gthp_ex1019





  Exhibit 10.19







 


 SECURITIES PURCHASE
AGREEMENT


This SECURITIES PURCHASE
AGREEMENT (the
“Agreement”), dated as of March 20, 2018, by and
between GUIDED THERAPEUTICS,
INC., a Delaware corporation,
with headquarters located at 5835 Peachtree Corners East, Suite D,
Norcross, GA 30092 (the “Company”), and
AUCTUS FUND,
LLC, a Delaware limited
liability company, with its address at 177 Huntington Avenue, 17th
Floor, Boston, MA 02115 (the
“Buyer”).


 


 


WHEREAS:


A. The
Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United
States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933
Act”);


 


B.
Buyer desires to purchase and the Company desires to issue and
sell, upon the terms and conditions set forth in this Agreement the
12% convertible note of the Company, in the form attached hereto as
Exhibit A, in the aggregate principal amount of US$150,000.00
(together with any note(s) issued in replacement thereof or as a
dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, the “Note”), convertible into
shares of common stock, $0.001 par value per share, of the Company
(the “Common Stock”), upon the terms and subject to the
limitations and conditions set forth in such Note.


 


C. The
Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, such principal amount of Note as is set forth
immediately below its name on the signature pages hereto;
and


 


NOW THEREFORE, the Company and the Buyer
severally (and not jointly) hereby agree as follows:


 


1.
PURCHASE AND SALE OF
NOTE.


 


a. Purchase of
Note. On the Closing Date (as
defined below), the Company shall issue and sell to the Buyer and
the Buyer agrees to purchase from the Company such principal amount
of Note as is set forth immediately below the Buyer’s name on
the signature pages hereto. In connection with the issuance of the
Note, the Company shall issue warrants to Buyer to purchase
3,409,090 shares of common stock.


 


b. Form of
Payment. On the Closing Date
(as defined below), (i) the Buyer shall pay the purchase price for
the Note to be issued and sold to it at the Closing (as defined
below) (the “Purchase Price”) by wire transfer of
immediately available funds to the Company, in accordance with the
Company’s written wiring instructions, against delivery of
the Note in the principal amount equal to the Purchase Price as is
set forth immediately below the Buyer’s name on the signature
pages hereto, and (ii) the Company shall deliver such duly executed
Note on behalf of the Company, to the Buyer, against delivery of
such Purchase Price.


 


c. Closing
Date. Subject to the
satisfaction (or written waiver) of the conditions thereto set
forth in Section 7 and Section 8 below, the date and time of the
issuance and sale of the Note pursuant to this Agreement (the
“Closing Date”) shall be 12:00 noon, Eastern Standard
Time on or about March 20, 2018, or such other mutually agreed upon
time. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall occur on the Closing
Date at such location as may be agreed to by the
parties.


 


2.
REPRESENTATIONS AND
WARRANTIES OF THE BUYER. The Buyer represents and warrants
to the Company that:


 


a.
Investment Purpose.
As of the date hereof, the Buyer is purchasing the Note and the
shares of Common Stock issuable upon conversion of or otherwise
pursuant to the Note (including, without limitation, such
additional shares of Common Stock, if any, as are issuable (i) on
account of interest on the Note (ii) as a result of the events
described in Sections


1.3 and
1.4(g) of the Note or (iii) in payment of the Standard Liquidated
Damages Amount (as defined in Section 2(f) below) pursuant to this
Agreement, such shares of Common Stock being collectively referred
to herein as the “Conversion Shares” and, collectively
with the Note, the “Securities”) for its own account
and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from
registration under the 1933 Act and Buyer is able to bear the
economic risk of holding the Conversion Shares for an indefinite
period (including total loss of its investment), and has sufficient
knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risk of its investment.
provided,
however, that by
making the representations herein, the Buyer does not agree to hold
any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.


 



 

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b. Accredited Investor
Status. The Buyer is an
“accredited investor” as that term is defined in Rule
501(a) of Regulation D (an “Accredited
Investor”).


 


c. Reliance on
Exemptions. The Buyer
understands that the Securities are being offered and sold to it in
reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Securities.


 


d. Information.
The Buyer and its advisors, if any, have been, and for so long as
the Note remains outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the
Securities which have been requested by the Buyer or its advisors.
The Buyer and its advisors, if any, have been, and for so long as
the Note remains outstanding will continue to be, afforded the
opportunity to ask questions of the Company. Notwithstanding the
foregoing, the Company has not disclosed to the Buyer any material
nonpublic information and will not disclose such information unless
such information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor
any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect
Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below. The Buyer understands
that its investment in the Securities involves a significant degree
of risk. The Buyer is not aware of any facts that may constitute a
breach of any of the Company's representations and warranties made
herein.


 


e. Governmental
Review. The Buyer understands
that no United States federal or state agency or any other
government or governmental agency has passed upon or made any
recommendation or endorsement of the
Securities.


