Attached files
Exhibit 3.5
EXHIBIT
A.
CERTIFICATE
OF DESIGNATION OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES
E CONVERTIBLE
PREFERRED STOCK
PURSUANT TO SECTION
151 OF THE
DELAWARE GENERAL
CORPORATION LAW
The
undersigned, Gene S. Cartwright, does hereby certify
that:
1.
He is the President, Chief Executive Officer, and acting Chief
Financial Officer of Guided Therapeutics, Inc., a Delaware
corporation (the “Corporation”).
2.
The Corporation is authorized to issue 5 million shares of
preferred stock.
3.
The following resolutions were duly adopted by the board of
directors of the Corporation (the “Board of
Directors”):
WHEREAS,
the certificate of incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, consisting
of 5 million shares, $0.001 par value per share, issuable from time
to time in one or more series;
WHEREAS,
the Board of Directors is authorized to fix the dividend rights,
dividend rate, voting rights, conversion rights, rights and terms
of redemption and liquidation preferences of any wholly unissued
series of preferred stock and the number of shares constituting any
series and the designation thereof, of any of them;
and
WHEREAS,
it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the
preferred stock, which shall consist of, except as otherwise set
forth in the Purchase Agreement, up to 6,000 shares of the
preferred stock which the Corporation has the authority to issue,
as follows:
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or
exchange of other securities, rights or property and does hereby
fix and determine the rights, preferences, restrictions and other
matters relating to such series of preferred stock as
follows:
TERMS
OF PREFERRED STOCK
Section
1. Definitions. For the purposes
hereof, the following terms shall have the following
meanings:
“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 under the U.S. securities laws) 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 any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
"Canadian Trading Market" means
any of the following markets or exchanges on which the Common Stock
is listed or quoted for trading on a date in question: the TSX
Venture Exchange and the Toronto Stock Exchange (or any successors
to any of the foregoing).
“Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1 of the Purchase Agreement.
“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto and all
conditions precedent to (i) each Holder’s obligations to pay
the Subscription Amount and (ii) the Corporation’s
obligations to deliver the Securities have been satisfied or
waived.
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“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
Corporation’s common stock, par value $0.001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.
“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 Date” shall
have the meaning set forth in Section 6(a).
“Conversion Price” shall
have the meaning set forth in Section 6(b).
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Preferred Stock in accordance with the terms
hereof.
“Dividend Conversion Rate”
means the Market Price (as such term is defined in the policies of
the TSX Venture Exchange) immediately prior to the Dividend Payment
Date in question provided, however, that if the Common Stock is not
listed or quoted for trading on a Canadian Trading Market, then the
"Dividend Conversion Rate" shall mean the average of the 20 volume
weighted average prices of the Common Stock on the principal
Trading Market immediately prior to the Dividend Payment Date in
question.
“Dividend Conversion
Shares” shall have the meaning set forth in Section
3(a).
“Dividend Notice Period”
shall have the meaning set forth in Section 3(a).
“Dividend Payment Date”
shall have the meaning set forth in Section 3(a).
“Dividend Share Amount”
shall have the meaning set forth in Section 3(a).
“Effective Date” means all of the
Conversion Shares have been sold pursuant to Rule 144 or may be
sold pursuant to Rule 144 without the requirement for the
Corporation to be in compliance with the current public information
required under Rule 144 and without volume or manner-of-sale
restrictions, (c) following the one year anniversary
of the Closing Date provided that a holder of the Underlying Shares
is not an Affiliate of the Corporation or (d) all of the Underlying
Shares may be sold pursuant to an exemption from registration under
Section 4(1) of the Securities Act without volume or manner-of-sale
restrictions.
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“Equity
Conditions” means, during the period in question, (a) the
Corporation shall have duly honored all conversions scheduled to
occur or occurring by virtue of one or more Notices of Conversion
of the applicable Holder on or prior to the dates so requested or
required, if any, (b)(i) there is an effective Registration
Statement pursuant to which the Holders are permitted to utilize
the prospectus thereunder to resell all of the shares of Common
Stock issuable pursuant to this Certificate of Designation (and the
Corporation believes, in good faith, that such effectiveness will
continue uninterrupted for the foreseeable future) or (ii) all of
the Conversion Shares issuable pursuant to this Certificate of
Designation may be resold pursuant to Rule 144 without volume or
manner-of-sale restrictions, (c) the Common Stock is trading on a
Trading Market and all of the shares issuable pursuant to the
Transaction Documents are listed or quoted for trading on such
Trading Market (and the Corporation believes, in good faith, that
trading of the Common Stock on a Trading Market will continue
uninterrupted for the foreseeable future), (d) there is a
sufficient number of authorized, but unissued and otherwise
unreserved, shares of Common Stock for the issuance of all of the
shares then issuable pursuant to the this Certificate of
Designation and (e) the shares issuable upon conversion in full of
the redemption amount to the applicable Holder would not violate
the limitations set forth in Section 6(d) herein.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Holder” shall have the
meaning given such term in Section 2.
