Document:

gthp_ex427

  Exhibit 4.27

 

NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE 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 OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

 

	

Principal Amount: US$700,000.00

Purchase Price: US$700,000.00 

	

Issue Date: December 17, 2019

                                                                                                                         

 

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, GUIDED
THERAPEUTICS, INC., a Delaware
corporation (hereinafter called the "Borrower") (Trading Symbol:
GTHP), hereby promises to pay to the order of AUCTUS FUND, LLC,
a Delaware limited liability company,
or registered assigns (the "Holder") the sum of US$700,000.00
together with any interest as set forth herein, on December
17,2021
(the "Maturity Date"), and to pay
interest on the unpaid principal balance hereof at the rate often
percent (10%) (the "Interest Rate") per annum from the date hereof
(the "Issue Date") until the same becomes due and payable, whether
at maturity or upon acceleration or by prepayment or otherwise.
This Note may not be prepaid in whole or in part except as
otherwise explicitly set forth herein. Any amount of principal or
interest on this Note which is not paid when due shall bear
interest at the rate of the lesser of (i) twenty-four
percent (24%) per annum
and (ii) the maximum amount
permitted under law from the due date thereof until the same is
paid (the "Default Interest"). Interest shall commence accruing on
the date that the Note is funded by the Holder and shall be
computed on the basis of a 360-day year and the actual number of
days elapsed. All
payments due hereunder (to the extent
not converted into common stock, $0.001 par value per share (the
"Common Stock") in accordance with the terms hereof) shall be made
in lawful money of the United States of America. All payments shall
be made at such address as the Holder shall hereafter give to the
Borrower by written notice made in accordance with the provisions
of this Note. Whenever any amount expressed to be due by the terms
of this Note is due on any day which is not a business day, the
same shall instead be due on the next succeeding day which is a
business day and, in the case of any interest payment date which is
not the date on which this Note is paid in full, the extension of
the due date thereof shall not be taken into account for purposes
of determining the amount of interest due on such date. As used in
this Note, the term "business day" shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of
New York, New York are authorized or required by law or executive
order to remain closed. Each capitalized term used herein, and not
otherwise defined, shall have the meaning ascribed thereto in that
certain securities purchase agreement dated the date hereof;
pursuant to which this Note was originally issued (the "Purchase
Agreement'').

 

This
Note is 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 Borrower and
will not impose personal liability upon the holder
thereof.

 

This
Note shall be a senior secured obligation of the Borrower, with
priority over all existing and future Indebtedness (as defined
below) of the Borrower as provided for herein. The obligations of
the Borrower under this Note are secured pursuant to the terms of
the security agreement of even date (the "Security Agreement) by
and among the Borrower and Holder, and such security interest
includes but is not limited to all of the assets of the Borrower
and its subsidiaries (including but not limited to Interscan,
Inc.). So long as the Borrower shall have any obligation under this
Note, except with respect to Permitted Indebtedness and Permitted
Liens, the Borrower shall not (directly or indirectly through any
subsidiary or affiliate) incur or suffer to exist or guarantee any
Indebtedness that is senior to or pari passu with (in priority of
payment and performance) the Borrower's obligations hereunder.
"Indebtedness" shall mean (a) all indebtedness of the Borrower for
borrowed money or for the deferred purchase price of property or
services, including any type of letters of credit, but not
including deferred purchase price obligations in place as of the
Issue Date or obligations to trade creditors incurred in the
ordinary course of business, (b) all obligations of the Borrower
evidenced by notes, bonds, debentures or other similar instruments,
(c) purchase money indebtedness hereafter incurred by the Borrower
to finance the purchase of fixed or capital assets, including all
capital lease obligations of the Borrower which do not exceed the
purchase price of the assets funded, (d) all guarantee obligations
of the Borrower in respect of obligations of the kind referred to
in clauses (a) through

(c)
above that the Borrower would not be permitted to incur or enter
into, and ( e) all obligations of the kind referred to in clauses
(a) through (d) above that the Borrower is not permitted to incur
or enter into that are secured and/ or unsecured by (or for which
the holder of such obligation has an existing right, contingent or
otherwise, to be secured and/ or unsecured by) any lien or
encumbrance on property (including accounts and contract rights)
owned by the Borrower, whether or not the Borrower has assumed or
become liable for the payment of such obligation. "Permitted
Indebtedness" means (a) the indebtedness evidenced by any
convertible notes issued by the Borrower to the Holder (the
"Notes"), (b) lease obligations and purchase money indebtedness
incurred in .connection with the acquisition of capital assets and
lease obligations with respect to newly acquired or leased assets,
(c) indebtedness that is expressly subordinate to the Notes
pursuant to a written subordination agreement with the Holder that
is acceptable to each Holder in its sole and absolute discretion
and (d) indebtedness pursuant to which the proceeds thereof are
first used to repay the Notes in the entirety within one (1)
business day of the closing of the respective transaction.
"Permitted Lien" means the individual and collective reference to
the following: (a) liens for taxes, assessments and other
governmental charges or levies not yet due or liens for taxes,
assessments and other governmental charges or levies being
contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of
the Company) have been established in accordance with GAAP, (b)
liens imposed by law which were incurred in the ordinary course of
the Company's business, such as carriers', warehousemen's and
mechanics' liens, statutory landlords' Liens, and other similar
Liens arising in the ordinary course of the Company's business, and
which (x) do not individually or in the aggregate materially
detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the
Company and its consolidated Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable
future the forfeiture or sale of the property or asset subject to
such lien, ( c) Liens incurred in connection with Permitted
Indebteduess under clauses (a), (b), (d) and (e) thereunder, and
(d) Liens incurred in connection with Permitted Indebtedness under
clause ( c) thereunder, provided that such Liens are not secured by
assets ofthe Company or its Subsidiaries other than the assets so
acquired or leased.

 

 

 

 

The
following terms shall also apply to this Note:

 

ARTICLE
I. CONVERSION RlGHTS

 

1.1 Conversion Right. The Holder shall have the
right from time to time, and at any time following the Issue Date,
and ending on the later of (i) the Maturity Date and (ii) the date
of payment of the Default Amount (as defined in Article III)
pursuant to Section 1.6(a) or Article 
III, each in respect of the
remaining outstanding principal amount of this Note to convert all
or any part of the outstanding and unpaid principal, interest,
penalties, and all other amounts under this Note into fully paid
and non-assessable shares of Common Stock, as such Common Stock
exists on the Issue Date, or any shares of capital stock or other
securities of the Borrower into which such Common Stock shall
hereafter be changed or reclassified at the Conversion Price (as
defined below) determined as provided herein (a "Conversion");
provided, however, that in no event shall the Holder be entitled to
convert any portion of this Note in excess of that portion of this
Note upon conversion of which the sum of (1) the number of shares
of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Notes
or the unexercised or unconverted portion of any other security of
the Borrower subject to a limitation on conversion or exercise
analogous to the limitations contained herein) and (2) the number
of shares of Common Stock issuable upon the conversion of the
portion of this Note with respect to which the determination of
this proviso is being made, would result in beneficial ownership by
the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock (the "Beneficial Ownership Limitations").
For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso. The number of
shares of Common Stock to be issued upon each conversion of this
Note shall be determined by dividing the Conversion Amount (as
defined below) by the applicable Conversion Price then in effect on
the date specified in the notice of conversion, in the form
attached hereto as Exhibit A (the "Notice of Conversion"),
delivered to the Borrower by the Holder in accordance with Section
1.4 below; provided that the Notice of Conversion is submitted by
facsimile or e-mail (or by other means resulting in, or reasonably
expected to result in, notice) to
the Borrower before 11:59 p.m., New
York, New York time on such conversion date (the "Conversion
Date"). The term "Conversion Amount" means, with respect to any
conversion of this Note, the sum of (1) the principal amount of
this Note to be converted in such conversion plus (2) at the
Holder's option, accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Note to the
Conversion Date, provided however, that the Borrower shall have the
right to
pay any or all interest in cash plus
(3) at the Holder's option, Default Interest, if any, on the
amounts referred to in the immediately preceding clauses (1) and/or
(2) plus (4) at the Holder's option, any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof.

 

1.2
Conversion Price.

 

