Document:

gtph_ex1023

 Exhibit 10.23

 

 

 SECURITIES PURCHASE
AGREEMENT

 

This SECURITIES PURCHASE
AGREEMENT (the "Agreement'),
dated as of July 3,
2018, by
and between GUIDED THERAPEUTICS,
INC., a Delaware corporation, with headquarters located at 5835 Peachtree Comers East, Suite D, Norcross, GA 30092
(the "Company"), and AUCTUS FUND, LLC,
a Delaware limited liability company, with its address at 545 Boylston Street,
2nd Floor, Boston, MA 02116 (the "Buyer").

 

WHEREAS:

 

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

 

B. Buyer desires to purchase and the
Company desires to
issue and sell, upon the terms and conditions set
forth in this Agreement the
12% convertible note of
the Company, in
the form attached hereto as
Exhibit A., in
the aggregate principal amount of US$89,250.00
(together with
any note(s) issued in replacement thereof or as
a dividend thereon
or otherwise with respect thereto in accordance with the
term thereof; the
''Note''), convertible into shares of
common stock,
$0.00 I par
value per share, of the Company
(the ''Common Stock'), upon
the terms and subject to
the limitations and conditions
set forth in such
Note.

 

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

 

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

 

1. PURCHASE AND SALE OF NOTE.

 

a. Purchase of Note. On the Closing
Date (as defined below),
the Company shall issue and sell to the Buyer
and the Buyer
agrees to purchase from the
Company such principal amount of Note as is set forth
immediately below the
Buyer's name on the signature
pages hereto.

 

b. Form of
Payment. On the
Closing Date (as defined below), (0 the Buyer shall
pay the purchase price
for the Note to be issued and
sold to it at the
Closing (as defined
below) (the ''Purchase
Price') by wire transfer of immediately available
funds to the Company, in
accordance with the Company's written wiring instructions,
against delivery
of the Note
in the principal amount equal to the Purchase Price
as is set forth immediately below the Buyer's
name on the signature pages hereto, and (n) the Company shall deliver such
duly executed Note
on behalf of the
Company, to the Buyer,
against delivery
of such Purchase Price.

 

c. Closing Date.
Subject to the satisfaction (or written waiver) of the
conditions thereto set
forth in Section 7 and Section 8
below, the date and time
of the issuance and sale of the Note pursuant
to this Agreement (the
"Closing Date') shall be 12:00
noon, Eastern Standard Time on or about July 3,
2018, or such
other mutually agreed upon time.
The closing of
the transactions contemplated by
this Agreement (the "Closing')
shall occur on the Closing Date
at such location
as may be agreed to by
the parties.

 

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

 

a. Investment
Purpose. As of
the date hereof, the Buyer is
purchasing the Note and
the shares of Common Stock issuable
upon conversion of or
otherwise pursuant to the
Note (including, without limitation, such additional
shares of
Common Stock, if
any, as are issuable
(i) on account of
interest on the Note (ii)
as a result of the events
described in Sections
1.3 and 1.4(g)
of the Note or
(iii) in payment of the Standard Liquidated Damages Amount
(as defined in Section 2(t)
below) pursuant
to this Agreement, such shares of Common Stock
being collectively referred to herein as the ''Conversion Shares" and,
collectively with
the Note, the
"Securities') fur its own account and
not with a present view towards the public sale or
distribution thereof, except pursuant to sales registered or
exempted from registration
under the 1933 Act
and Buyer is able to
bear the economic risk
of holding the
Conversion Shares for an
indefinite period (including total loss of
its investment),
and has sufficient
knowledge and
experience in financial and business matters so
as to be capable
of evaluating the merits and risk of
its investment.
provided, however, that
by making the representations
herein, the Buyer
does not
agree to hold any of the
Securities fur any minimum or other specific term and
reserves the right to dispose
of the Securities
at any time in
accordance with or pursuant to a registration statement or
an exemption under the
1933 Act.

 

 

1

 

 

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

 

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

 

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

 

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

 

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

 

g. Legends. The Buyer understands that
the Note and, until such time as the
Conversion Shares have been registered under the 1933 Act may
be sold pursuant to
Rule 144 or Regulation S without any restriction as to the number
of securities
as of a particular date that can
then be immediately sold, the Conversion Shares may
bear a restrictive legend
in substantially the following form
(and a stop-transfer order may be placed against transfer
of the certi1icates for such
Securities):

 

"NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED

(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRA
NON 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 ACCEPT ABLE FORM, THAT REGISTRATION IS
NOT SUREDUNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER DEALER OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES WITH A FINANCIAL INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT."