 


f. Transfer or
Re-sale. The Buyer understands
that (i) the sale or re-sale of the Securities has not been and is
not being registered under the 1933 Act or any applicable state
securities laws, and the Securities may not be transferred unless
(a) the Securities are sold pursuant to an effective registration
statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company an opinion of counsel of Buyer reasonably satisfactory
to the Company’s transfer agent that shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption
from such registration, which opinion shall be accepted by the
Company, (c) the Securities are sold or transferred to an
“affiliate” (as defined in Rule 144 promulgated under
the 1933 Act (or a successor rule) (“Rule 144”)) of the
Buyer who agrees in writing to be bound by this Agreement and who
is an Accredited Investor, (d) the Securities are sold pursuant to
Rule 144, or (e) the Securities are sold pursuant to Regulation S
under the 1933 Act (or a successor rule) (“Regulation
S”), and the Buyer shall have delivered to the Company an
opinion of counsel of Buyer reasonably satisfactory to the
Company’s transfer agent that shall be in form, substance and
scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of
such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule and further, if said Rule is
not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the
1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the
Securities may be pledged as collateral in connection with a
bona
fide margin account or other
lending arrangement.


 


g. Legends.
The Buyer understands that the Note and, until such time as the
Conversion Shares have been registered under the 1933 Act may be
sold pursuant to Rule 144 or Regulation S without any restriction
as to the number of securities as of a particular date that can
then be immediately sold, the Conversion Shares may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for such Securities):


“NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER DEALER OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES WITH A FINANCIAL INSTITUTION THAT IS AN
“ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT.”


The
legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by
applicable state securities laws, (a) such Security is registered
for sale under an effective registration statement filed under the
1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities
as of a particular date that can then be immediately sold, or (b)
such holder provides the Company with an opinion of counsel
reasonably satisfactory to the Borrower’s transfer agent, in
form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or
transfer of such Security may be made without registration under
the 1933 Act, which opinion shall be accepted by the Company so
that the sale or transfer is effected. The Buyer agrees to sell all
Securities, including those represented by a certificate(s) from
which the legend has been removed, in compliance with applicable
prospectus delivery requirements, if any.


 



 

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h. Authorization;
Enforcement. Buyer has all
necessary company power and authority to enter into this Agreement,
to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly authorized. This Agreement has been duly executed and
delivered on behalf of the Buyer, and this Agreement constitutes a
valid and binding agreement of the Buyer enforceable in accordance
with its terms.


 


i. Residency.
The Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of
Delaware.


 


3.
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Buyer that, except as otherwise disclosed in the
SEC Documents (as defined below):


 


a.
Organization and
Qualification. The Company and each of its Subsidiaries (as
defined below), if any, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to
carry on its business as and where now owned, leased, used,
operated and conducted. The Company and each of its Subsidiaries is
duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership or use
of property or the nature of the business conducted by it makes
such qualification necessary except where the failure to be so
qualified or in good standing would not have a Material Adverse
Effect (except with respect to the re-registration of the
Company’s ISO certification and CE Mark). “Material
Adverse Effect” means any material adverse effect on the
business, operations, assets, financial condition or prospects of
the Company or its Subsidiaries, if any, taken as a whole, or on
the transactions contemplated hereby or by the agreements or
instruments to be entered into in connection herewith provided,
however, that "Material Adverse Effect" shall not include any
event, occurrence, fact, condition or change, directly or
indirectly, arising out of or attributable to: (i) general economic
or political conditions; (ii) conditions generally affecting the
industries in which the Company operates; (iii) any changes in
financial, banking or securities markets in general, including any
disruption thereof and any decline in the price of any security or
any market index or any change in prevailing interest rates; (iv)
acts of war (whether or not declared), armed hostilities or
terrorism, or the escalation or worsening thereof; (v) any action
required or permitted by this Agreement or any action taken (or
omitted to be taken) with the written consent of or at the written
request of Buyer; (vi) any matter of which Buyer is aware on the
date hereof; (vii) any changes in applicable Laws or accounting
rules (including GAAP) or the enforcement, implementation or
interpretation thereof; (viii) the announcement, pendency or
completion of the transactions contemplated by this Agreement,
including losses or threatened losses of employees, customers,
suppliers, distributors or others having relationships with the
Company; (ix) any natural or man-made disaster or acts of God; or
(x) any failure by the Company to meet any internal or published
projections, forecasts or revenue or earnings predictions (provided
that the underlying causes of such failures (subject to the other
provisions of this definition) shall not be excluded).
“Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the
Company owns, directly or indirectly, any equity or other ownership
interest.


 


b. Authorization;
Enforcement. (i) The Company
has all requisite corporate power and authority to enter into and
perform this Agreement, the Note and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Note by the Company and the
consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Note and
the issuance and reservation for issuance of the Conversion Shares
issuable upon conversion or exercise thereof) have been duly
authorized by the Company’s Board of Directors and no further
consent or authorization of the Company, its Board of Directors, or
its shareholders is required, (iii) this Agreement has been duly
executed and delivered by the Company by its authorized
representative, and such authorized representative is the true and
official representative with authority to sign this Agreement and
the other documents executed in connection herewith and bind the
Company accordingly, and (iv) this Agreement constitutes, and upon
execution and delivery by the Company of the Note, each of such
instruments will constitute, a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms.


