GS Capital Securities Purchase Agreement

Effective March 7, 2019, MyDx, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with GS Capital Partners LLC, (“GSC”), pursuant to which GSC purchased an 8% unsecured convertible redeemable note (the “Note”) from the Company in the aggregate principal amount of $210,000.00, such principal and the interest thereon convertible into shares of the Company’s common stock at the option of GSC.

The purchase price of $207,000.00 of the Note was paid in cash by GSC on March 11, 2019. After payment of transaction-related expenses, net proceeds to the Company from the Note totaled $200,000.

The maturity date of the Note is March 7, 2020 (the “Note Maturity Date”). The Note shall bear interest at a rate of eight percent (8%) per annum (the “Note Interest Rate”), which interest shall be paid by the Company to GSC in shares of common stock at any time GSC sends a notice of conversion to the Company. GSC is entitled to, at its option, convert all or any amount of the principal face amount and any accrued but unpaid interest of the Note into shares of the Company’s common stock, at any time after the 6 month anniversary of Note, at the conversion price for each share of common stock equal to 65% of the average of the tow lowest closing bid prices of the common stock for the fifteen prior trading days including the day upon which a notice of conversion is received by the Company or its transfer agent.

The Note may be prepaid until 180 days from the issuance date with the following penalties: (i) if the Note is prepaid within thirty (30) days of the issuance date, then the prepayment premium shall be 105% of the face amount plus any accrued interest; (ii) if the Note is prepaid during the period beginning on the date which is thirty-one (31) days following the issuance date, and ending on the date which is sixty (60) days following the issuance date, then the prepayment premium shall be 110% of the face amount plus any accrued interest; (iii) if the Note is prepaid during the period beginning on the date which is sixty-one (61) days following the issuance date, and ending on the date which is ninety (90) days following the issuance date, then the prepayment premium shall be 115% of the face amount plus any accrued interest; (iv) if the Note is prepaid during the period beginning on the date which is ninety-one (91) days following the issuance date, and ending on the date which is one hundred twenty (120) days following the issuance date, then the prepayment premium shall be 120% of the face amount plus any accrued interest; (v) if the Note is prepaid during the period beginning on the date which is one hundred twenty-one (121) days following the issuance date, and ending on the date which is one hundred fifty (150) days following the issuance date, then the prepayment premium shall be 125% of the face amount plus any accrued interest; and (vi) if the Note is prepaid during the period beginning on the date which is one hundred fifty-one (151) days following the issuance date, and ending on the date which is one hundred eighty (180) days following the issuance date, then the prepayment premium shall be 130% of the face amount plus any accrued interest; Such prepayment redemptions must be closed and funded within three days of giving notice of redemption or the right to redeem shall be null and void.

The Company shall reserve 615,384,000 of its authorized and unissued common stock (the “Reserved Amount”), free from preemptive rights, to provide for the issuance of common stock upon the full conversion of the Note. Upon full conversion of the Note, any shares remaining in such reserve shall be cancelled. The Company shall at all times reserve a minimum of four (4) times the number of shares required if all outstanding principal under the Note would be fully converted and will from time to time increases the Reserved Amount in accordance with the Company’s obligations under the Note.

Pursuant to the terms of the Purchase Agreement, for so long as GSC owns any shares of common stock issued upon conversion of the Note (the “Conversion Shares”), the Company covenants to secure and maintain the listing of such shares of common stock. The Company is also subject to certain customary negative covenants under the Note and the Purchase Agreement, including but not limited to the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any offers or sales of any security under circumstances that would require registration of or stockholder approval for the Note or the Conversion Shares.

The Note is a long-term debt obligation that is material to the Company. The Note contains certain representations, warranties, covenants and events of default including if the Company is delinquent in its periodic report filings with the Securities and Exchange Commission and increases in the amount of the principal and interest rates under the Note in the event of such defaults. In the event of default, at the option of GSC and in GSC’s sole discretion, GSC may consider the Note immediately due and payable. 

Any shares to be issued pursuant to any conversion of the Note shall be issued pursuant to an exemption from the registration requirement of the Securities Act of 1933, provided in Section 4(a)(2) of the Securities Act.

The Company intends to use the proceeds from the Note for general working capital purposes.

The foregoing descriptions of the Purchase Agreement and the Note do not purport to be complete and are qualified in their entirety by reference to the Purchase Agreement and the Note, copies of which are filed as, respectively, Exhibits 10.1 and 4.1 hereto.