SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section
14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Solicitation Material Under Rule 14a-12
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GUIDED THERAPEUTICS, INC.
(Name of Registrant as Specified in its
Charter)
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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GUIDED THERAPEUTICS, INC.
5835 Peachtree Corners East, Suite
B
Norcross, Georgia 30092
September __, 2018
To the Stockholders of Guided Therapeutics, Inc.:
You are cordially invited to attend the
2018 Annual Meeting of Stockholders (the “
Annual Meeting
”) of Guided Therapeutics, Inc., a Delaware corporation
(the “
Company
”), to be held at 10:00 a.m. local time on [●], 2018, at the Company headquarters at 5835
Peachtree Corners East, Suite B, Norcross, Georgia 30092 to consider and vote upon the following proposals:
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1.
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The election of each of Gene S. Cartwright, Mark L. Faupel, Richard P. Blumberg, John E. Imhoff and Michael C. James (each a current member of the Company’s Board of Directors (the “
Board
”)) as directors of the Company, with each to serve on the Board until the next Annual Meeting of Stockholders or until his successor is elected and qualified or until his earlier death, resignation or removal;
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The ratification of the previous appointment by the Board of UHY LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018;
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An amendment to the Company’s Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s issued and outstanding common stock in a ratio of between 1-for-25 and 1-for-200, with such ratio to be determined at the sole discretion of the Board and with such reverse stock split to be effected at such time and date on or before December 31, 2018, if at all, as determined by the Board in its sole discretion;
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The adoption of the Guided Therapeutics, Inc. 2018 Stock Plan; and
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Vote on such other matters as may properly come before the Annual Meeting or any lawful adjournment or postponement thereof.
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THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES FOR AND “FOR” EACH OF THE OTHER PROPOSALS TO BE SUBMITTED
AT THE ANNUAL MEETING.
Pursuant to the provisions of the Company’s
bylaws, as amended, the Board of Directors has fixed the close of business on September 4, 2018 as the record date for determining
the stockholders of the Company entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. Accordingly,
only common and Series C2 preferred stockholders of record at the close of business on September 4, 2018 are entitled to notice
of, and shall be entitled to vote at, the Annual Meeting or any postponement or adjournment thereof.
Please carefully review
the attached notice and proxy statement for a more complete statement of matters to be considered at the Annual Meeting.
Your vote is very important to us regardless
of the number of shares you own.
Whether or not you are able to attend the Annual Meeting in person, please read the proxy
statement and promptly vote your proxy via the internet or by completing, dating, signing and returning the enclosed proxy to assure
representation of your shares at the Annual Meeting. Granting a proxy will not limit your right to vote in person if you wish to
attend the Annual Meeting and vote in person.
By Order of the Board of Directors,
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/s/ Gene S. Cartwright, Ph.D.
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Gene S. Cartwright, Ph.D.
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President and Chief Executive Officer, Director
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GUIDED THERAPEUTICS, INC.
5835 Peachtree Corners East, Suite
B
Norcross, Georgia 30092
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on
[●]
, 2018
This proxy statement is furnished in connection
with the solicitation of proxies by the Board of Directors (the “
Board
”) of Guided Therapeutics, Inc. (the “
Company
”)
for use at the 2018 Annual Meeting of Stockholders of the Company and at all adjournments and postponements thereof (the “
Annual
Meeting
”). The Annual Meeting will be held at 10:00 a.m. local time on [●], 2018, at the Company headquarters at
5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092, for the following purposes:
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The election of each of Gene S. Cartwright, Mark L. Faupel, Richard P. Blumberg, John E. Imhoff and Michael C. James (each a current member of the Company’s Board of Directors (the “
Board
”)) as directors of the Company, with each to serve on the Board until the next Annual Meeting of Stockholders or until his successor is elected and qualified or until his earlier death, resignation or removal;
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The ratification of the previous appointment by the Board of UHY LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018;
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An amendment to the Company’s Restated Certificate of Incorporation, as amended, to (i) effect a reverse stock split of the Company’s issued and outstanding common stock in a ratio of between 1-for-25 and 1-for-200, with such ratio to be determined at the sole discretion of the Board and with such reverse stock split to be effected at such time and date on or before December 31, 2018, if at all, as determined by the Board in its sole discretion;
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The adoption of the Guided Therapeutics, Inc. 2018 Stock Option Plan; and
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Vote on such other matters as may properly come before the Annual Meeting or any lawful adjournment or postponement thereof.
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The Board unanimously recommends a
vote “FOR” the election of the director nominees and “FOR” each of the other proposals submitted at the
Annual Meeting.
Holders of record of our common stock
and our Series C2 preferred stock at the close of business on September 4, 2018 (the “
Record Date
”) will be
entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.
However, to assure
your representation at the Annual Meeting, please vote your proxy via the internet or by completing, dating, signing and returning
the enclosed proxy.
Even if you have previously submitted your proxy, you may choose to vote in person at the Annual Meeting.
Whether or not you expect to attend the Annual Meeting, please read the proxy statement and then promptly vote your proxy to ensure
your representation at the Annual Meeting. Each share of common stock entitles the holder thereof to one vote. Each share of Series
C2 preferred stock entitles the holder thereof to 381,098 vote.
We are furnishing proxy materials on the
internet in addition to mailing paper copies of the materials to each of our common and Series C2 preferred stock stockholders
of record. You may also access the materials for the Annual Meeting as well as our other public filings (all of which you are urged
to read carefully) by visiting our website: http://www.guidedinc.com/regulatory-filings/
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Your vote is important, regardless
of the number of shares you own.
The affirmative vote of a plurality of the votes cast at the Annual Meeting by the holders
of the common stock and the holders of the Series C2 preferred stock, voting as a single class, is required to elect the director
nominees. The affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of common stock and the holders
of the Series C2 preferred stock, voting as a single class, is required to ratify the appointment of the Auditor and to adopt the
Guided Therapeutics, Inc. 2018 Stock Option Plan. The majority of the issued and outstanding shares of common stock and Series
C2 preferred stock, voting as a single class, entitled to vote at the Annual Meeting is required to approve the Reverse Split Proposal.
A complete list of common and Series C2
preferred stock stockholders of record entitled to vote at the Annual Meeting will be available for ten days before the Annual
Meeting at the principal executive offices of the Company for inspection by stockholders during ordinary business hours for any
purpose germane to the Annual Meeting.
You are urged to review carefully the
information contained in the enclosed proxy statement prior to deciding how to vote your shares.
This notice and the attached proxy statement
are first being disseminated to stockholders on or about [●], 2018.
By Order of the Board of Directors,
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/s/ Gene S. Cartwright, Ph.D.
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Gene S. Cartwright, Ph.D.
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President and Chief Executive Officer, Director
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IF YOU RETURN YOUR PROXY CARD WITHOUT
AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF THE DIRECTOR NOMINEES AND EACH OF THE OTHER PROPOSALS.
TABLE OF CONTENTS
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Page
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QUESTIONS AND ANSWERS
ABOUT THESE PROXY MATERIALS
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1
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THE ANNUAL MEETING
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5
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PROPOSAL 1: ELECTION
OF DIRECTORS
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9
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PROPOSAL 2: RATIFICATION
OF AUDITOR
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PROPOSAL 3: REVERSE
SPLIT PROPOSAL
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PROPOSAL 4: OPTION
PLAN PROPOSAL
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OTHER INFORMATION
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29
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ANNEX A: CERTIFICATE
OF AMENDMENT RELATING TO THE REVERSE SPLIT PROPOSAL
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A-1
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ANNEX B: GUIDED THERAPEUTICS, INC.
2018 STOCK OPTION PLAN
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B-1
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PROXY STATEMENT
GUIDED THERAPEUTICS, INC.
ANNUAL MEETING OF STOCKHOLDERS
To be held at
10:00 a.m. local time on
[●]
, 2018
at the Company
headquarters at 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092
QUESTIONS AND ANSWERS ABOUT THESE
PROXY MATERIALS
Why am I receiving this proxy statement?