 


c. Capitalization.
As of the date hereof, the authorized capital stock of the Company
consists of: (i) 1,000,000,000 shares of Common Stock, of which
approximately 116,140,159 shares are issued and outstanding; and
(ii) 5,000,000 shares of preferred stock, of which approximately
5,944.5 are issued and outstanding. Except No shares are reserved
for issuance pursuant to the Company’s stock option plans, no
shares are reserved for issuance pursuant to securities (other than
the Note and any other convertible promissory note issued to the
Buyer) exercisable for, or convertible into or exchangeable for
shares of Common Stock and 125,000,000 shares (initially) are
reserved for issuance upon conversion of the Note. All of such
outstanding shares of capital stock are, or upon issuance will be,
duly authorized, validly issued, fully paid and non-assessable. No
shares of capital stock of the Company are subject to preemptive
rights or any other similar rights of the shareholders of the
Company or any liens or encumbrances imposed through the actions or
failure to act of the Company. As of the effective date of this
Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights
of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of
the Company or any of its Subsidiaries, or arrangements by which
the Company or any of its Subsidiaries is or may become bound to
issue additional shares of capital stock of the Company or any of
its Subsidiaries, (ii) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933
Act and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) that will be
triggered by the issuance of the Note or the Conversion Shares. The
Company has filed in its SEC Documents true and correct copies of
the Company’s Certificate of Incorporation as in effect on
the date hereof (“Certificate of Incorporation”), the
Company’s By-laws, as in effect on the date hereof (the
“By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock of the Company and the
material rights of the holders thereof in respect thereto. The
Company shall provide the Buyer with a written update of this
representation signed by the Company’s Chief Executive on
behalf of the Company as of the Closing Date.


 



 

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d. Issuance of
Shares. The issuance of the
Note is duly authorized and, upon issuance in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights,
taxes, liens, charges and other encumbrances with respect to the
issue thereof. The Conversion Shares are duly authorized and
reserved for issuance and, upon conversion of the Note in
accordance with its respective terms, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and
encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of
shareholders of the Company and will not impose personal liability
upon the holder thereof.


 


e. Acknowledgment of
Dilution. The Company
understands and acknowledges the potentially dilutive effect to the
Common Stock upon the issuance of the Conversion Shares upon
conversion of the Note. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Note
in accordance with this Agreement, the Note is absolute and
unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the
Company.


 


f. No
Conflicts. The execution,
delivery and performance of this Agreement and the Note by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance of the Conversion Shares)
will not (i) conflict with or result in a violation of any
provision of the Certificate of Incorporation or By-laws, or (ii)
violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse
of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its Subsidiaries is a party, or
(iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to
which the Company or its securities are subject) applicable to the
Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or
affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect).


 


Neither
the Company nor any of its Subsidiaries is in violation of its
Certificate of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in
default (and no event has occurred which with notice or lapse of
time or both could put the Company or any of its Subsidiaries in
default) under, and neither the Company nor any of its Subsidiaries
has taken any action or failed to take any action that would give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party or by which any
property or assets of the Company or any of its Subsidiaries is
bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as the Buyer
owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity, the result of which would
have a Material Adverse Effect. Except as specifically contemplated
by this Agreement and as required under the 1933 Act and any
applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing
or registration with, any court, governmental agency, regulatory
agency, self-regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Note in accordance with the
terms hereof or thereof or to issue and sell the Note in accordance
with the terms hereof and to issue the Conversion Shares upon
conversion of the Note. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof. The Company is not in violation of
the listing requirements of the OTC Pink (the “OTC
Pink”), the OTCQB or any similar quotation system, and does
not reasonably anticipate that the Common Stock will be delisted by
the OTC Pink, the OTCQB or any similar quotation system, in the
foreseeable future nor are the Company's securities
“chilled” by DTC. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any
of the foregoing.


 


g.
SEC Documents; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it
with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter
referred to herein as the “SEC Documents”). The Company
has delivered to the Buyer true and complete copies of the SEC
Documents, except for such exhibits and incorporated documents. As
of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC
Documents is, or has been, required to be amended or updated under
applicable law (except for such statements as have been amended or
updated in subsequent filings prior the date hereof). As of their
respective dates, the financial statements of the Company included
in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements complied with all respects with United States generally
accepted accounting principles (“GAAP”), consistently
applied, during the periods involved, except as may otherwise be
specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business
subsequent to September 30, 2017, and (ii) obligations under
contracts and commitments incurred in the ordinary course of
business and not required under GAAP to be reflected in such
financial statements, which, individually or in the aggregate, are
not material to the financial condition or operating results of the
Company. The Company is subject to the reporting requirements of
the 1934 Act. For the avoidance of doubt, filing of the documents
required in this Section 3(g) via the SEC’s Electronic Data
Gathering, Analysis, and Retrieval system (“EDGAR”)
shall satisfy all delivery requirements of this Section
3(g).


 



 

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h. Absence of Certain
Changes. Since September 30,
2017, there has been no Material Adverse Effect and the Company has
not incurred any liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made
with the SEC. Except for the issuance of the Securities
contemplated by this Agreement, no event, liability, fact,
circumstance, occurrence or development has occurred or exists or
is reasonably expected to occur or exist with respect to the
Company or its Subsidiaries or their respective businesses,
prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made
that has not been publicly disclosed prior to the date of this
Agreement.


 


i. Absence of
Litigation. There is no action,
suit, claim, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened against or affecting the
Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse
Effect (except with respect to the lawsuit brought against the
Company by its previous controller). Schedule 3(i) contains a
complete list and summary description of any pending or, to the
knowledge of the Company, threatened proceeding against or
affecting the Company or any of its Subsidiaries involving
estimated damages in excess of $200,000, without regard to whether
it would have a Material Adverse Effect. The Company and its
Subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing.