 

The legend set forth
above shall be
removed and the
Company shall issue certi1icate without
such legend to the holder of any
Security upon which it is stamped,
if; unless otherwise
required by applicable state securities laws, (a)
such Security
is registered for sale
under an effective registration statement
filed under the
1933 Act or
otherwise may be
sold pursuant to
Rule 144 or Regulation S without any restriction as to the
number of securities as of a
particular date
that can then be
immediately sold, or (b) such holder provides the Company with
an opinion of
counsel reasonably satisfactory to the Borrower's transfer
agent, in form, substance and scope
customary for opinions
of counsel in comparable transactions, to the effect that
public sale or
transfer of such
Security may be made without
registration under
the 1933
Act, which opinion shall
be accepted by
the Company
so that the sale or
transfer is effected the
Buyer agrees to sell all Securities, including those
represented by
a certi1icate(s) from which
the legend has been
removed, in compliance with applicable prospectus delivery
requirements,
if any.

 

 

2

 

 

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

 

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

 

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

 

a. Organization and Qualification The
Company and each of its Subsidiaries (as defined
below), if any, is
a corporation duly organized,
validly existing
and in good standing under
the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and
other) to own, lease,
use and operate its properties and to
carry on its business as
and where now owned, leased, used, operated
and conducted. The Company and
each of its Subsidiaries is duly qualified as a foreign
corporation to do
business and is in
good standing
in every jurisdiction in which its ownership or use
of property or the nature of the business conducted
by it makes such
qualification necessary except where
the fui1ure to be so qualified or in good standing would
not have a Material Adverse
Effect (except with respect to
the re-registration of the Company's ISO certification and CE
Mark). "Material Adverse Effect" means
any material adverse effect on the business, operations, assets,
financial condition or prospects of the Company or its
Subsidiaries, if any,
taken as a whole, or on the
transactions contemplated hereby
or by the agreements or instruments to
be entered into in connection herewith provided, however, that 'Material
Adverse Effect"
shall not
include any event, occurrence, fact,
condition or change, directly or indirectly, arising out of or
attributable to: (i)
general economic or
political conditions; (iI) conditions generally affecting
the industries in
which the Company operates; (iii) any changes in financial
banking or securities markets in genera~ including any disruption
thereof and any decline in the price of any security or any market
index or any change in prevailing interest rates; (iv) acts of war (whether or not declared),
banned hostilities
or terrorism,
or the escalation or worsening
thereof, (v)
any action required or permitted by
this Agreement or
any action taken (or omitted to
be taken) with the written consent of or at the
written request of Buyer; (vi) any matter of which Buyer is aware
on the date hereof, (vii) any
changes in applicable Laws or accounting rules
(including GAAP) or the
enforcement, implementation or
interpretation thereof, (viii) the
announcement, pendency or completion of the transactions
contemplated by this Agreement, including losses or
threatened losses of employees, customers, suppliers,
distributors or others
having relationships with the Company;(ix)
any natural or man-made disaster
or acts of God; or (x) any failure by the Company to meet any
internal or published projections, forecasts or revenue or
earnings predictions (provided that the underlying
causes of such
failures (subject to the other
provisions of
this definition) shall not be
excluded). "Subsidiaries" means any corporation or
other organization, whether
incorporated or
unincorporated,
in which the Company owns, directly or indirectly, any equity or
other ownership interest.

 

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

 

c. Capitalization. As of the date hereof; the authorized capital stock of the Company
consist of (D 1,000,000,000 shares of Common Stock,
of which approximately 252,511,663 shares
are issued and outstanding;and (n)
5,000,000 shares of preferred
stock, of which approximately 5,944.5 are issued and outstanding.
Except No shares are reserved for issuance pursuant to the Company's stock
option plans,
no shares are
reserved for issuance
pursuant to securities (other than
the Note and
any other convertible promissory note issued to the Buyer) exercisable for,
or convertible into
or exchangeable fur
shares of Common Stock and 1
share (initially) is
reserved for issuance upon conversion of the Note. All of such
outstanding shares of capital stock
are, or upon
issuance will be, duly
authorized, validly issued, fully paid and non-assessable.
No shares of capital stock of
the Company are subject
to preemptive rights
or any other similar rights of the
shareholders of the
Company or any liens or
encumbrances imposed through
the actions or failure to act of the
Company. As of the effective
date of this Agreement, (i) there are no
outstanding options,
warrants, scrip, rights to subscribe for,
puts, calls, rights of first
refusal, agreements, understandings, claim;or other
commitments or rights of
any character whatsoever relating to, or
securities or rights
convertible into or exchangeable for any shares of capital stock
of the Company or any
of its Subsidiaries, or arrangements by
which the Company
or any of its Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any
of its Subsidiaries, (n) there are no agreements or arrangements under which
the Company or
any of its
Subsidiaries i<;obligated to register
the sale of any of its
or their securities under the 1933 Act and
(iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company
(or in any agreement providing rights to security holders) that
will be triggered by the issuance of the Note or
the Conversion
Shares. The
Company has
filed in its SEC Documents true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof
(''Certificate of Incorporation'), the Company's
By-laws, as in effect on the date
hereof (the "By-laws''),
and the terms of all securities
convertible into
or exercisable fur Common Stock of
the Company and the material rights of the holders
thereof in
respect thereto. The
Company shall provide the Buyer with a written update of this
representation signed
by the Company's Chief Executive on behalf of the
Company as of the Closing Date.

