Exhibit 3.1
GUIDED
THERAPEUTICS, inc.
CERTIFICATE OF DESIGNATION OF
PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C2 CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 151 OF THE
Delaware GENERAL CORPORATION LAW
The undersigned,
Dr. Gene S. Cartwright, does hereby certify that:
1. He is the
President and Chief Executive Officer of Guided Therapeutics, Inc.,
a Delaware corporation (the "
Corporation
").
2. The Corporation
is authorized to issue up to 5,000,000 shares of preferred
stock.
3. Pursuant to the
authority vested in the Board of Directors of the Corporation in
accordance with the provisions of the Certificate of Incorporation
of the Corporation (as amended, the "Certificate of
Incorporation"), the Board of Directors on August 23, 2018 adopted
the following resolution creating a series of 4,312.25 shares of
Preferred Stock designated as "Series C2 Convertible Preferred
Stock":
RESOLVED, that
pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation,
a series of Preferred Stock, par value $0.001 per share, of the
Corporation be and hereby is created, and that the designation and
number of shares thereof and the voting and other powers,
preferences and relative, participating, optional or other rights
of the shares of such series and the qualifications, limitations
and restrictions thereof as set forth in
Schedule 1
to the Certificate
of Designation of Preferences, Rights and Limitations of Series C2
Convertible Preferred Stock.
IN WITNESS WHEREOF,
the undersigned have executed this Certificate this 30
th
day of August
2018.
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/s/ Gene S.
Cartwright
Name: Gene S.
Cartwright
Title: President
and Chief Executive Officer
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SCHEDULE 1
TERMS
OF PREFERRED STOCK
Section 1.
Definitions
. In
addition to the terms defined elsewhere in this Certificate of
Designation (this “
Certificate of Designation
”), for
all purposes of this Certificate of Designation, the following
terms shall have the meanings indicated in this Section
1:
"
Affiliate
" means any Person that,
directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 of the
Securities Act.
"
Bankruptcy Event
" means any of the
following events: (a) the Corporation or any Significant Subsidiary
(as such term is defined in Rule 1-02(w) of Regulation S-X) thereof
commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any
jurisdiction relating to the Corporation or any Significant
Subsidiary thereof, (b) there is commenced against the Corporation
or any Significant Subsidiary thereof any such case or proceeding
that is not dismissed within 60 days after commencement, (c) the
Corporation or any Significant Subsidiary thereof is adjudicated
insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered, (d) the
Corporation or any Significant Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60
calendar days after such appointment, (e) the Corporation or any
Significant Subsidiary thereof makes a general assignment for the
benefit of creditors, (f) the Corporation or any Significant
Subsidiary thereof calls a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts,
or (g) the Corporation or any Significant Subsidiary thereof, by
any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the
foregoing.
"
Business Day
" means any day except
Saturday, Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State
of Georgia are authorized or required by law or other governmental
action to close.
"
Closing Bid Price
" means, for any
security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the
Principal Trading Market, or, if the Principal Trading Market
begins to operate on an extended hours basis and does not designate
the closing bid price or the closing trade price (as the case may
be) then the last bid price or last trade price, respectively, of
such security prior to 4:00:00 p.m., New York time, or, if the
Principal Trading Market is not the principal securities exchange
or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed
or traded, or if the foregoing do not apply, the last closing bid
price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such
security, or, if no closing bid price or last trade price,
respectively, is reported for such security, the average of the bid
prices, or the ask prices, respectively, of any market makers for
such security as reported by OTC Markets Group Inc. If the Closing
Bid Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value as mutually
determined by the parties. If the parties are unable to agree upon
the fair market value of such security, then the Board of Directors
of the Corporation shall use its good faith judgment to determine
the fair market value. The Board of Directors' determination shall
be binding upon all parties absent demonstrable error. All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during such period.
"
Commission
" means the United States
Securities and Exchange Commission or the successor
thereto.
"
Common Stock
" means (i) the
Corporation's shares of common stock, $0.001 par value per share,
and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification
of such common stock.
"
Common Stock Equivalents
" means any
securities of the Corporation or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
"
Conversion Amount
" means the sum of the
Stated Value at issue.
"
Conversion Price
" shall initially mean
the conversion price of the Series C Preferred Stock at the time
the Preferred Stock is first issued, subject to adjustment as
provided herein.