 


j. Patents, Copyrights,
etc. The Company and each of
its Subsidiaries owns or possesses the requisite licenses or rights
to use all patents, patent applications, patent rights, inventions,
know-how, trade secrets, trademarks, trademark applications,
service marks, service names, trade names and copyrights
(“Intellectual Property”) necessary to enable it to
conduct its business as now operated (and, as presently
contemplated to be operated in the future). There is no claim or
action by any person pertaining to, or proceeding pending, or to
the Company’s knowledge threatened, which challenges the
right of the Company or of a Subsidiary with respect to any
Intellectual Property necessary to enable it to conduct its
business as now operated (and, as presently contemplated to be
operated in the future); to the best of the Company’s
knowledge, the Company’s or its Subsidiaries’ current
and intended products, services and processes do not infringe on
any Intellectual Property or other rights held by any person; and
the Company is unaware of any facts or circumstances which might
give rise to any of the foregoing. The Company and each of its
Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual
Property.


 


k. No Materially Adverse
Contracts, Etc. Neither the
Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the
judgment of the Company’s officers has or is expected to have
a Material Adverse Effect.


 


l. Tax
Status. Except as would not
reasonably be expected to have Material Adverse Effect, the Company
and each of its Subsidiaries has made or filed all federal, state
and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) and
has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in
good faith and has set aside on its books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not
executed a waiver with respect to the statute of limitations
relating to the assessment or collection of any foreign, federal,
state or local tax. None of the Company’s tax returns is
presently being audited by any taxing
authority.


 


m. Certain
Transactions. Except for
arm’s length transactions pursuant to which the Company or
any of its Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable than the Company or any of
its Subsidiaries could obtain from third parties and other than the
grant of stock options described in Schedule 3(c), none of the
officers, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer,
director, trustee or partner.


 


n. Disclosure.
All information relating to or concerning the Company or any of its
Subsidiaries set forth in this Agreement and provided to the Buyer
pursuant to Section 2(d) hereof and otherwise in connection with
the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made herein
or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or
disclosed.


 



 

5







 






 


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


 


p. No Integrated
Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales in any
security or solicited any offers to buy any security under
circumstances that would require registration under the 1933 Act of
the issuance of the Securities to the Buyer. The issuance of the
Securities to the Buyer will not be integrated with any other
issuance of the Company’s securities (past, current or
future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.


 


q. No
Brokers. Except with respect to
payments to Moody Capital Solutions, Inc., the Company has taken no
action which would give rise to any claim by any person for
brokerage commissions, transaction fees or similar payments
relating to this Agreement or the transactions contemplated
hereby.


 


r.
Permits;
Compliance. Except as would not reasonably be expected to
have Material Adverse Effect, the Company and each of its
Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary
to own, lease and operate its properties and to carry on its
business as it is now being conducted (collectively, the
“Company Permits”), and there is no action pending or,
to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. Neither the Company nor
any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. Since September 30, 2017, neither the Company nor
any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws,
except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have
a Material Adverse Effect.


 


s.
Environmental
Matters.


 


(i)
Except as would not reasonably be expected to have Material Adverse
Effect, there are, to the Company’s knowledge, with respect
to the Company or any of its Subsidiaries or any predecessor of the
Company, no past or present violations of Environmental Laws (as
defined below), releases of any material into the environment,
actions, activities, circumstances, conditions, events, incidents,
or contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or
similar federal, state, local or foreign laws and neither the
Company nor any of its Subsidiaries has received any notice with
respect to any of the foregoing, nor is any action pending or, to
the Company’s knowledge, threatened in connection with any of
the foregoing. The term “Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as
all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.


 


(ii)
Other than those that are or were stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or
used by the Company or any of its Subsidiaries, and no Hazardous
Materials were released on or about any real property previously
owned, leased or used by the Company or any of its Subsidiaries
during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of
the Company’s or any of its Subsidiaries’
business.


(iii)
To the Company’s knowledge, there are no underground storage
tanks on or under any real property owned, leased or used by the
Company or any of its Subsidiaries that are not in compliance with
applicable law.


 


t. Title to
Property. The Company and its
Subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal
property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects or such as would not have a
Material Adverse Effect. Any real property and facilities held
under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions
as would not have a Material Adverse Effect.


 



 

6







 






 


u. Internal Accounting
Controls. The Company and each
of its Subsidiaries maintain a system of internal accounting
controls sufficient, in the judgment of the Company’s board
of directors, to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.


 


v. Foreign Corrupt
Practices. Except as would not
be reasonably expected to have a Material Adverse Effect, neither
the Company, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the
Company or any Subsidiary has, in the course of his actions for, or
on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any
foreign or domestic government official or
employee.


 


w. Solvency.
The Company (after giving effect to the transactions contemplated
by this Agreement) is solvent (i.e.,
its assets have a fair market value in excess of the amount
required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no
information that would lead it to reasonably conclude that the
Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it
intend to take any action that would impair its ability to, pay its
debts from time to time incurred in connection therewith as such
debts mature. The Company did not receive a qualified opinion from
its auditors with respect to its most recent fiscal year end and,
after giving effect to the transactions contemplated by this
Agreement, does not anticipate or know of any basis upon which its
auditors might issue a qualified opinion in respect of its current
fiscal year. For the avoidance of doubt any disclosure of the
Borrower’s ability to continue as a “going
concern” shall not, by itself, be a violation of this Section
3(w).