 

 

3

 

 

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

 

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

 

f No Conflicts. The execution, delivery
and performance of this Agreement and the Note
by the Company and
the consummation by
the Company of
the transactions contemplated hereby and thereby
(including, without
limitation, the issuance and reservation for issuance of
the Conversion Shares)
will not (i) conflict with or result in a violation
of any provision of the Certificate of Incorporation or
By-laws, or (ii)
violate or conflict with, or result in
a breach of any provision of;
or constitutes a default (or an event which with
notice or lapse of time or both could become
a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of; any
agreement,
indenture, patent, patent
license or instrument to which the Company or
any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws
and regulations and regulations of any self-regulatory
organizations to which the Company or
its securities are subject) applicable to the Company or
any of its Subsidiaries or by which any
property or asset of the
Company or any
of its Subsidiaries is bound or affected
(except for such
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its
Subsidiaries is in violation of its Certificate of Incorporation,
By-laws or other organizational documents and neither the
Company nor any of its Subsidiaries is in default (and no
event has occurred which with
notice or lapse of
time or both
could put the Company or any of its Subsidiaries
in default) under, and
neither the Company
nor any of its Subsidiaries
bas taken any
action or failed to take any
action that would give to others any rights of termination, amendment, acceleration
or cancellation of
any agreement, indenture or instrument
to which the Company
or any of its Subsidiaries is a party or
by which any
property or assets of
the Company or any of its Subsidiaries is bound or affected,
except for possible defaults as
would not, individually
or in the aggregate, have
a Material Adverse Effect.
The businesses of the
Company and its Subsidiaries, if
any, are not being conducted,
and shall not
be conducted so long as
the Buyer owns any of
the Securities, in
violation of any
law, ordinance or regulation of any governmental entity, the result of
which would have a Material Adverse Effect. Except
as specifically
contemplated by this Agreement and as required under the 1933 Act and any applicable state
securities laws, the
Company is not required to obtain any consent, authorization or order o( or make any filing or registration with, any court, governmental agency,
regulatory agency, sell'-regulatory
organization or stock market or any third party
in order for it to execute, deliver or perform
any of its obligations under this Agreement, the Note in
accordance with the terms hereof or thereof or
to issue and sell the Note in
accordance with the terms hereof and to issue the Conversion Shares upon conversion of
the Note. All consents, authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence have
been obtained or elected on or
prior to the date hereof.
The Company is
not in violation of the listing
requirements of the OTC Pink (the "OTC Pink"), the OTCQB or any
similar quotation system, and does
not reasonably anticipate that the Common Stock
will be delisted by the OTC Pink,
the OTCQB or any similar
quotation system, in the
foreseeable future nor are the Company's securities "chilled" by DTC.
The Company and its
Subsidiaries are unaware
of any facts or circumstances which might give rise to any
of the foregoing.

 