"
Conversion Shares
" means, collectively,
the shares of Common Stock or other securities issuable upon
conversion of the shares of Preferred Stock in accordance with the
terms hereof.
"
Eligible Market
" means any of the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: The NASDAQ Global
Market, The NASDAQ Global Select Market, The NASDAQ Capital Market,
the New York Stock Exchange, NYSE Arca, the NYSE MKT, the OTCQX
Marketplace or the OTCQB Marketplace (or any successor to any of
the foregoing).
"
Exchange Act
" means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“
Exchange Agreement
” means that
certain Share Exchange Agreement by and between the Corporation and
holders of the Corporations Series C1 Preferred Stock as of the
date therein stated.
"
Junior Securities
" means the Common
Stock and all other Common Stock Equivalents of the Corporation
other than the Series C Preferred Stock, each of which is
pari
passu
to the Preferred Stock,
or those other securities which are explicitly senior or
pari
passu
to the Preferred Stock in
dividend rights or liquidation preference.
“
Lock-Up Period”
means a period of
180 days following the date of the filing of the Certificate of
Designation with the Secretary of State of the State of Delaware
during which the Holders of the Preferred Stock shall not to
convert their Preferred Stock into Common Stock.
"
Original Issue Date
" means, with respect
to any shares of Preferred Stock, the date of the first issuance
thereof regardless of the number of transfers thereof or the number
of certificates which may be issued to evidence such Preferred
Stock.
"
Person
" means an individual,
corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed
herein.
"
Principal Trading Market
" means the
Principal Trading Market on which the Common Stock is primarily
listed and quoted for trading.
“
Qualified Financing
” means a
transaction or series of transactions pursuant to which the
Corporation issues and sells shares of its Preferred Stock or other
securities, in each case convertible into Common Stock, for
aggregate gross proceeds of at least One Million U.S. dollars
($1,000,000.00) (excluding all proceeds from notes that are
converted into such securities, or otherwise cancelled in
consideration for the issuance of such securities) with the
principal purpose of raising capital.
"
Securities Act
" means the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder.
“
Series C1 Preferred Stock
” means
the Corporation’s Series C1 Convertible Preferred Stock, par
value $0.001 per share.
"
Subsidiary
" means, as of any date of
determination, any Person in which the Corporation on such date
directly or indirectly, (i) owns any of the outstanding capital
stock or holds any equity or similar interest of such Person or
(ii) controls or operates all or any part of the business,
operations or administration of such Person.
"
Trading Day
" means a day on which the
Common Stock is listed or quoted and traded on its Principal
Trading Market, or, if the Common Stock is not listed or quoted on
any Principal Trading Market, a Business Day.
"
Transfer Agent
" means Computershare
Trust Company, N.A., the current transfer agent of the Corporation,
with a mailing address of 250 Royall Street, Canton, Massachusetts
02021 and a facsimile number of (303) 262-0610, and any successor
transfer agent of the Corporation.
"
Volume Failure
" means, with respect to a
particular date of determination, that the aggregate dollar trading
volume of the Common Stock on the Eligible Market on which the
Common Stock is listed or designated for quotation as of such date
of determination over the twenty (20) consecutive Trading Day
period ending on the Trading Day immediately preceding such date of
determination is less than $100,000.
Section 2.
Designation, Amount and
Par Value
. The series of preferred stock shall be designated
as the Series C2 Convertible Preferred Stock (the "
Preferred Stock
") and the number of
shares so designated shall be up to 4,312.25 (which shall not be
subject to increase without the written consent of all of the
holders of the Preferred Stock (each, a "
Holder
" and collectively, the
"
Holders
")). Each share of
Preferred Stock shall have a par value of $0.001 per share and a
stated value equal to $1,000 (the "
Stated Value
"), subject to increases as
set forth in Section 3.
Section 3.
Dividends
.
(a)
[Reserved]
(b) Holders shall
be entitled to receive, and the Corporation shall pay, dividends on
shares of Preferred Stock on an as-if-converted-to-Common-Stock
basis, equal to and in the same form as dividends (other than
dividends in the form of Common Stock) actually paid on shares of
the Common Stock when, as and if such dividends (other than
dividends in the form of Common Stock) are paid on shares of the
Common Stock. Other than as set forth in the previous sentence, no
other dividends shall be paid on shares of Preferred Stock; and the
Corporation shall pay no dividends (other than dividends in the
form of Common Stock) on shares of the Common Stock unless it
simultaneously complies with the previous sentence. At the election
of the Holder, any unpaid dividends hereunder shall be accreted to,
and shall increase the outstanding Stated Value.
