s compliance with its

obligations under the Registration Rights Agreement).

vi.

Fractional Shares. No fractional shares or scrip representing

fractional shares shall be issued upon the conversion of the Preferred Stock. As

to any fraction of a share which the Holder would otherwise be entitled to

purchase upon such conversion, the Corporation shall at its election, either pay a

cash adjustment in respect of such final fraction in an amount equal to such

fraction multiplied by the Conversion Price or round up to the next whole share.

Notwithstanding anything to the contrary contained herein, but consistent with the

provisions of this subsection with respect to fractional Conversion Shares, nothing

shall prevent any Holder from converting fractional shares of Preferred Stock.

vii.

Transfer Taxes and Expenses. The issuance of Conversion Shares

on conversion of this Preferred Stock shall be made without charge to any Holder

for any documentary stamp or similar taxes that may be payable in respect of the

issue or delivery of such Conversion Shares, provided that the Corporation shall

not be required to pay any tax that may be payable in respect of any transfer

involved in the issuance and delivery of any such Conversion Shares upon

conversion in a name other than that of the Holders of such shares of Preferred

Stock and the Corporation shall not be required to issue or deliver such

Conversion Shares unless or until the Person or Persons requesting the issuance

thereof shall have paid to the Corporation the amount of such tax or shall have

established to the satisfaction of the Corporation that such tax has been paid. The

Corporation shall pay all Transfer Agent fees required for same-day processing of

any Notice of Conversion and all fees to the Depository Trust Company (or

another established clearing corporation performing similar functions) required

for same-day electronic delivery of the Conversion Shares.

Beneficial Ownership Limitation. The Corporation shall not effect any

conversion of the Preferred Stock, and a Holder shall not have the right to convert any

portion of the Preferred Stock, to the extent that, after giving effect to the conversion set

forth on the applicable Notice of Conversion, such Holder (together with such Holder’s

Affiliates, and any Persons acting as a group together with such Holder or any of such

Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in

excess of the Beneficial Ownership Limitation (as defined below). For purposes of the

foregoing sentence, the number of shares of Common Stock beneficially owned by such

Holder and its Affiliates and Attribution Parties shall include the number of shares of

Common Stock issuable upon conversion of the Preferred Stock with respect to which

such determination is being made, but shall exclude the number of shares of Common

Stock which are issuable upon (i) conversion of the remaining, unconverted Stated Value

of Preferred Stock beneficially owned by such Holder or any of its Affiliates or

Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted

portion of any other securities of the Corporation subject to a limitation on conversion or

exercise analogous to the limitation contained herein (including, without limitation, the

Preferred Stock or the Warrants) beneficially owned by such Holder or any of its

Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for

purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with

Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.

To the extent that the limitation contained in this Section 6(d) applies, the determination

of whether the Preferred Stock is convertible (in relation to other securities owned by

such Holder together with any Affiliates and Attribution Parties) and of how many shares

of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the

submission of a Notice of Conversion shall be deemed to be such Holder’s determination

of whether the shares of Preferred Stock may be converted (in relation to other securities

owned by such Holder together with any Affiliates and Attribution Parties) and how

many shares of the Preferred Stock are convertible, in each case subject to the Beneficial

Ownership Limitation. To ensure compliance with this restriction, each Holder will be

deemed to represent to the Corporation each time it delivers a Notice of Conversion that

such Notice of Conversion has not violated the restrictions set forth in this paragraph and

the Corporation shall have no obligation to verify or confirm the accuracy of such

determination. In addition, a determination as to any group status as contemplated above

shall be determined in accordance with Section 13(d) of the Exchange Act and the rules

and regulations promulgated thereunder. For purposes of this Section 6(d), in

determining the number of outstanding shares of Common Stock, a Holder may rely on

the number of outstanding shares of Common Stock as stated in the most recent of the

following: (i) the Corporation’s most recent periodic or annual report filed with the

Commission, as the case may be, (ii) a more recent public announcement by the

Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent

setting forth the number of shares of Common Stock outstanding. Upon the written or

oral request of a Holder, the Corporation shall within one Trading Day confirm orally and

in writing to such Holder the number of shares of Common Stock then outstanding. In

any case, the number of outstanding shares of Common Stock shall be determined after

giving effect to the conversion or exercise of securities of the Corporation, including the

