Exhibit 4.5
NEITHERTHEISSUANCE ANDSALEOFTHESECURITIES REPRESENTEDBYTHISNOTENORTHESECURITIES INTOWHICHTHESESECURITIES ARECONVERTIBLEHAVEBEEN REGISTERED UNDERTHESECURITIES ACT OF1933,AS AMENDED,ORAPPLICABLESTATESECURITIESLAWS.THESECURITIESMAY NOTBE OFFEREDFORSALE,SOLD,TRANSFERRED OR ASSIGNED(I) INTHE ABSENCE OF(A) ANEFFECTIVE REGISTRATIONSTATEMENTFORTHESECURITIES UNDERTHESECURITIES ACT OF1933,AS AMENDED, OR(B) AN OPINION OF COUNSEL(WHICH COUNSELSHALLBESELECTEDBYTHE HOLDER), INAGENERALLY ACCEPTABLEFORM,THAT REGISTRATION IS NOT REQUIRED UNDERSAID ACT OR(II) UNLESSSOLDPURSUANTTO RULE 144 OR RULE 144A UNDERSAID ACT. NOTWITHSTANDINGTHEFOREGOING,THESECURITIESMAYBEPLEDGED IN CONNECTIONWITHABONAFIDEMARGINACCOUNTOROTHERLOANORFINANCING ARRANGEMENTSECUREDBYTHESECURITIES.
Amount: $66,000
Date: May 18, 2017
CONVERTIBLE PROMISSORY NOTE
Guided Therapeutics, Inc.,(hereinaftercalledthe“Company”), herebypromisestopaytotheorder ofGHS Investments, LLC, aNevadaLimited Liability Company,or itsregisteredassigns(the“Holder”) thesumof $66,000 upon theearlier of (a) the Company receiving, whether through revenues, loans, investments or any other means (other than through the issuance of four short term promissory notes to two investors on or around the date hereof), One Hundred Thousand Dollars ($100,000) in the aggregate or more; or (b)on December 31, 2017 (the "Maturity Date")togetherwithany interestas setforth herein,and to pay interest on the unpaidprincipal balancehereofat therateofeightpercent(8%)(the“InterestRate”) perannumfrom the date hereof(the“Issue Date”) until the same becomesdueandpayable,whetheratmaturityoruponaccelerationorbyprepaymentor otherwise.This Note is being issued with a ten percent (10%) original issuance discount to offset transaction costs.
This Notemaynotbeprepaid inwholeorinpartexceptasotherwiseexplicitlysetforth herein.Following any Event of Default, all amounts owing pursuant to this Note shall bearinterestattherateof twenty percent(20%) perannumfromthe duedatethereofuntil thesameispaid(“DefaultInterest”).Interest shallbecomputed on the basis ofa 365-day yearand theactualnumber of dayselapsed.Allpaymentsdue hereunder(to theextent notconverted intocommon stock) shall be made in lawful moneyoftheUnitedStates ofAmerica.
All payments shallbemadeatsuchaddressas theHolder shallhereaftergivetotheCompanybywritten noticemade inaccordance withthe provisionsof thisNote.Wheneveranyamountexpressed tobe dueby the terms of thisNote is dueonanyday which is notabusinessday, thesame shallinstead be dueonthenext succeeding daywhich isabusiness dayand,inthecase ofany interest payment datewhichisnotthedateon which this Note is paid infull, the extensionof the due date thereof shall not be taken intoaccountforpurposes of determiningtheamount ofinterest due onsuch date. As usedinthis Note, the term“business day” shall meananyday other than aSaturday,Sundayora dayon whichcommercial banks in thecity ofNew York, New Yorkareauthorized orrequired bylaw orexecutive order toremainclosed. Eachcapitalized term used herein,and not otherwise defined, shallhave themeaningascribed thereto in the supporting documents of same date (attached hereto).
This Noteisfreefromall taxes, liens,claimsandencumbrances withrespect totheissue thereofand shallnotbesubject topreemptiverights orothersimilarrights ofshareholders oftheCompanyand will not imposepersonal liabilityupon theholder thereof.
Thefollowingterms shallapply to this Note:
ARTICLEI.CONVERSIONRIGHTS
1.1ConversionRight.TheHoldershallhave therightandatanytimefollowing six months from the issuance of this Note or following an Event of Default, toconvertallorany partoftheoutstandingandunpaid principalamountof thisNoteintofully paidand non-assessable shares ofCommonStock,assuchCommonStockexists onthe Issue Date, orany sharesofcapital stockor other securities of theCompany into which suchCommonStock shall hereafter bechanged orreclassifiedat theconversion price(the“ConversionPrice”) determinedas provided herein(a“Conversion”);provided,however, thatinnoevent shallthe Holder beentitled toconvertanyportionof thisNote inexcess of that portionof thisNote uponconversion of whichthe sumof(1) the number of shares ofCommonStock beneficiallyownedby the Holderand itsaffiliates(other than shares ofCommonStock which maybedeemedbeneficially ownedthroughtheownershipoftheunconverted portionof the Notes or the unexercised or unconvertedportion ofany other security of theCompany subject to a limitationonconversion orexerciseanalogous to the limitationscontained herein)and(2) the numberofsharesofCommonStockissuable upontheconversion of the portionof this Note withrespect to which the determination of this proviso isbeing made, wouldresult in beneficial ownershipby the Holderand itsaffiliates of more than 4.99% of the outstanding sharesofCommonStock (such sum, the “Maximum Share Amount”).For purposesof the provisotothe immediatelypreceding sentence, beneficial ownership shall be determined inaccordance withSection13(d) of theSecurities Exchange Act of 1934,asamended(the“ExchangeAct”),andRegulations 13D-G thereunder. Thenumber ofsharesofCommonStock to beissued uponeachconversionof thisNote shall be determinedby dividingtheConversionAmount(as defined below)by theapplicableConversionPrice then ineffect on the date specified in the notice ofconversion,(the“Notice ofConversion”), deliveredtotheCompanyby the Holder inaccordance with theSections below; provided that the Notice ofConversion is submittedbyfacsimile ore-mail(orby other meansresulting in, orreasonablyexpected toresultin,notice) totheCompany before 6:00p.m.,New York,New York time onsuchconversiondate(the“Conversion Date”). Notwithstanding the foregoing, the term "4.99%" above shall be replaced with "9.99%" following any Event of Default if the Holder, in its sole discretion and in writing, elects to demand the replacement. If the term "4.99%" is replaced with "9.99%" pursuant to the preceding sentence, such increase to "9.99%" shall remain at 9.99% until decreased by the Holder in writing.