(c)
[Reserved]
(d)
Other Securities
. So long as
any Preferred Stock shall remain outstanding, without the
affirmative vote of the Holders of a majority of the
then-outstanding shares of the Preferred Stock, the Corporation
shall not redeem, purchase or otherwise acquire directly or
indirectly more than a
de
minimis
amount of any Junior
Securities, other than as to repurchases of Common Stock or Common
Stock Equivalents from officers or directors for tax withholding
purposes or related to their departure, provided that, while any of
the Preferred Stock remains outstanding, such repurchases shall not
exceed an aggregate of $100,000 for any fiscal year from all
officers and directors.
(e)
[Reserved]
(f)
Special Reserves
. The
Corporation acknowledges and agrees that the capital of the
Corporation (as such term is used in Section 154 of the Delaware
General Corporation Law) in respect of the Preferred Stock and any
future issuances of the Corporation's capital stock shall be equal
to the aggregate par value of such Preferred Stock or capital
stock, as the case may be, and that, on or after the date of the
Exchange Agreement, it shall not increase the capital of the
Corporation with respect to any shares of the Corporation's capital
stock issued and outstanding on such date. The Corporation also
acknowledges and agrees that it shall not create any special
reserves under Section 171 of the Delaware General Corporation Law
without the prior written consent of each Holder.
Section 4.
Voting Rights
.
Except as otherwise provided herein or as otherwise required by
law, the Preferred Stock shall have the right to vote as a single
class with the Common Stock on an as-if-converted-to-Common-Stock
basis (without regard to whether or not the shares are then
convertible due to the existence or non-existence of a Lock-Up
Period or as a result of the beneficial ownership limitations set
forth in Section 6(e)]). Further, as long as any shares of
Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote of the Holders of a majority of the then
outstanding shares of the Preferred Stock, (a) alter or change
adversely the powers, preferences or rights given to the Preferred
Stock or alter or amend this Certificate of Designation, (b)
authorize or create any class of stock ranking as to dividends,
redemption or distribution of assets upon a Liquidation (as defined
in Section 5) senior to, or otherwise
pari
passu
with, the Preferred
Stock, (c) amend its certificate of incorporation or other charter
documents in any manner that adversely affects any rights of the
Holders, (d) increase the number of authorized shares of Preferred
Stock, or (e) enter into any agreement with respect to any of the
foregoing.
Section 5.
Liquidation
. Upon
any liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary (a "
Liquidation
"), the Holders shall be
entitled to receive out of the assets, whether capital or surplus,
of the Corporation an amount equal to the Stated Value, plus any
other fees, liquidated damages or dividends then due and owing
thereon under this Certificate of Designation, for each share of
Preferred Stock before any distribution or payment shall be made to
the holders of any Junior Securities, and if the assets of the
Corporation shall be insufficient to pay in full such amounts, then
the entire assets to be distributed among the Holders ratably in
accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. A
Bankruptcy Event shall be deemed a Liquidation. The Corporation
shall mail written notice of any such Liquidation, not less than
forty-five (45) days prior to the payment date stated therein, to
each Holder.
Section 6.
Conversion
.
(a)
Conversions at Option of
Holder
. Each share of Preferred Stock shall be convertible,
at any time and from time to time after the expiration of the
Lock-Up Period at the option of the Holder thereof, into that
number of shares of Common Stock (subject to the limitations set
forth in this Section 6) determined by dividing the Stated Value of
such share of Preferred Stock by the Conversion Price. Holders
shall effect conversions by providing the Corporation with a
conversion notice, substantially in the form attached hereto as
Annex A
(each, a
"
Notice of Conversion
").
Each Notice of Conversion shall specify the number of shares of
Preferred Stock to be converted, the number of shares of Preferred
Stock owned prior to the conversion at issue, the number of shares
of Preferred Stock owned subsequent to the conversion at issue and
the date on which such conversion is to be effected, which date may
not be prior to the date the applicable Holder delivers by
facsimile such Notice of Conversion to the Corporation (such date,
the "
Conversion Date
"). If
no Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion to
the Corporation is deemed delivered hereunder. No ink-original
Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Conversion form be required. The calculations and entries
set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error. To effect conversions of shares
of Preferred Stock, a Holder shall not be required to surrender the
certificate(s) representing the shares of Preferred Stock to the
Corporation unless all of the shares of Preferred Stock represented
thereby are so converted, in which case such Holder shall deliver
the certificate representing such shares of Preferred Stock
promptly following the Conversion Date at issue. Shares of
Preferred Stock converted into Common Stock in accordance with the
terms hereof shall be canceled and shall not be
reissued.