Calculation of Conversion Price. Subject to the
adjustments described herein, the conversion price (the "Conversion
Price") shall equal the lesser of: (i) the lowest Trading Price (as
defined below) on the Issue Date, and (ii) the Variable Conversion
Price (as defined herein) (subject to equitable adjustments for
stock splits, stock dividends or rights offerings by the Borrower
relating to the Borrower's securities or the securities Of any
subsidiary of the Borrower, combinations, recapitalization,
reclassifications, extraordinary distributions and similar events).
The "Variable Conversion Price" shall mean 95% multiplied by the
Market Price (as defined herein) (representing a discount rate of
5%), minus $0.04 per share, provided, however, that in no event
shall the Variable Conversion Price be less than $0.15 (the "Floor
Price") (subject to equitable adjustment as set forth above) except
as provided in this Note. If (i) an Event of Default (as defined in
this Note) under this Note occurs and/ or (ii) the Note is not
extinguished in its entirety prior to December 17, 2020, the Floor
Price shall no longer apply. "Market Price" means the average of
the five (5) lowest Trading Prices (as defined below) for the
Common Stock during the period beginning on the Issue Date and
ending on the Maturity Date. "Trading Price" means, for any
security as of any date, the closing bid price on the OTC Pink,
OTCQB or applicable trading market as reported by a Reporting
Service designated by the Holder-or, if the OTC Pink is not the
principal trading market for such security, the closing bid price
of such security on the principal securities exchange or trading
market where such security is listed or traded or, if no closing
bid price of such security is available in any of the foregoing
manners, the average of the closing bid prices of any market makers
for such security that are listed in the "pink sheets" by the
National Quotation Bureau, Inc. To the extent the Conversion Price
of the Borrower's Common Stock closes below the par value per
share, the Borrower will take all steps necessary to solicit
the· consent of the stockholders to reduce the par value to
the lowest value possible under law. The Borrower agrees to honor
all conversions submitted pending this adjustment. If the shares of
the Borrower's Common Stock have not been delivered within three
(3) business days to the Borrower, the Notice of Conversion may be
rescinded. At any time after the Closing Date, if in the case that
the Borrower's Common Stock is not deliverable by DWAC (including
if the Borrower's transfer agent has a policy prohibiting or
limiting delivery of shares of the Borrower's Common Stock
specified in a Notice of Conversion), an additional 10% discount
will apply for all future conversions under all Notes. If in the
case that the Borrower's Common Stock is "chilled" for deposit into
the DTC system and only eligible for clearing deposit, an
additional 15% discount shall apply for all future conversions
under all Notes while the "chill" is in effect. If in the case of
both of the above, an additional cumulative 25% discount shall
apply. Additionally, if the Borrower ceases to
be a reporting company pursuant to the
1934 Act or if the Note cannot be converted into free trading
shares after one hundred eighty-one (181) days from the Issue Date,
an additional 15% discount will be attributed to the Conversion
Price. If
the Trading Price cannot be calculated
for such security on such date in the manner provided above, the
Trading Price shall be the fair market value as mutually determined
by the Borrower and the holders of a majority in interest of the
Notes being converted for which the calculation of the Trading
Price is required in order to determine the Conversion Price of
such Notes. "Trading Day" shall mean any day on which the Common
Stock is tradable for any period on the OTC Pink, OTCQB or on the
principal securities exchange or other securities market on which
the Common Stock is then being traded. The Borrower shall be
responsible for the fees of its transfer agent and all DTC fees
associated with any such issuance. Holder shall be entitled to
deduct $500.00 from the conversion amount in each Notice of
Conversion to cover Holder's deposit fees associated with each
Notice of Conversion.

 

 

 

 

While this Note is outstanding, each time any
3rd
party has the right to convert monies
owed to that 3rd  party
(or receive shares pursuant to a settlement or otherwise),
including but not limited to under Section 3(a)(9) and Section
3(a)(1O), at a discount to market greater than the Conversion Price
in effect at that time (prior to all other applicable adjustments
in the Note), then the H1older, in Holder's sole discretion, may
utilize such greater discount percentage (prior to all applicable
adjustments in this Note) until this Note is no longer outstanding.
While this Note is outstanding, each time any 3rd party has a look
back period greater than the look back period in effect under the
Note at that time, including but not limited to under Section
3(a)(9) and Section 3(a)(10), then the Holder, in Holder's sole
discretion, may utilize such greater number of look back days until
this Note is no longer outstanding. The Borrower shall give written
notice to the Holder within one (1) business day of becoming aware
of any event that could permit the Holder to make any adjustment
described in the two immediately preceding
sentences.

 

(a)
Conversion Price During Major Announcements. Notwithstanding
anything contained in Section 1.2(a) to the contrary, in the event
the Borrower (i) makes a public announcement that it intends to
consolidate or merge with any other corporation (other than a
merger in which the Borrower is the surviving or continuing
corporation and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower or (ii) any
person, group or entity (including the Borrower) publicly announces
a tender offer to purchase 50% or more of the Borrower's Common
Stock (or any other takeover scheme) (the date of the announcement
referred to in clause (i) or (ii) is hereinafter referred to as the
"Announcement Date"), then the Conversion Price shall, effective
upon the Announcement Date and continuing through the Adjusted
Conversion Price Termination Date (as defined below), be equal to
the lower of (x) the Conversion Price which would have been
applicable for a Conversion occurring on the Announcement Date and
(y) the Conversion Price that would otherwise be in effect. From
and after the Adjusted Conversion Price Termination Date, the
Conversion Price shall be determined as set forth in this Section
1.2(a). For purposes hereof, "Adjusted Conversion Price Termination
Date" shall mean, with respect to any proposed transaction or
tender offer (or takeover scheme) for which a public announcement
as contemplated by this Section 1.2(b) has been made, the date upon
which the Borrower (in the case of clause (i) above) or the person,
group or entity (in the case of clause (ii) above) consummates or
publicly announces the termination or abandonment of the proposed
transaction or tender offer (or takeover scheme) which caused this
Section 1.2(b) to become operative.

 

(b) Pro Rata Conversion; Disputes.
In
the event of a dispute as to the
number of shares of Common Stock issuable to the Holder in
connection with a conversion of this Note,
the Borrower shall issue to the Holder the number of shares of
Common Stock not in dispute and resolve such dispute in accordance
with Section 4.13.

 

(c)
If at any time the Conversion Price as determined hereunder for any
conversion would be less than the par value of the Common Stock,
then the Conversion Price hereunder shall equal such par value for
such conversion and the Conversion Amount for such conversion shall
be increased to include Additional Principal, where "Additional
Principal" means such additional amount to be added to the
Conversion Amount to the extent necessary to cause the number of
conversion shares issuable upon such conversion to equal the same
number of conversion shares as would have been issued had the
Conversion Price not been subject to the minimum price set forth in
this Section 1.2( c).

 

1.3 Authorized Shares. The Borrower covenants that
during the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient
number of shares, free from preemptive rights, to provide for the
issuance of Common Stock upon the full conversion of this Note
issued pursuant to the Purchase Agreement. The Borrower is required
at all times to have authorized and reserved five times the number
of shares that is actually issuable upon full conversion of the
Note (based on the Conversion Price of the Notes in effect from
time to time without regard to the Floor Price) (the "Reserved
Amount"). The Reserved Amount shall be increased from time to time
in accordance with the Borrower's obligations pursuant to Section
3(d) of the Purchase Agreement. The Borrower represents that upon
issuance, such shares will be du1y and validly issued, fully paid
and nonassessable. In
addition, if the Borrower shall issue
any securities or make any change to its capital structure which
would change the number of shares of Common Stock into which the
Notes shall be convertible at the then current Conversion Price,
the Borrower shall at the same time make proper provision so that
thereafter there shall be a sufficient number of shares of Common
Stock authorized and reserved, free from preemptive rights, for
conversion of the outstanding Notes. The Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue
certificates for the Common Stock issuable upon conversion of this
Note, and (ii)
agrees that its issuance of this Note shall constitute full
authority to its officers and agents who are charged with the duty
of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock in accordance with the
terms and conditions of this Note. Notwithstanding the foregoing,
in no event shall the Reserved Amount be lower than the initial
Reserved Amount, regardless of any prior conversions.

 

If,
at any time the Borrower does not maintain or replenish the
Reserved Amount within three (3) business days of the request of
the Holder, the principal amount of the Note shall increase by Five
Thousand and No/IOO United States Dollars ($5,000) (under Holder's
and Borrower's expectation that any principal amount increase will
tack back to the Issue Date) per occurrence.

 

1.4
Method of Conversion.

 

(a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be
converted by the Holder in whole or in part at any time from time
to time after the Issue Date, by (A)
submitting to the Borrower a Notice of Conversion (by facsimile,
e-mail or other reasonable means of communication dispatched on the
Conversion Date prior to 11:59 p.m., New York, New York time) and
(B) subject to Section 1.4(b), surrendering this Note at the
principal office of the Borrower.

 

 

 

 

(b) Surrender of Note Upon Conversion.
Notwithstanding anything to the contrary set forth herein, upon
conversion of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to
the Borrower unless the entire unpaid principal amount of this Note
is so converted. The Holder and the Borrower shall maintain records
showing the principal amount so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory
to the Holder and the Borrower, so as not to require physical
surrender of this Note upon each such conversion.
In
the event of any dispute or
discrepancy, such records of the Borrower shall,
prima
facie, be controlling and
determinative in the absence of manifest error. Notwithstanding the
foregoing, if any portion of this Note is converted as aforesaid,
the Holder may not transfer this Note unless the Holder first
physically surrenders this Note to the Borrower, whereupon the
Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may
request, representing in the aggregate the remaining unpaid
principal amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this
Note represented by this Note may be less than the amount stated on
the face hereof.

 

(c) Payment of Taxes. The Borrower shall not be
required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common
Stock or other securities or property on conversion of this Note in
a name other than that of the Holder (or in street name), and the
Borrower shall not be required to
issue or deliver any such shares or
other securities or property unless and until the person or persons
(other than the Holder or the custodian in whose street name such
shares are to be held for the Holder's account) requesting the
issuance thereof shall have paid to the Borrower the amount of any
such tax or shall have established to the satisfaction of the
Borrower that such tax has been paid.

 

(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the
Borrower from the Holder of a facsimile transmission or e-mail (or
other reasonable means of communication) of a Notice of Conversion
meeting the requirements for conversion as provided in this Section
1.4, the Borrower shall issue and deliver or cause to be issued and
delivered to or upon the order of the Holder certificates for the
Common Stock issuable upon such conversion within three (3)
business days after such receipt (the "Deadline") (and, solely in
the case of conversion of the entire unpaid principal amount
hereof, surrender of this Note) in accordance with the terms hereof
and the Purchase Agreement.

 

(e) Obligation of Borrower to Deliver Common
Stock. Upon receipt by the Borrower of a Notice of Conversion, the
Holder shall be deemed to be the holder of record of the Common
Stock issuable upon such conversion, the outstanding principal
amount and the amount of accrued and unpaid interest on this Note
shall be reduced to reflect such conversion, and, unless the
Borrower defaults on its obligations under this Article I, all
rights with respect to the portion of this Note being so converted
shall forthwith terminate except the right to receive the Common
Stock or other securities, cash or other assets, as herein
provided, on such conversion. If the Holder shall have given a
Notice of Conversion as provided herein, the Borrower's obligation
to issue and deliver the certificates for Common' Stock shall be
absolute and unconditional, irrespective of the absence of any
action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, the recovery of any judgment
against any person or any action to enforce the same, any failure
or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Borrower to the Holder in connection with such conversion. The
Conversion Date specified in the Notice of Conversion shall be the
Conversion Date so long as the Notice of Conversion is received by
the Borrower before 11:59
p.m., New York, New York time, on such date.