“Junior Securities” means
the Common Stock and all other Common Stock Equivalents of the
Corporation other than those securities which are explicitly senior
or pari
passu to the
Preferred Stock in dividend rights or liquidation
preference.
“Liens” means a lien,
charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
“Liquidation” shall have
the meaning set forth in Section 5.
“New York Courts” shall
have the meaning set forth in Section 9(d).
“Notice of Conversion”
shall have the meaning set forth in Section 6(a).
“Optional Redemption”
shall have the meaning set forth in Section 8(b).
“Optional Redemption
Amount” means the aggregate Stated Value then
outstanding plus accrued but unpaid dividends in respect of the
Preferred Stock.
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“Optional Redemption Date”
shall have the meaning set forth in Section 8(b).
“Optional Redemption
Notice” shall have the meaning set forth in Section
8(b).
“Optional Redemption Notice
Date” shall have the meaning set forth in Section
8(b).
“Original Issue Date”
means the date of the first issuance of any shares of the Preferred
Stock regardless of the number of transfers of any particular
shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred
Stock.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Preferred Stock” shall
have the meaning set forth in Section 2.
“Purchase Agreement” means
the Securities Purchase Agreement, dated as of the Original Issue
Date, among the Corporation and the original Holders, as amended,
modified or supplemented from time to time in accordance with its
terms.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such
Rule.
“Securities” means
Preferred Stock and the Underlying Shares.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Stated Value” shall have
the meaning set forth in Section 2, as the same may be increased
pursuant to Section 3.
“Subscription Amount”
shall mean, as to each Holder, the aggregate amount to be paid for
the Preferred Stock purchased pursuant to the Purchase Agreement as
specified below such Holder’s name on the signature page of
the Purchase Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately
available funds.
“Subsidiary” means any
subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase
Agreement and shall, where applicable, also include any direct or
indirect subsidiary of the Corporation formed or acquired after the
date of the Purchase Agreement.
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“Successor Entity” shall
have the meaning set forth in Section 7(e).
“Trading Day” means a day
on which the principal Trading Market is open for
business.
“Trading 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 NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, OTCQB,
OTCQX, the Toronto Stock Exchange and the TSX Venture Exchange (or
any successors to any of the foregoing).
“Transaction Documents”
means this Certificate of Designation, the Purchase Agreement, all
exhibits and schedules thereto and hereto and any other documents
or agreements executed in connection with the transactions
contemplated pursuant to the Purchase Agreement.
“Transfer Agent” means
Computershare, the current transfer agent of the Corporation, and
any successor transfer agent of the Corporation.
“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion or
redemption of the Preferred Stock.
Section
2. Designation, Amount and Par
Value. The series of preferred stock shall be designated as
its Series E Convertible Preferred Stock (the “Preferred Stock”) and the
number of shares so designated shall be up to 5,000. Each share of
Preferred Stock shall have a par value of $0.001 per share and a
stated value equal to $1,000.00, subject to increase set forth in
Section 3 below (the “Stated
Value”).
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Section
3. Dividends.
a) Dividends in Cash or in Kind.