(b)
Mandatory Lock-Up Period
.
Notwithstanding anything to the contrary contained elsewhere in
this Certificate of Designation and the Exchange Agreement, no
conversion of the Preferred Stock shall occur during the Lock-Up
Period.
(c)
Mandatory Conversion upon Qualified
Financing
. If a Qualified Financing occurs, then the
Preferred Stock shall automatically convert into that number of
securities sold in such Qualified Financing determined by dividing
the Stated Value of such share of Preferred Stock by the purchase
price of the securities sold in the Qualified
Financing.
(d)
Mechanics of
Conversion
(i)
Delivery of Conversion Shares upon
Conversion
. Not later than three (3) Trading Days after each
Conversion Date (the "
Share
Delivery Date
"), the Corporation shall deliver, or cause to
be delivered, to the converting Holder (A) a certificate or
certificates representing the number of Conversion Shares being
acquired upon the conversion of the Preferred Stock and (B) a bank
check in the amount of accrued and unpaid dividends, if the
Corporation has elected or is required to pay accrued dividends in
cash. The Corporation shall use its best efforts to deliver the
Conversion Shares electronically through the Depository Trust
Company or another established clearing corporation performing
similar functions.
(ii)
Share Delivery Failure
. If the
Corporation shall fail, for any reason or for no reason, to issue
and deliver to the Holder on the Share Delivery Date, in accordance
with this Section 6, all Conversion Shares to which the Holder is
entitled (a "
Conversion
Failure
"), and if on or after such Share Delivery Date but
before the Corporation issues and delivers to the Holder such
Conversion Shares the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such conversion that the Holder anticipated receiving
from the Corporation, then, in addition to all other remedies
available to the Holder, the Corporation shall, within three (3)
Business Days after the Holder's request and in the Holder's sole
discretion, either (i) pay cash to the Holder in an amount equal to
the Holder's total purchase price (including brokerage commissions
and other reasonable out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (including, without limitation, by any
other Person in respect, or on behalf, of the Holder) (the
"
Buy-In Price
"), at which
point the Corporation's obligation to issue and deliver such shares
of Common Stock shall terminate, the Conversion Failure shall be
deemed cured, and the Stated Value shall be adjusted as though the
Corporation had honored its obligation to issue and deliver to the
Holder such Conversion Shares, or (ii) promptly honor its
obligation to issue and deliver to the Holder such Conversion
Shares, in accordance with this Section 6, and pay cash to the
Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) the number of Conversion Shares that
the Corporation failed to issue and deliver multiplied by (B) the
Closing Bid Price on the applicable Share Delivery Date, at which
point the Conversion Failure shall be deemed cured and the
outstanding Stated Value shall be adjusted to reflect that the
Corporation honored its obligation to issue and deliver to the
Holder such Conversion Shares. Furthermore, upon any Conversion
Failure, the Corporation shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each one thousand
dollars ($1,000) of Stated Value of Preferred Stock being
converted, ten dollars ($10) per Trading Day (increasing to twenty
dollars ($20) per Trading Day on the fifth (5th) Trading Day after
such liquidated damages begin to accrue) for each Trading Day after
such Share Delivery Date until such Conversion Shares are issued
and delivered in accordance with this Section 6 (or the obligation
to issue and deliver such shares is terminated in accordance with
the foregoing sentence). Nothing herein shall limit a Holder's
right to pursue actual damages for the Corporation's failure to
deliver Conversion Shares by the applicable Share Delivery Date and
the Holder shall have the right to pursue all remedies available to
it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief. The
exercise of any such rights shall not prohibit the Holder from
seeking to enforce damages pursuant to any other Section hereof or
under applicable law.
(iii)
Reservation of Shares Issuable Upon
Conversion
. The Corporation covenants that it will use
reasonable efforts to reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose
of issuance upon conversion of the Preferred Stock and payment of
dividends on the Preferred Stock, each as herein provided, free
from preemptive rights or any other actual contingent purchase
rights of Persons other than the Holder (and the other holders of
the Preferred Stock), not less than such aggregate number of shares
of the Common Stock as shall (subject to the terms and conditions
set forth in the Exchange Agreement) be issuable (taking into
account the adjustments and restrictions of Section 7) upon the
conversion of the then outstanding shares of Preferred Stock and
payment of dividends hereunder. The Corporation covenants that all
shares of Common Stock that shall be so issuable shall, upon issue,
be duly authorized, validly issued, fully paid and
nonassessable.