 

(f) Deliverv of Common Stock by Electronic
Transfer. In
lieu of delivering physical
certificates representing the Common Stock issuable upon
conversion, provided the Borrower is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer
("FAST") program, upon request of the Holder and its compliance
with the provisions contained in Section 1.1 and in this Section
lA, the Borrower shall use its commercially reasonable best efforts
to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the
account of Holder's Prime Broker with DTC through its Deposit
Withdrawal At Custodian ("DWAC") system.

 

(g) DTC Eligibility Market Loss. If the Borrower fails to maintain its
status as "DTC Eligible" for any reason, or, if the Conversion
Price is less than $0.05 at any time after the Issue Date, the
principal amount of the Note shall increase by Fifteen Thousand and
No/l00 United States Dollars ($15,000) and the Variable Conversion
Price shall be redefined to mean thirty percent (30%) multiplied by
the Market Price, subject to adjustment as provided in this
Note.

 

 

 

 

(h)
Failure to Deliver Common Stock Prior to Delivery Deadline. Without
in any way limiting the Holder's right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree
that if delivery of the Common Stock issuable upon conversion of
this Note is not delivered by the Deadline (other than a failure
due to the circumstances described in Section 1.3 above, which
failure shall be governed by such Section) the Borrower shall pay
to the Holder $2,000 per day in cash, for each day beyond the
Deadline that the Borrower fails to deliver such Common Stock until
the Borrower issues and delivers a certificate to the Holder or
credit the Holder's balance account with OTC for the number of
shares of Common Stock to which the Holder is entitled upon such
Holder's conversion of any Conversion Amount (under Holder's and
Borrower's expectation that any damages will tack back to the Issue
Date).. Such cash amount shall be paid to Holder by the fifth day
of the month following the month in which it has accrued or, at the
option of the Holder (by written notice to the Borrower by the
first day of the month following the month in which it has
accrued), shall be added to the principal amount of this Note, in
which event interest shall accrue thereon in accordance with the
terms of this Note and such additional principal amount shall be
convertible into Common Stock in accordance with the terms of this
Note. The Borrower agrees that the right to convert is a valuable
right to the Holder. The damages resulting from a failure, attempt
to frustrate, interference with such conversion right are difficult
if not impossible to qualify. Accordingly the parties acknowledge
that the liquidated damages provision contained in this Section
1.4(h) are justified.

 

(i) Rescindment of a Notice of Conversion. If (i)
the Borrower fails to respond to Holder within one (1) business day
from the Conversion Date confirming the details of Notice of
Conversion-, (ii) the Borrower fails to provide any of the shares
of the Borrower's Common Stock requested in the Notice of
Conversion within three (3) business days from the date of receipt
of the Note of Conversion, (iii) the Holder is unable to procure a
legal opinion required to have the shares of the Borrower's Common
Stock issued unrestricted and/or deposited to sell for any reason
related to the Borrower's standing, (iv) the Holder is unable to
deposit the shares of the Borrower's Common Stock requested in the
Notice of Conversion for any reason related to the Borrower's
standing, (v) at any time after a missed Deadline, at the Holder's
sole discretion, or (vi) if OTC Markets changes the Borrower's
designation to 'Limited Information' (Yield), 'No Information'
(Stop Sign), 'Caveat Emptor' (Skull &
Crossbones), 'OTC', 'Other OTC' or
'Grey Market' (Exclamation Mark Sign) or other trading restriction
on the day of or any day after the Conversion Date, the Holder
maintains the option and sole discretion to rescind the Notice of
Conversion ("Rescindment") with a "Notice of
Rescindment."

 

1.5
Concerning the Shares. The shares of Common Stock issuable upon
conversion of this Note may not be sold or transferred unless (i)
such shares are sold pursuant to an effective registration
statement under the Act or (ii) the Borrower or its transfer agent
shall have been furnished with an opinion of counsel (which opinion
shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that the shares
to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (iii) such shares are sold or
transferred pursuant to Rule 144 under the Act (or a successor
rule) ("Rule 144") or (iv) such shares are transferred to an
"affiliate" (as defined in Rule 144) of the Borrower who agrees to
sell or otherwise transfer the shares only in accordance with this
Section 1.5 and who is an Accredited Investor (as defined in the
Purchase Agreement). Except as otherwise provided in the Purchase
Agreement (and subject to the removal provisions set forth below),
until such time as the shares of Common Stock issuable upon
conversion of this Note have been registered under the Act or
otherwise 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, each certificate for shares of Common
Stock issuable upon conversion of this Note that has not been so
included in an effective registration statement or that has not
been sold pursuant to an effective registration statement or an
exemption that permits removal of the legend, shall bear a legend
substantially in the following form, as appropriate:

 

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY TIDS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1~33,
AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (1) 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 OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES."

 

The
legend set forth above shall be removed and the Borrower shall
issue to the Holder a new certificate therefore free of any
transfer legend if (i) the Borrower or its transfer agent shall
have received an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, to
the effect that a public sale or transfer of such Common Stock may
be made without registration under the Act, which opinion shall be
reasonably accepted by the Borrower so that the sale or transfer is
effected or (ii) in the case of the Common Stock issuable upon
conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under
the Act or otherwise 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.

 

 

 

 

1.6
Effect of Certain Events.

 

(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder,
the sale, conveyance or disposition of all or substantially all of
the assets of the Borrower, the effectuation by the Borrower of a
transaction or series of related transactions in which more than
50% of the voting power of the Borrower is disposed of, or the
consolidation, merger or other business combination of the Borrower
with or into any other Person (as defined below) or Persons when
the Borrower is not the survivor shall either: (i) be deemed to be
an Event of Default (as defined in Article ill) pursuant to which
the Borrower shall be required to pay to the Holder upon the
consummation of and as a condition to such transaction an amount
equal to the Default Amount (as defined in Article ill) or (ii) be
treated pursuant to Section 1.6(b) hereof. "Person" shall mean any
individual, corporation, limited liability company, partnership,
association, trust or other entity or organization.

 

(b) Adjustment Due to Merger, Consolidation,
Etc. I~
at any time when this Note is issued
and outstanding and prior to conversion of all of the Notes, there
shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a
result of which shares of Common Stock of the Borrower shall be
changed into the same or a different number of shares of another
class or classes of stock or securities of the Borrower or another
entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Borrower other than in
connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to
receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the Holder would have been
entitled to receive in such transaction had this Note been
converted in full immediately prior to such transaction (without
regard to any limitations on conversion set forth herein), and in
any such case appropriate provisions shall be made with respect to
the rights and interests of the Holder of this Note to the end that
the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be
applicable, as nearly as may be practicable in relation to any
securities or assets thereafter deliverable upon the conversion
hereof. The Borrower shall not affect any transaction described in
this Section 1.6(b) unless (a) it first gives, to the extent
practicable, thirty
(30) days prior written notice (but in
any event at least fifteen (15) days prior written notice) of the
record date of the special meeting of shareholders to approve, or
if there is no such record date, the consummation of, such merger,
consolidation, exchange of shares, recapitalization, reorganization
or other similar event or sale of assets (during which time the
Holder shall be entitled to convert this Note) and (b) the
resulting successor or acquiring entity (if not the Borrower)
assumes by written instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share
exchanges.

 

(c)
Adjustment Due to Distribution. If the Borrower shall declare or
make any distribution of its assets (or rights to acquire its
assets) to holders of Common Stock as a dividend, stock repurchase,
by way of return of capital or otherwise (including any dividend or
distribution to the Borrower's shareholders in cash or shares (or
rights to acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a "Distribution"), then the Holder of this Note shall
be entitled, upon any conversion of this Note after the date of
record for determining shareholders entitled to such Distribution,
to receive the amount of such assets which would have been payable
to the Holder with respect to the shares of Common Stock issuable
upon such conversion had such Holder been the holder of such shares
of Common Stock on the record date for the determination of
shareholders entitled to such Distribution.

 

(d)
Adjustment Due to Dilutive Issuance. If, at any time when any Notes
are issued and outstanding, the Borrower issues or sells, or in
accordance with this Section 1.6( d) hereof is deemed to have
issued or sold, except for shares of Common Stock issued directly
to vendors or suppliers of the Borrower in satisfaction of amounts
owed to such vendors or suppliers (provided, however, that such
vendors or suppliers shall not have an arrangement to transfer,
sell or assign such shares of Common Stock prior to the issuance of
such shares), any shares of Common Stock for no consideration or
for a consideration per share (before deduction of reasonable
expenses or commissions or underwriting discounts or allowances in
connection therewith) less than the Conversion Price in effect on
the date of such issuance (or deemed issuance) of such shares of
Common Stock (a "Dilutive Issuance"), then immediately upon the
Dilutive Issuance, the Conversion Price will be reduced to the
amount of the consideration per share received by the Borrower in
such Dilutive Issuance.