g. SEC
Documents;Financial Statements. The
Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the
"1934 Act) (all
of the foregoing
filed prior to
the date hereof
and all exhibits included
therein and financial
statements and schedules
thereto and documents (other than exhibits to
such documents) incorporated by reference therein,
being hereinafter referred to herein as the ''SEC Documents"). The Company has
delivered to the Buyer
true and complete copies
of the SEC
Documents, except for such exhibits and incorporated documents. As of their
respective dates, the
SEC Documents complied in all material respects with the
requirements of
the 1934 Act and the
rules and regulations of the
SEC promulgated thereunder applicable to the
SEC DocW11ents, and
none of the SEC
Documents, at the time
they were filed with the SEC, contained any untrue statement of a material fact or omitted
to state
a material fact required to be
stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading. None of
the statements made in any such
SEC Documents
is, or
has been,
required to be amended
or updated under
applicable law (except
for such statements as have
been amended or
updated in subsequent filings prior the date hereof).
As of their respective dates, the financial statements of the Company
included in the
SEC Documents complied as to form in all material respects with applicable accounting requirements
and the published rules
and regulations of the SEC
with respect
thereto. Such financial statements complied with all respects with United
States generally
accepted accounting principles
("GAAP'), consistently
applied, during
the periods involved, except as may otherwise be specified
in such financial statements
or the notes thereto
and except that unaudited financial statements may not contain
all footnotes required by
GAAP, and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as of
the dates thereof and
the consolidated results
of their operations and cash flows for the periods then ended (subject, in the case
of unaudited
statements, to normal year-end audit adjustments). Except as set
forth in the financial
statements of the Company
included in the
SEC Documents, the Company has no
liabilities,
contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to March 31,
2018, and (ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under
GAAP to be reflected in such financial statements, which, individually or in
the aggregate, are not
material to the
financial condition or
operating results
of the Company.
The Company is subject to the
reporting requirements of the 1934 Act. For the avoidance
of doubt, filing
of the documents required in this Section 3(g)
via the SEC's
Electronic Data Gathering, Analysis, and Retrieval system ("EDGAR') shall
satisfy all delivery requirements of this Section 3(g).

 

 

4

 

 

h Absence of
Certain Changes. Since
March 31, 2018,
there has been
no Material Adverse Effect
and the Company has not incurred
any liabilities
(contingent or
otherwise) other than
(A) trade payables and
accrued expenses incurred in
the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to
GAAP or disclosed in
filings made with the SEC.
Except fur the
issuance of the Securities
contemplated by
this Agreement, no event, liability, fact, circumstance, occurrence
or development has occurred or
exists or is reasonably
expected to occur or
exist with respect to
the Company or its Subsidiaries
or their respective
businesses, prospects, properties, operations,
assets or financial condition that would be required to
be disclosed by the
Company under applicable securities laws
at the time this representation is made that has
not been publicly disclosed
prior to the date of
this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

5

 

 

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

 

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

 

r. Permits; Compliance. Except as would
not reasonably
be expected to have Material
Adverse Effect, the Company and each of its Subsidiaries is
in possession of all
franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders necessary to
own, lease and
operate its properties and to carry on
its business as it is now being conducted
(collectively,
!be ''Company
Permits'), and there
is no action pending or, to
the knowledge of the
Company, threatened
regarding suspension or
cancellation of any of the
Company Permits.
Neither the Company
nor any of its Subsidiaries
is in conflict with, or in default or
violation o~ any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not
reasonably be expected to have a
Material Adverse Effect. Since March 31, 2018, neither the
Company nor any of its Subsidiaries has received any notification with respect to possible
conflicts, defaults or violations of applicable laws, except
fur notices relating to
possible conflicts, defaults or
violations, which conflicts, defaults or
violations would not have a Material Adverse Effect.

 

s.
Environmental Matters.

 

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

 

(ii) Other than those that are or were
stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are
contained on or about
any real property currently owned, leased or used by the Company or any of its
Subsidiaries, and no Hazardous Materials were released on or
about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was
owned, leased
or used by the Company
or any of its Subsidiaries, except in the normal course of
the Company's or any of its
Subsidiaries'
business.
(iii) To the Company's knowledge, there
are no underground storage tanks
on or under any real property owned, leased or used by the
Company or any of
its Subsidiaries that are not in compliance with applicable
law.

 

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

 

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

 

v. Foreign Corrupt Practices. Except as would not be reasonably expected to
have a Material Adverse Effect, neither the Company, nor
any of its Subsidiaries, nor any director, officer, agent,
employee or other person
acting on behalf of the Company or any
Subsidiary has,
in the course of his actions
fur, or on behalf of; the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; made any
direct or indirect unlawful payment
to any foreign or domestic government official or emp1oyee
from corporate
funds;violated or
is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any
bribe, rebate,
payoff; influence payment, kickback
or other unlawful payment to any foreign or domestic
government official or employee.

 

 

6

 

 

w. Solvency. The Company (after gIVII1g effect to the transactions contemplated by this
Agreement) is solvent
G&, its assets have a
fair market value in excess of
the amount required to pay its probable liabilities
on its existing debts as they become
absolute and
matured) and currently the
Company has no information that would lead it
to reasonably conclude that
the Company would not, after
giving effect
to the transaction contemplated by this Agreement, have the
ability to, nor does it intend to take any action that
would impair its ability
to, pay its debts from time to time
included in connection therewith as such debts
mature. The Company
did not receive a qualified opinion from
its auditors
with respect to its most
recent fiscal year end
and, after giving effect to the
transactions contemplated by this Agreement, does
not anticipate or know of any basis
upon which its auditors might issue a qualified opinion in respect
of its current
fiscal year. For the
avoidance of
doubt any disclosure
of the Borrower's
ability to continue as a "going concern"
shall not, by itself; be a violation of this
Section 3 (w).