(iv)
Fractional Shares
. No
fractional shares or scrip representing fractional shares shall be
issued upon the conversion of the Preferred Stock, and instead the
number of shares issued shall be rounded down to the next whole
share. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such conversion, the
Corporation shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Conversion Price.
(v)
Transfer Taxes and Expenses
.
The issuance of Conversion Shares on conversion of this Preferred
Stock shall be made without charge to any Holder for any
documentary stamp or similar taxes that may be payable in respect
of the issue or delivery of such Conversion Shares, provided that
the Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance and
delivery of any such Conversion Shares upon conversion in a name
other than that of the Holders of such shares of Preferred Stock
and the Corporation shall not be required to issue or deliver such
Conversion Shares unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Corporation the amount
of such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid. The Corporation shall pay
all Transfer Agent fees required for same-day processing of any
Notice of Conversion.
(e)
Beneficial Ownership
Limitation
. Notwithstanding anything to the contrary
contained elsewhere herein, the number of Conversion Shares that
may be acquired by a Holder upon any conversion of this Preferred
Stock (or otherwise in respect hereof) shall be limited to the
extent necessary to ensure that, following such conversion (or
other issuance), the total number of shares of Common Stock then
beneficially owned by the Holder and its Affiliates and any other
Persons whose beneficial ownership of Common Stock would be
aggregated with the Holder's for purposes of Section 13(d) of the
Exchange Act, does not exceed 4.999% of the total number of then
issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon such conversion),
it being acknowledged by the Holder that the Corporation is not
representing to such Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and such Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 6(c) applies, the determination of whether this Preferred
Stock is convertible (in relation to other securities owned by such
Holder) and of which portion of this Preferred Stock is convertible
shall be in the sole discretion of the Holder, and the Corporation
shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 6(c), in
determining the number of outstanding shares of Common Stock, the
Holder may rely on the number of outstanding shares of Common Stock
as reflected in (x) the Corporation's most recent Form 10-Q or Form
10-K, as the case may be, (y) a more recent public announcement by
the Corporation or (z) any other notice by the Corporation or the
Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of the Holder, the
Corporation shall within three (3) Trading Days confirm orally and
in writing to such Holder the number of shares of Common Stock then
outstanding. This provision shall not restrict the number of shares
of Common Stock which a Holder may receive or beneficially own in
order to determine the amount of securities or other consideration
that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 8. By written notice to the
Corporation, which will not be effective until the sixty-first
(61st) day after such notice is delivered to the Corporation, a
Holder may waive the provisions of this Section 6(c) (but such
waiver will not affect any other Holder) to change the beneficial
ownership limitation to 9.999% of the number of shares of the
Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon conversion of this
Preferred Stock, and the provisions of this Section 6(c) shall
continue to apply. Upon such a change by a Holder of the beneficial
ownership limitation from such 4.999% limitation to such 9.999%
limitation, the beneficial ownership limitation may not be further
waived by such Holder. This Section 6(c) shall not apply to any
Holder who, immediately prior to becoming the beneficial owner of
shares of Preferred Stock, beneficially held more than 4.99% of the
Common Stock.
(f)
[Reserved]
Section 7.
Certain
Adjustments
.
(a)
Stock Dividends and Stock
Splits
. If the Corporation, at any time while this Preferred
Stock is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions payable in shares of Common Stock
on shares of Common Stock or any other Common Stock Equivalents
(other than Common Stock issued as dividends on or upon the
conversion of this Preferred Stock), (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, (iii)
combines (including by way of a reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv)
issues, in the event of a reclassification of shares of the Common
Stock, any shares of capital stock of the Corporation, then the
Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
any treasury shares of the Corporation) outstanding immediately
before such event, and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to this Section 7(a) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or
re-classification.
(b)
Subsequent Equity
Sales
.