Each Holder of Preferred Stock (each, a “Holder” and collectively,
the “Holders”) shall be
entitled to receive, and the Corporation shall pay, cumulative
dividends at the rate per share (as a percentage of the Stated
Value per share) of 8% per annum (subject to increase pursuant to
Section 10(b)), payable
annually, beginning on the first such date after the Original Issue
Date and on each Optional Redemption Date (with respect only to
Preferred Stock being redeemed) (each such date, a
“Dividend Payment
Date”) (if any Dividend Payment Date is not a Trading
Day, the applicable payment shall be due on the next succeeding
Trading Day) in cash, or, following the approval of Canadian
Trading Market if required and at the Corporation’s option
(subject to the waterfall
below), in duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock as set forth in this Section
3(a), or a combination thereof (the dollar amount to be paid in
shares of Common Stock, the “Dividend Share Amount”)
based on the Dividend Conversion Rate.;
provided, however, the Corporation’s election to pay the
Dividend Share Amount in lieu of cash is subject to the following
order of priority: (i) if funds are legally available for the
payment of dividends and the Equity Conditions have not been met
during on the applicable Dividend Payment Date, in cash only, (ii)
if funds are legally available for the payment of dividends and the
Equity Conditions have been met on the applicable Dividend Payment
Date, at the sole election of the Corporation, in cash or shares of
Common Stock which shall be valued as determined above, (iii) if
funds are not legally available for the payment of dividends and
the Equity Conditions have been met on the applicable Dividend
Payment Date, in shares of Common Stock which shall be valued as
determined above, (iv) if funds are not legally available for the
payment of dividends and the Equity Conditions have not been met on
the applicable Dividend Payment Date, then, at the election of such
Holder, such dividends shall accrue to the next Dividend Payment
Date or shall be accreted to, and increase, the outstanding Stated
Value.
b) Corporation’s Ability to Pay
Dividends in Cash or Kind. The Corporation shall promptly
notify the Holders at any time the Corporation shall become able or
unable, as the case may be, to legally pay cash dividends. If at
any time the Corporation has the right to pay dividends in cash or
shares of Common Stock, the Corporation must provide the Holders
with at least 5 Trading Days’ notice of its election to pay a
regularly scheduled dividend in shares of Common Stock (the
Corporation may indicate in such notice that the election contained
in such notice shall continue for later periods until revised by a
subsequent notice).
c) Dividend Calculations.
Dividends on the Preferred Stock shall be calculated on the basis
of a 360-day year, consisting of twelve 30 calendar day periods,
and shall accrue daily commencing on the Original Issue Date, and
shall be deemed to accrue from such date whether or not earned or
declared and whether or not there are profits, surplus or other
funds of the Corporation legally available for the payment of
dividends.
d) Late Fees. Any dividends,
whether paid in cash or shares of Common Stock, that are not paid
within three Trading Days following a Dividend Payment Date shall
continue to accrue and shall entail a late fee, which must be paid
in cash, at the rate of 12% per annum or the lesser rate permitted
by applicable law which shall accrue daily from the Dividend
Payment Date through and including the date of actual payment in
full.
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Section
4. Voting Rights. Except as
otherwise provided herein or as otherwise required by law, the
Preferred Stock shall have no voting rights. However, 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 accrued and unpaid dividends thereon and any
other fees or liquidated damages 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 to the Holders shall be ratably distributed among
the Holders in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid in
full.
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 from and after the Original Issue
Date until the 5-year anniversary of the Original Issue Date at the
option of the Holder thereof, into that number of shares of Common
Stock (subject to the limitations set forth in Section 6(d))
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 the form of conversion notice
attached hereto as Annex
A (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 or redeemed in
accordance with the terms hereof shall be canceled and shall not be
reissued.
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b) Conversion Price. The
conversion price for the Preferred Stock shall equal $0.25, subject to adjustment herein (the
“Conversion
Price”).
c)
Mechanics of
Conversion.
i. Delivery of Conversion Shares Upon
Conversion. Not later than five (5) Trading Days after each
Conversion Date, the Corporation shall deliver, or cause to be
delivered, to the converting Holder the number of Conversion Shares
being acquired upon the conversion of the Preferred
Stock.
ii. Obligation Absolute; Partial
Liquidated Damages. The Corporation’s obligation to
issue and deliver the Conversion Shares upon conversion of
Preferred Stock in accordance with the terms hereof are absolute
and unconditional, irrespective of any action or inaction by a
Holder to enforce the same, any waiver or consent with respect to
any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by such Holder or any other Person of any
obligation to the Corporation or any violation or alleged violation
of law by such Holder or any other person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Corporation to such Holder in connection with the issuance of
such Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Corporation of any such action
that the Corporation may have against such Holder.
iii. Reservation
of Shares Issuable Upon Conversion. The Corporation
covenants that it will at all times 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 Purchase 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.
iv. Fractional Shares. No
fractional shares or scrip representing fractional shares shall be
issued upon the conversion of the Preferred Stock. As to any
fraction of a share which the Holder would otherwise be entitled to
purchase upon such conversion, the Corporation shall at its
election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.