Preferred Stock, by such Holder or its Affiliates or Attribution Parties since the date as of

which such number of outstanding shares of Common Stock was reported. The

“Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the

Common Stock outstanding immediately after giving effect to the issuance of shares of

Common Stock issuable upon conversion of Preferred Stock held by the applicable

Holder. A Holder, upon notice to the Corporation, may increase or decrease the

Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its

Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds

9.99% of the number of shares of the Common Stock outstanding immediately after

giving effect to the issuance of shares of Common Stock upon conversion of this

Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue

to apply. Any such increase in the Beneficial Ownership Limitation will not be effective

until the 61^st day after such notice is delivered to the Corporation and shall only apply to

such Holder and no other Holder. The provisions of this paragraph shall be construed

and implemented in a manner otherwise than in strict conformity with the terms of this

Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or

inconsistent with the intended Beneficial Ownership Limitation contained herein or to

make changes or supplements necessary or desirable to properly give effect to such

limitation. The limitations contained in this paragraph shall apply to a successor holder of

Preferred Stock.

Section 7.

Certain Adjustments.

Stock Dividends and Stock Splits. If the Corporation, at any time while

this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a

distribution or distributions payable in shares of Common Stock on shares of Common

Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not

include any shares of Common Stock issued by the Corporation upon conversion of, or

payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of

Common Stock into a larger number of shares, (iii) combines (including by way of a

reverse stock split) outstanding shares of Common Stock into a smaller number of shares,

or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares

of capital stock of the Corporation, then the Conversion Price shall be multiplied by a

fraction of which the numerator shall be the number of shares of Common Stock

(excluding any treasury shares of the Corporation) outstanding immediately before such

event, and of which the denominator shall be the number of shares of Common Stock

outstanding immediately after such event. Any adjustment made pursuant to this Section

7(a) shall become effective immediately after the record date for the determination of

stockholders entitled to receive such dividend or distribution and shall become effective

immediately after the effective date in the case of a subdivision, combination or

re-classification.

Subsequent Equity Sales. If, at any time while this Preferred Stock is

outstanding, the Corporation or any Subsidiary, as applicable sells or grants any option to

purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or

announces any sale, grant or any option to purchase or other disposition), any Common

Stock or Common Stock Equivalents entitling any Person to acquire shares of Common

Stock at an effective price per share that is lower than the then Conversion Price (such

lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive

Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued

shall at any time, whether by operation of purchase price adjustments, reset provisions,

floating conversion, exercise or exchange prices or otherwise, or due to warrants, options

or rights per share which are issued in connection with such issuance, be entitled to

receive shares of Common Stock at an effective price per share that is lower than the

Conversion Price, such issuance shall be deemed to have occurred for less than the

Conversion Price on such date of the Dilutive Issuance), then simultaneously with the

consummation (or, if earlier, the announcement) of each Dilutive Issuance the

Conversion Price shall be reduced to equal the Base Conversion Price. Notwithstanding

the foregoing, no adjustment will be made under this Section 7(b) in respect of an

Exempt Issuance. If the Corporation enters into a Variable Rate Transaction, despite the

prohibition set forth in the Purchase Agreement, the Corporation shall be deemed to have

issued Common Stock or Common Stock Equivalents at the lowest possible conversion

price at which such securities may be converted or exercised. The Corporation shall

notify the Holders in writing, no later than the Trading Day following the issuance of any

Common Stock or Common Stock Equivalents subject to this Section 7(b), indicating

therein the applicable issuance price, or applicable reset price, exchange price, conversion

price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes

of clarification, whether or not the Corporation provides a Dilutive Issuance Notice

pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Holders

are entitled to receive a number of Conversion Shares based upon the Base Conversion

Price on or after the date of such Dilutive Issuance, regardless of whether a Holder

accurately refers to the Base Conversion Price in the Notice of Conversion.

Subsequent Rights Offerings. In addition to any adjustments pursuant to

Section 7(a) above, if at any time the Corporation grants, issues or sells any Common

Stock Equivalents or rights to purchase stock, warrants, securities or other property pro

rata to the record holders of any class of shares of Common Stock (the “Purchase

Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such

Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if

the Holder had held the number of shares of Common Stock acquirable upon complete

conversion of such Holder’s Preferred Stock (without regard to any limitations on

exercise hereof, including without limitation, the Beneficial Ownership Limitation)

immediately before the date on which a record is taken for the grant, issuance or sale of

such Purchase Rights, or, if no such record is taken, the date as of which the record

holders of shares of Common Stock are to be determined for the grant, issue or sale of

such Purchase Rights (provided, however, that, to the extent that the Holder’s right to

participate in any such Purchase Right would result in the Holder exceeding the

Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in

such Purchase Right to such extent (or beneficial ownership of such shares of Common

Stock as a result of such Purchase Right to such extent) and such Purchase Right to such

extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto

would not result in the Holder exceeding the Beneficial Ownership Limitation).