(i) For so long as
any Preferred Stock is outstanding, if the Corporation shall issue
or sell any shares of Common Stock (as actually issued or, pursuant
to paragraph (ii) below, deemed to be issued), without the consent
of the holders of at least a majority in interest of the Preferred
Stock then outstanding, for a consideration per share less than the
Conversion Price in effect immediately prior to such issue or sale,
then immediately upon such issue or sale the Conversion Price shall
automatically be adjusted to a price equal to the price paid per
share in such sale or issue.
(ii) For the
purposes of the paragraph (i) above, none of the following
issuances (each, an "
Exempt
Issuance
") shall be considered the issuance or sale of
Common Stock:
(A) the issuance of
Common Stock upon the conversion of, or dividends or distributions
on, any Common Stock Equivalents outstanding as of the date of the
Exchange Agreement, provided that such Common Stock Equivalents
have not been amended since the date of the Exchange Agreement to
increase the number of underlying securities or to decrease the
exercise price, exchange price or conversion price of such
securities (other than automatically pursuant to their
terms);
(B) the issuance of
shares of Common Stock (or Common Stock Equivalents to employees or
directors of, or consultants to, the Corporation upon approval by
the Corporation's Board of Directors or under a stock plan approved
by the Corporation's Board of Directors (not including the
reissuance of shares repurchased by the Corporation from employees
of the Corporation);
(C) the issuance of
the Preferred Stock pursuant to the Exchange Agreement, and the
issuance of any Securities (as defined by the Exchange Agreement)
upon conversion or exercise of any Preferred Stock
(D) the issuance of
Common Stock or Common Stock Equivalents to any existing holder of
the Corporation's securities as of the date of the Exchange
Agreement that do not exceed $150,000 of Common Stock in the
aggregate, which issuances are for the purpose of obtaining
benefits and/or waivers from such holder and not for financing
purposes;
(E) the issuance of
Common Stock or Common Stock Equivalents in full or partial
consideration in connection with a bona fide strategic merger,
acquisition, consolidation or purchase of all or substantially all
of the securities or assets of a corporation or other entity, so
long as such issuance is not for the primary purpose of raising
capital by the Corporation;
(F) the issuance of
Common Stock or Common Stock Equivalents in connection with a bona
fide strategic license agreement, sponsored research agreement,
collaboration agreement, development agreement, OEM agreement,
marketing or distribution agreement, or other bona fide partnering
arrangement, so long as such issuance is not for the primary
purpose of raising capital by the Corporation;
(G) the issuance of
Common Stock or Common Stock Equivalents to a bank or other
financial institution pursuant to a bona fide commercial debt
financing or to equipment lessor pursuant to a bona fide equipment
leasing agreement; and
(H) the issuance of
Common Stock upon a stock split, stock dividend or subdivision of
the Common Stock.
(iii) For the
purposes of paragraph (i) above, the following subparagraphs (A) to
(C), inclusive, shall also be applicable:
(A) In case at any
time the Corporation shall grant any rights to subscribe for, or
any rights or options to purchase, Common Stock Equivalents,
whether or not such rights or options or the right to convert or
exchange any such Common Stock Equivalents are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such rights or options or upon
conversion or exchange of such Common Stock Equivalents (determined
by dividing (x) the total amount, if any, received or receivable by
the Corporation as consideration for the granting of such rights or
options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of such
rights or options, plus, in the case of any such rights or options
which relate to such Common Stock Equivalents, the minimum
aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Common Stock Equivalents and upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the exercise of such rights or
options or upon the conversion or exchange of all such Common Stock
Equivalents issuable upon the exercise of such rights or options)
shall be less than the Conversion Price in effect immediately prior
to the time of the granting of such rights or options, then the
total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon conversion or exchange
of the total maximum amount of such Common Stock Equivalents
issuable upon the exercise of such rights or options shall (as of
the date of granting of such rights or options) be deemed to be
outstanding and to have been issued for such price per
share.
(B) In case at any
time the Corporation shall issue or sell any Common Stock
Equivalents, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange
(determined by dividing (x) the total amount received or receivable
by the Corporation as consideration for the issue or sale of such
Common Stock Equivalents, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon
the conversion or exchange thereof, by (y) the total maximum number
of shares of Common Stock issuable upon the conversion or exchange
of all such Common Stock Equivalents) shall be less than the
Conversion Price in effect immediately prior to the time of such
issue or sale, then the total maximum number of shares of Common
Stock issuable upon conversion or exchange of such Common Stock
Equivalents shall (as of the date of the issue or sale of such
Common Stock Equivalents) be deemed to be outstanding and to have
been issued for such price per share, provided that if any such
issue or sale of such Common Stock Equivalents is made upon
exercise of any rights to subscribe for or to purchase or any
option to purchase any such Common Stock Equivalents for which
adjustments of the conversion price have been or are to be made
pursuant to other provisions of this Section 7(b), no further
adjustment of the conversion price shall be made by reason of such
issue or sale.