ThenumberofsharesofCommonStock to beissued uponeachconversionofthisNoteshallbedeterminedbydividingtheConversion Amount(as defined below)by theapplicableConversionPrice thenineffectonthedatespecified inthe noticeofconversion,(the“NoticeofConversion”), delivered to the Companyby the Holder inaccordance with theSections below.
The term“Conversion Amount”means, withrespect toanyconversion ofthisNote, thesumof(1)theprincipalamountofthisNoteto beconverted insuchconversionplus(2)attheCompany’soption,accruedandunpaid interest,ifany, on suchprincipalamountat the interestrates provided in this Noteto theConversionDate,plus(3)at theCompany’s option, Default Interest, ifany, on theamountsreferred to in the immediately precedingclauses(1)and/or(2)plus(4)at theHolder’s option,anyamountsowed to theHolder.
1.2ConversionPrice.
(a)CalculationofConversionPrice. Holder, at its discretion, shall have the right to convert this Note in its entirety or in part(s) into common stock of the Company valued at a forty percent (40%) discount off of the lowest trading price for the Company’s common stock during the twenty five (25) trading days immediately preceding a conversion date, as reported by Quotestream Media.
If at any time after the execution of this Note, the Company experiences a "DTC Chill," the Conversion Price Discount shall be increased by ten percent (10%). If at any time following the execution of this Note, the Company becomes ineligible to participate in the DTC's "DWAC" system, the Conversion Price Discount will be increased by five percent (5%). Following any Event of Default, the Conversion Price discount shall be permanently increased by ten percent (10%).
1.3AuthorizedShares.TheCompanycovenants thatduringtheperiodtheconversionrightexists theCompanywillreservefromitsauthorizedandunissuedCommonStock asufficient numberofshares,freefrompreemptiverights,toprovidefortheissuance ofCommonStock upon the fullconversion ofthisNote.TheCompany isrequiredatall timestohaveauthorizedandreservedthree times the numberof shares that isactually issuable uponfullconversion of the Note(based ontheConversionPrice of the Notes ineffectfrom time to time)(the“Reserved Amount”). TheReserved Amount shall beincreasedfrom timeto timeinaccordance with theCompany’s obligations.
TheCompanyrepresents thatuponissuance, suchshares will bedulyand validly issued,fully paidand non-assessable.Inaddition,iftheCompanyshallissueany securities ormakeanychange toitscapital structure whichwouldchangethenumberof shares ofCommonStock into which theNotes shall beconvertibleat thethencurrentConversionPrice, theCompanyshallat thesametimemakeproperprovisionsothatthereafter there shallbe asufficient numberofshares ofCommonStockauthorizedandreserved,freefrom preemptiverights,forconversion of the outstanding Notes.
TheCompany(i)acknowledgesthat itwillirrevocably instructitstransferagenttoissuecertificatesfortheCommonStock issuable uponconversion ofthisNote,and(ii)agrees thatitsissuance ofthisNote shallconstitutefullauthority toitsofficersandagents whoarecharged withthe duty ofexecuting stockcertificates toexecuteand issue the necessarycertificatesfor shares ofCommonStock inaccordance with thetermsandconditions ofthis Note.
If,atany timetheCompanydoesnotmaintaintheReserved Amountitwillbeconsideredan Event ofDefault as defined in this Note.
1.4Method ofConversion.
(a)MechanicsofConversion.ThisNotemay beconvertedbythe Holder,inwholeorinpart,atany timefollowing executionbysubmittingtotheCompanyaNoticeofConversion(byfacsimile,e-mailorotherreasonable meansofcommunication dispatched ontheConversion Dateprior to4:00p.m.,New York,New York time).
(b)SurrenderofNoteUponConversion.Notwithstandinganything to thecontrary setforth herein, uponconversion ofthisNoteinaccordance withtheterms hereof, the Holder shall not berequired to physically surrender this Note to theCompany unless theentire unpaidprincipalamountof thisNote issoconverted. The HolderandtheCompany shall maintainrecords showingthe principalamount soconvertedand thedates ofsuchconversions or shallusesuch othermethod,reasonably satisfactory totheHolderand theCompany, soasnottorequirephysical surrender ofthis Noteuponeach suchconversion.In theevent ofany disputeor discrepancy, suchrecords oftheHoldershall,primafacie,becontrollinganddeterminative in theabsence of manifesterror. TheHolderandanyassignee,byacceptance of thisNote,acknowledgeandagree that,byreason oftheprovisions ofthisparagraph,followingconversionofaportion ofthisNote, theunpaidandunconverted principalamountofthisNoterepresentedbythis Notemaybe less than the amount stated on the facehereof.
(c)PaymentofTaxes.TheCompanyshallnotberequired topayany tax whichmaybepayable inrespect ofany transfer involvedintheissueand deliveryofshares ofCommonStockorother securities orproperty onconversion ofthisNote inaname otherthan that oftheHolder(orinstreetname),andtheCompanyshallnot berequired toissueordeliverany suchsharesorother securities orproperty unlessanduntiltheperson orpersons(otherthan the Holder or thecustodian in whose street name such sharesare to be heldfor the Holder’saccount)requesting theissuance thereofshallhave paidtotheCompanytheamount ofany such tax orshall haveestablished to thesatisfaction oftheCompanythat such taxhas been paid.
(d)DeliveryofCommonStockUponConversion.Uponreceiptby theCompanyfromtheHolderofafacsimiletransmissionore-mail(orotherreasonable means ofcommunication)ofaNoticeofConversionmeetingtherequirementsforconversionas provided in thisSection, theCompanyshall issueand deliver orcause to be issuedand delivered to orupon theorder oftheHoldercertificatesfortheCommonStock issuableupon suchconversion within three(3) business daysafter suchreceipt(the“Deadline”)(and, solely in thecase ofconversionof theentire unpaid principalamount hereof, surrender of this Note) inaccordance with theterms hereofand thePurchase Agreement. The Company will pay any and all legal and transfer agent fees that may be incurred or charged in connection with the issuance of shares of the Company's Common Stock to the Holder arising out of or relating to the conversions of this Note.