The Company has delivered printed versions
of these materials by mail to holders of common stock and Series C2 preferred stock of record and has otherwise made these materials
available on the internet in connection with the Company’s solicitation of proxies for use at our 2018 Annual Meeting of
Stockholders (the “
Annual Meeting
”), which will take place at 10:00 a.m. local time on [●], 2018, at the
Company headquarters at 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092, and any postponement(s) or adjournment(s)
thereof.
This proxy statement gives you information
on each of the proposals put forth by Board of Directors (the “
Board
”) so that you can make an informed decision.
These materials were first sent or given to all common and Series C2 preferred stockholders of record entitled to vote at the Annual
Meeting on or about [●], 2018.
In this proxy statement, we refer to Guided
Therapeutics, Inc. as the “Company,” “we,” “us” or “our” or similar terminology.
What is included in these materials?
If you are a holder of our common stock,
par value $0.001 per share, or the holders of the Series C2 preferred stock, par value $0.001 per share, you will have received
a printed version of the proxy materials, which include:
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This proxy statement for the Annual Meeting;
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A proxy card along with voting instructions; and
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The Company’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2017 (the “
Annual Report
”).
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Who can vote at the Annual Meeting of stockholders?
Stockholders who owned shares of our common
stock and the holders of the Series C2 preferred stock on September 4, 2018 (the “
Record Date
”) may attend and
vote at the Annual Meeting. There were 320,715,101 shares of common stock and 3,263 shares of Series C2 preferred stock outstanding
on the Record Date. Each share of common stock entitles the holder thereof to one vote and each Series C2 preferred stock entitles
the holder thereof to 381,098 votes.
What is the proxy card?
The proxy card enables you to appoint
Gene S. Cartwright, Ph.D., our President and Chief Executive Officer, and Mark L. Faupel, our Chief Operating Officer, as your
representative at the Annual Meeting. By completing and returning the proxy card (or voting online or by telephone, if permissible
and as described herein), you are authorizing these persons or each of them to vote your shares at the Annual Meeting in accordance
with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting. Even
if you plan to attend the Annual Meeting, it is strongly recommended that you complete and return your proxy card before the Annual
Meeting date just in case your plans change. If a proposal comes up for vote at the Annual Meeting that is not on the proxy card,
the proxies will vote your shares, under your proxy, according to their best judgment.
What am I voting on?
You are being asked to vote:
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The election of each of Gene S. Cartwright, Mark L. Faupel, Richard P. Blumberg, John E. Imhoff and Michael C. James (each a current member of the Board)) as directors of the Company, with each to serve on the Board until the next Annual Meeting of Stockholders or until his successor is elected and qualified or until his earlier death, resignation or removal;
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2.
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The ratification of the previous appointment by the Board of UHY LLP (the “
Auditor
”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018;
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3.
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An amendment to the Company’s Restated Certificate of Incorporation, as amended, to (i) effect a reverse stock split of the Company’s issued and outstanding common stock in a ratio of between 1-for-25 and 1-for-200, with such ratio to be determined at the sole discretion of the Board and with such reverse stock split to be effected at such time and date on or before March 31, 2019, if at all, as determined by the Board in its sole discretion (the “
Reverse Split Proposal
”);
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4.
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The adoption of the Guided Therapeutics, Inc. 2018 Stock Option Plan (the “
Option Plan Proposal
”); and
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5.
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To undertake such other matters as may properly come before the Annual Meeting or any lawful adjournment or postponement thereof.
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How does the Board recommend that I vote?
Our Board unanimously recommends that
the stockholders vote
“FOR”
the election of the director nominees and
“FOR”
each
of the other proposals being put before our stockholders at the Annual Meeting.
What is the difference between holding shares as a stockholder
of record and as a beneficial owner?
Most of our common stockholders hold their
shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their own name.
As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If,
on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare Limited, you are a
“stockholder of record” who may vote at the Annual Meeting, and we are sending these proxy materials directly to you.
As the stockholder of record, you have the right to direct the voting of your shares by returning the enclosed proxy card to us
or to vote in person at the Annual Meeting or to vote on the internet at
http://www.envisionreports.com/GTHP
. Whether or not you plan to attend the Annual Meeting, please complete, date and sign the enclosed proxy card to ensure that your
vote is counted.
Beneficial Owner
If, on the Record Date, your shares were
held in an account at a brokerage firm or at a bank or other nominee holder, you are considered the beneficial owner of shares
held “in street name,” and these proxy materials are being forwarded to you by your broker or nominee who is considered
the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your
broker on how to vote your shares and to attend the Annual Meeting. However, since you are not the stockholder of record, you may
not vote these shares in person at the Annual Meeting unless you receive a valid proxy from your brokerage firm, bank or other
nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm, bank or other nominee holder.
If you do not make this request, you can still vote by using the voting instruction card enclosed with this proxy statement; however,
you will not be able to vote in person at the Annual Meeting.
If I am a holder of record of common stock and/or Series
C2 preferred stock, how do I vote?
There are three ways to vote:
(1)
In person.
If you are a holder of record of our common stock
and/or
Series C2 preferred stock, you may vote in person at the Annual Meeting. The Company will give you a ballot when you arrive.
(2) By mail.
As described
above, all holders of record of our common stock and Series C2 preferred stock will receive printed versions of the proxy materials,
including the proxy card. As such, you may vote by proxy by filling out the proxy card and sending it back in the envelope provided.
(3) Via the internet.
You may vote
via the internet by following the instructions provided on your proxy card.
If I am a beneficial owner of shares of our common stock
held in street name, how do I vote?
(1) In person.
If you
are a beneficial owner of shares of our common stock held in street name and you wish to vote in person at the Meeting, you must
obtain a legal proxy from the brokerage firm, bank, broker-dealer or other similar organization that holds your shares. Please
contact that organization for instructions regarding obtaining a legal proxy.
(2) By mail.
If you
request printed copies of the proxy materials by mail, you may vote by proxy by filling out the vote instruction form and sending
it back in the envelope provided by your brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
(3) Via the internet.
You may vote
by proxy via the internet by following the instructions provided by your brokerage firm, bank, broker-dealer or other similar organization
that holds your shares.
What does it mean if I receive more than one proxy card?
You may have multiple accounts at the
transfer agent and/or with brokerage firms. Please sign and return all proxy cards to ensure that all of your shares are voted.
What if I change my mind after I return my proxy?
As a holder of record of our common stock
or Series C2 preferred stock, you may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting.
You may do this by:
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sending a written notice to Mark L. Faupel, our Chief Operating Officer, stating that you would like to revoke your proxy of a particular date;
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signing another proxy card with a later date and returning it before the polls close at the Annual Meeting; or
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attending the Annual Meeting and voting in person.
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Please note, however, that if your shares
are held of record by a brokerage firm, bank or other nominee, you must instruct your broker, bank or other nominee that you wish
to change your vote by following the procedures on the voting form provided to you by the broker, bank or other nominee. If your
shares are held in street name, and you wish to attend and vote at the Annual Meeting, you must bring to the Annual Meeting a legal
proxy from the broker, bank or other nominee holding your shares, confirming your beneficial ownership of the shares and giving
you the right to vote your shares.
Will my shares be voted if I do not sign and return my
proxy card?
If your shares are held in street name
and you do not sign and return your proxy card, your shares will not be voted on non-routine matters. Your broker could vote on
routine matters without instructions from you.
If your shares are held in your name and
you do not sign and return your proxy card, your shares will not be voted.
How are votes counted?
You may vote “for,” “against,”
or “abstain” on each of the proposals being placed before our stockholders. Abstentions and broker non-votes will be
counted for the purpose of determining whether a quorum is present at the Annual Meeting.
Broker non-votes occur on a matter when
a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given.
These matters are referred to as “non-routine” matters. The election of directors and the Option Plan Proposal are
“non-routine.” Thus, in tabulating the voting result for these proposals, shares that constitute broker non-votes are
not considered votes cast on that proposal. The ratification of the appointment of the Auditor and the Reverse Split Proposal are
“routine” and therefore a broker may vote on these matters without instructions from the beneficial owner as long as
instructions are not given.
How many shares must be present or represented to conduct
business at the Annual Meeting?