Pro Rata Distributions. During such time as this Preferred Stock is

outstanding, if the Corporation declares or makes any dividend or other distribution of its

assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of

return of capital or otherwise (including, without limitation, any distribution of cash,

stock or other securities, property or options by way of a dividend, spin off,

reclassification, corporate rearrangement, scheme of arrangement or other similar

transaction) (a "Distribution"), at any time after the issuance of this Preferred Stock, then,

in each such case, the Holder shall be entitled to participate in such Distribution to the

same extent that the Holder would have participated therein if the Holder had held the

number of shares of Common Stock acquirable upon complete conversion of this

Preferred Stock (without regard to any limitations on conversion hereof, including

without limitation, the Beneficial Ownership Limitation) immediately before the date of

which a record is taken for such Distribution, or, if no such record is taken, the date as of

which the record holders of shares of Common Stock are to be determined for the

participation in such Distribution (provided, however, to the extent that the Holder's right

to participate in any such Distribution would result in the Holder exceeding the

Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in

such Distribution to such extent (or in the beneficial ownership of any shares of Common

Stock as a result of such Distribution to such extent) and the portion of such Distribution

shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right

thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

Fundamental Transaction. Subject to Section 8(a), if, at any time while

this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one or

more related transactions effects any merger or consolidation of the Corporation with or

into another Person, (ii) the Corporation (and all of its Subsidiaries, taken as a whole),

directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or

other disposition of all or substantially all of its assets in one or a series of related

transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer

(whether by the Corporation or another Person) is completed pursuant to which holders

of Common Stock are permitted to sell, tender or exchange their shares for other

securities, cash or property and has been accepted by the holders of 50% or more of the

outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more

related transactions effects any reclassification, reorganization or recapitalization of the

Common Stock or any compulsory share exchange pursuant to which the Common Stock

is effectively converted into or exchanged for other securities, cash or property, or (v) the

Corporation, directly or indirectly, in one or more related transactions consummates a

stock or share purchase agreement or other business combination (including, without

limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with

another Person whereby such other Person acquires more than 50% of the outstanding

shares of Common Stock (not including any shares of Common Stock held by the other

Person or other Persons making or party to, or associated or affiliated with the other

Persons making or party to, such stock or share purchase agreement or other business

combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion

of this Preferred Stock, the Holder shall have the right to receive, for each Conversion

Share that would have been issuable upon such conversion immediately prior to the

occurrence of such Fundamental Transaction (without regard to any limitation in Section

6(d) on the conversion of this Preferred Stock), the number of shares of Common Stock

of the successor or acquiring corporation or of the Corporation, if it is the surviving

corporation, and any additional consideration (the “Alternate Consideration”) receivable

as a result of such Fundamental Transaction by a holder of the number of shares of

Common Stock for which this Preferred Stock is convertible immediately prior to such

Fundamental Transaction (without regard to any limitation in Section 6(d) on the

conversion of this Preferred Stock). For purposes of any such conversion, the

determination of the Conversion Price shall be appropriately adjusted to apply to such

Alternate Consideration based on the amount of Alternate Consideration issuable in

respect of one share of Common Stock in such Fundamental Transaction, and the

Corporation shall apportion the Conversion Price among the Alternate Consideration in a

reasonable manner reflecting the relative value of any different components of the

Alternate Consideration. If holders of Common Stock are given any choice as to the

securities, cash or property to be received in a Fundamental Transaction, then the Holder

shall be given the same choice as to the Alternate Consideration it receives upon any

conversion of this Preferred Stock following such Fundamental Transaction. To the

extent necessary to effectuate the foregoing provisions, any successor to the Corporation

or surviving entity in such Fundamental Transaction shall file a new Certificate of

Designation with the same terms and conditions and issue to the Holders new preferred

stock consistent with the foregoing provisions and evidencing the Holders’ right to

convert such preferred stock into Alternate Consideration. The Corporation shall cause

any successor entity in a Fundamental Transaction in which the Corporation is not the

survivor (the “Successor Entity”) to assume in writing all of the obligations of the