 


x. No Investment
Company. The Company is not,
and upon the issuance and sale of the Securities as contemplated by
this Agreement will not be an “investment company”
required to be registered under the Investment Company Act of 1940
(an “Investment Company”). The Company is not
controlled by an Investment Company.


 


y. Insurance.
The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have
a Material Adverse Effect. Upon written request the Company will
provide to the Buyer true and correct copies of all policies
relating to directors’ and officers’ liability
coverage, errors and omissions coverage, and commercial general
liability coverage.


 


z. Bad
Actor. To the Company’s
knowledge, no officer or director of the Company would be
disqualified under Rule 506(d) of the Securities Act as amended on
the basis of being a “bad actor” as that term is
established in the September 19, 2013 Small Entity Compliance Guide
published by the SEC.


 


aa.
Shell Status. The
Company is not a “shell” issuer and has never been a
“shell” issuer, or that if it previously has been a
“shell” issuer, that at least twelve (12) months have
passed since the Company has reported Form 10 type information
indicating that it is no longer a “shell”
issuer.


 


bb.
No-Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required
to be disclosed by the Company in its 1934 Act filings and is not
so disclosed or that otherwise could be reasonably likely to have a
Material Adverse Effect.


 


cc.
Manipulation of
Price. The Company has not, and to its knowledge no one
acting on its behalf has: (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be
expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company.


 


dd.
[Intentionally
Omitted]


 



 

7







 






 


ee.
Employee Relations.
Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union.
The Company believes that its and its Subsidiaries’ relations
with their respective employees are good. No executive officer (as
defined in Rule 501(f) promulgated under the 1933 Act)
or other key employee of the Company or any of its Subsidiaries has
notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any
such Subsidiary. To the knowledge of the Company, no executive
officer or other key employee of the Company or any of its
Subsidiaries is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition
agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive
officer or other key employee (as the case may be) does not subject
the Company or any of its Subsidiaries to any liability with
respect to any of the foregoing matters.


 


ff.
Breach of Representations
and Warranties by the Company. The Company agrees that if
the Company breaches any of the representations or warranties set
forth in this Section 3, and in addition to any other remedies
available to the Buyer pursuant to this Agreement and it being
considered an Event of Default under Section 3.5 of the Note, the
Company shall pay to the Buyer the Standard Liquidated Damages
Amount in cash or in shares of Common Stock at the option of the
Company, until such breach is cured. If the Company elects to pay
the Standard Liquidated Damages Amounts in shares of Common Stock,
such shares shall be issued at the Conversion Price at the time of
payment.


 


4.
COVENANTS.


 


a. Best
Efforts. The parties shall use
their commercially reasonable best efforts to satisfy timely each
of the conditions described in Section 7 and 8 of this
Agreement.


 


b. Blue Sky
Laws. The Company shall, on or
before the Closing Date, take such action as the Company shall
reasonably determine may be necessary to qualify the Securities for
sale to the Buyer at the applicable closing pursuant to this
Agreement under applicable securities or “blue sky”
laws of the states of the United States (or to qualify for or
obtain an exemption from such qualification for sale), and shall
provide evidence of any such action so taken to the Buyer on or
prior to the Closing Date.


 


c. Use of
Proceeds. The Company shall use
the proceeds from the sale of the Note for working capital and
other general corporate purposes and shall not, directly or
indirectly, use such proceeds for any loan to or investment in any
other corporation, partnership, enterprise or other person (except
in connection with its currently existing direct or indirect
Subsidiaries).


 


d. Expenses.
Except as otherwise expressly provided in Section 5, all costs and
expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection
with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses, whether or
not the Closing shall have occurred.


 


e. Financial
Information. The Company agrees
to send or make available the following reports to the Buyer until
the Buyer transfers, assigns, or sells all of the
Securities:


(i)
within ten (10) days after the filing with the SEC, a copy of its
Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and
any Current Reports on Form 8-K; (ii) within one (1) day after
release, copies of all press releases issued by the Company or any
of its Subsidiaries; and (iii) contemporaneously with the making
available or giving to the shareholders of the Company, copies of
any notices or other information the Company makes available or
gives to such shareholders. For the avoidance of doubt, filing the
documents required in (i) above via EDGAR or releasing any
documents set forth in (ii) above via a recognized wire service
shall satisfy the delivery requirements of this Section
4(f).


 


f. Listing.
The Company shall use commercially reasonable efforts to secure the
listing of the Conversion Shares upon each national securities
exchange or automated quotation system, if any, upon which shares
of Common Stock are then listed (subject to official notice of
issuance) and, so long as the Buyer owns any of the Securities,
shall use commercially reasonable efforts to maintain, so long as
any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion
of the Note. So long as the Buyer owns any of the Securities, The
Company will use commercially reasonable efforts to maintain the
listing and trading of its Common Stock on the OTC Pink, OTCQB or
any equivalent replacement exchange, the Nasdaq National Market
(“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq
SmallCap”), the New York Stock Exchange (“NYSE”),
or the NYSE MKT and will use commercially reasonable efforts to
comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of the Financial
Industry Regulatory Authority (“FINRA”) and such
exchanges, as applicable. The Company shall promptly provide to the
Buyer copies of any material notices it receives from the OTC Pink,
OTCQB and any other exchanges or quotation systems on which the
Common Stock is then listed regarding the continued eligibility of
the Common Stock for listing on such exchanges and quotation
systems. The Company shall pay any and all fees and expenses in
connection with satisfying its obligation under this Section
4(g).