The quorum requirement for holding the
Annual Meeting and transacting business is that holders of a majority of the common stock and Series C2 preferred stock outstanding
as of the Record Date must be present in person or represented by proxy. “Broker non-votes,” which are described above,
and abstentions are counted for the purpose of determining the presence of a quorum. In order to meet the quorum requirement for
holding the Annual Meeting and transacting business, holders of at least 160,357,551 shares of our common stock and holders of
at least 1,632 shares of Series C2 preferred stock must be present in person or represented by proxy at the Annual Meeting.
How many votes are required to elect the director nominees
of the Company?
In the election of the directors, the
five people receiving the highest number of affirmative votes from holders of our common stock and holders of our Series C2 preferred
stock, voting as a single class, will be elected.
How many votes are required to ratify the Board’s
appointment of the Auditor?
The affirmative vote of a majority of
the votes cast at the Annual Meeting by the holders of common stock and Series C2 preferred stock, voting as a single class, is
required to ratify the previous appointment by the Board of the Auditor as our independent registered public accounting firm for
the year ending December 31, 2018.
How many votes are required to approve the Reverse Split
Proposal?
The affirmative vote of a majority of
the issued and outstanding shares of common stock and Series C2 preferred stock entitled to vote at the Annual Meeting, voting
as a single class, is required to approve the Reverse Split Proposal.
How many votes are required to approve the Option Plan
Proposal?
The affirmative vote of a majority of
the votes cast at the Annual Meeting by the holders of common stock and Series C2 preferred stock, voting as a single class, is
required to approve the Option Plan Proposal.
What happens if I don’t indicate how to vote my
proxy?
If you just sign your proxy card without
providing further instructions, your shares will be voted “FOR” the director nominees and “FOR” the other
proposals being placed before our stockholders at the Annual Meeting.
Is my vote kept confidential?
Proxies, ballots and voting tabulations
identifying stockholders are kept confidential and will not be disclosed except as may be necessary to meet legal requirements.
Where do I find the voting results of the Meeting?
We will announce preliminary voting results
at the Annual Meeting. The final voting results will be tallied by the inspector of election at the Annual Meeting and then published
in the Company’s Current Report on Form 8-K, which the Company is required to file with the SEC within four business days
following the Annual Meeting.
Who can help answer my questions?
You can contact our Chief Operating Officer,
Mark L. Faupel, by telephone at (770) 242-8723, or by sending a letter to Mr. Faupel at the offices of the Company at 5835 Peachtree
Corners East, Suite B, Norcross, Georgia 30092 with any questions about the proposals described in this proxy statement or how
to execute your vote.
THE ANNUAL MEETING
General
This proxy statement is being furnished
to you, as a stockholder of Guided Therapeutics, Inc., as part of the solicitation of proxies by our Board for use at the Annual
Meeting to be held on [●], 2018, and any adjournment or postponement thereof.
Date, Time, Place and Purpose of the Annual Meeting
The Annual Meeting will be held on at
10:00 a.m. local time on [●], 2018, at the Company headquarters at 5835 Peachtree Corners East, Suite B, Norcross, Georgia
30092, or such other date, time and place to which the Annual Meeting may be adjourned or postponed. You are cordially invited
to attend the Annual Meeting, at which stockholders will be asked to consider and vote upon the following proposals, which are
more fully described in this proxy statement:
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The election of each of Gene S. Cartwright, Mark L. Faupel, Richard P. Blumberg, John E. Imhoff and Michael C. James (each a current member of the Board)) as directors of the Company, with each to serve on the Board until the next Annual Meeting of Stockholders or until his successor is elected and qualified or until his earlier death, resignation or removal;
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2.
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The ratification of the appointment by the Board of the Auditor as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018;
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The approval of the Reverse Split Proposal;
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The approval of the Option Plan Proposal; and
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To undertake such other matters as may properly come before the Annual Meeting or any lawful adjournment or postponement thereof.
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Recommendations of the Board
After careful consideration, the Board
has unanimously determined to recommend that stockholders vote (i) “FOR” the director nominees, (ii) “FOR”
the ratification of the appointment of the Auditor as the Company’s independent registered public accounting firm for the
fiscal year ending December 31, 2018, (iii) “FOR” the Reverse Split Proposal, and (iv) “FOR” the Option
Plan Proposal.
Record Date and Voting Power
Our Board fixed the close of business
on September 4, 2018, as the Record Date for the determination of the outstanding shares of common stock entitled to notice of,
and to vote on, the matters presented at this Annual Meeting. As of the Record Date, there were 320,715,101 shares of common stock
outstanding and 3,263 shares of Series C1 preferred stock outstanding. Each share of common stock entitles the holder thereof to
one vote. Each share of Series C1 preferred stock entitles the holder thereof to 381,098 votes.
Quorum and Required Vote
A quorum of stockholders is necessary
to hold a valid meeting. A quorum will be present at the Annual Meeting if the holders of 160,357,551 shares of common stock (representing
a majority of the common stock outstanding and entitled to vote at the Annual Meeting) and the holders of 1,632 shares of Series
C2 preferred stock (representing a majority of the Series C2 preferred stock outstanding and entitled to vote at the Annual Meeting)
is represented in person or by proxy. Abstentions and broker non-votes will count as present for purposes of establishing a quorum.
In the election of the directors, the
five people receiving the highest number of affirmative votes from holders of our common stock and holders of our Series C2 preferred
stock, voting as a single class, at the Annual Meeting will be elected. Abstentions and broker non-votes will have no effect on
this proposal.
The
affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of common stock
and
holders of Series C2 preferred stock, voting as a single class, is required to ratify the Auditor as our independent registered
public accounting firm for the year ending December 31, 2018. Abstentions will have no effect on this proposal. Brokers may use
their discretion to vote shares held by them of record for this proposal if they have not been provided with voting instructions
from the beneficial owner of the shares of common stock.
The affirmative vote of a majority of
the issued and outstanding shares of common stock and Series C2 preferred stock entitled to vote at the Annual Meeting, voting
as a single class, is required for approval of the Reverse Split Proposal. Abstentions will have the effect of a vote against this
proposal. Brokers may use their discretion to vote shares held by them of record for this proposal if they have not been provided
with voting instructions from the beneficial owner of the shares of common stock.
The affirmative vote of a majority of
the votes cast at the Annual Meeting by the holders of common stock and holders of Series C2 preferred stock, voting as a single
class, is required to approve the Option Plan Proposal. Abstentions and broker non-votes will have no effect on this proposal.
Voting
There are three ways to vote if you are
a holder of record of common stock and/or Series C2 preferred stock:
(1)
In person
. If
you are a holder of record of common stock, you may vote in person at the Annual Meeting. The Company will give you a ballot when
you arrive.
(2)
By mail
. You
may vote by mail. As described above, all holders of record of our common stock and our Series C2 preferred stock will receive
printed versions of the proxy materials, including the proxy card. As such, you may vote by proxy by filling out the proxy card
and sending it back in the envelope provided.
(3)
Via the internet.
You may
vote via the internet by following the instructions provided on your proxy card.
There are three ways to vote if you are
a beneficial owner of shares of common stock held in street name:
(1)
In person
. If
you are a beneficial owner of shares of common stock held in street name and you wish to vote in person at the Annual Meeting,
you must obtain a legal proxy from the brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
Please contact that organization for instructions regarding obtaining a legal proxy.
(2)
By mail
. If
you request printed copies of the proxy materials by mail, you may vote by proxy by filling out the vote instruction form and sending
it back in the envelope provided by your brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
(3)
Via the internet.
Use the
internet to vote by going to the internet address listed on your proxy card; have your proxy card in hand as you will be prompted
to enter your control number and to create and submit an electronic vote. If you vote in this manner, your “proxy,”
whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy
card or submit an electronic vote but do not give instructions on how to vote your shares, your shares will be voted as recommended
by the Board.
While we know of no other matters to be
acted upon at this year’s Annual Meeting, it is possible that other matters may be presented at the Annual Meeting. If that
happens and you have signed a proxy card or submitted an electronic vote and not revoked such proxy card or vote, your proxy will
vote on such other matters in accordance with your proxies’ best judgment.