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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.
d) Beneficial
Ownership Limitation. The Corporation shall not effect
any conversion of the Preferred Stock, and a Holder shall not have
the right to convert any portion of the Preferred Stock, to the
extent that, after giving effect to the conversion set forth on the
applicable Notice of Conversion, such Holder (together with such
Holder’s Affiliates, and any Persons acting as a group
together with such Holder or any of such Holder’s Affiliates
(such Persons, “Attribution Parties”))
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon
conversion of the Preferred Stock with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (i) conversion of the
remaining, unconverted Stated Value of Preferred Stock beneficially
owned by such Holder or any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Corporation
subject to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, the
Preferred Stock) beneficially owned by such Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 6(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this
Section 6(d) applies, the determination of whether the Preferred
Stock is convertible (in relation to other securities owned by such
Holder together with any Affiliates and Attribution Parties) and of
how many shares of Preferred Stock are convertible shall be in the
sole discretion of such Holder, and the submission of a Notice of
Conversion shall be deemed to be such Holder’s determination
of whether the shares of Preferred Stock may be converted (in
relation to other securities owned by such Holder together with any
Affiliates and Attribution Parties) and how many shares of the
Preferred Stock are convertible, in each case subject to the
Beneficial Ownership Limitation. To ensure compliance with this
restriction, each Holder will be deemed to represent to the
Corporation each time it delivers a Notice of Conversion that such
Notice of Conversion has not violated the restrictions set forth in
this paragraph 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(d), in
determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock
as stated in the most recent of the following: (i) the
Corporation’s most recent periodic or annual report filed
with the Commission, as the case may be, (ii) a more recent public
announcement by the Corporation or (iii) a more recent written
notice by the Corporation or the Transfer Agent setting forth the
number of shares of Common Stock outstanding. Upon the written or
oral request of a Holder, the Corporation shall within one Trading
Day confirm orally and in writing to such Holder the number of
shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the
Corporation, including the Preferred Stock, by such Holder or its
Affiliates or Attribution Parties since the date as of which such
number of outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% (or, upon
election by a Holder prior to the issuance of any shares of
Preferred Stock, 9.99%) of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon conversion of Preferred Stock
held by the applicable Holder. A Holder, upon notice to the
Corporation, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 6(d) applicable to its
Preferred Stock provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% 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
held by the Holder and the provisions of this Section 6(d) shall
continue to apply. Any such increase in the Beneficial Ownership
Limitation will not be effective until the 61st day after such
notice is delivered to the Corporation and shall only apply to such
Holder and no other Holder. The provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 6(d) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of Preferred Stock.
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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
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Corporation upon conversion of, or
payment of a dividend on, 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) Fundamental Transaction. If, at
any time while this Preferred Stock is outstanding, (i) the
Corporation, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Corporation
with or into another Person, (ii) the Corporation, directly or
indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any,
direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Corporation or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Corporation, directly or
indirectly, in one or more related transactions effects any
reclassification, reorganization or recapitalization 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, or (v) the Corporation, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such
other Person acquires more than 50% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the
other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or
share purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Preferred Stock, the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 6(d) on
the conversion of this Preferred Stock), the number of shares of
Common Stock of the successor or acquiring corporation or of the
Corporation, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Preferred
Stock is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 6(d) on
the conversion of this Preferred Stock). For purposes of any such
conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Corporation shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. 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 following such Fundamental
Transaction.
c) 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.
11
d) Notice to the
Holders.
i. Adjustment to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any provision
of this Section 7, the Corporation shall promptly deliver to each
Holder by facsimile or email 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
by facsimile or email to each Holder at its last facsimile number
or email 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.