Within Five (5) business days of having received common stock pursuant to a Notice of Conversion and prior to having traded any shares from that specific conversion, Holder may elect to rescind the Notice of Conversion and return the shares, at Holder's expense, to the Company's Transfer Agent. In the event of such rescission, the principal amount outstanding under this Note shall be adjusted to include the Conversion Amount which was deducted from the Note as part of the rescinded Notice of Conversion.
(e)Obligation ofCompanytoDeliverCommonStock.UponreceiptbytheCompanyofaNotice ofConversion, theHoldershallbedeemed tobethe holderofrecord of theCommonStock issuable uponsuchconversion, the outstandingprincipalamountand theamount ofaccruedand unpaid interest on this Noteshall bereduced toreflect suchconversion,and, unlesstheCompanydefaultson itsobligations underthis Article I,allrights withrespect to the portion of this Note being soconverted shallforthwith terminateexcept theright toreceive theCommonStock or other securities,cash or otherassets,as herein provided, on suchconversion.If the Holder shall havegiven a NoticeofConversionas provided herein, theCompany’sobligationtoissueanddeliverthecertificatesforCommonStock shall beabsoluteand unconditional,irrespectiveoftheabsence ofanyaction by the Holdertoenforce the same,any waiver orconsent withrespect toany provision thereof, therecovery ofanyjudgmentagainstanypersonoranyactiontoenforce thesame,anyfailure or delay intheenforcement ofany otherobligationof theCompanytotheholderofrecord,orany setoff,counterclaim,recoupment, limitationortermination, orany breach oralleged breachby theHolder ofany obligation totheCompany,and irrespective ofanyothercircumstancewhichmightotherwise limitsuchobligationof theCompanytothe Holder inconnection withsuchconversion. TheConversion Date specified in the Notice ofConversion shall be theConversion Date so longas the Notice ofConversion isreceived by theCompany before 4:00 p.m., New York,New York time, on such date.
(f)DeliveryofCommonStockbyElectronic Transfer.In lieuof deliveringphysicalcertificatesrepresentingtheCommonStockissuable uponconversion, provided the Company is participating in the DepositoryTrustCompany(“DTC”)Fast AutomatedSecurities Transfer(“FAST”) program, uponrequest of the Holderand itscompliance with the provisionscontained inSection 1.1and in thisSection 1.4, the Company shalluse its besteffortstocause itstransferagent toelectronically transmit theCommonStock issuable uponconversion tothe Holderbycrediting theaccount of Holder’sBroker with DTCthrough its DepositWithdrawal AgentCommission(“DWAC”)system.
(g)Failure toDeliverCommonStockPriortoDeadline.WithoutinanywaylimitingtheHolder’sright topursueotherremedies, includingactual damagesand/orequitablerelief,thepartiesagreethat ifdelivery oftheCommonStockissuableuponconversion of this Note is not delivered by the Deadline theCompanyshall pay to the Holder $500 perday incash,foreachday beyond the Deadline that theCompanyfailstodeliver suchCommonStock.Suchcashamount shall bepaid toHolderby thefifth dayofthemonthfollowing themonthinwhichithasaccrued or,at theoptionoftheHolder(by written notice to theCompany by thefirst day of the monthfollowing the month in which it hasaccrued), shallbeadded totheprincipalamountof thisNote,inwhicheventinterestshallaccrue thereoninaccordance withtheterms ofthisNoteandsuchadditional principalamount shallbeconvertibleintoCommonStockinaccordancewiththetermsofthisNote. TheCompanyagrees that theright toconvert is avaluableright to theHolder.Thedamagesresultingfromafailure,attempttofrustrate, interference withsuchconversionrightaredifficult ifnot impossibletoqualify.
Accordinglythepartiesacknowledgethattheliquidateddamages provisioncontained in thisSectionare justified. Any delay or failure of performance by the Company hereunder shall be excused if and to the extent caused by Force Majeure. For purposes of this agreement, Force Majeure shall mean a cause or event that is not reasonably foreseeable and not caused by the Company, including acts of God, fires, floods, explosions, riots wars, hurricanes, etc.
1.5Concerning the Shares. ThesharesofCommonStockissuableuponconversionofthisNotemaynotbesold ortransferred unless(i) suchsharesaresoldpursuant toaneffectiveregistration statement undertheActor(ii)theCompanyoritstransferagentshall have beenfurnished withanopinionofcounsel(whichopinionshallbeinform, substanceand scopecustomaryfor opinions ofcounsel incomparable transactions) to theeffect that the shares tobesoldortransferredmay besoldortransferredpursuanttoanexemptionfromsuchregistration or(iii)such sharesare soldor transferred pursuant toRule144 under the Act(or a successorrule)(“Rule144”) or(iv) such sharesare transferred toan“affiliate”(as defined inRule 144) of theCompany whoagreestosell orotherwise transfer the shares only inaccordancewith thisSection 1.5andwho isan AccreditedInvestor. Exceptasotherwise providedherein(andsubjecttotheremoval provisions setforthbelow), untilsuch timeastheshares ofCommonStockissuableuponconversion ofthis Note havebeenregistered under theActor otherwise maybesold pursuant toRule 144 withoutanyrestrictionas to the number of securitiesas of a particular date thatcan then be immediately sold,eachcertificatefor sharesofCommonStockissuableuponconversion ofthisNotethathas not been so included inaneffectiveregistration statement or that has not been sold pursuant toaneffectiveregistration statement oranexemption thatpermitsremoval of thelegend, shallbear alegend substantially in the followingform,asappropriate:
“NEITHERTHE ISSUANCEAND SALEOFTHE SECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTO WHICHTHESE SECURITIESAREEXERCISABLEHAVEBEENREGISTEREDUNDERTHE SECURITIESACTOF 1933,ASAMENDED,ORAPPLICABLE STATE SECURITIESLAWS.THE SECURITIES MAYNOTBEOFFEREDFORSALE, SOLD,TRANSFERREDORASSIGNED(I)INTHEABSENCEOF(A)ANEFFECTIVEREGISTRATION STATEMENT FORTHE SECURITIESUNDERTHE SECURITIESACTOF 1933,ASAMENDED,OR(B)ANOPINIONOFCOUNSEL(WHICHCOUNSEL SHALLBE SELECTEDBYTHEHOLDER), IN AGENERALLYACCEPTABLE FORM,THATREGISTRATIONISNOTREQUIREDUNDERSAIDACTOR(II)UNLESS SOLDPURSUANTTORULE144ORRULE144AUNDERSAIDACT.NOTWITHSTANDINGTHEFOREGOING,THESECURITIESMAYBEPLEDGED INCONNECTIONWITH ABONAFIDE MARGINACCOUNTOROTHERLOANOR FINANCINGARRANGEMENT SECUREDBYTHE SECURITIES.”