A special note for those who plan to
attend the Annual Meeting and vote in person: if your shares are held in the name of a broker, bank or other nominee, you must
bring a statement from your brokerage account or a letter from the person or entity in whose name the shares are registered indicating
that you are the beneficial owner of those shares of common stock as of the Record Date. In addition, you will not be able to vote
at the Annual Meeting unless you obtain a legal proxy from the record holder of your shares of common stock.
Our
Board is asking for your proxy. Giving your proxy to the individuals named herein as designated by the Board means you authorize
those individuals (who are our named executive officers) to vote your shares of common stock
and/or
Series C2 preferred stock at the Annual Meeting in the manner you direct. You may vote for or withhold your vote for the director
nominees or each proposal or you may abstain from voting. All valid proxies received prior to the Annual Meeting will be voted.
All shares represented by a proxy will be voted, and where a stockholder specifies by means of the proxy a choice with respect
to any matter to be acted upon, the shares will be voted in accordance with the specification so made. If no choice is indicated
on the proxy, the shares will be voted “FOR” the election of the director nominees, “FOR” the other proposals
and as the proxy holders may determine in their discretion with respect to any other matters that may properly come before the
Annual Meeting.
Stockholders who have questions or need
assistance in completing or submitting their proxy cards should contact Mark L. Faupel, Chief Operating Officer of the Company,
at (770) 242-8723, or by sending a letter to Mr. Faupel at the offices of the Company at 5835 Peachtree Corners East, Suite B,
Norcross, Georgia 30092.
Stockholders who hold their shares of
common stock in “street name,” meaning that a broker or other nominee is the record holder of their common stock, must
either direct the record holder of their shares to vote their shares or obtain a proxy or voting instruction from the record holder
to vote their shares at the Annual Meeting.
Expenses
The cost of preparing, assembling, printing
and mailing this proxy statement and the accompanying form of proxy, and the cost of soliciting proxies relating to the Annual
Meeting, will be borne by the Company. Some banks and brokers have customers who beneficially own common stock listed of record
in the names of nominees. We intend to request banks and brokers to solicit such customers and will reimburse them for their reasonable
out-of-pocket expenses for such solicitations. If any additional solicitation of the holders of our outstanding shares of common
stock is deemed necessary, we (through our directors and officers) anticipate making such solicitation directly. The solicitation
of proxies by mail may be supplemented by telephone and personal solicitation by officers, directors and other employees of the
Company, but no additional compensation will be paid to such individuals.
Revocability of Proxies
Any proxy may be revoked by the person
giving it at any time before the polls close at the Annual Meeting. A proxy may be revoked by filing with Mark L. Faupel, Chief
Operating Officer of the Company, either (i) a written notice of revocation bearing a date later than the date of such proxy, (ii)
a subsequent proxy relating to the same shares, or (iii) by attending the Annual Meeting and voting in person.
Simply attending the Annual Meeting will
not constitute revocation of your proxy. If your shares of common stock are held in the name of a broker or other nominee who is
the record holder, you must follow the instruction of your broker or other nominee to revoke a previously given proxy.
Attendance at the Annual Meeting
Only holders of common stock and/or Series
C2 preferred stock and their proxy holders we may invite may attend the Annual Meeting. If you wish to attend the Annual Meeting
in person but you hold your shares through someone else, such as a broker, you must bring proof of your ownership and identification
with photo identification at the Annual Meeting. For example, you may bring an account statement showing that you beneficially
owned shares of the Company as of the Record Date as acceptable proof of ownership.
No Right of Appraisal
None of Delaware law, our Restated Certificate
of Incorporation or our bylaws, as amended (the “
Bylaws
”), provides for appraisal or other similar rights for
dissenting stockholders in connection with any of the proposals to be voted upon at this Annual Meeting. Accordingly, our stockholders
will have no right to dissent and obtain payment for their shares.
Principal Offices
The principal executive offices of the
Company are located at 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092. The Company’s telephone number at such
address is (770) 242-8723.
ALL PROXIES RECEIVED WILL BE VOTED
IN ACCORDANCE WITH THE CHOICES SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY SPECIFICATION
IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE DISCRETION OF THE PERSONS NAMED IN THE PROXY WITH RESPECT TO ANY OTHER
BUSINESS THAT MAY COME BEFORE THE MEETING. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE DIRECTOR NOMINEES AND
“FOR” EACH OF THE OTHER PROPOSALS TO BE SUBMITTED AT THE MEETING.
PROPOSAL 1
ELECTION OF DIRECTORS
Introduction
The Board has nominated each of Gene S.
Cartwright, Mark L. Faupel, Richard P. Blumberg, John E. Imhoff and Michael C. James (each of whom are the current members of the
Board) to stand for re-election as directors of the Company at the Annual Meeting. Stockholders will be asked to elect the director
nominees named herein, who, if elected, will each hold office until the next Annual Meeting of Stockholders or until his successor
is elected and qualified or until his earlier death, resignation or removal. The enclosed proxy, if returned, and unless indicated
to the contrary, will be voted for the election of the director nominees named herein.
We have been advised by each of the director
nominees that he is willing to be named as a nominee and is willing to continue to serve as a director if elected. If some unexpected
occurrence should make necessary, in the discretion of the Board, the substitution of some other person as nominee, it is the intention
of the persons named in the proxy to vote for the election of such other person as may be designated by the Board.
For the biographies of our director nominees
and other related information, please see ““Directors, Executive Officers and Corporate Governance” section of
this proxy statement.
Board Qualifications
We believe that the collective skills, experiences
and qualifications of the director nominees provide our Board with the expertise and experience necessary to advance the interests
of our stockholders. We believe Dr. Cartwright is well-qualified to serve as a member of our Board because he brings over 30 years
of experience working in the IVD diagnostics industry, with great experience in the diagnostics market both in the development
and introduction of new diagnostics technologies, as well as extensive successful commercial experience with global businesses.
We believe Dr. Faupel, one of our co-founders, is well-qualified to serve as a member of our Board because he has more than 30
years of experience in developing non-invasive alternatives to surgical biopsies and blood tests, especially in the area of cancer
screening and diagnostics. We believe Mr. Blumberg is well-qualified to serve as a member of our Board because of his extensive
experience as a venture capitalist specializing in high-tech and life science companies. We believe Dr. Imhoff is well-qualified
to serve as a member of our Board because of his experience in clinical trials and in other technical aspects of a medical device
company, his background in industrial engineering which allows him to combine his knowledge with clinical applications, and his
experience in the investment community. We believe Mr. James is well-qualified to serve as a member of our Board because of his
experience both in the areas of company finance and accounting as well his extensive experience in the management of both small
and large companies and his entrepreneurial background.
Required Vote
In the election of the directors, the
five people receiving the highest number of affirmative votes cast by holders of the common stock and holders of Series C2 preferred
stock, voting as a single class, at the Annual Meeting will be elected. Abstentions and broker non-votes will have no effect on
this proposal.
Recommendation of the Board
THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES.
PROPOSAL 2
RATIFICATION OF AUDITOR
Introduction
UHY LLP has previously been appointed
by our Board to serve as our independent registered public accounting firm for our fiscal year ending December 31, 2018. Stockholders
will be asked to ratify the appointment of the Auditor to serve as our independent auditors. The Board is directly responsible
for appointing the Company’s independent registered public accounting firm. The Board is not bound by the outcome of this
vote but will consider these voting results when selecting the Company’s independent auditor for fiscal year 2019. A representative
of the Auditor is expected to be present at the Annual Meeting via telephone.
The Board reviews and approves the audit
and non-audit services to be provided by our independent registered public accounting firm during the year, considers the effect
that performing those services might have on audit independence and approves management’s engagement of our independent registered
public accounting firm to perform those services. The Board reserves the right to appoint a different independent registered public
accounting firm at any time during the year if the Board believes that a change is in the best interest of the Company and our
stockholders.