Optional Redemption at Election of
Corporation. Subject to the
provisions of this Section 8, at any time following the Effective Date if the average of the
VWAPs for any consecutive 5 Trading Day period (“Measurement
Period”) exceeds 200% of the then Conversion Price and the
average daily trading volume of the Common Stock on the primary
Trading Market exceeds 20,000 shares per Trading Day during the
Measurement Period (subject to adjustment for reverse and forward
stock splits and the like), then the Corporation may deliver a notice to the Holders (an
“Optional Redemption
Notice” and the date such
notice is deemed delivered hereunder, the
“Optional
Redemption Notice Date”)
of its irrevocable election to redeem some or all of the then
outstanding Preferred Stock, for cash in an amount equal to the
Optional Redemption Amount on the 20th
Trading Day following the Optional
Redemption Notice Date (such date, the “Optional Redemption
Date” and such
redemption, the “Optional
Redemption”). The
Optional Redemption Amount is payable in full on the Optional
Redemption Date. The
Corporation may only effect an Optional Redemption if each of the
Equity Conditions shall have been met on each Trading Day occurring
during the period commencing on the Optional Redemption Notice Date
through to the Optional Redemption Date and through and including
the date payment of the Optional Redemption Amount is actually
made. If
any of the Equity Conditions shall cease to be satisfied at any
time during the 20 Trading Day period, then a Holder may elect to
nullify the Optional Redemption Notice as to such Holder by notice
to the Corporation within 3 Trading Days after the first day on
which any such Equity Condition has not been met (provided that if,
by a provision of the Transaction Documents, the Corporation is
obligated to notify the Holders of the non-existence of an Equity
Condition, such notice period shall be extended to the third
Trading Day after proper notice from the Corporation) in which case
the Optional Redemption Notice shall be null and void, ab
initio. The
Corporation covenants and agrees that
it will honor all Notices of Conversion tendered from the time of
delivery of the Optional Redemption Notice through the date the
Optional Redemption Amount is paid in
full.
12
Section
9. Miscellaneous
a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holders
hereunder including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile or
e-mail attachment, or sent by a nationally recognized overnight
courier service, addressed to the Corporation, at the address set
forth above Attention: Mark L. Faupel, COO, e-mail address of
mfaupel@guidedinc.com, or such other facsimile number, e-mail
address or address as the Corporation may specify for such purposes
by notice to the Holders delivered in accordance with this Section
11. Any and all notices or other communications or deliveries to be
provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile or e-mail attachment, or sent by
a nationally recognized overnight courier service addressed to each
Holder at the facsimile number, e-mail address or address of such
Holder appearing on the books of the Corporation, or if no such
facsimile number, e-mail address or address appears on the books of
the Corporation, at the principal place of business of such Holder,
as set forth in the Purchase Agreement. Any notice or other
communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
number or e-mail attachment at the e-mail address set forth in this
Section prior to 5:30 p.m. (New York City time) on any date, (ii)
the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number
or e-mail attachment at the e-mail address set forth in this
Section on a day that is not a Trading Day or later than 5:30 p.m.
(New York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be
given.
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, accrued dividends and accrued interest, as applicable, 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.
13
d) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of
conflict of laws thereof. All legal proceedings concerning the
interpretation, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in
the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). The
Corporation and each Holder hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such New York Courts, or such New
York Courts are improper or inconvenient venue for such proceeding.
The Corporation and each Holder hereby irrevocably waives personal
service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this
Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
applicable law. The Corporation and each Holder hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of
or relating to this Certificate of Designation or the transactions
contemplated hereby. If the Corporation or any Holder shall
commence an action or proceeding to enforce any provisions of this
Certificate of Designation, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or
proceeding.
e) 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.
f) 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.
14
g) 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.
h) 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.
i) Status of Converted or Redeemed
Preferred Stock. Shares of Preferred Stock may only be
issued pursuant to the Purchase 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 E Convertible Preferred Stock.
j) Non-Transferrable. The
Preferred Stock (but not the Conversion Shares following a
conversion hereunder) may not be transferred.
*********************
15
RESOLVED, FURTHER,
that the Chairman, the president or any vice-president, and the
secretary or any assistant secretary, of the Corporation be and
they hereby are authorized and directed to prepare and file this
Certificate of Designation of Preferences, Rights and Limitations
in accordance with the foregoing resolution and the provisions of
Delaware law.
IN
WITNESS WHEREOF, the undersigned have executed this Certificate
this ___ day of July, 2019.
|
__________________________________________
Name:
Gene S. Cartwright
Title:
President and CEO
|
__________________________________________
Name:
Mark Faupel
Title:
Secretary and COO
|
16
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
E 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 Purchase 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:
________________
|
|
|
Address
for Delivery: ______________________
or
DWAC
Instructions:
Broker
no: _________
Account
no: ___________
|
|
[HOLDER]
By:___________________________________
Name:
Title:
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