The legend setforthaboveshallberemovedandtheCompanyshall issuetothe Holder anewcertificate thereforefree ofanytransferlegendif(i) theCompanyoritstransferagent shall havereceivedan opinion ofcounsel, inform, substanceand scopecustomaryfor opinionsofcounselincomparable transactions, totheeffect thata publicsale or transferof suchCommonStock may be madewithoutregistration undertheAct,whichopinion shall be acceptedby theCompany sothatthe sale ortransfer iseffected or(ii) inthecase of theCommonStock issuable uponconversion of thisNote,suchsecurity isregisteredfor saleby the Holder underaneffectiveregistration statementfiled under theAct or otherwise maybe sold pursuant toRule 144 withoutanyrestrictionas to the number ofsecuritiesas of aparticular date thatcan then be immediately sold. Intheevent that theCompany does notaccept such opinion ofcounsel providedby theBuyer withrespect tothetransfer ofSecurities pursuanttoanexemptionfromregistration, suchasRule 144 orRegulationS,atthe Deadline, itwillbeconsideredan Eventof Default pursuant tothis note.
1.6EffectofCertain Events.
(a) Intentionally omitted.
(b)AdjustmentDuetoMerger,Consolidation,Etc.If,atany time whenthisNoteisissuedandoutstandingandprior toconversion ofalloftheNotes, thereshall beany merger,consolidation,exchange of shares,recapitalization,reorganization,or other similarevent,as aresult of which shares ofCommonStock of theCompany shall bechangedinto the sameor a different numberof sharesofanotherclass orclassesof stock or securities of theCompany oranotherentity,or incase ofany sale orconveyance ofallor substantiallyallof theassets of theCompany other than inconnection with a plan ofcomplete liquidation of theCompany, then the Holder of this Note shall thereafter have theright toreceive uponconversion of thisNote,upon thebasisanduponthe termsandconditionsspecifiedhereinand inlieuof the sharesofCommonStock immediately theretofore issuable uponconversion, such stock, securities orassets which the Holder would have beenentitled toreceive in such transaction had this Note beenconverted infull immediately prior to such transaction(withoutregard toany limitations onconversion setforth herein),and inany suchcaseappropriate provisions shall be made withrespect totherightsandinterests of theHolderofthis Notetotheend thatthe provisions hereof(including, without limitation, provisionsforadjustment of theConversionPriceand of the number of shares issuable uponconversion of theNote) shall thereafter beapplicable,as nearlyas maybe practicable inrelation toany securities orassets thereafterdeliverable upon theconversion hereof.TheCompanyshall notaffectanytransaction describedin thisSection 1.6(b)unless(a) itfirstgives, to theextent practicable, thirty(30) days prior writtennotice(but inanyeventatleastfifteen(15)daysprior writtennotice)oftherecorddate ofthespecial meetingofshareholders toapprove,orifthereis nosuchrecorddate,theconsummation of, such merger,consolidation,exchangeof shares,recapitalization,reorganization or other similarevent or sale ofassets(duringwhich time the Holder shall beentitled toconvert this Note)and(b) theresulting successor oracquiringentity(if not theCompany)assumesbywritten instrumentthe obligationsof thisSection 1.6(b). Theabove provisions shall similarlyapply to successiveconsolidations, mergers, sales, transfers or shareexchanges.
(c)AdjustmentDuetoDistribution.IftheCompanyshall declareor makeany distributionofitsassets(orrights toacquire itsassets) toholdersofCommonStockas adividend, stockrepurchase,byway ofreturnofcapitalor otherwise(includingany dividend or distribution to theCompany’s shareholders incash or shares(orrights toacquire shares) ofcapital stock ofa subsidiary(i.e.,a spin-off))(a“Distribution”), then the Holder of this Note shallbeentitled, uponanyconversion of thisNoteafter the date ofrecordfor determining shareholdersentitled tosuch Distribution, toreceive the amountofsuchassets which wouldhave been payable to the Holder withrespect to the shares ofCommonStock issuable upon suchconversion hadsuch Holder been the holder of such sharesofCommonStockontherecord dateforthedetermination ofshareholdersentitled to such Distribution.
(d)Adjustment DuetoDilutiveIssuance.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, any shares of Common Stock in connection with a financing transaction based on a variable price formula (the “Alternative Variable Price Formula”) that is more favorable to the investor in such financing transaction than the formula for calculating 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 formula for the Conversion Price will be adjusted to match the Alternative Variable Price Formula. If it is unclear whether the Alternative Variable Price Formula is better or worse, then Holder, in its sole discretion, may elect at the time of such issuance whether to switch to the Alternative Variable Price Formula or not.
(e)PurchaseRights.If,atany timewhenanyNotesareissuedand outstanding, theCompanyissuesanyconvertiblesecurities orrights topurchase stock,warrants, securities orotherproperty(the“PurchaseRights”) prorata totherecord holdersofanyclassofCommonStock,thenthe Holder of thisNote will beentitledtoacquire,uponthe termsapplicabletosuchPurchaseRights,theaggregatePurchaseRightswhichsuch Holdercould haveacquired if such Holder had held the number of shares ofCommonStockacquirable uponcompleteconversion of this Note(withoutregard toanylimitations onconversioncontained herein) immediately before the date on which arecord istakenfor the grant, issuanceor sale of suchPurchaseRightsor,if nosuchrecord istaken, the dateasof whichtherecord holdersofCommonStockare to bedeterminedforthegrant,issueorsale ofsuchPurchaseRights.