Corporation under this Certificate of Designation and the other Transaction Documents

(as defined in the Purchase Agreement) in accordance with the provisions of this Section

7(e) pursuant to written agreements in form and substance reasonably satisfactory to the

Holder and approved by the Holder (without unreasonable delay) prior to such

Fundamental Transaction and shall, at the option of the holder of this Preferred Stock,

deliver to the Holder in exchange for this Preferred Stock a security of the Successor

Entity evidenced by a written instrument substantially similar in form and substance to

this Preferred Stock which is convertible for a corresponding number of shares of capital

stock of such Successor Entity (or its parent entity) equivalent to the shares of Common

Stock acquirable and receivable upon conversion of this Preferred Stock (without regard

to any limitations on the conversion of this Preferred Stock) prior to such Fundamental

Transaction, and with a conversion price which applies the conversion price hereunder to

such shares of capital stock (but taking into account the relative value of the shares of

Common Stock pursuant to such Fundamental Transaction and the value of such shares

of capital stock, such number of shares of capital stock and such conversion price being

for the purpose of protecting the economic value of this Preferred Stock immediately

prior to the consummation of such Fundamental Transaction), and which is reasonably

satisfactory in form and substance to the Holder. Upon the occurrence of any such

Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for

(so that from and after the date of such Fundamental Transaction, the provisions of this

Certificate of Designation and the other Transaction Documents referring to the

“Corporation” shall refer instead to the Successor Entity), and may exercise every right

and power of the Corporation and shall assume all of the obligations of the Corporation

under this Certificate of Designation and the other Transaction Documents with the same

effect as if such Successor Entity had been named as the Corporation herein.

Calculations. All calculations under this Section 7 shall be made to the

nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this

Section 7, the number of shares of Common Stock deemed to be issued and outstanding

as of a given date shall be the sum of the number of shares of Common Stock (excluding

any treasury shares of the Corporation) issued and outstanding.

Notice to the Holders.

Adjustment to Conversion Price. Whenever the Conversion Price

is adjusted pursuant to any provision of this Section 7, the Corporation shall

promptly deliver to each Holder by facsimile or email a notice setting forth the

Conversion Price after such adjustment and setting forth a brief statement of the

facts requiring such adjustment.

ii.

Notice to Allow Conversion by Holder. If (A) the Corporation

shall declare a dividend (or any other distribution in whatever form) on the

Common Stock, (B) the Corporation shall declare a special nonrecurring cash

dividend on or a redemption of the Common Stock, (C) the Corporation shall

authorize the granting to all holders of the Common Stock of rights or warrants to

subscribe for or purchase any shares of capital stock of any class or of any rights,

(D) the approval of any stockholders of the Corporation shall be required in

connection with any reclassification of the Common Stock, any consolidation or

merger to which the Corporation is a party, any sale or transfer of all or

substantially all of the assets of the Corporation (and all of its Subsidiaries, taken

as a whole), or any compulsory share exchange whereby the Common Stock is

converted into other securities, cash or property or (E) the Corporation shall

authorize the voluntary or involuntary dissolution, liquidation or winding up of

the affairs of the Corporation, then, in each case, the Corporation shall cause to be

filed at each office or agency maintained for the purpose of conversion of this

Preferred Stock, and shall cause to be delivered by facsimile or email to each

Holder at its last facsimile number or email address as it shall appear upon the

stock books of the Corporation, at least twenty (20) calendar days prior to the

applicable record or effective date hereinafter specified, a notice stating (x) the

date on which a record is to be taken for the purpose of such dividend,

distribution, redemption, rights or warrants, or if a record is not to be taken, the

date as of which the holders of the Common Stock of record to be entitled to such

dividend, distributions, redemption, rights or warrants are to be determined or (y)

the date on which such reclassification, consolidation, merger, sale, transfer or

share exchange is expected to become effective or close, and the date as of which

it is expected that holders of the Common Stock of record shall be entitled to

exchange their shares of the Common Stock for securities, cash or other property

deliverable upon such reclassification, consolidation, merger, sale, transfer or

share exchange, provided that the failure to deliver such notice or any defect

therein or in the delivery thereof shall not affect the validity of the corporate

action required to be specified in such notice. To the extent that any notice

provided hereunder constitutes, or contains, material, non-public information

regarding the Corporation or any of the Subsidiaries, the Corporation shall

simultaneously file such notice with the Commission pursuant to a Current Report

on Form 8-K. The Holder shall remain entitled to convert the Conversion

Amount of this Preferred Stock (or any part hereof) during the 20-day period

commencing on the date of such notice through the effective date of the event

triggering such notice except as may otherwise be expressly set forth herein.