 

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

 

y.
Insurance. The Company and each
of its Subsidiaries are insured by l11Surers of
recognized financial responsibility against such losses
and risks and in such
amounts as management of the Company believes to be prudent
and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor
any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material
Adverse Effect. Upon
written request the
Company will provide to the Buyer true and correct
copies of all policies relating to directors' and officers'
liability coverage, errors and omissions coverage, and commercial
general liability coverage.

 

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

 

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

 

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

 

cc. Manipulation of Price. The Company has not, and to its knowledge no one acting
on its behalf
has: (i) taken, directly or
indirectly, any action designed to cause or to
result, or that could reasonably be expected to cause or result, in the stabili2ation or
manipulation of the price of any security of
the Company to facilitate the sale
or resale of any of the
Securities, (ii) sold,
bid fur, purchased, or paid any compensation fur
soliciting purchases o~ any of the
Securities, or (iii) paid or agreed to
pay to any person any compensation for soliciting
another to purchase any other
securities of the Company.

 

dd.
I1ntentionally
Omitted]

 

ee. Employee Relations. Neither the Company nor
any of its Subsidiaries is a party to any collective bargaining
agreement or employs any
member of a union. The
Company believes
that its and its Subsidiaries'
relations with their respective employees are good.
No executive officer (as defined in
Rule 501(f) promulgated
lll1der the 1933 Act)
or other key employee of the Company or any of its Subsidiaries has
notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such officer's
employment with the Company or any such Subsidiary. To the knowledge of the
Company, no executive officer or other key employee
of the Company
or any of its Subsidiaries is, or is now expected to be, in
violation of any material term of any employment contract,
confidentiality, disclosure
or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and
the continued employment of each such executive
officer or other key employee (as
the case may be) does not subject the Company or
any of its Subsidiaries to any liability with respect to any
of the foregoing matters.

 

ff. Breach of Representations and Warranties by
the Company.
The Company agrees
that if the Company
breaches any of the representations or
warranties set forth in
this Section 3, and
in addition to any other remedies available to the
Buyer pursuant to this Agreement and it being considered an
Event of Delimit under Section
3.5 of
the Note, the Company shall pay to the Buyer the Standard Liquidated Damages
Amolll1t in cash
or in shares of Common Stock
at the option of the
Company, until such breach is
cured. If the Company elects to pay
the Standard Liquidated Damages
Arnolll1ts in shares of Common Stock, such shares shall be issued at
the Conversion
Price at the time of
payment.

 

 

7

 

 

4.
COVENANTS.

 

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

 

b. Blue Sky Laws. The Company shall, on or
before the Closing
Date, take such action as
the Company shall reasonably determine may be necessary to
qualify the Securities fur sale
to the Buyer at
the applicable closing pursuant to
this Agreement lll1der
applicable securities or "blue
sky" laws of the states of the United
States (or to qualify
fur or obtain an
exemption from
such qualification for sale), and shall provide
evidence of any such
action so taken to
the Buyer on or prior to the Closing Date.

 

c.
Use of Proceeds. The Company shall use
the proceeds from the
sale of the Note fur
working capital and other general corporate purposes and shall
not, directly or indirectly, use
such proceeds fur any loan
to or inves1lrent in any other corporation, partnership, enterprise
or other person (except in connection with its currently
existing direct or indirect
Subsidiaries).

 

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

 

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

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

 

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

 

g. Corporate Existence. So long as
the Buyer beneficially owns any
Note, the Company shall maintain its corporate
existence and
shall not sell all or
substantially all
of the
Company's assets, except
in the event of a
merger or consolidation or sale of
all or substantially all of
the Company's assets, where the surviving or successor entity in such
transaction (0 assumes the Company's
obligations hereunder and under the agreements and instruments entered into
in connection herewith and (n)
is a publicly traded
corporation whose Common
Stock is listed fur
trading on the
OTC Pink, OTCQB, OTCQX, Nasdaq,
NasdaqSmallCap, NYSE or AMEX.

 

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

 

i Failure to
Comply with the 1934
Act. So long as
the Buyer beneficially
owns the Note, the Company
shall comply with the reporting
requirements of
the 1934 Act;and the
Company shall continue to
be subject to the reporting requirements of the 1934 Act.J. Trading Activities. Neither the Buyer nor its affiliates has an
open short position
(or other hedging or
similar transactions) in the
common stock of
the Company and
the Buyer agree that it shall
not, and that
it will cause
its affiliates not to, engage in any short
sales of or hedging
transactions with respect to the common stock of the Company.