We were billed by UHY LLP $147,000 and
$176,000 during the fiscal years ended December 31, 2017 and 2016, respectively, for professional services, which include fees
associated with the annual audit of financial statements and review of our quarterly reports on Form 10-Q, and other SEC filings.
|
2017
|
2016
|
Audit fees
|
$116,000
|
$154,000
|
Audit related fees
|
24,000
|
15,000
|
Tax fees
|
7,000
|
7,000
|
Total Fees
|
$147,000
|
$176,000
|
Our Board has determined that the
services provided by the Auditor are compatible with maintaining the independence of the Auditor as our independent registered
public accounting firm.
Required Vote
Ratification
of the appointment by the Board of the Auditor as the Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2018 requires the affirmative vote of a majority of the votes cast at the Annual Meeting by the holders
of common stock
and the holders of Series C2 preferred stock, voting
as a single class.
Recommendation of the Board
THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT BY THE BOARD OF THE AUDITOR AS THE COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
PROPOSAL 3
REVERSE SPLIT
PROPOSAL
Introduction
On August 31, 2018, the Board acted
unanimously to adopt the Reverse Split Proposal to amend our Restated Certificate of Incorporation, as amended (the “
Certificate
of Incorporation
”), to enable a potential reverse split of our outstanding common stock (the “
Reverse Split
”)
at a ratio of between 1-for-25 and 1-for-200, with such ratio to be determined at the sole discretion of the Board and with such
reverse split to be effected at such time and date on or before March 31, 2019, if at all, as determined by the Board in its sole
discretion. The Board is now asking you to approve the Reverse Split.
Effecting the Reverse Split and corresponding
proportionate reduction in outstanding shares of our common stock requires that Article IV of our Certificate of Incorporation
be amended to include a reference to the Reverse Split. If approved, the Reverse Split will be effective upon the filing of a Certificate
of Amendment to the Certificate of Incorporation, in the form attached to this proxy statement as
Annex A
, with the
Secretary of State of Delaware, with such filing to occur, if at all, at the sole discretion of the Board.
The intention of the Board in obtaining
approval for the authority to effect a Reverse Split would be to increase the stock price of our common stock, which the Board
believes could enhance the acceptability and marketability of our common stock to the financial community and the investing public
and may mitigate any reluctance on the part of certain brokers and investors to trade in our common stock.
In addition, the Board believes the
Reverse Split would increase the potential for our common stock to be listed on a U.S. or foreign securities exchange, potentially
increasing the liquidity of our common stock, although there can be no assurance that the Reverse Split will be sufficient to satisfy
applicable listing requirements for any securities exchange. Many institutional investors have policies prohibiting them from holding
stocks in their own portfolios which trade at prices below certain levels. These policies reduce the number of potential investors
in our common stock at its current market price.
In addition, analysts at many leading
brokerage firms are reluctant to recommend stocks to their clients, or monitor the activity of stocks, that trade at a price per
share below certain levels. A variety of brokerage house policies and practices also tend to discourage individual brokers within
those firms from dealing in stocks that trade at a price per share below certain levels. Some of those policies and practices pertain
to the payment of brokers’ commissions and to time-consuming procedures that function to make the handling of such stocks
unattractive to brokers from an economic standpoint. Additionally, because brokers’ commissions on such stocks generally
represent a higher percentage of the stock price than commissions on higher-priced stocks, the current share price of our common
stock can result in an individual stockholder paying transaction costs that represent a higher percentage of total share value
than would be the case if our share price were higher. This factor may also limit the willingness of institutions to purchase our
common stock.
One principal effect of the Reverse
Split would be to decrease the number of outstanding shares of our common stock (and the shares of common stock underlying our
outstanding Series C preferred stock, Series C1 preferred stock and Series C2 preferred stock) as described below. Except for de
minimus adjustments that may result from the treatment of fractional shares as described below, the Reverse Split will not have
any dilutive effect on our stockholders (whether such stockholders hold common stock or preferred stock) since each stockholder
would hold the same percentage of our common stock outstanding immediately following the Reverse Split as such stockholder held
immediately prior to the Reverse Split. The relative voting and other rights that accompany the shares would not be affected by
the Reverse Split. Our preferred stock will not be subject to the Reverse Split, but the shares of common stock receivable upon
conversion of such preferred stock will be adjusted as a result of the Reverse Split.
The table below sets forth the number
of shares of our common stock outstanding before and after the Reverse Split based on 320,715,101 shares of common stock outstanding
as of the Record Date. The table below also sets forth the number of shares of common stock issuable upon conversion of the Series
C preferred stock, Series C1 preferred stock and Series C2 preferred stock before and after the Reverse Split based on 320,715,101
shares outstanding, respectively, as of the Record Date.
|
Prior to the reverse split
|
Assuming a
1-for-25
reverse split
|
Assuming a
1-for-50
reverse split
|
Assuming a
1-for-100
reverse split
|
Assuming a
1-for-150
reverse split
|
Assuming a
1-for-200
reverse split
|
Aggregate Number of Shares of Common Stock Outstanding
|
320,715,101
|
12,828,604
|
6,414,302
|
3,207,151
|
2,138,101
|
1,603,576
|
Aggregate Number of Shares of Common Stock Issuable upon Conversion of Series C Preferred Stock Outstanding
|
109,057,419
|
4,362,297
|
2,181,148
|
1,090,574
|
727,049
|
545,287
|
Aggregate Number of Shares of Common Stock Issuable upon Conversion of Series C1 Preferred Stock Outstanding
|
399,866,644
|
15,994,666
|
7,997,333
|
3,998,666
|
2,665,778
|
1,999,333
|
Aggregate Number of Shares of Common Stock Issuable upon Conversion of Series C2 Preferred Stock Outstanding
|
1,243,521,341
|
49,740,854
|
24,870,427
|
12,435,213
|
8,290,142
|
6,217,607
|
The Reverse Split is not part of a broader
plan to take us private.
Potential Disadvantages of the Reverse
Split
As noted above, the principal purpose
of the Reverse Split would be to help increase the per share market price of our common stock by up to factor of 200. We cannot
assure you, however, that the Reverse Split will accomplish this objective for any meaningful period of time. While we expect that
the reduction in the number of outstanding shares of common stock will increase the market price of our common stock, we cannot
assure you that the Reverse Split will increase the market price of our common stock by a multiple equal to the number of pre-split
shares, or result in any permanent increase in the market price of our common stock, which is dependent upon many factors, including
our business and financial performance, general market conditions and prospects for future success. If the per share market price
does not increase proportionately as a result of the Reverse Split, then the value of our Company as measured by our stock capitalization
will be reduced, perhaps significantly.
The number of shares held by each individual
holder of common stock would be reduced if the Reverse Split is implemented. This will increase the number of stockholders who
hold less than a “round lot,” or 100 shares. Typically, the transaction costs to stockholders selling “odd lots”
are higher on a per share basis. Consequently, the Reverse Split could increase the transaction costs to existing holders of common
stock in the event they wish to sell all or a portion of their position.
Although our Board believes that the
decrease in the number of shares of our common stock outstanding as a consequence of the Reverse Split and the anticipated increase
in the market price of our common stock could encourage interest in our common stock and possibly promote greater liquidity for
our stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse
Split.
Effecting the Reverse Split
Upon receipt of stockholder approval
for the Reverse Split Proposal, if our Board concludes that it is in the best interests of our company and our stockholders to
effect the Reverse Split, the Certificate of Amendment will be filed with the Secretary of State of Delaware. The actual timing
of the filing of the Certificate of Amendment with the Secretary of State of Delaware to effect the Reverse Split will be determined
by our Board in its sole discretion. Even if our stockholders approve the Reverse Split Proposal, no assurances can be given that
our Board will approve the Reverse Split. In addition, if for any reason our Board deems it advisable to do so, the Reverse Split
(even if approved by the Board) may be abandoned at any time prior to the filing of the Certificate of Amendment, without further
action by our stockholders. Finally, the Board alone will have sole discretion to determine the final ratio of the Reverse Split
within the parameters contain in the Reverse Split Proposal. The Reverse Split will be effective as of the date of filing with
the Secretary of State of the State of Delaware (the “
Effective Time
”).