(C) In case at any
time any shares of Common Stock or Common Stock Equivalents or any
rights or options to purchase any such Common Stock, or Common
Stock Equivalents shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount
received by the Corporation therefor. In case any shares of Common
Stock or Common Stock Equivalents or any rights or options to
purchase any such Common Stock or Common Stock Equivalents shall be
issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined
by the Corporation's Board of Directors.
(c)
Subsequent Rights Offerings
. In
addition to any adjustments pursuant to Section 7(a) above, if at
any time the Corporation grants, issues or sells any Common Stock
or Common Stock Equivalents or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any
class of shares of Common Stock (the "
Purchase Rights
"), then the Holder will
be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of such Holder's
Preferred Stock (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no
such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided, however, to the extent that
the Holder's right to participate in any such Purchase Right would
result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such
Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
(d)
Pro Rata Distributions
. During
such time as this Preferred Stock is outstanding, if the
Corporation shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to
holders of shares of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash,
stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
"
Distribution
"), at any time
after the issuance of this Preferred Stock, then, in each such
case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Preferred
Stock (without regard to any limitations on conversion hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (
provided
,
however
, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
(e)
Fundamental Transaction
. If, at
any time while this Preferred Stock is outstanding (i) the
Corporation effects any merger or consolidation of the Corporation
with or into another Person, in which the Corporation is not the
survivor or the stockholders of the Corporation immediately prior
to such merger or consolidation do not own, directly or indirectly,
at least 50% of the voting securities of the surviving entity, (ii)
the Corporation effects any sale of all or substantially all of its
assets or a majority of its Common Stock is acquired by a third
party, in each case, in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the
Corporation or another Person) is completed pursuant to which all
or substantially all of the holders of Common Stock are permitted
to tender or exchange their shares for other securities, cash or
property, or (iv) the Corporation effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for
other securities, cash or property (other than as a result of a
subdivision or combination of shares of Common Stock covered by
Section 7(a) above) (in any such case, a "
Fundamental Transaction
"), then, subject
to Section 6(c) (including with respect to the beneficial ownership
of securities of any successor to the Corporation, surviving entity
or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or Person (the "
Successor Entity
") as a result of the
Fundamental Transaction) the Holder shall receive, upon
consummation of the Fundamental Transaction, the same amount and
kind of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if
it had been, immediately prior to such Fundamental Transaction, the
holder of the number of shares of Common Stock then issuable upon
conversion in full of this Preferred Stock without regard to any
limitations on conversion contained herein (the "
Alternate Consideration
"), and the
Holder shall promptly thereafter return the certificate for such
Holder's Preferred Stock to the Corporation (or Successor Entity)
for cancelation. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Preferred Stock in connection with such Fundamental Transaction.
The Corporation shall not effect any such Fundamental Transaction
unless prior to or simultaneously with the consummation thereof,
the Successor Entity shall assume the obligation to deliver to the
Holder, such Alternate Consideration as, in accordance with the
foregoing provisions, the Holder may be entitled to receive, and
the other obligations under this Preferred Stock. To the extent
Section 6(c) would otherwise limit the amount of Alternate
Consideration payable to the Holder under this Section 8(a), the
Corporation (or Successor Entity, as applicable) shall pay to the
Holder the cash equivalent of the fair market value of such
Alternate Consideration, but only to the extent of such limitation
under Section 6(c). Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Certificate of
Designation referring to the "Corporation" shall refer instead to
the Successor Entity), and may exercise every right and power of
the Corporation and shall assume all of the obligations of the
Corporation under this Certificate of Designation with the same
effect as if such Successor Entity had been named as the
Corporation herein.
(f)
Calculations
. All calculations
under this Section 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 7, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of
the Corporation) issued and outstanding.
(g)
Notice to the
Holders
.
(i)
Adjustment to Conversion Price
.
Whenever the Conversion Price is adjusted pursuant to any provision
of this Section 7 or pursuant to the definition of "Conversion
Price" contained in Section 1, the Corporation shall, as promptly
as practicable but in no event later than five (5) calendar days
following such adjustment, deliver to each Holder a notice setting
forth the Conversion Price after such adjustment and setting forth
a brief statement of the facts requiring such
adjustment.