(f)Notice ofAdjustments.Upontheoccurrenceofeachadjustment orreadjustmentoftheConversionPriceasaresult oftheevents described inthisSection 1.6, theCompany,at itsexpense, shallpromptlycomputesuchadjustment orreadjustmentandprepareandfurnish to the Holder of acertificate settingforth suchadjustment orreadjustmentand showingin detail thefacts upon which suchadjustment orreadjustment is based. TheCompanyshall, upon the writtenrequestatanytime of the Holder,furnish to such Holder a likecertificate settingforth(i)suchadjustment orreadjustment,(ii)theConversionPriceatthetimeineffectand(iii) the number of sharesofCommonStockandtheamount, ifany, of other securities or property whichat thetimewould be received uponconversion oftheNote.
1.7Security. OMIT.
1.8StatusasShareholder.UponsubmissionofaNotice ofConversionbya Holder,(i)thesharescoveredthereby(otherthanthe shares,ifany,whichcannotbe issued because their issuancewouldexceed such Holder’sallocated portion of theReserved Amount or MaximumShareAmount) shall bedeemedconverted into shares ofCommonStockand(ii) the Holder’srightsas a Holder of suchconvertedportionof this Note shallceaseand terminate,excepting only therighttoreceivecertificatesforsuch shares ofCommonStockandtoanyremedies provided herein or otherwiseavailableat law or inequity to such Holder because of afailureby theCompany tocomply withthe terms of thisNote.Notwithstanding theforegoing, if a Holder has notreceivedcertificatesforall shares ofCommonStock prior to the tenth(10th) businessdayafter theexpiration of the Deadline withrespect toaconversion ofany portion of this Noteforanyreason,then(unless theHolder otherwiseelects toretain its statusas aholder ofCommonStockby sonotifying the Company)theHolder shallregain therights ofa Holder of this Note withrespect to such unconverted portions of this Noteand the Company shall,as soonaspracticable,return suchunconvertedNotetothe Holderor,if the Notehasnotbeen surrendered,adjust itsrecords to reflect that such portion ofthis Notehasnot beenconverted. Inallcases, the Holder shallretainall of itsrightsandremedies(including, withoutlimitation,(i) therighttoreceiveConversionDefaultPaymentspursuanttoSection 1.3totheextentrequired therebyfor suchConversion Defaultandany subsequentConversion Defaultand(ii) theright to havethe ConversionPrice withrespect tosubsequentconversions determined inaccordance withSection 1.3) fortheCompany’sfailure toconvert this Note.
1.9Prepayment. Maker may prepay this Note, in accordance with the following schedule: If within 30 calendar days from the execution of this Note, 110% of all outstanding principal and interest due on each outstanding Note in one payment; After 30 calendar days from the execution of the note and within 60 days from execution, 120% of all outstanding principal and interest due on each outstanding Note in one payment. Between 60 and 180 days from the date of execution, the Note may be prepaid for 140% of all outstanding amounts due on each outstanding Note in one payment.
ARTICLEII.CERTAINCOVENANTS
2.1Distributions onCapitalStock.SolongastheCompanyshall haveany obligation underthisNote,theCompanyshallnotwithouttheHolder’s writtenconsent(a)pay, declare or setapartfor such payment,any dividend or other distribution(whether incash, property orothersecurities) on sharesofcapital stock otherthan dividends on sharesofCommonStock solelyintheform ofadditional shares ofCommonStock or regular dividends on shares of the Company’s outstanding preferred stock required pursuant to the terms thereof, or(b) directly orindirectly or throughany subsidiary makeany other payment or distributioninrespect of itscapital stockexceptfordistributions pursuant toany shareholders’rights plan whichisapprovedbyamajority oftheCompany’s disinterested directors.
2.2Restriction onStockRepurchases.SolongastheCompanyshall haveany obligationunderthisNote, and other than in accordance with contractual obligations existing prior to the date of this Note,theCompanyshall notwithouttheHolder’swrittenconsentredeem,repurchase orotherwiseacquire(whetherforcash orinexchangeforpropertyorother securities orotherwise) inany onetransaction orseries of related transactionsanysharesofcapital stock of theCompanyor anywarrants,rights oroptions topurchaseor acquireanysuch shares.
2.3Borrowings.The Issuershallretain the ability toconsent,create,incur,assumeguarantee,endorse,contingentlyagreetopurchaseorotherwisebecomeliableuponthe obligationofanyperson,firm, partnership,jointventureorcorporation,exceptbytheendorsement ofnegotiable instrumentsfor deposit orcollection, orsuffertoexistany liabilityfor borrowed money (a “Future Financing”), as long as it shall first provide Holder with at least twenty four (24) hour notice of such Future Financing and provide Holder with the ability to match the same terms of the Future Financing, except no notice shall be required to Holder for:(a)borrowings inexistence orcommitted on thedatehereofandof which theIssuerhas informed Holder inwritingprior tothedatehereof,(b) indebtedness to tradecreditors orfinancial institutionsincurredinthe ordinarycourse ofbusiness or(c) borrowings, theproceeds ofwhich shall beused torepay this Note.
2.4Sale ofAssets.SolongastheCompanyshall haveany obligationunder thisNote,theCompanyshall not,withouttheHolder’swrittenconsent, sell,lease orotherwise disposeofany significant portionofitsassets outsidetheordinarycourse of business.Anyconsent to the disposition ofanyassets maybeconditioned on a specified use of the proceeds of disposition.
2.5Advances andLoans.SolongastheCompanyshallhaveany obligation underthis Note, theCompanyshall not,withoutthe Holder’s writtenconsent, lendmoney,givecredit ormakeadvances toany person,firm, joint venture orcorporation, including,without limitation, officers,directors,employees, subsidiariesandaffiliates of theCompany,except loans,credits oradvances(a) inexistence orcommitted on the date hereofand which theCompanyhas informed Holder in writingprior to the date hereof,(b) made in the ordinarycourseofbusinessor(c)not inexcess of$50,000.
ARTICLEIII.EVENTSOFDEFAULT
Ifanyofthefollowingevents ofdefault(each,an“Event ofDefault”) shall occur:
3.1FailuretoPayPrincipalorInterest. TheCompanyfailstopaythe principalhereoforinterestthereonwhendueonthisNote,whetheratmaturity,uponacceleration orotherwise.