Section 8.

Mandatory Conversion and Optional Redemption.

Forced Conversion. Notwithstanding anything herein to the contrary, if

the Company consummates a Fundamental Transaction where the Successor Entity is a

publicly traded company on a national securities exchange with the valuation of the

Common Stock exceeding 300% of the then effective Conversion Price, the Corporation

may, within 1 Trading Day after the initial public announcement of such Fundamental

Transaction, deliver a written notice to all Holders (a “Forced Conversion Notice” and

the date such notice is delivered to all Holders, the “Forced Conversion Notice Date”) to

cause each Holder to convert all or part of such Holder’s Preferred Stock (as specified in

such Forced Conversion Notice) plus all accrued but unpaid dividends thereon and all

liquidated damages and other amounts due in respect of the Preferred Stock pursuant to

Section 6, it being agreed that the “Conversion Date” for purposes of Section 6 shall be

deemed to occur no later than the later of (i) 30 Trading Days following the Forced

Conversion Notice Date and (ii) the date such Fundamental Transaction is consummated

(such date, the “Forced Conversion Date”). The Corporation may not deliver a Forced

Conversion Notice, and any Forced Conversion Notice delivered by the Corporation shall

not be effective, unless all of the Equity Conditions have been met on each Trading Day

beginning on the Forced Conversion Notice Date and until the later of through and

including the later of the Forced Conversion Date and the Trading Day after the date that

the Conversion Shares issuable pursuant to such conversion are actually delivered to the

Holders pursuant to the Forced Conversion Notice. Any Forced Conversion Notices

shall be applied ratably to all of the Holders based on each Holder’s initial purchases of

Preferred Stock hereunder, provided that any voluntary conversions by a Holder shall be

applied against such Holder’s pro rata allocation, thereby decreasing the aggregate

amount forcibly converted hereunder if less than all shares of the Preferred Stock are

forcibly converted. For purposes of clarification, a Forced Conversion shall be subject to

all of the provisions of Section 6, including, without limitation, the provisions requiring

payment of liquidated damages and limitations on conversions.

Mandatory Conversion. Each outstanding share of Preferred Stock shall

automatically convert into that number of shares of Common Stock determined by

dividing the Stated Value of such share of Preferred Stock by the Conversion Price then

in effect on the Mandatory Conversion Date. In the case of a mandatory conversion

pursuant to this Section 8, a Holder shall be required to forthwith surrender the

certificate(s) representing such shares of Preferred Stock to the Corporation within three

Trading Days of the Mandatory Conversion Date; provided, however, that the failure by a

Holder to surrender the certificate(s) representing such converted shares of Preferred

Stock shall not prevent the Corporation from delivering the shares of Common Stock

issuable upon mandatory conversion thereof and, upon receipt of such consideration by

such Holder, such shares of Preferred Stock shall be converted for all purposes

hereunder.

Optional Redemption at Election of Corporation. Subject to the

provisions of this Section 8, the Corporation may deliver a notice to the Holders (an

“Optional Redemption Notice” and the date such notice is deemed delivered hereunder,

the “Optional Redemption Notice Date”) of its irrevocable election to redeem some or all

of the then outstanding Preferred Stock, for cash in an amount equal to the Optional

Redemption Amount on the 20^th Trading Day following the Optional Redemption Notice

Date (such date, the “Optional Redemption Date” and such redemption, the “Optional

Redemption”). The Optional Redemption Amount is payable in full on the Optional

Redemption Date. The Corporation may only effect an Optional Redemption if each of

the Equity Conditions shall have been met on each Trading Day occurring during the

period commencing on the Optional Redemption Notice Date through to the Optional

Redemption Date and through and including the date payment of the Optional

Redemption Amount is actually made. If any of the Equity Conditions shall cease to be

satisfied at any time during the 20 Trading Day period, then a Holder may elect to nullify

the Optional Redemption Notice as to such Holder by notice to the Corporation within 3

Trading Days after the first day on which any such Equity Condition has not been met

(provided that if, by a provision of the Transaction Documents, the Corporation is

obligated to notify the Holders of the non-existence of an Equity Condition, such notice

period shall be extended to the third Trading Day after proper notice from the

Corporation) in which case the Optional Redemption Notice shall be null and void, ab

initio. The Corporation covenants and agrees that it will honor all Notices of Conversion

tendered from the time of delivery of the Optional Redemption Notice through the date

the Optional Redemption Amount is paid in full.