 

The Borrower shall be deemed to have issued or
sold shares of Common Stock if the Borrower in any manner issues or
grants any warrants, rights or options (not including employee
stock option plans), whether or not immediately exercisable, to
subscribe for or to purchase Common Stock or other securities
convertible into or exchangeable for Common Stock ("Convertible
Securities") (such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as
"Options") and the price per share for which Common Stock is
issuable upon the exercise of such Options is less than the
Conversion Price then in effect, then the Conversion Price shall be
equal to
such price per share. For purposes of
the preceding sentence, the "price per share for which Common Stock
is issuable upon the exercise of such Options" is determined by
dividing (i) the total amount, if any, received or receivable by
the Borrower as consideration for the issuance or granting of all
such Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Borrower upon the exercise of
all such Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate
amount of additional consideration payable upon the conversion or
exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of all
such Options (assuming full conversion of Convertible Securities,
if applicable). No further adjustment to the Conversion Price will
be made upon the actual issuance of such Common Stock upon the
exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such
Options.

 

Additionally,
the Borrower shall be deemed to have issued or sold shares of
Common Stock if the Borrower in any manner issues or sells any
Convertible Securities, whether or not immediately convertible
(other than where the same are issuable upon the exercise of
Options), and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the
Conversion Price then in effect, then the Conversion Price shall be
equal to such price per share. For the purposes of the preceding
sentence, the "price per share for which Common Stock is issuable
upon such conversion or exchange" is determined by dividing (i) the
total amount, if any, received or receivable by the Borrower as
consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Borrower upon the conversion
or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment
to the Conversion Price will be made upon the actual issuance of
such Common Stock upon conversion or exchange of such Convertible
Securities.

 

 

 

 

(e)
Purchase Rights. If, at any time when any Notes are issued and
outstanding, the Borrower issues any convertible securities or
rights to purchase stock, warrants, securities or other property
(the "Purchase Rights") pro rata to the record holders of any class
of Common Stock, then the Holder of this Note will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such Holder could have acquired if
such Holder had held the number of shares of Common Stock
acquirable upon complete conversion of this Note (without regard to
any limitations on conversion contained herein) 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 Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights.

 

(f)
Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion
Price as a result of the events described in this Section 1.6, the
Borrower, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and
showing in
detail the facts upon which such adjustment or readjustment is
based. The Borrower shall, upon the written request at any time of
the Holder, furnish to such Holder a like certificate setting forth
(i) such adjustment or readjustment, (ii) the Conversion Price at
the time in effect and (iii) the number of shares of Common Stock
and the amount, if any, of other securities or property which at
the time would be received upon conversion of the
Note.

 

1.7
[Intentionally Omitted

 

1.8
Status as Shareholder. Upon submission of a Notice of Conversion by
a Holder, (i) the shares covered thereby (other than the shares, if
any, which cannot be issued because their issuance would exceed
such Holder's allocated portion of the Reserved Amount or Maximum
Share Amount) shall be deemed converted into shares of Common Stock
and (ii) the Holder's rights as a Holder of such converted portion
of this Note shall cease and terminate, excepting only the right to
receive certificates for such shares of Common Stock and to any
remedies provided herein or otherwise available at law or in equity
to such Holder because of a failure by the Borrower to comply with
the terms of this Note. Notwithstanding the foregoing, if a Holder
has not received certificates for all shares of Common Stock prior
to the tenth (10th) business day after the expiration of the
Deadline with respect to a conversion of any portion of this Note
for any reason, then (unless the Holder otherwise elects to retain
its status as a holder of Common Stock by so notifying the
Borrower) the Holder shall regain the rights of a Holder of this
Note with respect to such unconverted portions of this Note and the
Borrower shall, as soon as practicable, return such unconverted
Note to the Holder or, if the Note has not been surrendered, adjust
its records to reflect that such portion of this Note has not been
converted. In all cases, the Holder shall retain all of its rights
and remedies (including, without limitation, (i) the right to
receive Conversion Default Payments pursuant to Section 1.3 to the
extent required thereby for such Conversion Default and any
subsequent Conversion Default and (ii) the right to have the
Conversion Price with respect to subsequent conversions determined
in accordance with Section 1.3) for the Borrower's failure to
convert this Note.

 

1.9
Prepayment. The Borrower may prepay the amounts outstanding
hereunder pursuant to the following terms and conditions and
subject to the terms of this Note:

 

(a)
At any time during the period beginning on the Issue Date and
ending on the date which is sixty (60) calendar days following the
Issue Date, the Borrower shall have the right, exercisable on not
less than three (3) Trading Days prior written notice to the Holder
of the Note, to prepay the outstanding Note (principal and accrued
interest), in full by making a payment to the Holder of an amount
in cash equal to 115%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note plus
(y) Default Interest, if any.

 

(b)
At any time during the period beginning the day which is sixty
one

 

(61)
calendar days following the Issue Date and ending on the date which
is one hundred twenty (120) calendar days following the Issue Date,
the Borrower shall have the right, exercisable on not less than
three (3) Trading Days prior written notice to the Holder of the
Note, to prepay the outstanding Note (principal and accrued
interest), in full by making a payment to the Holder of an amount
in cash equal to 125%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note plus
(y) Default Interest, if any.

 

(c)
At any time during the period beginning the day which is one
hundred twenty one (121) calendar days following the Issue Date and
ending on the last Trading Day immediately preceding the Maturity
Date, the Borrower shall have the right, exercisable on not less
than three (3) Trading Days prior written notice to the Holder of
the Note, to prepay the outstanding Note (principal and accrued
interest), in full by making a payment to the Holder of an amount
in cash equal to 150%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note plus
(y) Default Interest, if any

 

1.10
Any notice of prepayment hereunder (an "Optional Prepayment
Notice") shall be delivered to the Holder of the Note at its
registered addresses by physical mail and shall state: (1) that the
Borrower is requesting to prepay the Note, and (2) the date of the
requested prepayment which shall be not more than three (3) Trading
Days from the date of the Optional Prepayment Notice. On the date
fixed for prepayment (the "Optional Prepayment Date"), the Borrower
shall make payment of the applicable prepayment amount to or upon
the order of the Holder as specified by the Holder in writing to
the Borrower. If the Borrower delivers an Optional Prepayment
Notice, and Borrower fails to pay the applicable prepayment amount
due to the Holder of the Note within two (2) business days
following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to request a prepayment pursuant to Section
1.9.

 

 

 

 

ARTICLE
II. CERTAIN COVENANTS

 

2.1
Distributions on Capital Stock. So long as the Borrower shall have
any obligation under this Note, the Borrower shall not without the
Holder's written consent (a) pay, declare or set apart for such
payment, any dividend or other distribution (whether in cash,
property or other securities) on shares of capital stock other than
dividends on shares of Common Stock solely in the form of
additional shares of Common Stock or (b) directly or indirectly or
through any subsidiary make any other payment or distribution in
respect of its capital stock except for distributions pursuant to
any shareholders' rights plan which is approved by a majority of
the Borrower's disinterested directors.

 

2.2
Restriction on Stock Repurchases. So long as the Borrower shall
have any obligation under this Note, the Borrower shall not without
the Holder's written consent redeem, repurchase or otherwise
acquire (whether for cash or in exchange for property or other
securities or otherwise) in anyone transaction or series of related
transactions any shares of capital stock of the Borrower or any
warrants, rights or options to purchase or acquire any such
shares.

 

2.3 Borrowings. Other than Permitted Indebtedness,
so long as the Borrower shall have any obligation under this Note,
the Borrower shall not, without the Holder's written consent,
create, incur, assume guarantee, endorse, contingently agree to
purchase or otherwise become liable upon the obligation of any
person, firm, partnership, joint venture or corporation, except by
the endorsement of negotiable instruments for deposit or
collection, or suffer to exist any liability for borrowed money,
except (a) borrowings in existence or committed on the date hereof
and of which the Borrower has informed Holder in writing prior to
the date hereof, (b) indebtedness to trade creditors financial
institutions or other Holders incurred in the ordinary course of
business or (c) borrowings, the proceeds of which shall
be
used to repay this
Note.

 

2.4
Sale of Assets. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder's
written consent, sell, lease or otherwise dispose of any
significant portion of its assets outside the ordinary course of
business. Any consent to the disposition of any assets shall be
conditioned on a specified use of the proceeds towards the
repayment ofthis Note.

 

2.5
Advances and Loans. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not, without the
Holder's written consent, lend money, give credit or make advances
to any person, firm, joint venture or corporation, including,
without limitation, officers, directors, employees, subsidiaries
and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which the
Borrower has informed Holder in writing prior to the date hereof,
(b) made in the ordinary course of business or (c) not in excess
of$100,000.

 

2.6
Section 3(a)(9) or 3(a)(l0) Transaction. So long as this Note is
outstanding, the Borrower shall not enter into any transaction or
arrangement structured in accordance with, based upon, or related
or pursuant to, in whole or in part, either Section 3(a)(9) of the
Securities Act (a "3(a)(9) Transaction") or Section 3(a)(IO) of the
Securities Act (a "3(a)(lO) Transaction"). In the event that the
Borrower does enter into, or makes any issuance of Common Stock
related to a 3(a)(9) Transaction or a 3(a)(IO) Transaction while
this note is outstanding, a liquidated damages charge of 25% of the
outstanding principal balance of this Note, but not less than
Fifteen Thousand Dollars $15,000, will be assessed and will become
immediately due and payable to the Holder at its election in the
form of cash payment or addition to the balance of this
Note.

 

2.7
Preservation of Existence, etc. The Borrower shall maintain and
preserve, and cause each of its Subsidiaries to maintain and
preserve, its existence, rights and privileges, and become or
remain, and cause each of its Subsidiaries (other than dormant
Subsidiaries that have no or minimum assets) to become or remain,
duly qualified and in good standing in each jurisdiction in which
the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification
necessary.

 

2.8
Non-circumvention. The Borrower hereby covenants and agrees that
the Borrower will not, by amendment of its Certificate or Articles
of Incorporation or Bylaws, or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Note, and will at all times in good faith
carry out all the provisions of this Note and take all action as
may be required to protect the rights of the Holder.