 



 

8







 






 


g. Corporate
Existence. So long as the Buyer
beneficially owns any Note, the Company shall maintain its
corporate existence and shall not sell all or substantially all of
the Company’s assets, except in the event of a merger or
consolidation or sale of all or substantially all of the
Company’s assets, where the surviving or successor entity in
such transaction (i) assumes the Company’s obligations
hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose
Common Stock is listed for trading on the OTC Pink, OTCQB, OTCQX,
Nasdaq, NasdaqSmallCap, NYSE or AMEX.


 


h. No
Integration. The Company shall
not make any offers or sales of any security (other than the
Securities) under circumstances that would require registration of
the Securities being offered or sold hereunder under the 1933 Act
or cause the offering of the Securities to be integrated with any
other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its
securities.


 


i. Failure to Comply with
the 1934 Act. So long as the
Buyer beneficially owns the Note, the Company shall comply with the
reporting requirements of the 1934 Act; and the Company shall
continue to be subject to the reporting requirements of the 1934
Act.


 


j. Trading
Activities. Neither the Buyer
nor its affiliates has an open short position (or other hedging or
similar transactions) in the common stock of the Company and the
Buyer agree that it shall not, and that it will cause its
affiliates not to, engage in any short sales of or hedging
transactions with respect to the common stock of the
Company.


 


k. Restriction on
Activities. Commencing as of
the date first above written, and until the sooner of the six month
anniversary of the date first written above or payment of the Note
in full, or full conversion of the Note, the Company shall not,
directly or indirectly, without the Buyer’s prior written
consent, which consent shall not be unreasonably withheld: (a)
change the nature of its business; (b) sell, divest, acquire,
change the structure of any material assets other than in the
ordinary course of business; or (c) solicit any offers for, respond
to any unsolicited offers for, or conduct any negotiations with any
other person or entity in respect of any variable rate debt
transactions (i.e., transactions were the conversion or exercise
price of the security issued by the Company varies based on the
market price of the Common Stock) above $500,000, whether a
transaction similar to the one contemplated hereby or any other
investment.


 


l. Legal
Counsel Opinions. Upon the request of the Buyer
from to time to time, the Company shall be responsible (at its
cost) for promptly supplying to the Company’s transfer agent
and the Buyer a customary legal opinion letter of its counsel (the
“Legal Counsel Opinion”) to the effect that the sale of
Conversion Shares by the Buyer or its affiliates, successors and
assigns is exempt from the registration requirements of the 1933
Act pursuant to Rule 144 (provided the requirements of Rule 144 are
satisfied and provided the Conversion Shares are not then
registered under the 1933 Act for resale pursuant to an effective
registration statement). Should the Company’s legal counsel
fail for any reason to issue the Legal Counsel Opinion, the Buyer
may (at the Company’s cost) secure another legal counsel to
issue the Legal Counsel Opinion, and the Company will instruct its
transfer agent to accept such opinion.


 


m. Par
Value. If the closing bid price
at any time the Note is outstanding falls below $0.001, the Company
shall use all commercially reasonable efforts to obtain shareholder
consent, to reduce the par value of its Common Stock to $0.0001 or
less and shall effect such action promptly upon obtaining such
approval.


 


n. Breach of
Covenants. The Company agrees
that if the Company breaches any of the covenants set forth in this
Section 4, and in addition to any other remedies available to the
Buyer pursuant to this Agreement, it will be considered an Event of
Default under Section 3.4 of the Note, the Company shall pay to the
Buyer the Standard Liquidated Damages Amount in cash or in shares
of Common Stock at the option of the Buyer, until such breach is
cured, or with respect to Section 4(d) above, the Company shall pay
to the Buyer the Standard Liquidated Damages Amount in cash or
shares of Common Stock, at the option of the Buyer, upon each
violation of such provision. If the Company elects to pay the
Standard Liquidated Damages Amounts in shares of Common Stock, such
shares shall be issued at the Conversion Price at the time of
payment.


 


5. Transaction Expense
Amount. Upon Closing, the
Company shall pay an amount equal to Fifteen Thousand and 00/100
United States Dollars (US$15,000.00), to Auctus Fund Management,
LLC (“Auctus Management”) to cover the Holder's due
diligence, monitoring, and other transaction costs incurred for
services rendered in connection herewith.