Redemption Procedure. The payment of cash pursuant to an Optional

Redemption shall be made on the Optional Redemption Date. If any portion of the cash

payment for an Optional Redemption has not been paid by the Corporation on the

Optional Redemption Date, interest shall accrue thereon until such amount is paid in full

at a rate equal to the lesser of 18% per annum or the maximum rate permitted by

applicable law.

Section 9.

Miscellaneous.

Notices. Any and all notices or other communications or deliveries to be

provided by the Holders hereunder including, without limitation, any Notice of

Conversion, shall be in writing and delivered personally, by facsimile or e-mail

attachment, or sent by a nationally recognized overnight courier service, addressed to the

Corporation, at the address set forth above Attention: Chief Executive Officer, facsimile

number 888-899-3966, e-mail address paul@parallaxcare.com, or such other facsimile

number, e-mail address or address as the Corporation may specify for such purposes by

notice to the Holders delivered in accordance with this Section 9. Any and all notices or

other communications or deliveries to be provided by the Corporation hereunder shall be

in writing and delivered personally, by facsimile or e-mail attachment, or sent by a

nationally recognized overnight courier service addressed to each Holder at the facsimile

number, e-mail address or address of such Holder appearing on the books of the

Corporation, or if no such facsimile number, e-mail address or address appears on the

books of the Corporation, at the principal place of business of such Holder, as set forth in

the Purchase Agreement. Any notice or other communication or deliveries hereunder

shall be deemed given and effective on the earliest of (i) the time of transmission, if such

notice or communication is delivered via facsimile at the facsimile number or e-mail

attachment at the e-mail address set forth in this Section prior to 5:30 p.m. (New York

City time) on any date, (ii) the next Trading Day after the time of transmission, if such

notice or communication is delivered via facsimile at the facsimile number or e-mail

attachment at the e-mail address set forth in this Section on a day that is not a Trading

Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second

Trading Day following the date of mailing, if sent by U.S. nationally recognized

overnight courier service, or (iv) upon actual receipt by the party to whom such notice is

required to be given.

Absolute Obligation. Except as expressly provided herein, no provision of

this Certificate of Designation shall alter or impair the obligation of the Corporation,

which is absolute and unconditional, to pay liquidated damages, accrued dividends and

accrued interest, as applicable, on the shares of Preferred Stock at the time, place, and

rate, and in the coin or currency, herein prescribed.

Lost or Mutilated Preferred Stock Certificate. If a Holder’s Preferred

Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall

execute and deliver, in exchange and substitution for and upon cancellation of a mutilated

certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new

certificate for the shares of Preferred Stock so mutilated, lost, stolen or destroyed, but

only upon receipt of evidence of such loss, theft or destruction of such certificate, and of

the ownership hereof reasonably satisfactory to the Corporation.

Governing Law. All questions concerning the construction, validity,

enforcement and interpretation of this Certificate of Designation shall be governed by and

construed and enforced in accordance with the internal laws of the State of Nevada,

without regard to the principles of conflict of laws thereof. All legal proceedings

concerning the interpretation, enforcement and defense of the transactions contemplated

by any of the Transaction Documents (whether brought against a party hereto or its

respective Affiliates, directors, officers, shareholders, employees or agents) shall be

commenced in the state and federal courts sitting in the City of New York, Borough of

Manhattan (the “New York Courts”). The Corporation and each Holder hereby

irrevocably submits to the exclusive jurisdiction of the New York Courts for the

adjudication of any dispute hereunder or in connection herewith or with any transaction

contemplated hereby or discussed herein (including with respect to the enforcement of

any of the Transaction Documents), and hereby irrevocably waives, and agrees not to

assert in any suit, action or proceeding, any claim that it is not personally subject to the

jurisdiction of such New York Courts, or such New York Courts are improper or

inconvenient venue for such proceeding. The Corporation and each Holder hereby

irrevocably waives personal service of process and consents to process being served in

any such suit, action or proceeding by mailing a copy thereof via registered or certified

mail or overnight delivery (with evidence of delivery) to such party at the address in

effect for notices to it under this Certificate of Designation and agrees that such service

shall constitute good and sufficient service of process and notice thereof. Nothing

contained herein shall be deemed to limit in any way any right to serve process in any

other manner permitted by applicable law. The Corporation and each Holder hereby

irrevocably waives, to the fullest extent permitted by applicable law, any and all right to

trial by jury in any legal proceeding arising out of or relating to this Certificate of