3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the
principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise.

 

 

 

 

ARTICLE IIl.
EVENTS OF DEFAULT

 

If
any of the following events of default (each, an "Event of
Default") shall occur:

 

3.2 Conversion and the Shares. The Borrower (i)
fails to issue shares of Common Stock to the Holder (or announces
or threatens in writing that it will not honor its obligation to do
so) upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Note, (ii) fails to
transfer or cause its transfer agent to transfer (issue)
(electronically or in certificated form) any certificate for shares
of Common Stock issued to the Holder upon conversion of or
otherwise pursuant to this Note as and when required by this Note,
(iii) directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or
issuing) (electronically or in certificated form) any certificate
for shares of Common Stock to be issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when
required by this Note, (iv) fails 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 shares of Common Stock issued to the Holder
upon conversion of or otherwise pursuant to this Note as and when
required by this Note (or makes any written announcement, statement
or threat that it does not intend to honor the obligations
described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to
honor its obligations shall not be rescinded in writing) for three
(3) business days after the Holder shall have delivered a Notice of
Conversion, (v) fails to remain current in its obligations to its
transfer agent, (vi) causes a conversion of this Note is delayed,
hindered or frustrated due to a balance owed by the Borrower to its
transfer agent, (vii) fails to repay Holder, within forty eight
(48) hours of a demand from the Holder, any amount of funds
advanced by Holder to Borrower's transfer ~gent
in order to process a conversion,
(viii) fails to reserve sufficient amount of shares of common stock
to satisfy the Reserved Amount at all times, (ix) fails to provide
a Rule 144 opinion letter from the Borrower's legal counsel to the
Holder, covering the Holder's resale into the public market of the
respective conversion shares under this Note, within two (2)
business days of the Holder's submission of a Notice of Conversion
to the Borrower (provided that the Holder must request the opinion
from the Borrower at the time that Holder submits the respective
Notice of Conversion and the date of the respective Notice of
Conversion must be on or after the date which follows the date that
the shares may be sold pursuant to Rule 144), and/or (x) an
exemption under Rule 144 is unavailable for the Holder's deposit
into Holder's brokerage account and resale into the public market
of any of the conversion shares under this Note at any time after
the date which is six (6) months after the date that the Holder
funded the Purchase Price under this Note.

 

3.3
Failure to Deliver Transaction Expense Amount. The Borrower fails
to deliver the Transaction Expense Amount (as defined in the
Purchase Agreement) to the Holder within three (3) business days of
the date such amount is due.

 

3.4
Breach of Covenants. The Borrower breaches any material covenant or
other material term or condition contained in this Note and any
collateral documents including but not limited to the Purchase
Agreement and such breach continues for a period often (10) days
after written notice thereof to the Borrower from the
Holder.

 

3.5
Breach of Representations and Warranties. Any representation or
warranty of the Borrower made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection
herewith (including, without limitation, the Purchase Agreement),
shall be false or misleading in any material respect when made and
the breach of which has (or with the passage of time will have) a
material adverse effect on the rights ofthe Holder with respect to
this Note or the Purchase Agreement.

 

3.6
Receiver or Trustee. The Borrower or any subsidiary of the Borrower
shall make an assignment for the benefit of creditors or commence
proceedings for its dissolution, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial
part of its property or business, or such a receiver or trustee
shall otherwise be appointed for the Borrower or for a substantial
part of its property or business without its consent and shall not
be discharged within sixty (60) days after such
appointment.

 

3.7
Judgments. Any money judgment, writ or similar process shall be
entered or filed against the Borrower or any subsidiary of the
Borrower or any of its property or other assets for more than
$50,000, and shall remain unvacated, unbonded or unstated for a
period of twenty (20) days unless otherwise consented to by the
Holder, which consent will not be unreasonably
withheld.

3.8
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings, voluntary or involuntary, for
relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower, or the Borrower admits in writing its
inability to pay its debts generally as they mature, or have filed
against it an involuntary petition for bankruptcy relief, all under
federal or state laws as applicable or the Borrower admits in
writing its inability to pay its debts generally as they mature, or
have filed against it an involuntary petition for bankruptcy
relief, all under international, federal or state laws as
applicable.

 

3.9
Delisting of Common Stock. The Borrower shall fail to maintain the
listing of the Common Stock on at least one of the OTC Pink, OTCQB,
Nasdaq National Market, Nasdaq Small Cap Market, New York Stock
Exchange, NYSE MKT, or an equivalent replacement
exchange

 

3.10
Failure to Comply with the Exchange Act. The Borrower shall fail to
comply with the reporting requirements of the Exchange Act
(including but not limited to becoming delinquent in its filings);
and/or the Borrower shall cease to be subject to the reporting
requirements of the Exchange Act.

 

 

 

 

3.11
Liquidation. Any dissolution, liquidation, or winding up of
Borrower or any substantial portion of its business.

 

3.12 Cessation of Operations. Any cessation of
operations by Borrower or Borrower admits it is otherwise generally
unable to
pay its debts as such debts become
due, provided, however, that any disclosure of the Borrower's
ability to continue as a "going concern" shall not be an admission
that the Borrower cannot pay its debts as they become
due.

 

3.13
Maintenance of Assets. The failure by Borrower to maintain any
material intellectual property rights, personal, real property or
other assets which are necessary to conduct its business (whether
now or in the future), or any disposition or conveyance of any
material asset of the Borrower.

 

3.14
Financial Statement Restatement. The restatement of any financial
statements filed by the Borrower with the SEC for any date or
period from two years prior to the Issue Date of this Note and
until this Note is no longer outstanding, if the result of such
restatement would, by comparison to the undrestated financial
statement, have constituted a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase
Agreement.

 

3.15
Reverse Splits. The Borrower effectuates a reverse split of its
Common Stock without twenty (20) days prior written notice to the
Holder.

 

3.16 Replacement of Transfer Agent.
In
the event that the Borrower proposes
to replace its transfer agent, the Borrower fails to 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.

 

3.17
Cessation of Trading. Any cessation of trading of the Common Stock
on at least one of the OTC Pink, OTCQB, Nasdaq National Market,
Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an
equivalent replacement exchange, and such cessation of trading
shall continue for a period of five consecutive (5) Trading
Days.

 

3.18
Cross-Default. Notwithstanding anything to the contrary contained
in this Note or the other related or companion documents, a breach
or default by the Borrower of any covenant or other term or
condition contained in any of the Other Agreements (as defined
herein), after the passage of all applicable notice and cure or
grace periods, shall, at the option of the Holder, be considered a
default under this Note and the Other Agreements, in which event
the Holder shall be entitled (but in no event required) to apply
all rights and remedies of the Holder under the terms of this Note
and the Other Agreements by reason of a default under said Other
Agreement or hereunder. "Other Agreements" means, collectively, all
agreements and instruments between, among or by: (l) the Borrower,
and, or for the benefit of, (2) the Holder (and any affiliate of
the Holder) or any other third party, including, without
limitation, promissory notes; provided, however, the term "Other
Agreements" shall not include the agreements and instruments
defined as the Documents. Each of the loan transactions will be
cross-defaulted with each other loan transaction and with all other
existing and future debt of Borrower to the Holder. 3.19 Bid Price.
The Borrower shall lose the ''bid'' price for its Common Stock
($0.000 I on the "Ask" with zero market makers on the "Bid" per
Level 2) and/or a market (including the OTC Pink, OTCQB or an
equivalent replacement exchange).

 

3.20
OTC Markets Designation. OTC Markets changes the Borrower's
designation to 'No Information' (Stop Sign), 'Caveat Emptor' (Skull
and Crossbones), or 'OTC', 'Other OTC' or 'Grey Market'
(Exclamation Mark Sign).

 

3.21
Inside Information. Any attempt by the Borrower or its officers,
directors, and/or affiliates to transmit, convey, disclose, or any
actual transmittal, conveyance, or disclosure by the Borrower or
its officers, directors, and/or affiliates of, material non-public
information concerning the Borrower, to the Holder or its
successors and assigns, which is not immediately cured by
Borrower's filing of a Form 8-K pursuant to Resignation FD on that
same date.

 

3.22
Unavailability of Rule 144. If, at any time on or after the date
which is six

(6)
months after the Issue Date, the Holder is unable to (i) obtain a
standard "144 legal opinion letter" from an attorney reasonably
acceptable to the Holder, the Holder's brokerage firm (and
respective clearing firm), and the Borrower's transfer agent in
order to facilitate the Holder's conversion of any portion of the
Note into free trading shares of the Borrower's Common Stock
pursuant to Rule 144, and (ii) thereupon deposit such shares into
the Holder's brokerage account.

 

 

 

 

3.23
Delisting or Suspension of Trading of Common Stock. If, at any time
on or after the Issue Date, the Borrower's Common Stock (i) is
suspended from trading, (ii) halted from trading, andlor (iii)
fails to be quoted or listed (as applicable) on any level of the
OTC Markets, any tier of the NASDAQ Stock Market, the New York
Stock Exchange, or the NYSE American.

 

3.24
Failure to Register. The Borrower fails to (I) file a registration
statement covering the Holder's resale at prevailing market prices
(and not fixed prices) of all of the Common Stock (the
"Registration Statement") underlying the Note and Common Stock
underlying the Warrant (as defined in the Purchase Agreement) (the
"Warrant") within ninety (90)
calendar days following the Issue Date, (ii) cause the Registration
Statement to become effective within one hundred fifty (150)
calendar days following the Issue Date, (iii) cause the
Registration Statement to remain effective until the Note is
extingnished in full and the Warrant is exercised in full, (iv)
comply with the registration rights agreement between the Borrower
and Holder entered into in connection with the issuance of this
Note, and/or (v) immediately amend the Registration Statement or
file a new Registration Statement (and cause such Registration
Statement to become immediately effective) if there are no longer
sufficient shares registered under the initial Registration
Statement for the Holder's resale at prevailing market prices (and
not fixed prices) of all of the Common Stock underlying the Note
and Common Stock underlying the Warrant.