 



 

9







 






 


6. Transfer Agent
Instructions. The Company shall
issue irrevocable instructions to its transfer agent to issue
certificates, registered in the name of the Buyer or its nominee,
for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the Note in
accordance with the terms thereof (the “Irrevocable Transfer
Agent Instructions”). In the event that the Borrower proposes
to replace its transfer agent, the Borrower shall provide, prior to
the effective date of such replacement, a fully executed
Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to the Purchase Agreement (including but not
limited to the provision to irrevocably reserve shares of Common
Stock in the Reserved Amount) signed by the successor transfer
agent to Borrower and the Borrower. Prior to registration of the
Conversion Shares under the 1933 Act or the date on which the
Conversion Shares may be sold pursuant to Rule 144 without any
restriction as to the number of Securities as of a particular date
that can then be immediately sold, all such certificates shall bear
the restrictive legend specified in Section 2(g) of this Agreement.
The Company warrants that: (i) no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this
Section, and stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to
registration of the Conversion Shares under the 1933 Act or the
date on which the Conversion Shares may be sold pursuant to Rule
144 without any restriction as to the number of Securities as of a
particular date that can then be immediately sold), will be given
by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement and the
Note; (ii) it will not direct its transfer agent not to transfer or
delay, impair, and/or hinder its transfer agent in transferring (or
issuing)(electronically or in certificated form) any certificate
for Conversion Shares to be issued to the Buyer upon conversion of
or otherwise pursuant to the Note as and when required by the Note
and this Agreement; and (iii) it will not fail to remove (or
directs its transfer agent not to remove or impairs, delays, and/or
hinders its transfer agent from removing) any restrictive legend
(or to withdraw any stop transfer instructions in respect thereof)
on any certificate for any Conversion Shares issued to the Buyer
upon conversion of or otherwise pursuant to the Note as and when
required by the Note and this Agreement. Nothing in this Section
shall affect in any way the Buyer’s obligations and agreement
set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the
Securities. If the Buyer provides the Company with (i) an opinion
of counsel of Buyer reasonably satisfactory to the Company’s
transfer agent in form, substance and scope customary for opinions
in comparable transactions, to the effect that a public sale or
transfer of such Securities may be made without registration under
the 1933 Act and such sale or transfer is effected or (ii) the
Buyer provides reasonable assurances that the Securities can be
sold pursuant to Rule 144, the Company shall permit the transfer,
and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates, free from
restrictive legend, in such name and in such denominations as
specified by the Buyer. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the
Buyer, by vitiating the intent and purpose of the transactions
contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section
may be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section,
that the Buyer shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and
requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being
required.


 


7. CONDITIONS PRECEDENT
TO THE COMPANY’S OBLIGATIONS TO SELL. The obligation of the Company hereunder to issue
and sell the Note to the Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date of each of the
following conditions thereto, provided that these conditions are
for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:


 


a.
The Buyer shall have executed this Agreement and delivered the same
to the Company.


 


b.
The Buyer shall have delivered the Purchase Price in accordance
with Section 1(b) above.


 


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


 


d.
No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.


 


8. CONDITIONS PRECEDENT
TO THE BUYER’S OBLIGATION TO PURCHASE. The obligation of the Buyer hereunder to
purchase the Note at the Closing is subject to the satisfaction, at
or before the Closing Date of each of the following conditions,
provided that these conditions are for the Buyer’s sole
benefit and may be waived by the Buyer at any time in its sole
discretion:


 


a.
The Company shall have executed this Agreement and delivered the
same to the Buyer.


 


b.
The Company shall have delivered to the Buyer the duly executed
Note (in such denominations as the Buyer shall request) and in
accordance with Section 1(b) above.


 



 

10







 






 


c.
The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to a majority-in-interest of the Buyer, shall have
been delivered to and acknowledged in writing by the
Company’s Transfer Agent.


 


d.
The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of
the Closing Date as though made at such time (except for
representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. The Buyer
shall have received a certificate or certificates, executed by the
chief executive officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may
be reasonably requested by the Buyer including, but not limited to
certificates with respect to the Company’s Certificate of
Incorporation, By-laws and Board of Directors’ resolutions
relating to the transactions contemplated hereby.


 


e.
No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.


 


f.
No event shall have occurred which could reasonably be expected to
have a Material Adverse Effect on the Company including but not
limited to a change in the 1934 Act reporting status of the Company
or the failure of the Company to be timely in its 1934 Act
reporting obligations.


 


g.
The Conversion Shares shall have been authorized for quotation on
the OTC Pink, OTCQB or any similar quotation system and trading in
the Common Stock on the OTC Pink, OTCQB or any similar quotation
system shall not have been suspended by the SEC or the OTC Pink,
OTCQB or any similar quotation system.


 


h.
The Buyer shall have received an officer’s certificate
described in Section 3(c) above, dated as of the Closing
Date.


 


9. GOVERNING LAW;
MISCELLANEOUS.


 


a. Governing
Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Nevada without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the
transactions contemplated by this Agreement, the Note or any other
agreement, certificate, instrument or document contemplated hereby
shall be brought only in the state courts of Massachusetts or in
the federal courts located in the state of Massachusetts. The
parties to this Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or
based upon forum non
conveniens. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY
OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.
The prevailing party shall be entitled to recover from the other
party its reasonable attorney's fees and costs. In the event that
any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of
any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document 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 Agreement 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
law.


 


b. Counterparts;
Signatures by Facsimile. This
Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute
one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the
other party. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a
copy of this Agreement bearing the signature of the party so
delivering this Agreement.


 


c. Construction;
Headings. This Agreement shall
be deemed to be jointly drafted by the Company and the Buyer and
shall not be construed against any person as the drafter hereof.
The headings of this Agreement are for convenience of reference
only and shall not form part of, or affect the interpretation of,
this Agreement.


 



 

11







 






 


d. Severability.
In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any provision hereof which may prove
invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision
hereof.