3.2ConversionandtheShares. TheCompanyfailstoissuesharesofCommonStocktotheHolder(orannounces orthreatens inwriting thatitwillnothonorits obligation todoso)uponexercisebythe Holder oftheconversionrights oftheHolderinaccordance withtheterms ofthis Note,failsto transfer orcauseitstransferagenttotransfer(issue)(electronically or incertificatedform)anycertificatefor shares ofCommonStock issued totheHolder uponconversion oforotherwise pursuant tothis Noteasand when required bythis Note, theCompanydirects its transferagent not to transfer ordelays, impairs,and/or hinders its transferagent intransferring(orissuing)(electronically orincertificatedform)anycertificateforshares ofCommonStocktobeissued totheHolder uponconversion of orotherwisepursuant to this Note asand whenrequiredby this Note,orfails toremove(ordirects its transferagent not toremoveor impairs,delays,and/or hindersitstransferagentfromremoving)anyrestrictive legend(ortowithdrawanystop transfer instructions inrespect thereof) onanycertificateforany shares ofCommonStock issued to the Holder uponconversion of or otherwise pursuant to this Noteasand when requiredbythis Note(ormakesanywrittenannouncement, statement orthreat that it does not intend to honor the obligations described in this paragraph)andany suchfailure shallcontinueuncured(orany writtenannouncement,statementorthreat not tohonorits obligations shall not berescinded inwriting)forthree(3) business daysaftertheHoldershall have delivered a Notice ofConversion. It isan obligation of theCompany toremaincurrent in its obligations to its transferagent. It shall beanevent of default of this Note, if aconversion of this Note is delayed, hindered orfrustrated due to a balance owed bytheCompanyto its transferagent. Ifat the option of the Holder, the Holderadvancesanyfunds to theCompany’s transferagent in order to process aconversion, suchadvancedfunds shall be paidbytheCompany to the Holderwithinfortyeight(48)hours ofademandfrom theHolder.
3.3BreachofCovenants.TheCompanybreachesanycovenantor othertermorconditioncontained inthisNoteandanycollateral documentsincluding butnotlimited tothePurchaseAgreement.
3.4BreachofRepresentationsandWarranties. Anyrepresentationor warranty oftheCompanymadeherein orinanyagreement, statement orcertificategiven in writingpursuantheretoorinconnection herewith(including, withoutlimitation,thePurchase Agreement), shallbefalseormisleading inany materialrespect whenmadeandthebreach of which has(or with thepassage oftime will have) a materialadverseeffect on therights of the Holderwithrespect to this NoteorthePurchaseAgreement.
3.5ReceiverorTrustee.TheCompanyorany subsidiary oftheCompanyshallmakeanassignmentforthebenefit ofcreditors, orapplyfororconsent totheappointment ofareceiverortrusteeforit or forasubstantialpart ofits property orbusiness, orsuchareceiver ortrustee shall otherwise be appointed.
3.6Judgments.Any money judgment,writorsimilarprocessshallbeentered orfiledagainst theCompanyorany subsidiaryoftheCompanyorany ofitsproperty orotherassetsfor more than $100,000,and shallremain unvacated, unbonded or unstayedfor aperiod of twenty(20) daysunlessotherwiseconsentedto by theHolder,whichconsentwillnot be unreasonably withheld.
3.7Bankruptcy.Bankruptcy,insolvency,reorganizationorliquidation proceedingsorotherproceedings, voluntaryorinvoluntary,forrelief underanybankruptcylaw oranylawforthe relief ofdebtors shall beinstitutedby oragainst theCompanyorany subsidiaryoftheCompany.
3.8Delisting ofCommonStock. If theCompanyshallfailtomaintain in good standingthe listingoftheCommonStock onthe OTC Marketplacesoranequivalentreplacementexchange, theNasdaq NationalMarket, theNasdaqSmallCap Market ortheNew YorkStock Exchangeor if the Company's shall lose the "bid" price for its common stock on any given trading day.
3.9Failure toComply withtheExchangeAct. If theCompanyshallfailtocomply, in a timely manner,withthereportingrequirements oftheExchange Act (other than the filing of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2017);and/or theCompanyshallcease to besubject to the reportingrequirements oftheExchangeAct.
3.10Liquidation. Anydissolution,liquidation,orwindingupofCompanyoranysubstantial portion ofits business.
3.11Cessation ofOperations. Anycessation ofoperationsbyCompanyorCompanyadmits itisotherwisegenerally unabletopayitsdebtsassuch debtsbecome due, provided, however, thatany disclosureoftheCompany’sability tocontinueas a “goingconcern” shall not be anadmission that theCompanycannotpay its debtsas theybecome due.
3.12MaintenanceofAssets. ThefailurebyCompanytomaintainany material intellectual propertyrights, personal,realproperty orotherassetswhicharenecessary toconduct its business(whether now orin thefuture).
3.13FinancialStatementRestatement. Therestatementofanyfinancialstatementsfiled by theCompanywiththeSECforanydate orperiodfromtwoyears priortotheIssueDateofthisNoteand untilthisNoteis nolonger outstanding, iftheresult ofsuchrestatementwould, bycomparisontotheoriginalfinancialstatement,haveconstituteda materialadverseeffect on therights of the Holder withrespect to this Note or supporting documents.
3.14ReverseSplits. TheCompanyeffectuatesareversesplitofits
CommonStock without at least twenty(20)dayspriorwritten noticeto theHolder.
3.15Replacement ofTransferAgent.In theevent thattheCompanyproposes toreplace its transferagent, theCompanyfailstoprovide,priortotheeffectivedateofsuchreplacement, afullyexecutedIrrevocableTransferAgentInstructions inaformasinitially deliveredpursuant tothePurchaseAgreement(including butnotlimitedtothe provisionto irrevocablyreserve shares ofCommonStock intheReserved Amount) signedby the successor transferagent toCompany and theCompany.