 

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

 

 

8

 

 

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

 

m. Par Value. If
the closing bid price at
any time the
Note is outstanding falls
below $0.00 I,
the Company
shall use all commercially
reasonable
efforts to obtain shareholder consent, to reduce the par value of its Common
Stock to $0.000 I
or less and shall e:trect such
action promptly
upon obtaining such approval

 

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

 

1.

Transaction Expense Amount. Upon Closing, the Company shall
pay an amount equal to Seven
Thousand Two
Hundred Fifty and 0011
00 United States Dollars (US$7,250.00),
to Auctus Fund Management, LLC ("Auctus
Management'') to
cover the
Holder's due
diligence, monitoring, and other transaction
costs incurred for services rendered
in connection
herewith.

2.

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

 

 

9

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

e. No
litigation, statute, rule,
regulation, executive order, decree,
ru1ing or 1l!JlIDction shall have
been enacted, entered, promulgated
or endorsed by or
in any court or governmental authority of
competent jurisdiction
or any self regulatory organization having authority over the matters
contemplated hereby
which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

f. No event
shall have occurred which could reasonably
be expected to have a
Material Adverse Effect on
the Company including but not 1irnited to a change in the
1934 Act reporting status of the Company or
the failure of
the Company to be
timely in its 1934 Act
reporting
obligations.

 

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

 

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

 

 

10

 

 

9. GOVERNING LAW; MISCELLANEOUS.

 

a. Governing Law. This Agreement
shall be governed by
and construed
in accordance with the
laws of the State of Nevada without regard
to principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement, the Note
or any other agreement, certificate,
instrument or document
contemplated hereby
shall be brought only in
the state courts
of Massachusetts or in the federal
courts located in the state
of Massachusetts. The parties
to this Agreement hereby irrevocably waive any objection to
jurisdiction and
venue of any
action instituted hereunder and shall
not assert any defense based on lack
of jurisdiction or venue or based
upon forum
non conveniens. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR
UNDER ANY OTHER TRANSACTION DOCUMENT OR
IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT,
ANY
OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
The prevai1ing party shall be
entitled to recover from the other party
its reasonable attorneys fees and costs. In the event that any provision
of this Agreement
or any other agreement delivered in connection herewith
is invalid or unenforceable under any applicable statute or
rule of law, then such
provision shall be deemed inoperative to the
extent that it
may conflict therewith and
shall be deemed modified to conform with such
statute or rule of law.
Any such provision which may
prove invalid or unenforceable under any law
shall not affrect the validity or enforceability of any other
provision of
any agreement. Each party hereby irrevocably waives personal service of
process and consents to
process being served in
any suit, action or
proceeding in connection with this Agreement or any
other Transaction Document by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such
party at the address in effect
for notices to it under this Agreement and
agrees that such service shall
constitute good and
sufficient service of
process and notice thereof
Nothing contained herein shall be deemed to limit
in any way any right to
serve process in any other
manner permitted by
law.

 

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

 

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

 

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

 

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

 

f Notices. AU notices, demands, requests, consents, approvals, and other
complications required or permitted hereunder shall be in
writing and,
unless otherwise specified herein, shall be (i)
personally served, (n) deposited in the mail,
registered or certified,
return receipt requested,
postage prepaid, (iii)
delivered by
reputable air courier
service with charges prepaid, or (iv)
transmitted by
hand delivery, telegram,
email, or facsimile, addressed as set
forth below or to
such other address as such
party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall be
deemed effective (a)
upon hand delivery or delivery
by email or facsimile,
with accurate confirmation generated
by the transmitting facsimile machine, at
the address or
number designated below
(if delivered on a
business day during normal
business hours where
such notice is to be
received), or the
1irst business day following such delivery (if delivered other than on
a business day during
normal business hours
where such notice
is to be received) or (b) on
the second business day following
the date of mailing
by express courier service, fully
prepaid, addressed
to such address, or
upon actual receipt of such mailing, whichever shall first occur.

The addresses for such communications shall
be:

 

If to the
Company, to:

 

Guided Therapeutics, Inc.

5835 Peachtree Comers
East, Suite
D

Norcross, GA
30092

Attn:
Gene Cartwright

E-mail:
infu@guidedinc.com

 

 

11

 

 

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

 

Jones Day

[420 Peachtreet St.