 


e. Entire Agreement;
Amendments. This Agreement, the
Note and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the
majority in interest of the Buyer.


 


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


If to
the Company, to:


 


Guided
Therapeutics, Inc.


5835
Peachtree Corners East, Suite D


Norcross, GA
30092


Attn:
Gene Cartwright


E-mail:
info@guidedinc.com


 



With a
copy to (which copy shall not constitute notice):


 


Jones
Day



1420
Peachtreet St.


Norcross,
GA 30092


E-mail:
hdrodman@jonesday.com


 


If to
the Buyer:


 


Auctus
Fund, LLC


177
Huntington Avenue, 17th Floor


Boston,
MA 02115


Attn:
Lou Posner


Facsimile: (617)
532-6420


 


With a
copy to (which copy shall not constitute notice):


 


Chad
Friend, Esq., LL.M.


Legal
& Compliance, LLC


330
Clematis Street, Suite 217


West
Palm Beach, FL 33401


e-mail:
CFriend@LegalandCompliance.com


 


Each
party shall provide notice to the other party of any change in
address.


 



 

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g.
Successors and
Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or
any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, subject to
Section 2(f), the Buyer may assign its rights hereunder to any
person that purchases Securities in a private transaction from the
Buyer or to any of its “affiliates,” as that term is
defined under the 1934 Act, without the consent of the
Company.


 


h. Third Party
Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other
person.


 


i. Survival.
The representations and warranties of the Company and the
agreements and covenants set forth in this Agreement shall survive
the closing hereunder not withstanding any due diligence
investigation conducted by or on behalf of the Buyer. The Company
agrees to indemnify and hold harmless the Buyer and all their
officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach
by the Company of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and
obligations under this Agreement, including advancement of expenses
as they are incurred.


 


j. Further
Assurances. Each party shall do
and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.


 


k. No Strict
Construction. The language used
in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party.


 


l. Remedies.
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the
intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Agreement will be inadequate
and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement, that the Buyer shall
be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to
an injunction or injunctions restraining, preventing or curing any
breach of this Agreement and to enforce specifically the terms and
provisions hereof, without the necessity of showing economic loss
and without any bond or other security being
required.


 


m. Publicity.
The Company, and the Buyer shall have the right to review a
reasonable period of time before issuance of any press releases,
SEC, OTCQB or FINRA filings, or any other public statements with
respect to the transactions contemplated hereby;provided,
however,
that the Company shall be entitled, without the prior approval of
the Buyer, to make any press release or SEC, OTCQB (or other
applicable trading market) or FINRA filings with
respect
to such transactions as is required by applicable law and
regulations (although the Buyer shall be consulted by the Company
in connection with any such press release prior to its release and
shall be provided with a copy thereof and be given an opportunity
to comment thereon). Notwithstanding the foregoing, the Company
shall not be required to submit for review any such disclosure
contained in filings with the SEC if it shall have previously
provided substantially the same disclosure for review in connection
with a previous filing.


 


n.
Indemnification.
Subject to the provisions of this Section 9(n), the Company will
indemnify and hold Buyer and its directors, officers, shareholders,
members, partners, employees and agents (each, a “Buyer
Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs
and reasonable attorneys’ fees and costs of investigation
that any such Buyer Party may suffer or incur as a result of or
relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this
Agreement or the Note, or any other agreement, certificate,
instrument, or document contemplated hereby or thereby, (b) any
action instituted against the Buyer Parties in any capacity, or any
of them or their respective affiliates, by any stockholder of the
Company who is not an affiliate of such Buyer Party, with respect
to any of the transactions contemplated by this Agreement (unless
such action is based upon a breach of such Buyer Party’s
representations, warranties or covenants under this Agreement or
any agreements or understandings such Buyer Party may have with any
such stockholder or any violations by such Buyer Party of state or
federal securities laws or any conduct by such Buyer Party that
constitutes fraud, gross negligence, willful misconduct or
malfeasance) or (c) any untrue or alleged untrue statement of a
material fact contained in any registration statement, any
prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any prospectus or supplement
thereto, in light of the circumstances under which they were made)
not misleading. If any action shall be brought against any Buyer
Party in respect of which indemnity may be sought pursuant to this
Agreement, such Buyer Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense
thereof with counsel of its own choosing reasonably acceptable to
the Buyer Party. Any Buyer Party shall have the right to employ
separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such Buyer Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in
such action there is, in the reasonable opinion of counsel, a
material conflict on any material issue between the position of the
Company and the position of such Buyer Party, in which case the
Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be
liable to any Buyer Party under this Agreement (y) for any
settlement by a Buyer Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld,
conditioned, or delayed; or (z) to the extent, but only to the
extent that a loss, claim, damage or liability is attributable to
any Buyer Party’s breach of any of the representations,
warranties, covenants or agreements made by such Buyer Party in
this Agreement. The indemnification required by this Section 9.n.
shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any
Buyer Party against the Company or others and any liabilities the
Company may be subject to pursuant to law.


 


[signature page
follows]


 


 



 

13







 






 


 


 


 


 


/s/
Gene S. Cartwright


Gene
S. Cartwright


CEO


Guided
Therapeutics, Inc.


 


 


/s/
Lou Posner


Lou
Posner


Managing
Director


Auctus
Fund, LLC




 

14