 

UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT
SPECIFIED IN SECTION 3.2, 3.22, AND/OR 3.24 OF THIS NOTE, THE NOTE
SHALL BECOME IMMEDIATELY AND AUTOMATICALLY DUE AND PAYABLE WITHOUT
DEMAND, PRESENTMENT, OR NOTICE AND THE BORROWER SHALL PAY TO THE
HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER,
AN
AMOUNT EQUAL TO: (Y)
THE DEFAULT SUM (AS DEFINED HEREIN)
MULTIPLIED BY (Z)
TWO (2). Upon the occurrence of any
Event of Default specified in Sections 3.1, 3.3, 3.4, 3.5, 3.6,
3.7, 3.8, 3.9, 3.10,
3.11,3.12,3.13,3.14,3.15,3.16.3.17,3.18,3.19,3.20, 3.21, and/or
3.23, the Note shall become immediately and automatically due and
payable without demand, presentment or notice and the Borrower
shall pay to the Holder, in full satisfaction of its obligations
hereunder, an amount equal to (i) 130% times the sum of (w) the
then outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note to the
date of payment (the "Mandatory Prepayment Date") plus (y) Default
Interest, if any, on the amounts referred to in clauses (w) and/or
(x) plus (z) any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof (the then outstanding principal amount of
this Note to the date of payment plus the amounts referred to in
clauses (x), (y) and (z) shall collectively be known as the
"Default Sum") or (ii) at the option of the Holder, the "parity
value" of the Default Sum to be prepaid, where parity value means
(a) the highest number of shares of Common Stock issuable upon
conversion of or otherwise pursuant to such Default Sum in
accordance with Article I, treating the Trading Day immediately
preceding the Mandatory Prepayment Date as the "Conversion Date"
for purposes of determining the lowest applicable Conversion Price,
unless the Default Event arises as a result of a breach in respect
of a specific Conversion Date in which case such Conversion Date
shall be the Conversion Date), multiplied by (b) the highest
Trading Price for the Common Stock during the period beginning on
the date of first occurrence of the Event of Default and ending one
day prior to the Mandatory Prepayment Date (the "Default Amount")
and all other amounts payable hereunder shall immediately become
due and payable, all without demand, presentment or notice, all of
which hereby are expressly waived, together with all costs,
including, without limitation, legal fees and expenses, of
collection, and the Holder shall be entitled to exercise all other
rights and remedies available at law or in equity. Further, if a
breach of Sections 3.9, 3.10 and/or 3.19 occurs or is continuing
after the six (6) month anniversary of this Note, then the
principal amount of the Note shall increase by Fifteen Thousand and
No/IOO United States Dollars ($15,000) and the Holder shall be
entitled to use the lowest Trading Price during the delinquency
period as a base price for the conversion with the Variable
Conversion Price shall be redefined to mean forty percent (40%)
multiplied by the Market Price, subject to adjustment as provided
in this Note. For example, of the lowest Trading Price during the
delinquency period is $0.50 per share and the conversion discount
is 50%, then the Holder may elect to convert future conversions at
$0.25 per share. If this Note is not paid at Maturity Date, then
the outstanding principal due under this Note shall increase by
Fifteen Thousand and No/IOO United States Dollars
($15,000).

The
Holder shall have the right at any time after an Event of Default
occurs under this Note to require the Borrower, to immediately
issue, in lieu of the Default Amount and/or Default Sum, the number
of shares of Common Stock of the Borrower equal to the Default
Amount and/or Default Sum divided by the Conversion Price then in
effect, pursuant to the terms of this Note (including but not
limited to any beneficial ownership limitations contained herein).
This requirement by the Borrower shall automatically apply upon the
occurrence of an Event of Default without the need for any party to
give any notice or take any other action.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its
name by its duly authorized officer as of the date first above
written.

 

GUIDED
THERAPEUTICS, INC.

By:
/s/ Gene
Cartwright

Name:
Gene Cartwright

Title:
Chief Executive Officergthp_ex428

  Exhibit 4.28

 

NEITHER THIS SECURITY NOR THE SECURITIES AS TO
WHICH THIS SECURITY MAY BE EXERCISED HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAYBE PLEDGED
IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON
STOCK PURCHASE WARRANT

GUIDED
THERAPEUTICS, INC.

Warrant Shares: 7,500,000 Date of Issuance:
December 17,
2019 ("Issuance Date")

This COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for value received (in
connection with the issuance
of the $700,000.00 senior secured
convertible promissory note to the Holder (as defined
below) of even date) (the "Note"), Auctus Fund, LLC, a
Delaware limited liability company (including any
permitted and
registered assigns, the "Holder"), is
entitled, upon the terms and subject to the
limitations on exercise and the
conditions hereinafter set forth, at
any time on or after the
date of issuance
hereof, to purchase from Guided Therapeutics, Inc., a Delaware
corporation (the
"Company"), up to
7,500,000 shares
of Common Stock
(as defined below) (the "Warrant Shares")
(whereby such number may be adjusted from time to time pursuant
to the terms and conditions of this Warrant) at the
Exercise Price per share then in
effect. This Warrant
is issued by the Company as of
the date hereof in connection with that certain securities purchase agreement
dated December 17,2019,
by and among the
Company and the Holder
(the "Purchase Agreement").

Capitalized terms used in this Warrant
shall
have the meanings
set forth in the Purchase Agreement
unless otherwise defined in the body of this
Warrant or in Section 12 below. For purposes of this Warrant, the
term "Exercise Price" shall mean $0.20, subject to adjustment as provided herein
(including but not limited to cashless exercise), and the term "Exercise Period" shall mean the period
commencing
on the Issuance Date
and ending on 5:00 p.m. eastern standard
time on the
five-year anniversary thereof.

 

I. EXERCISE OF WARRANT.

(a) Mechanics of Exercise. Subject to the terms and
conditions hereof, the rights represented by this
Warrant may be exercised in whole or in part at any time or times during the
Exercise
Period by delivery of
a written notice, in the form attached hereto as Exhibit A (the
"Exercise Notice"),
of the
Holder's election to exercise this Warrant. The Holder
shall
not be required to
deliver the original Warrant in order to effect an
exercise hereunder. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of
Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares
purchasable hereunder in an amount equal to
the applicable number of Warrant Shares
purchased.
On or before
the second Trading Day (the "Warrant Share Delivery Date") following
the date on which the Holder
sent
the Exercise Notice
to the
Company or the
Company's transfer agent, and upon receipt
by the Company of payment to the
Company
of
an
amount equal to
the applicable Exercise Price multiplied by the
number of Warrant Shares as to which all or a portion of this
Warrant is being exercised (the "Aggregate Exercise
Price" and together
with the Exercise Notice,
the
"Exercise
Delivery Documents")
in cash or by wire transfer of immediately available funds (or by
cashless exercise, in which case there shall be no Aggregate Exercise Price
provided), the Company shall (or direct its transfer agent to)
issue and dispatch by overnight
courier to the address as specified in the
Exercise Notice, a certificate, registered in the
Company's
share register in
the name of the Holder or its designee, for the number
of shares of Common Stock to which the Holder is entitled pursuant
to such exercise (or deliver such shares of Common Stock
in electronic format if requested by the Holder). Upon delivery of
the Exercise Delivery Documents, the Holder shall be deemed
for all corporate purposes to have
become the holder of record of the Warrant Shares with
respect to which this Warrant has been
exercised, irrespective of the date of delivery of the
certificates evidencing such Warrant
Shares. If this
Warrant is submitted
in connection with any exercise and the number of
Warrant Shares represented by
this Warrant submitted
for exercise is greater than
the number of Warrant Shares being acquired upon an
exercise, then the Company shall
as soon as practicable and in no event later than three Business Days after any
exercise and at its own expense, issue a new Warrant (in accordance
with Section
6) representing the right to purchase
the number of Warrant Shares purchasable immediately prior
to such exercise under this
Warrant, less the number of Warrant Shares with respect to which
this

 

 

 

 

1

 

Warrant is exercised.

If the Company
fails to cause
its transfer agent to transmit to the
Holder the respective shares of Common Stock by the respective
Warrant Share Delivery Date, then the Holder will have the right to
rescind such
exercise in Holder's sole
discretion, and such failure
shall be deemed
an event of default under the Note.

If the Market Price of one share of
Common Stock is greater
than the Exercise Price, then, unless there
is an effective
non-stale registration statement of
the Company covering the Holder's immediate resale of the
Warrant Shares at prevailing market prices (and not fixed
prices) without any limitation, the
Holder may elect to
receive Warrant
Shares pursuant to a cashless
exercise, in lieu
of a cash exercise, equal to
the value of this Warrant determined in the manner described below
(or of any portion thereof remaining unexercised) by surrender of
this Warrant and a Notice of Exercise, in which event the
Company shall issue to
Holder a number of Common Stock computed using the following formula:

X=Y
(A-B)

A

Where 

X= the
number of Shares to be
issued to Holder.

Y= 

the number ofW3ITant Shares that the Holder elects
to purchase under this Warrant (at
the date of such calculation).

A= 

the Market Price (at the date
of such calculation).

B= 

Exercise Price
(as adjusted to the date of such calculation).