Upon the filing of the Certificate of
Amendment, without further action on our part or our stockholders, the outstanding shares of common stock held by stockholders
of record as of the Effective Time would be converted into a lesser number of shares of common stock based on a Reverse Split ratio
as determined by the Board in its sole discretion. For example, if you presently hold 1,500 shares of our common stock, you would
hold 60 shares of our common stock following the Reverse Split if the ratio is 1-for-25 or you would hold 10 shares of our common
stock if the ratio is 1-for-200.
Effect on Outstanding Shares, Options
and Certain Other Securities
If the Reverse Split is implemented,
the number of shares of our common stock that may be purchased upon exercise of outstanding options or other securities (including
our outstanding preferred stock) convertible into, or exercisable or exchangeable for, shares of our common stock, and the exercise
or conversion prices for these securities, will also be ratably adjusted in accordance with their terms as of the Effective Time.
Effect on Registration
Our common stock is currently registered
under the Securities Act of 1933, as amended, and we are subject to the periodic reporting and other requirements of the Securities
Exchange Act of 1934, as amended (the “
Exchange Act
”). The proposed Reverse Split will not affect the registration
of our common stock.
Fractional Shares; Exchange of Stock
Certificates
Our Board does not currently intend
to issue fractional shares in connection with the Reverse Split. Therefore, we do not expect to issue certificates representing
fractional shares. In lieu of any fractional shares, we will issue to stockholders of record who would otherwise hold a fractional
share because the number of shares of common stock they hold of record before the Reverse Split is not evenly divisible by the
Reverse Split ratio that number of shares of common stock as rounded up to the nearest whole share. For example, if a stockholder
holds 150.25 shares of common stock following the Reverse Split, that stockholder will receive a certificate representing 151 shares
of common stock. No stockholders will receive cash in lieu of fractional shares.
As of the Record Date, we had 144
holders of record of our common stock (although we have significantly more beneficial holders). We do not expect the Reverse
Split and the rounding up of fractional shares to whole shares to result in a significant reduction in the number of record holders.
We presently do not intend to seek any change in our status as a reporting company for federal securities law purposes, either
before or after the Reverse Split.
On or after the Effective Time, we will
mail a letter of transmittal to each stockholder of our common stock. Each stockholder of our common stock will be able to obtain
a certificate evidencing his, her or its post-Reverse Split shares of common stock only by sending the exchange agent (who will
be Computershare Limited, the Company’s transfer agent) the stockholder’s old common stock certificate(s), together
with the properly executed and completed letter of transmittal and such evidence of ownership of the shares as we may require.
Stockholders of our common stock will not receive certificates for post-Reverse Split shares unless and until their old certificates
are surrendered. Stockholders of our common stock should not forward their certificates to the exchange agent until they receive
the letter of transmittal, and they should only send in their certificates with the letter of transmittal. The exchange agent will
send each stockholder, if elected in the letter of transmittal, a new stock certificate after receipt of that stockholder’s
properly completed letter of transmittal and old stock certificate(s). A stockholder of our common stock that surrenders his, her
or its old stock certificate(s) but does not elect to receive a new stock certificate in the letter of transmittal will be deemed
to have requested to hold that stockholder’s shares of common stock electronically in book-entry form with our transfer agent.
Certain of our registered holders of
common stock hold some or all of their shares electronically in book-entry form with our transfer agent. These stockholders do
not have stock certificates evidencing their ownership of our common stock. They are, however, provided with a statement reflecting
the number of shares registered in their accounts. If a stockholder holds registered shares in book-entry form with our transfer
agent, the stockholder may return a properly executed and completed letter of transmittal.
Stockholders of our common stock who
hold shares in street name through a nominee (such as a bank or broker) will be treated in the same manner as stockholders whose
shares are registered in their names, and nominees will be instructed to effect the Reverse Split for their beneficial holders.
However, nominees may have different procedures and stockholders holding shares in street name should contact their nominees.
Stockholders of our common stock will
not have to pay any service charges in connection with the exchange of their certificates.
Anti-Takeover and Dilutive Effects
Because we are changing the number of
outstanding shares of common stock, but keeping the authorized shares the same, the Reverse Split will have the effect of increasing
the number of shares common stock that could be issued. The common stock and preferred stock that is authorized but unissued provide
the Board with flexibility to effect among other transactions, public or private financings, acquisitions, stock dividends, stock
splits and the granting of equity incentive awards. However, these authorized but unissued shares may also be used by our Board,
consistent with and subject to its fiduciary duties, to deter future attempts to gain control of us or make such actions more expensive
and less desirable. The Certificate of Amendment would continue to give our Board authority to issue additional shares from time
to time without delay or further action by the stockholders except as may be required by applicable law or regulations. The Certificate
of Amendment is not being recommended in response to any specific effort of which we are aware to obtain control of us, nor does
our Board have any present intent to use the authorized but unissued common stock or preferred stock to impede a takeover attempt.
There are no plans or proposals to adopt other provisions or enter into any arrangements that have material anti-takeover effects.
Accounting Consequences
As of the Effective Time, the stated
capital attributable to common stock on our balance sheet will be reduced proportionately based on the Reverse Split ratio (including
a retroactive adjustment of prior periods), and the additional paid-in capital account will be credited with the amount by which
the stated capital is reduced. Reported per share net income or loss will be higher because there will be fewer shares of our common
stock outstanding.
Federal Income Tax Consequences
The following discussion is a summary
of the U.S. federal income tax consequences of the Reverse Split generally applicable to U.S holders (as defined below) of our
common stock, and is based upon U.S. federal income tax law and relevant interpretations thereof in effect as of the date of this
proxy statement, all of which are subject to change, possibly with retroactive effect. This summary does not discuss all aspects
of U.S. federal income taxation that may be important to you in light of your individual circumstances, including if you are subject
to special tax rules that apply to certain types of investors (e.g., financial institutions, insurance companies, broker-dealers,
partnerships or other pass-through entities for U.S. federal income tax purposes, tax-exempt organizations (including private foundations),
taxpayers that have elected mark-to-market tax accounting, S corporations, regulated investment companies, real estate investment
trusts, investors that will hold our securities as part of a straddle, hedge, conversion, or other integrated transaction for U.S.
federal income tax purposes, or investors that have a functional currency other than the U.S. dollar), all of whom may be subject
to tax rules that differ materially from those summarized below. In addition, this summary does not discuss other U.S. federal
tax consequences (e.g., estate or gift tax), any state, local, or non-U.S. tax considerations, the Medicare tax on certain investment
income or the alternative minimum tax.
This summary is limited to U.S. holders
that hold our common stock as “capital assets” (generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended, (the “
Code
”). We have not sought, and will not seek,
a ruling from the Internal Revenue Service (the “
IRS
”) regarding any matter discussed herein, and no assurance
can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax aspects set
forth below.
For purposes of this summary, a “
U.S.
holder
” is a beneficial holder of common stock who or that, for U.S. federal income tax purposes, is:
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•
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an individual who is a United States citizen or resident of the United States;
|
|
|
|
|
•
|
a corporation or other entity treated as a corporation for United States federal income tax purposes that is created or organized (or treated as created or organized) in or under the laws of the United States or any state or political subdivision thereof;
|
|
|
|
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•
|
an estate the income of which is subject to United States federal income taxation regardless of its source; or
|
|
|
|
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•
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a trust if (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) it has in effect a valid election under applicable Treasury regulations to be treated as a United States person.
|
If a partnership (or other entity classified
as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock or preferred stock, the U.S.
federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities
of the partnership. Partnerships that hold our common stock or preferred stock, and partners in such partnerships, should consult
their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Split.
Each stockholder should consult his,
her or its own tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences of the Reverse
Split.
The Reverse Split should be treated
as a recapitalization for U.S. federal income tax purposes. Therefore, no gain or loss should be recognized by a U.S. holder upon
the Reverse Split. Accordingly, the aggregate tax basis in the common stock or preferred stock received pursuant to the Reverse
Split should equal the aggregate tax basis in the common stock or preferred stock surrendered and the holding period for the common
stock or preferred stock received should include the holding period for the common stock or preferred stock surrendered.