Designation or the transactions contemplated hereby. If the Corporation or any Holder

shall commence an action or proceeding to enforce any provisions of this Certificate of

Designation, then the prevailing party in such action or proceeding shall be reimbursed

by the other party for its attorneys’ fees and other costs and expenses incurred in the

investigation, preparation and prosecution of such action or proceeding.

Waiver. Any waiver by the Corporation or a Holder of a breach of any

provision of this Certificate of Designation shall not operate as or be construed to be a

waiver of any other breach of such provision or of any breach of any other provision of

this Certificate of Designation or a waiver by any other Holders. The failure of the

Corporation or a Holder to insist upon strict adherence to any term of this Certificate of

Designation on one or more occasions shall not be considered a waiver or deprive that

party (or any other Holder) of the right thereafter to insist upon strict adherence to that

term or any other term of this Certificate of Designation on any other occasion. Any

waiver by the Corporation or a Holder must be in writing.

Severability. If any provision of this Certificate of Designation is invalid,

illegal or unenforceable, the balance of this Certificate of Designation shall remain in

effect, and if any provision is inapplicable to any Person or circumstance, it shall

nevertheless remain applicable to all other Persons and circumstances. If it shall be

found that any interest or other amount deemed interest due hereunder violates the

applicable law governing usury, the applicable rate of interest due hereunder shall

automatically be lowered to equal the maximum rate of interest permitted under

applicable law.

Next Business Day. Whenever any payment or other obligation hereunder

shall be due on a day other than a Business Day, such payment shall be made on the next

succeeding Business Day.

Headings. The headings contained herein are for convenience only, do not

constitute a part of this Certificate of Designation and shall not be deemed to limit or

affect any of the provisions hereof.

Status of Converted or Redeemed Preferred Stock. Shares of Preferred

Stock may only be issued pursuant to the Purchase Agreement. If any shares of Preferred

Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall

resume the status of authorized but unissued shares of preferred stock and shall no longer

be designated as Series B1 10% Convertible Preferred Stock.

*********************

RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and the secretary or any

assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this

Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution

and the provisions of Nevada law.

IN WITNESS WHEREOF, the undersigned have executed this Certificate this 10^th day of February

2020.

[ex31certofdesigserb111.gif] __________________________________________

__________________________________________

Name: Paul R. Arena

Name:

Title: Chief Executive Officer

Title:

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES

OF PREFERRED STOCK)

The undersigned hereby elects to convert the number of shares of Series B 10% Convertible

Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the

“Common Stock”), of Parallax Health Sciences, Inc., a Nevada corporation (the “Corporation”),

according to the conditions hereof, as of the date written below. If shares of Common Stock are

to be issued in the name of a Person other than the undersigned, the undersigned will pay all

transfer taxes payable with respect thereto and is delivering herewith such certificates and

opinions as may be required by the Corporation in accordance with the Purchase Agreement. No

fee will be charged to the Holders for any conversion, except for any such transfer taxes.

Conversion calculations:

Date to Effect Conversion: _____________________________________________

Number of shares of Preferred Stock owned prior to Conversion: _______________

Number of shares of Preferred Stock to be Converted: ________________________

Stated Value of shares of Preferred Stock to be Converted: ____________________

Number of shares of Common Stock to be Issued: ___________________________

Applicable Conversion Price:____________________________________________

Number of shares of Preferred Stock subsequent to Conversion: ________________

Address for Delivery: ______________________

DWAC Instructions:

Broker no: _________

Account no: ___________

[HOLDER]

By:___________________________________

Name:

Title:

PARALLAX HEALTH SCIENCES, INC. - FORM 8-K - EX-3 - EX 3.1 CERTIFICATE OF DESIGNATION-SERIES B1 - February 13, 2020

Attached files

PARALLAX HEALTH SCIENCES, INC. Reports