(b) No Fractional
Shares. No fractional shares
shall be issued upon the exercise of this Warrant as a consequence of
any adjustment pursuant hereto.
All Warrant Shares (including
fractions) issuable upon
exercise of this
Warrant may be aggregated for
purposes of determining whether the exercise would result
in the issuance of any
fractional share. If,
after aggregation, the exercise would
result in the
issuance of a fractional share, the Company shall,
in lieu of issuance of any fractional share,
pay the Holder
otherwise entitled to such fraction a sum in cash
equal to the
product resulting from
multiplying the
then-current fair market value of a
Warrant Share by such fraction.

(c) Holder's Exercise
Limitations. The
Company shall
not effect any exercise of this Warrant, and a Holder shall
not have the right to exercise any
portion of this Warrant, to the extent that after giving
effect to issuance
of Warrant Shares upon
exercise as set
forth on the applicable Notice of Exercise, the Holder (together with the
Holder's Affiliates, and any other
persons acting as a group together with the Holder or any of the
Holder's Affiliates), 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 the Holder and its
Affiliates shall include
the number of shares
of Common Stock issuable upon exercise of this
Warrant with respect
to which such
determination is being made,
but shall exclude
the number of shares of Common Stock which would be issuable upon

(i) exercise of
the remaining, non-exercised portion of this
Warrant beneficially owned by the
Holder or any of
its Affiliates and (ii) exercise or conversion
of the unexercised or
non-converted portion
of any other
securities of the
Company (including without limitation any other Common Stock Equivalents) subject to a
limitation on conversion or exercise analogous
to the limitation contained
herein beneficially owned by the Holder or any
of its Affiliates. Except as set
forth in the preceding
sentence, for purposes of this
paragraph (d),
beneficial ownership shall be
calculated in accordance with Section 13(
d) of the
Exchange Act, it being acknowledged by the Holder
that the Company is not
representing to the Holder
that such calculation is in
compliance with Section 13{d) of the
Exchange Act and the Holder is solely
responsible for any
schedules required
to be filed in accordance therewith. To
the extent that the limitation
contained in this paragraph applies, the
determination of whether
this Warrant is
exercisable (in
relation to
other securities
owned by the Holder together
with any affiliates) and of which portion of this
Warrant is exercisable
shall be in the
sole discretion
of the Holder, and
the submission of a
Notice of Exercise shall
be deemed to be the
Holder's determination of
whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each
case subject
to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such
determination.

For purposes of this
paragraph, in determining the number of outstanding shares
of Common Stock, a Holder may rely on the
number of outstanding shares of Common Stock as reflected
in (A) the Company's most
recent periodic
or annual report filed with the Commission, as the case may
be, (8)
a more recent public announcement by the Company or
(C) a more recent written notice by the
Company or its transfer agent setting forth the number of
shares of Common Stock
outstanding.
Upon the
request of a
Holder, the Company shall within two Trading
Days confirm to the 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 Company, including this Warrant, by the Holder or
its affiliates 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 exercise
of this Warrant.
The limitations
contained in this paragraph shall apply
to a successor Holder of
this Warrant.

 

 

2

 

 

2. ADJUSTMENTS. The Exercise Price and the number of
Warrant Shares shall
be adjusted from
time to time as
follows:

(a) Distribution
of Assets.
If the
Company shall
declare
or
make
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 or other similar transaction) (a "Distribution"), at any time after the issuance of
this Warrant, then, in each
such case:

(i) any Exercise Price in effect immediately prior to the
close of business on the record date fixed for the
determination of holders of shares of Common Stock entitled
to
receive the
Distribution shall be reduced,
effective
as
of
the close
of business on
such record
date, to
a price
determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale Price of the shares
of
Common
Stock
on
the
Trading
Day
immediately preceding such record date
minus
the value
of
the
Distribution (as determined in good faith by the Company's Board of Directors)
applicable to
one share of Common Stock, and (ii)
the
denominator
of
which shall be the
Closing Sale Price of the shares of Common Stock on the
Trading Day immediately preceding such
record date;and

(ii) the number of Warrant
Shares shall be increased to
a number of shares equal to
the number
of shares of Common
Stock obtainable immediately prior to
the close of business on the record date fixed for the
determination of holders of shares of Common
Stock
entitled
to receive the
Distribution multiplied by the reciprocal of the fraction
set forth
in the
immediately
preceding
clause (i);provided, however, that in the event that
the Distribution is of shares of common stock of a company (other
than the Company)
whose common stock is traded on
a national securities exchange or a national
automated
quotation
system ("Other
Shares of
Common
Stock"), then the Holder may elect to
receive a warrant to purchase
Other
Shares of
Common Stock
in lieu of an
increase
in the number
of
Warrant Shares, the
terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of
shares
of Other Shares of
Common Stock that would have been payable to the Holder pursuant to
the Distribution had the Holder exercised this Warrant immediately
prior to such record date and with an aggregate exercise price equal to the product of the
amount by which the exercise price of this Warrant was decreased with
respect
to the Distribution
pursuant to the terms of the immediately
preceding clause (i) and the number of Warrant Shares calculated in
accordance with the first part of this clause
(ii).

(b) Anti-Dilution
Adjustments to
Exercise Price. If the Company
or any Subsidiary
thereof, as applicable, at any time while
this Warrant is outstanding,
shall sell or grant any option
to purchase, or sell or
grant any right to reprice, or
otherwise dispose of or
issue (or announce
any offer, sale, grant or any option to
purchase or other disposition) any Common Stock or securities entitling any person
or entity to
acquire shares of Common Stock (upon conversion, exercise or otherwise) during the period beginning on the
Issuance Date and ending
on December 17,2021 (provided,
however, that
December 17,2021 shall automatically be replaced with December 17,2024 if an
Event of Default (as defined in
the Note) occurs under the Note), at an
effective price per share less
than the then Exercise
Price (such lower
price, the "Base Share 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, elimination of an
applicable floor price for any reason in the future
(including but not limited to the
passage of time or satisfaction of certain condition(s» , 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 or
potentially entitled to receive shares of Common Stock
at an effective
price per share which is less
than the Exercise Price
at any time while
such Common Stock or
Common Stock Equivalents
are in existence, such issuance shall be
deemed to have occurred
for less than the Exercise Price
on such date of the Dilutive Issuance (regardless of whether the Common Stock or
Common Stock Equivalents
are (i) subsequently
redeemed or retired by the
Company after the date of the Dilutive Issuance or (ii) actually converted or exercised at
such Base Share
Price), then the Exercise Price shall be reduced at the option of the Holder and only
reduced to equal the Base Share Price, and the
number of Warrant Shares issuable hereunder shall be
increased such
that the aggregate Exercise Price payable hereunder, after taking
into account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such
adjustment (for the
avoidance of doubt, the aggregate
Exercise Price prior to such
adjustment is calculated as
follows: the total number of Warrant Shares issuable upon
exercise of this
Warrant immediately prior to
such adjustment (without regard
to the Beneficial Ownership Limitation) multiplied by the Exercise Price
in effect immediately prior to such adjustment)_ By way of
example, if E is the
total number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to such
adjustment (without
regard to the Beneficial Ownership
Limitation),
F is the Exercise Price
in effect immediately prior to such adjustment, and G is the
Base Share Price,
the adjustment to the number
of Warrant Shares can be expressed in the following formula: Total
number of Warrant Shares after such Dilutive
Issuance =
the number obtained from dividing [E x
F] by G.
Such adjustment
shall be made whenever such Common Stock
or Common Stock Equivalents are issued, regardless of whether the Common Stock
or Common Stock Equivalents are (i) subsequently redeemed
or retired by the
Company after the date of the
Dilutive Issuance or (ii) actually converted or exercised at such Base Share Price by the bolder
thereof (for the avoidance of doubt, the Holder may
utilize the Base Share Price even if
the Company did
not actually issue shares of its
common stock at the Base Share Price under the respective
Common stock Equivalents)_ The Company shall notify the Holder in writing, no
later than the
Trading Day following the issuance of
any Common Stock or Common Stock Equivalents subject to this Section 2(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 Company provides a Dilutive Issuance Notice
pursuant to this Section 2(b), upon the Occurrence of any
Dilutive Issuance,
after the date of
such Dilutive Issuance the Holder is
entitled to receive a number of
Warrant Shares based
upon the Base Share
Price regardless
of whether the Holder accurately refers to the Base Share
Price in the Notice of Exercise.

(c) Subdivision or Combination of
Common Stock. If the Company at
any time on or after
the Issuance Date subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one
or more classes of its outstanding shares
of Common Stock
into a greater number of shares, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of Warrant Shares will be
proportionately increased. If
the Company at any time on or after the Issuance Date
combines (by combination, reverse stock split or
otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares,
the Exercise Price in
effect immediately prior to
such combination
will be proportionately increased and the number of Warrant Shares
will be proportionately decreased.
Any adjustment under this Section 2(
c) shall become effective at the close of business on the date the
subdivision or combination becomes effective. Each such adjustment
of the Exercise
Price shall be calculated
to the nearest one-hundredth of a cent. Such adjustment shall be
made successively whenever any event covered by
this Section 2(c) shall occur.

 

 

3

 

 

3. FUNDAMENTAL TRANSACTIONS. If, at any
time while this
Warrant is outstanding, (i) the Company effects any merger of the
Company with or into another entity
and the Company
is not the surviving entity (such
surviving entity,
the "Successor
Entity"),
(ii) the Company effects any
sale of all or
substantially all of its
assets in one or
a series of related
transactions, (iii)
any tender offer or exchange offer (whether by the Company
or by another
individual or entity,
and approved by the
Company) is completed pursuant to which holders of Common Stock
are permitted
to tender or exchange
their shares of Common
Stock for other securities, cash or property and the holders
of at least
50% of the Common Stock accept such offer, or (iv) the
Company effects any reclassification 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 (other
than as a result of a subdivision or
combination of shares of Common Stock) (in any such
case, a "Fundamental Transaction"), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive the number of shares of
Common Stock of the Successor Entity or of the Company and any
additional consideration (the
"Alternate Consideration") receivable
upon or as a result
of such
reorganization, reclassification,
merger, consolidation or disposition of assets
by a holder of the number of shares
of Common Stock for which this
Warrant is exercisable immediately prior to such event
(disregarding any limitation on exercise contained herein
solely for
the purpose of such determination). For
purposes of any such exercise, the
determination of the Exercise 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 Company shall apportion the
Exercise
Price among the
Alternate Consideration in a reasonable
manner
reflecting the
relative value of any different components of the Alternate
Consideration. [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 exercise of
this Warrant following
such Fundamental Transaction.
To the extent necessary to effectuate the
foregoing provisions, any
Successor Entity in
such
Fundamental Transaction shall
issue to the Holder a new warrant consistent with
the foregoing provisions and
evidencing the
Holder's right to exercise such
warrant into
Alternate
Consideration.