Norcross,
GA 30092

E-mail:
hdrodman@jonesday.com

 

If to
the Buyer:

Auctus Fund, LLC

545
Boylston Street, 2nd Floor

Boston,
MA 02[[6

Attn:
Lou Posner

Facsimile: (617) 532-6420

 

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

 

Chad
Friend, Esq., LL.M.

Legal & Compliance, LLC

330
Clematis Street, Suite 217

West Pahn Beach, FL
3340 [

e-mail: CFriend@LegalandCompliance.com

 

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

 

g. Successors and Assigns.
1bis Agreement shan be
binding upon and
inure to the benefit
of the parties
and their successors and assigns. Neither
the Company
nor the Buyer shall assign this
Agreement or any rights
or obligations hereunder without the prior
written consent of the
other. Notwithstanding
the furegoing, subject to Section
2(f), the Buyer
may assign its
rights hereunder
to any person that purchases
Securities in a private transaction from the Buyer or to any of its
"affiliates,"
as that term is defined under the 1934 Act,
without the consent of the Company.

 

h. Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties
hereto and their respective permitted successors
and assigns, and is not fur the benefit 01; nor
may any provision hereof be enforced by, any
other person.

 

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

 

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

 

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

 

1 Remedies.
The Company acknowledges that a breach by it of its
obligations hereunder will cause
in'eparable harm to the Buyer by vitiating the intent
and purpose of the transaction contemplated
hereby. Accordingly, the Company
acknowledges that the
remedy at law
for a breach of its
obligations under this Agreement will be inadequate
and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this
Agreement, that the Buyer shall
be entitled, in
addition to all other available remedies at Jawor
in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement and to
enforce specifically
the te= and
provisions hereo1;without
the necessity of showing
economic loss and
without any bond or other security being
required.

 

 

12

 

 

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

 

o Indemnification. Subject to the
provisions of
this Section 9(n), the Company will
indemnify and hold Buyer
and its directors,
officers, shareholders,
members, partners, employees and
agents (each, a "Buyer
Party") harmless from any
and all losses,
liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all
judgments, amounts paid
in settlements, court
costs and reasonable
attorneys' fees and
costs of investigation that any
such Buyer Party may suffer or incur as a result of
or relating to (a) any
breach of any of the representations,
warranties, covenants or agreements made by the Company in
this Agreement
or the Note,
or any other agreement,
certificate, instrument,
or document contemplated hereby or thereby, (b)
any action instituted against the Buyer Parties in any
capacity, or any of them
or their respective affiliates, by any
stockholder of the Company
who is not an
affiliate of such
Buyer Party, with respect
to any of the transactions contemplated by this Agreement (unless such action is based upon a breach of
such Buyer Party's
representations, warranties
or covenants under this Agreement or any agreements or understandings such Buyer Party may have
with any such stockholder
or any violations by
such Buyer Party
of state or federal securities laws or any
conduct by such
Buyer Party that constitutes fraud,
gross negligence, willful misconduct or malfeasance)
or (c) any untrue or alleged untrue statement of a
material fact contained in any
registration statement,
any prospectus or any form
of prospectus or in any amendment or supplement thereto or in
any preliminary prospectus, or arising
out of or relating to any
omission or alleged omission of
a material fact required to
be stated therein or necessary to
make the statements therein (in the
case of any prospectus or
supplement thereto, in light of
the circumstances under which they were made) not
misleading. If any action
shall be brought against any
Buyer Party in respect of which
indemnity may be sought
pursuant to this Agreement, such Buyer Party shall
promptly notify the Company in
writing, and
the Company
shall have the right to assume the defense thereof with
counsel of its own
choosing reasonably acceptable
to the Buyer Party. Any Buyer Party shall
have the right to employ separate counsel in
any such
action and participate in the defense thereof; but the fees and expenses of such
counsel shall be
at the expense of such Buyer Party except to the extent that (i) the
employment thereof has been specifically authorized by the
Company in writing, (iJ) the Company has
failed after a
reasonable period of time to
assume such defense and to employ counselor (rn) in
such action there is, in the reasonable opinion of counsel
material conflict on any
material issue between the position of
the Company and
the position of such Buyer Party,
in which case the Company shall be responsible for the reasonable
tees and expenses of no more
than one such separate
counsel The Company will not be liable
to any Buyer Party prior this Agreement (y) fur any settlement by a Buyer Party effected without the Company's prior written consent, which shall not be
unreasonably withheld, conditioned, or
delayed;or
(z) to the extent, but only to
the extent that a
loss, claim,
damage or liability is
attributable
to any Buyer Party's breach of
any of the representations, warranties, covenants
or agreements made by such
Buyer Party in this Agreement
The indemnification required by this
Section 9.0 shall
be made by
periodic payments of
the amount thereof during the
course of the investigation or defense, as
and when bills are
received or are
incurred. The
indemnity agreements contained
herein shall
be in addition to any cause of action or similar
right of any
Buyer Party against
the Company
or others and any
liabilities the Company may be
subject to pursuant to law.