(ii)
Notice to Allow Conversion by
Holder
. If (A) the Corporation shall declare a dividend (or
any other distribution in whatever form) on the Common Stock, (B)
the Corporation shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock, (C) the Corporation shall
authorize the granting to all holders of the Common Stock of rights
or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any
stockholders of the Corporation shall be required in connection
with any reclassification of the Common Stock, any consolidation or
merger to which the Corporation is a party, any sale or transfer of
all or substantially all of the assets of the Corporation, or any
compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property or (E) the Corporation
shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, then,
in each case, the Corporation shall cause to be filed at each
office or agency maintained for the purpose of conversion of this
Preferred Stock, and shall cause to be delivered to each Holder at
its last address as it shall appear upon the stock books of the
Corporation, at least twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Corporation or any of the Subsidiaries, the
Corporation shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Holder
shall remain entitled to convert the Conversion Amount of this
Preferred Stock (or any part hereof) during the 20-day period
commencing on the date of such notice through the effective date of
the event triggering such notice except as may otherwise be
expressly set forth herein.
Section 8.
Miscellaneous.
(a)
Notices
. Whenever notice is
required to be given hereunder, unless otherwise provided herein,
such notice shall be given in accordance with Section 4(d) of the
Exchange Agreement.
(b)
Absolute Obligation
. Except as
expressly provided herein, no provision of this Certificate of
Designation shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay liquidated
damages and any accrued dividends on the shares of Preferred Stock
at the time, place, and rate, and in the coin or currency, herein
prescribed.
(c)
Lost or Mutilated Preferred Stock
Certificate
. If a Holder's Preferred Stock certificate shall
be mutilated, lost, stolen or destroyed, the Corporation shall
execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated certificate, or in lieu of or in
substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Preferred Stock so mutilated, lost,
stolen or destroyed, but only upon receipt of evidence of such
loss, theft or destruction of such certificate, and of the
ownership hereof reasonably satisfactory to the
Corporation.
(d)
Waiver
. Any waiver by the
Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a
waiver by any other Holders. The failure of the Corporation or a
Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of
the right thereafter to insist upon strict adherence to that term
or any other term of this Certificate of Designation on any other
occasion. Any waiver by the Corporation or a Holder must be in
writing.
(e)
Severability
. If any provision
of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to
all other Persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law.
(f)
Next Business Day
. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.
(g)
Headings
. The headings
contained herein are for convenience only, do not constitute a part
of this Certificate of Designation and shall not be deemed to limit
or affect any of the provisions hereof.
(h)
Status of Converted or Redeemed
Preferred Stock
. Shares of Preferred Stock may only be
issued pursuant to the Exchange Agreement. If any shares of
Preferred Stock shall be converted, redeemed or reacquired by the
Corporation, such shares shall resume the status of authorized but
unissued shares of preferred stock and shall no longer be
designated as Series C2 Convertible Preferred Stock.
*********************
ANNEX
A
NOTICE OF
CONVERSION
(To be Executed by the Registered
Holder in order to Convert Shares of Preferred
Stock)
The undersigned
hereby elects to convert the number of shares of Series C2
Convertible Preferred Stock indicated below into shares of common
stock, par value $0.001 per share (the "
Common Stock
"), of Guided Therapeutics,
Inc., a Delaware corporation (the "
Corporation
"), according to the
conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a Person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates and opinions as may be required by the Corporation in
accordance with the Exchange Agreement. No fee will be charged to
the Holders for any conversion, except for any such transfer
taxes.
Conversion
calculations:
|
Date to Effect
Conversion:
_____________________________________________
|
|
Number of shares of
Preferred Stock owned prior to Conversion:
_______________
|
|
Number of shares of
Preferred Stock to be Converted:
________________________
|
|
Stated Value of
shares of Preferred Stock to be Converted:
____________________
|
|
Number of shares of
Common Stock to be Issued: ___________________________
|
|
Applicable
Conversion
Price:____________________________________________
|
|
Number of shares of
Preferred Stock subsequent to Conversion:
________________
|
|
DWAC
Instructions:
Broker no:
_________
Account no:
___________
|
|
|
[NAME OF
HOLDER]
By:___________________________________
Name:
Title:
|
|
|
|