4. NON-CIRCUMVENTION. The
Company covenants and agrees that it will
not, by amendment of its certificate of incorporation, bylaws or
through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, and will
at
all times in
good faith carry out all the provisions of this Warrant and take all action
as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect, (ii) shall
take all such actions as may be necessary or
appropriate in order that the Company may validly and
legally
issue fully paid and
non-assessable shares of Common Stock upon
the
exercise of this
Warrant, and (iii) shall, for so long as this Warrant is
outstanding, have authorized
and reserved, free from preemptive rights, ten times the number
of shares of Common Stock that is actually
issuable upon full exercise of
the Warrant (based 00 the Exercise Price in
effect from time
to time, and without regard to any
limitations on exercise).

5. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER.
Except as otherwise specifically provided herein, this
Warrant, io and of itself,
shall not entitle the Holder to
any voting rights or other rights as a stockholder of
the Company. In addition, nothing contained
in this Warrant shall
be construed as
imposing any
liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the
Company, whether such
liabilities
are asserted by the Company or by
creditors of
the Company.

6.
REISSUANCE.

(a) Lost, Stolen
or Mutilated Warrant. If
this Warrant is lost,
stolen, mutilated or destroyed, the
Company will, on such
terms as to indemnity
or otherwise as it may reasonably impose (which
shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen,
mutilated or destroyed.

(b) Issuance
of New
Warrants. Whenever the
Company is
required to issue
a new Warrant pursuant to the
terms of this
Warrant, such new Warrant shall be of
like tenor with this Warrant, and
shall have an
issuance date, as indicated on the
face of such new
Warrant which is the same as
the Issuance Date.

 

1. TRANSFER.
This Warrant shall be binding upon the
Company and its successors and
assigns, and shall inure to be the benefit of
the Holder and its successors and assigns. Notwithstanding anything
to the contrary herein, the rights, interests or obligations of
the Company hereunder may not be assigned, by operation of law
or otherwise, in whole or in part, by the Company without the
prior signed written
consent of the Holder, which consent may be withheld at
the sole discretion of the Holder (any such assignment
or transfer shall
be null and void if the
Company does not
obtain the prior signed written consent of the Holder). This
Warrant or any of the severable rights and obligations
inuring to the
benefit of or to be performed by Holder hereunder may be assigned
by Holder to
a third party, in whole
or in part, without the need to obtain the
Company's consent thereto.

2. NOTICES.
Whenever notice is required to be given under
this Warrant, unless otherwise provided herein, such notice
shall be given in accordance with the
notice provisions contained in the Purchase Agreement. The Company
shall provide
the Holder with prompt written
notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail,
the calculation
of such adjustment and (ii) at least
20 days prior to the date
on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution
upon the shares
of Common
Stock, (B) with respect to any grants,
issuances or sales of any stock or other securities directly or
indirectly convertible into or exercisable or exchangeable
for shares of
Common Stock or other property, pro
rata to the holders of shares of
Common Stock or (C) for determining rights to vote with
respect to any
Fundamental Transaction, dissolution or liquidation, provided in
each case that
such information shall be made known
to the public prior
to or in conjunction
with such notice being provided to the Holder.

 

 

4

 

3. AMENDMENT
AND WAIVER. The terms of this Warrant may
be amended or waived (either generally
or in a particular
instance and either retroactively or
prospectively) only with the written consent of the
Company and the Holder. 
4. GOVERNING LAW
AND VENUE. This Warrant 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 Warrant shall be
brought only in the state courts
located in the Commonwealth of
Massachusetts or in the
federal courts located in the
Commonwealth of
Massachusetts. The parties
to this Warrant 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 a forum
non conveniens.
THE BORROWER 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 IN CONNECTION WITH
OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION
CONTEMPLATED
HEREBY.
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 Warrant 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.

II. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to
all of the terms and conditions
contained herein.

12. CERTAIN DEFINITIONS. For purposes of this
Warrant, the
following terms shall have the
following meanings:

(a) ''Nasdaq'' means www.Nasdaq.com.

(b) "Closing Sale Price" means,
for any security as of any
date, (i) the last
closing trade
price for such
security on the Principal
Market, as reported by Nasdaq, or,
if the Principal Market begins to
operate on an extended hours basis and does not designate the closing
trade price,
then the last trade price of such
security prior to 4:00
p.m., New York time, as
reported by Nasdaq, or (ii) if
the foregoing does not
apply, the last trade price of such security in
the over-the-counter market for
such security as
reported by Nasdaq, or
(iii) if no last trade price
is reported for such
security by Nasdaq, the average
of the bid and
ask prices of any market makers for such security as reported by the OTC
Markets. If the Closing Sale Price cannot be calculated for
a security on a
particular date on any of the
foregoing bases,
the Closing Sale
Price of such
security on such date shall be the
fair market value as mutually
determined hy the Company
and the Holder. All such determinations to be appropriately adjusted for
any stock dividend, stock split, stock combination or
other similar transaction
during the applicable
calculation period.

 

(c) "Common Stock" means the Company's common stock, and any
other class of securities into which such securities may hereafter be reclassified or
changed.

(d) "Common Stock Equivalents" means any
securities of the Company that 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.

(e) "Dilutive Issuance" is any issuance of Common Stock or Common Stock
Equivalents described in Section 2(b)
above;provided, however,
that a Dilutive
Issuance shall not include any
Exempt Issuance.

(t)
"Exempt Issuance" means
the issuance of (i) shares of Common Stock or
options to employees,
officers, or directors
of the Company
pursuant to any stock or option plan duly adopted by a
majority of the
non-employee members of the
Board of Directors of the Company or a
majority of the
members of a committee of non-employee directors established for such purpose,
and (ii) shares
of Common Stock issued pursuant
to real property leasing arrangement
from a bank approved
by the Board
of Directors of the Company; (iii)
securities upon the conversion
of the Note, and (iv)
securities issued
pursuant to acquisitions or
strategic transactions approved
by a majority
of the disinterested directors
of the Company.

(g) "Principal Market" means the primary
national securities exchange on which the Common
Stock is then traded.

(h) "Market
Price" means
the highest traded price
of the Common Stock on the
Trading Day immediately
prior to the date of the
respective Exercise Notice.

(i) "Trading Day" means (i) any
day on which the Common Stock is listed or
quoted and traded on its
Principal Market, (ii)
if the Common Stock is not then listed or
quoted and traded on any national securities exchange,
then a day on which trading occurs on any over-the-counter markets,
or (iii) if trading does not occur on the over-the-counter markets,
any Business
Day.

 

* *
* * * * *

 

5

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be
duly executed as
of the Issuance Date set forth
above.

 

 

GUIDED THERAPEUTICS, INC.

Name: Gene Cartwright

Title:
Chief Executive Officer

 

 

 

6

 

EXHIBIT
A

EXERCISE NOTICE

(To be executed by the registered holder to
exercise this Common
Stock Purchase
Warrant)

THE UNDERSIGNED holder hereby
exercises the right to purchase of the shares of
Common Stock ("Warrant Shares") of Guided Therapeutics, loc.,
a Delaware corporation (the "Company"), evidenced by
the attached copy of
the Common Stock
Purchase Warrant (the "Warrant"). Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in
the Warrant.

1. Form
of Exercise Price. The Holder intends that payment of the
Exercise Price shall be
made as (check
one):

a. o
a cash exercise with respect to _
_ _ _
_ ___ Warrant
Shares; or

b. o
by cashless exercise
pursuant to the Warrant.

 

1. Payment
of Exercise Price. If cash exercise is selected above, the holder shall pay the
applicable Aggregate Exercise Price in the sum
of$ to the Company in
accordance with the terms of the
Warrant.

2. Delivery
of Warrant Shares. The Company
shall deliver
to the holder ____
_ _ _
_ Warrant Shares in accordance with the terms of
the Warrant.

 

Date:

(Print Name of
Registered Holder)

By: Name:

Title: ____ _________ _ _ _ EXHIBITB

 

 

7

 

ASSIGNMENT OF WARRANT

(To be
signed only upon
authorized transfer of the
Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto the
right to purchase shares
of common stock of
Guided Therapeutics,
Inc., to which the within
Common Stock
Purchase Warrant relates and appoints , as attorney-in-fact, to
transfer said
right on the hooks of
Guided Therapeutics, Inc. with full power of substitution and re-substitution in the premises. By
accepting such transfer,
the transferee has agreed to
be bound in all
respects by the terms and conditions
of the within Warrant.

Dated:

(Signature) *

(Name)

(Address)

(Social Security or Tax Identification No.)

● The signature on this
Assignment of
Warrant must correspond to the name as written upon the face of
the Common Stock Purchase Warrant
in
every
particular without
alteration or enlargement or any change whatsoever.
When signing
on behalf of a corporation, partnership, trust
or other
entity, please
indicate your position(s) and title(s)
with such
entity.

 

 

 

 

 

8

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