3.16Cross-Default.Notwithstandinganything tothecontrarycontained inthis Noteortheotherrelated orcompanion documents, abreach ordefaultby theCompanyofanycovenant or othertermorconditioncontained inanyofthe OtherAgreements,after thepassage ofallapplicable noticeandcure or grace periods, shall,at the option of the Holder,beconsidered adefault under this Noteand the OtherAgreements, in whichevent the Holder shall beentitled(but in noeventrequired) toapplyallrightsandremediesof the Holder under the termsof thisNoteandthe OtherAgreementsby reason ofa default undersaid OtherAgreement or hereunder.“Other Agreements” means,collectively,allagreementsand instruments between,amongorby:(1) theCompany,and, orfor the benefit of,(2)the Holderandanyaffiliate of the Holder,including, without limitation, promissorynotes;provided, however, the term“OtherAgreements” shall not include therelated orcompanion documents to this Note. Eachoftheloan transactions willbecross-defaulted witheachotherloan transactionandwithall other existingandfuture debt ofCompany.
Upon theoccurrenceandduringthecontinuationofany EventofDefault specified inSection3.1(solely with respect tofailure topaytheprincipal hereoforinterestthereonwhen dueattheMaturity Date), theNoteshall becomeimmediately dueandpayableandtheCompany shall pay to theHolder, infull satisfactionof its obligations hereunder,anamountequal to the DefaultSum(as defined herein). UPON THEOCCURRENCE AND DURINGTHECONTINUATIONOFANYEVENTOFDEFAULTSPECIFIED INSECTION3.2,THE NOTESHALLBECOMEIMMEDIATELY DUE ANDPAYABLEAND THECOMPANYSHALLPAYTO THEHOLDER,INFULLSATISFACTIONOF ITSOBLIGATIONS HEREUNDER, ANAMOUNTEQUAL TO:(Y)THEDEFAULTSUM(ASDEFINED HEREIN); MULTIPLIEDBY (Z)TWO(2). Upontheoccurrenceandduring thecontinuationofany Event ofDefault specified inSections 3.1(solely withrespect tofailure to paythe principal hereof or interest thereon when due on this Note upon a Trading MarketPrepayment Event pursuant toSection 1.7oruponacceleration), 3.3,3.4,3.6,3.8,3.9,3.11,3.12,3.13,3.14,and/or 3. 15exercisable throughthe delivery of writtennotice totheCompanyby suchHolders(the“Default Notice”),and upon the occurrence ofan Event ofDefault specified theremaining sections of ArticlesIII(other thanfailure topaytheprincipalhereof or interest thereonat the Maturity Date specified inSection 3,1 hereof), the Note shall become immediately dueand payableandtheCompanyshallpaytotheHolder,infullsatisfactionofits obligations hereunder,anamountequal to thegreater of(i) 150%times thesumof(w) the then outstanding principalamount ofthis Noteplus(x)accruedand unpaid interest onthe unpaidprincipalamount ofthis Notetothedate of payment(the“MandatoryPrepayment Date”)plus(y)DefaultInterest, ifany, on theamountsreferred to inclauses(w)and/or(x)plus(z)anyamountsowed to theHolder pursuant toSections 1.3and 1.4(g)hereof(the then outstandingprincipalamount of this Note to the dateof paymentplus theamountsreferred to inclauses(x),(y)and(z)shallcollectively be knownas the“DefaultSum”)or(ii)the“parityvalue” ofthe DefaultSum tobe prepaid, where parityvalue means(a) the highest numberof shares ofCommonStock issuable uponconversion oforotherwise pursuant tosuchDefaultSum inaccordance withArticle I, treating the Trading Day immediatelypreceding theMandatoryPrepayment Dateas the“Conversion Date”for purposes of determining the lowestapplicableConversionPrice, unless the Default Eventarises as aresult ofabreach inrespect ofaspecificConversion Date in whichcase suchConversion Date shall be theConversion Date),multipliedby(b) the highestClosingPricefor theCommonStock during the period beginning onthe date offirstoccurrenceof the EventofDefaultandending oneday priortotheMandatoryPrepayment Date(the“Default Amount”)andallotheramounts payable hereunder shall immediatelybecome dueand payable,all without demand, presentment or notice,all of which herebyareexpresslywaived, together withallcosts, including, without limitation, legalfeesandexpenses, ofcollection,and the Holder shall beentitled toexerciseall other rightsandremediesavailableat law orinequity.
If theCompanyfailstopaytheDefaultAmountwithinfive(5)business daysofwritten noticethat suchamount isdueandpayable, thentheHoldershallhavetherightatany time,so longas theCompanyremains in default(and so longand to theextent that thereare sufficientauthorized shares), torequire theCompany,upon writtennotice,toimmediately issue,in lieu of the Default Amount, the number of sharesofCommonStock of theCompanyequal to the Default Amount divided bytheConversionPricethen ineffect.
ARTICLEIV.MISCELLANEOUS
4.1Failure orIndulgenceNotWaiver.Nofailureordelay onthe part ofthe Holder in theexercise ofany power,rightor privilege hereunder shall operateas a waiver thereof, nor shallanysingle or partialexercise ofanysuch power,right or privilege preclude other orfurtherexercise thereof or ofany otherright, power or privileges. Allrightsandremediesexisting hereunderarecumulative to,and notexclusive of,anyrights orremedies otherwise available.
4.2Notices.Allnotices, demands,requests,consents,approvals,andothercommunicationsrequiredorpermittedhereundershallbeinwritingand,unlessotherwise specifiedherein, shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,returnreceiptrequested, postage prepaid,(iii)deliveredbyreputableaircourier service withchargesprepaid,or(iv) transmittedbyhanddelivery, telegram, orfacsimile,addressedasset forthbelowortosuchotheraddressassuch party shall havespecifiedmostrecentlyby written notice.Any notice orothercommunicationrequired or permitted tobe givenhereunder shallbe deemedeffective(a) upon hand deliveryor deliverybyfacsimile, withaccurateconfirmation generatedbythe transmittingfacsimile machine,at theaddress or number designatedbelow(if delivered onabusinessday during normal business hours where suchnotice is to bereceived),or thefirst businessdayfollowingsuch delivery(if delivered other than on a businessdayduring
normal businesshours wheresuch noticeistobereceived) or(b)onthesecond businessdayfollowingthedateofmailing byexpresscourierservice,fullyprepaid,addressedtosuchaddress,oruponactualreceiptofsuchmailing, whichever shallfirst occur. Theaddressesfor suchcommunications shall be:
If to theCompany, to:
If to theHolder:
GHS Investments, LLC.