 

[signature
page follows]

 

 

13

 

 

IN WTINESS WHEREOF, the undersigned Buyer and the Company
have caused this Agreement to be duly executed as of the date first
above written

 

 

GUIDED THERAPEUTICS, INC.

/s/
Gene S. Cartwright

 

Name:
Gene S. Cartwright

Title: Chief
Executive Officer

 

 

 

AUCTUS FUND, LLC

By: /s/ Lou
Posner

 Name:
Lou Posner

Title: Managing Director

 

 

 

AGGREGATE
SUBSCRIPTION AMOUNT:

 

Aggregate Principal Amount of Note:
US$89,250.00

 

Aggregate Purchase Price: US$85,000.00

 

14gthp_ex1024

  Exhibit 10.24

 

 PROMISSORY NOTE

 

	
Original Issuance Date: August 22,
2018

	
 Principal
Amount: $150,000.00

                                                                                                               

THIS
PROMISSORY NOTE is duly authorized and validly Note of Guided
Therapeutics, Inc., a Delaware corporation, (the "Company"), having
its principal place of business at 5835 Peachtree Comers East,
Suite D, Norcross, Georgia 30092.

 

FOR
VALUE RECEIVED, the undersigned promises to pay to the Flynn D.
Case Living Trust, Flynn

D.
Case signing as trustee, with an address of P.O. Box 5639, Salem,
Oregon, 97304 ("Holder") the principal sum of $150,000.00 plus a
$7,500.00 loan origination fee for a total of ONE HUNDRED FIFTY
SEVEN THOUSAND FIVE HUNDRED DOLLARS AND no CENTS ($157,500.00) in
lawful money of the United States of America at such place as
Holder may designate in writing. The note shall earn 6% interest
per annum payable to the Holder in quarterly installments beginning
90 days after funds are received by the Company for any amount of
the principle plus loan origination fee that is
unpaid.

 

The
entire unpaid principal balance on this Promissory Note (this
''Note''), together with all accrued and unpaid interest and loan
origination fees, if any, at the choice of the Holder, shall be due
and payable in full from the funds received by the Company from a
financing of at least $2,000,000.00 DOLLARS (two million U.S.
dollars, zero cents) or, at the option of the Holder, to be
included as part of the Company's financing under the same terms as
the new investors with the most favorable terms making a cash
investment. If the Company does not complete a financing of at
least two million dollars within 90 days of the execution of this
Promissory Note, any unpaid amounts shall be due in full to the
Holder and shall accrue interest at 12% (instead of 6%) per annum
from the date thereof (90 days after execution), if not paid in
full.

 

Whether or not the Holder of this Note converts
the note into the next Company financing, the Holder shall be
granted 10 (ten) warrants for each dollar of the Principle Amount
loaned to the Company (or $1,500,000 warrants) under this
Promissory Note. The warrants shall be issued and vest upon the
financing of at least $2,000,000.00 DOLLARS ("2 million dollars")
and expire on the third anniversary of said financing. The warrant
exercise price shall be set at the same price as for warrants
granted to the investors with the most favorable terms as part of
any $2 million dollars or more financing. of the
Company or $0.25, whichever is lower. The warrants shall have
standard anti-dilution features to protect the holder from dilution
due to down rounds off financing.

 

All
parties to this Note, including maker and any sureties, endorsers,
or guarantors, hereby waive protest, presentment, notice of
dishonor, and notice of acceleration of maturity and agree to
continue to remain bound for the payment of principal, interest and
all other sums due under this Note, notwithstanding any change or
changes by way of release, surrender, exchange, modification or
substitution of any security for this Note or by way of any
extension or extensions of time for the payment of principal and
interest, if any; and all such parties waive all and every kind of
notice of such change or changes and agree that the same may be
made without notice or consent of any of them.

 

This
Note shall be governed by, and construed in accordance with, the
laws of the State of Georgia, regardless of laws that might
otherwise govern under applicable principles of conflicts of
law.

 

IN
WITNESS WHEREOF, the undersigned has caused this instrument to be
duly executed the day and year first above written.

 

 

 

 

GUIDED THERAPEUTICS, INC.

By: /s/ Gene S. Cartwright

Name: Gene S. Cartwright

Title: CEO

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