Text of Proposed Certificate of Amendment; Effectiveness
The text of the proposed Certificate
of Amendment is set forth in
Annex A
to this proxy statement. If and when effected by our Board, the Certificate
of Amendment will become effective upon its filing with the Secretary of State of Delaware.
Required Vote
The affirmative vote of a majority of
the issued and outstanding shares of common stock and Series C2 preferred stock entitled to vote at the Annual Meeting, voting
as a single class, is required to approve the Reverse Split Proposal. Abstentions are considered present for purposes of establishing
a quorum.
Recommendation of the Board
THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE
REVERSE SPLIT PROPOSAL.
Notwithstanding
stockholder approval of the Reverse Split Proposal, the Board may abandon the Reverse Split Proposal without further stockholder
action.
PROPOSAL 4
OPTION PLAN PROPOSAL
Overview of Proposal
In this Proposal, we are requesting
that our stockholders approve and adopt the Guided Therapeutics, Inc. 2018 Stock Option Plan (the “
Plan
”) and
the material terms thereunder. A total of 2,500,000 shares of common stock will be reserved for issuance under the Plan. Our board
of directors approved the Plan on August 7, 2018 (including the performance criteria upon which performance goals may be based),
subject to stockholder approval at the Annual Meeting. The Plan is described in more detail below. A copy of the Plan is attached
to this proxy statement as
Annex B
.
Summary of the Proposal
The purpose of the Plan is to enhance
our ability to attract, retain and motivate persons who make (or are expected to make) important contributions to our company by
providing these individuals with equity ownership opportunities. We believe that the Plan is essential to our success. Equity awards
are intended to motivate high levels of performance and align the interests of our directors, employees and consultants with those
of our shareholders by giving directors, employees and consultants the perspective of an owner with an equity stake in our company
and providing a means of recognizing their contributions to the success of the Company. Our Board and management believe that equity
awards are necessary to remain competitive in our industry and are essential to recruiting and retaining the highly qualified employees
who help and will help our company meet its goals.
Administration
Our Board or a committee of at least two people
as our Board may appoint (the “
Committee
”) will administer the Plan. The Committee will have the authority to
determine the terms and conditions of any agreements evidencing any awards granted under the Plan and to adopt, alter and repeal
rules, guidelines and practices relating to the Plan. The Committee will have full discretion to administer and interpret the Plan
and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the
time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.
Eligibility
Employees, directors, officers, advisors or
consultants of our company or our affiliates are eligible to participate in the Plan. The Committee has the sole and complete authority
to determine who will be granted an award under the Plan, however, it may delegate such authority to one or more officers of the
Company under the circumstances set forth in the Plan.
Number of Shares Authorized
The Plan provides for an aggregate of 2,500,000
shares of common stock (the “
Common Shares
”) to be available for awards. If an award is forfeited or if any
option terminates, expires or lapses without being exercised, the Common Shares subject to such award will again be made available
for future grant. Shares that are used to pay the exercise price of an option or that are withheld to satisfy the plan participant’s
tax withholding obligation will not be available for re-grant under the Plan.
If there is any change in our corporate capitalization,
the Committee in its sole discretion may make substitutions or adjustments to the number of shares reserved for issuance under
the Plan, the number of shares covered by awards then outstanding under the Plan, the limitations on awards under the Plan, the
exercise price of outstanding options and such other equitable substitution or adjustments as it may determine appropriate.
The Plan will have a term of ten years and no
further awards may be granted under the Plan after that date.
Awards Available for Grant
The Committee may grant awards of Non-Qualified
Stock Options, Incentive (qualified) Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock
Bonus Awards or any combination of the foregoing; provided, that the Committee may not grant to any one person in any one calendar
year Awards (i) for more than 500,000 Common Shares in the aggregate or (ii) payable in cash in an amount to exceed $25,000 in
the aggregate.
Options
The Committee will be authorized to grant Options
to purchase Common Shares that are either “qualified,” meaning they are intended to satisfy the requirements of Code
Section 422 for incentive stock options, or “non-qualified,” meaning they are not intended to satisfy the requirements
of Section 422 of the Code. Options granted under the Plan will be subject to the terms and conditions established by the
Committee. Under the terms of the Plan, the exercise price of the Options will not be less than the fair market value (as determined
under the Plan) of the common shares at the time of grant or 100% of the fair market value if granted to a 10% stockholder. Options
granted under the Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as
may be determined by the Committee and specified in the applicable award agreement. The maximum term of an option granted under
the Plan will be ten years from the date of grant (or five years in the case of a qualified option granted to a 10% stockholder).
Payment in respect of the exercise of an option may be made in cash or by check, by surrender of unrestricted shares (at their
fair market value on the date of exercise) that have been held by the participant for any period deemed necessary by our accountants
to avoid an additional compensation charge or have been purchased on the open market, or the Committee may, in its discretion and
to the extent permitted by law, allow such payment to be made through a broker-assisted cashless exercise mechanism, a net exercise
method, or by such other method as the Committee may determine to be appropriate.
Stock Appreciation Rights
The Committee will be authorized to award Stock
Appreciation Rights (or “
SARs
”) under the Plan. SARs will be subject to the terms and conditions established
by the Committee. A SAR is a contractual right that allows a participant to receive, either in the form of cash, shares or any
combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An Option granted
under the Plan may include SARs and SARs may also be awarded to a participant independent of the grant of an Option. SARs granted
in connection with an Option shall be subject to terms similar to the Option corresponding to such SARs. SARs shall be subject
to terms established by the Committee and reflected in the award agreement.
Restricted Stock
The Committee will be authorized to award Restricted
Stock under the Plan. Unless otherwise provided by the Committee and specified in an award agreement, restrictions on Restricted
Stock will lapse after three years of service with the Company. The Committee will determine the terms of such Restricted Stock
awards. Restricted Stock are Common Shares that generally are non-transferable and subject to other restrictions determined by
the Committee for a specified period. Unless the Committee determines otherwise or specifies otherwise in an award agreement, if
the participant terminates employment or services during the restricted period, then any unvested restricted stock is forfeited.
Restricted Stock Unit Awards
The Committee will be authorized to award Restricted
Stock Unit awards. Unless otherwise provided by the Committee and specified in an award agreement, Restricted Stock Units will
vest after three years of service with the Company. The Committee will determine the terms of such Restricted Stock Units. Unless
the Committee determines otherwise or specifies otherwise in an award agreement, if the participant terminates employment or services
during the period of time over which all or a portion of the units are to be earned, then any unvested units will be forfeited.
At the election of the Committee, the participant will receive a number of Common Shares equal to the number of units earned or
an amount in cash equal to the fair market value of that number of shares at the expiration of the period over which the units
are to be earned or at a later date selected by the Committee.
Stock Bonus Awards
The Committee will be authorized to grant awards
of unrestricted Common Shares or other awards denominated in Common Shares, either alone or in tandem with other awards, under
such terms and conditions as the Committee may determine.
Transferability
Each award may be exercised during the participant’s
lifetime only by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative
and may not be otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution.
The Committee, however, may permit awards (other than incentive stock options) to be transferred to family members, a trust for
the benefit of such family members, a partnership or limited liability company whose partners or stockholders are the participant
and his or her family members or anyone else approved by it.
Amendment
The Plan will have a term of ten years. Our
Board may amend, suspend or terminate the Plan at any time; however, shareholder approval to amend the Plan may be necessary if
the law so requires. No amendment, suspension or termination will impair the rights of any participant or recipient of any award
without the consent of the participant or recipient.
U.S. Federal Income Tax Consequences
The following is a general summary of the material
U.S. federal income tax consequences of the grant and exercise and vesting of Awards under the Plan and the disposition of shares
acquired pursuant to the exercise of such awards and is intended to reflect the current provisions of the Code and the regulations
thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local
and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from
those described herein by reason of, among other things, the particular circumstances of such participant.