420JerichoTurnpike,
Suite 207
Jericho, NY 11753
4.3Amendments.ThisNoteandany provisionhereof mayonly beamendedbyan instrumentinwriting signedby the Companyandthe Holder. The term“Note”andallreference thereto,asused throughoutthisinstrument,shallmean thisinstrument(andthe other Notesissued pursuanttothePurchase Agreement)as originallyexecuted, or if lateramended or supplemented, thenas soamended orsupplemented.
4.4Assignability. This Noteshall bebindingupontheCompanyandits successorsandassigns,andshall inuretobethebenefit oftheHolderanditssuccessorsandassigns.Notwithstandinganythingin this Note tothecontrary, thisNote may be pledgedascollateral inconnection with abonafidemargin account or other lendingarrangement.
4.5Cost ofCollection.Ifdefaultismade inthepaymentofthisNote,the
Companyshall paytheHolderhereofcosts ofcollection, includingreasonableattorneys’fees.
4.6GoverningLaw. This Noteshallbegovernedbyandconstruedinaccordance withthelaws oftheState ofNevadawithoutregard toprinciples ofconflicts of laws. Anyactionbroughtbyeither partyagainstthe otherconcerningthe transactionscontemplatedby thisNote shall be brought onlyinthe state orfederal courtslocated in New York City,New York.The parties tothisNote hereby irrevocably waiveany objection to jurisdictionand venue ofanyaction instituted hereunderandshall notassertany defensebased onlackofjurisdictionorvenue orbased uponforumnonconveniens. TheCompanyandHolder waivetrialbyjury.The prevailing partyshallbeentitledtorecover from theotherpartyitsreasonableattorney'sfeesandcosts. Intheevent thatany provisionof this Note orany otheragreement delivered inconnection herewith is invalid or unenforceable underanyapplicable statuteorruleoflaw,then suchprovision shallbedeemedinoperative to theextent thatit mayconflict therewithand shall be deemed modified toconform with such statute orrule of law.Any such provision which may prove invalid or unenforceable underany law shallnotaffect thevalidity orenforceability ofany otherprovisionofanyagreement.Each partyhereby irrevocably waivespersonalservice ofprocessandconsents toprocess being served inany suit,actionor proceeding inconnection withthisAgreement oranyotherTransaction Documentbymailingacopy thereof viaregistered orcertified mailorovernight delivery(withevidence of delivery) to such partyat theaddress ineffectfor notices to it under this Agreementandagrees thatsuch service shallconstitutegoodandsufficient service of processandnotice thereof. Nothingcontained hereinshall be deemedtolimitinany wayanyrighttoserve process inany other mannerpermittedby law. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
4.7CertainAmounts.WheneverpursuanttothisNotetheCompanyisrequired topayanamount inexcess oftheoutstanding principalamount(or theportionthereofrequired tobepaidatthat time)plusaccruedandunpaidinterest plusDefaultInterest onsuch interest, theCompanyandthe Holderagree thattheactual damages tothe Holderfrom thereceipt ofcash payment on this Note may be difficult to determineand theamount to be so paidby theCompanyrepresents stipulateddamagesandnot a penaltyandisintended tocompensate theHolderinpartforlossoftheopportunitytoconvertthisNoteandtoearn areturnfromthe saleofsharesofCommonStockacquireduponconversion ofthisNoteatapriceinexcess ofthe price paidfor such shares pursuant to this Note.TheCompanyand theHolder herebyagree that suchamount of stipulated damages is not plainlydisproportionate to the possible loss to the Holderfrom thereceipt of acash payment without the opportunitytoconvert this Note into shares ofCommonStock.
4.8PurchaseAgreement.Byitsacceptance ofthisNote,each partyagreesto beboundbythe applicable terms ofthe Assignment Agreement and supporting documents of same date.
4.9Notice ofCorporate Events.Exceptasotherwise providedbelow,the Holder ofthisNote shallhavenorightsasaHolderofCommonStockunlessand only totheextent that itconverts this NoteintoCommonStock. TheCompanyshallprovidetheHolderwith prior notification ofany meeting of theCompany’s shareholders(andcopies of proxy materialsand other information sent to shareholders).In theevent ofanytakingby theCompany of a recordof itsshareholdersfor the purpose of determining shareholders whoareentitled toreceive payment ofany dividend or other distribution,anyright to subscribefor, purchaseor otherwiseacquire(includingbywayofmerger,consolidation,reclassification or recapitalization)any share ofanyclassorany othersecurities orproperty, ortoreceiveany otherright, orforthepurposeof determining shareholders whoareentitled to vote inconnection withanyproposed sale, leaseorconveyance ofall or substantiallyall of theassets of theCompany orany proposed liquidation, dissolution or winding up of theCompany, theCompany shall mail anotice to the Holder,at least twenty(20)days prior to therecord date specified therein(or thirty(30) days prior to theconsummation of the transaction orevent, whichever isearlier), of the date on whichany suchrecordistobetakenforthepurposeof suchdividend, distribution,right orotherevent,anda brief statementregarding theamountandcharacter of such dividend, distribution,right or othereventtotheextent knownatsuchtime. TheCompany shallmake a publicannouncementofanyeventrequiring notification to the Holder hereunder substantially simultaneously with the notification to theHolderinaccordance with theterms ofthisSection 4.9.
4.10Remedies. TheCompanyacknowledgesthatabreachbyitofits obligationshereunderwillcause irreparableharm totheHolder,byvitiating theintentand purposeof thetransactioncontemplated hereby.Accordingly, theCompanyacknowledges that theremedyat lawforabreachofits obligations under this Notewill beinadequateandagrees, in the eventof abreach orthreatened breachby theCompanyoftheprovisions ofthis Note, that the Holdershall beentitled, inadditiontoallotheravailableremediesatlaw orinequity,and inaddition to the penaltiesassessable herein, toan injunction or injunctionsrestraining, preventing orcuringanybreach of thisNoteand toenforce specifically the termsandprovisionsthereof, withoutthenecessityof showingeconomic lossandwithoutany bond orothersecuritybeingrequired.
INWITNESSWHEREOF,CompanyhascausedthisNotetobesigned initsnameby its dulyauthorized officer:
| | Guided Therapeutics, Inc. | |
| | | |
| | By: /s/ Gene Cartwright | |
| | | |
| | Print: Gene Cartwright | |
| | | |
| | Title/Date: CEO 5/19/17 | |