Options
There are a number of requirements that must
be met for a particular option to be treated as a qualified option. One such requirement is that Common Shares acquired through
the exercise of a qualified option cannot be disposed of before the later of (i) two years from the date of grant of the option,
or (ii) one year from the date of exercise. Holders of qualified options will generally incur no federal income tax liability
at the time of grant or upon exercise of those options. However, the spread at exercise will be an “item of tax preference,”
which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the
holder does not dispose of the shares before the later of two years following the date of grant and one year following the date
of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term
capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to the Company
for federal income tax purposes in connection with the grant or exercise of the qualified option. If, within two years following
the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of a qualified
option disposes of those shares, the participant will generally realize taxable compensation at the time of such disposition equal
to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the
amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by the Company for federal
income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code for compensation
paid to executives designated in those Sections. Finally, if an otherwise qualified option becomes first exercisable in any one
year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the qualified option
in respect of those excess shares will be treated as a non-qualified stock option for federal income tax purposes.
No income will be realized by a participant
upon grant of a non-qualified stock option. Upon the exercise of a non-qualified stock option, the participant will recognize ordinary
compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over
the option exercise price paid at the time of exercise. The Company will be able to deduct this same amount for U.S. federal income
tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives
designated in those Sections.
Restricted Stock
A participant will not be subject to tax upon
the grant of an award of restricted stock unless the participant otherwise elects to be taxed at the time of grant pursuant to
Section 83(b) of the Code. On the date an award of restricted stock becomes transferable or is no longer subject to a substantial
risk of forfeiture, the participant will recognize taxable compensation equal to the difference between the fair market value of
the shares on that date over the amount the participant paid for such shares, if any, unless the participant made an election under
Section 83(b) of the Code to be taxed at the time of grant. If the participant made an election under Section 83(b),
the participant will recognize taxable compensation at the time of grant equal to the difference between the fair market value
of the shares on the date of grant over the amount the participant paid for such shares, if any. (Special rules apply to the receipt
and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”)). The Company will be able to deduct, at the same time as it is recognized
by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction
may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted Stock Units
A participant will not be subject to tax upon
the grant of a restricted stock unit award. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit award,
the participant will have taxable compensation equal to the fair market value of the number of shares (or the amount of cash) the
participant actually receives with respect to the award. The Company will be able to deduct the amount of taxable compensation
to the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the
Code for compensation paid to certain executives designated in those Sections.
SARs
No income will be realized by a participant
upon grant of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary compensation income in an amount equal
to the fair market value of the payment received in respect of the SAR. The Company will be able to deduct this same amount for
U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation
paid to certain executives designated in those Sections.
Stock Bonus Awards
A participant will have taxable compensation
equal to the difference between the fair market value of the shares on the date the Common Shares subject to the award are transferred
to the participant over the amount the participant paid for such shares, if any. The Company will be able to deduct, at the same
time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax
purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives
designated in those Sections.
Section 162(m)
In general, Section 162(m) of the Code
denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation in excess of $1,000,000 per
year per person to its principal executive officer, its principal financial officer and the three other officers (other than the
principal executive officer and principal financial officer) whose compensation is disclosed in its proxy statement as a result
of their total compensation, subject to certain exceptions.
New Plan Benefits
Future grants under the Plan will be made at
the discretion of the Committee and, accordingly, are not yet determinable. In addition, the value of the awards granted under
the Plan will depend on a number of factors, including the fair market value of the Common Shares on future dates, the exercise
decisions made by the participants and/or the extent to which any applicable performance goals necessary for vesting or payment
are achieved. Consequently, it is not possible to determine the benefits that might be received by participants receiving discretionary
grants under, or having their annual bonus paid pursuant to, the Plan.
Vote Required for Approval
Approval of the Option Plan Proposal
requires the affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of common stock and the holders
of Series C2 preferred stock, voting as a single class.
Recommendation of the Board of Directors
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE OPTION PLAN PROPOSAL.
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
Our executive officers are elected by
and serve at the discretion of our Board. The following table lists information about our directors and executive officers:
Name
|
Age
|
Position
|
Gene S. Cartwright, Ph.D. (*)
|
64
|
Chief Executive Officer, President, Acting Chief Financial Officer and Director
|
Mark L. Faupel, Ph.D. (*)
|
62
|
Chief Operating Officer and Director
|
Richard L. Fowler
|
61
|
Senior Vice President of Engineering
|
Richard P. Blumberg (*)
|
61
|
Director
|
John E. Imhoff, M.D. (*)
|
68
|
Director
|
Michael C. James (*)
|
59
|
Chairman and Director
|
Except as set forth below, all of the
executive officers have been associated with us in their present or other capacities for more than the past five years. Officers
are elected annually by the Board and serve at the discretion of the Board. There are no family relationships among any of our
executive officers and directors.
Gene S. Cartwright, Ph.D.
joined
us in January 2014 as the President, Chief Executive Officer and Acting Chief Financial Officer. He was elected as a director on
January 11, 2014. His most recent position was with Omnyx, LLC, a Joint Venture between GE Healthcare and the University of Pittsburgh
Medical Center, where, as CEO for over four years he founded and managed the successful development of products for the field of
Digital Pathology. Prior to his work with Omnyx, LLC, he was President of Molecular Diagnostics for GE Healthcare. Prior to GE,
Dr. Cartwright was Divisional Vice President/General Manager for Abbott Diagnostics’ Molecular Diagnostics business. In his
24 year career at Abbott, he also served as Divisional Vice President for U.S. Marketing for five years. He received a Masters
of Management degree from Northwestern’s Kellogg School of Management and also holds a Ph.D. in chemistry from Stanford University
and an AB from Dartmouth College.
Dr. Cartwright brings over 30 years
of experience working in the IVD diagnostics industry. He has great experience in the diagnostics market both in the development
and introduction of new diagnostics technologies, as well as extensive successful commercial experience with global businesses.
With his background and experience, Dr. Cartwright, as President and Chief Executive Officer, as well as Acting Chief Financial
Officer, works with and advises the Board as to how we can successfully market and build LuViva international sales.
Mark L. Faupel, Ph.D.
, rejoined
us as Chief Operating Officer and director on December 8, 2016. He previously served on our Board through 2013 and has more than
30 years of experience in developing non-invasive alternatives to surgical biopsies and blood tests, especially in the area of
cancer screening and diagnostics. Dr. Faupel was one of our co-founders and also served as our Chief Executive Officer from May
2007 through 2013. Prior thereto was our Chief Technical Officer from April 2001 to May 2007. Dr. Faupel has served as a National
Institutes of Health reviewer, is the inventor on 26 U.S. patents and has authored numerous scientific publications and presentations,
appearing in such peer-reviewed journals as The Lancet. Dr. Faupel earned his Ph.D. in neuroanatomy and physiology from the University
of Georgia. Dr. Faupel is also a shareholder of Shenghuo Medical, LLC. See Item 13, Certain Relationships and Related Transactions
and Director Independence
Rick Fowler
, Senior Vice President
of Engineering is an accomplished executive with significant experience in the management of businesses that sell, market, produce
and develop sophisticated medical devices and instrumentation. Mr. Fowler’s 25 plus years of experience includes assembling
and managing teams, leading businesses and negotiating contracts, conducting litigation, and developing ISO, CE, FDA QSR, GMP and
GCP compliant processes and products. He is adept at providing product life cycle management through effective process definition
and communication - from requirements gathering, R&D feasibility, product development, product launch, production startup and
support. Mr. Fowler combines outstanding analytical, out-of-the-box, and strategic thinking with strong leadership, technical,
and communication skills and he excels in dynamic, demanding environments while remaining pragmatic and focused. He is able to
deliver high risk projects on time and under budget as well as enhance operational effectiveness through outstanding cross-functional
team leadership (R&D, marketing, product development, operations, quality assurance, sales, service, and finance). In addition,
Mr. Fowler is well versed in global medical device regulatory and product compliance requirements.
Richard P. Blumberg
was
appointed to the Board of Directors on November 10, 2016. Mr. Blumberg has been a long-time investor in the Company. Since 1978,
Mr. Blumberg has been a Principal at Webster, Mrak & Blumberg, a medical-legal and class action labor litigation firm. He is
also currently the Managing Member of Elysian Medical, LLC, a company with world-wide rights for certain breast cancer detection
technology. He served from 2004 to 2007 as Chief Executive Officer of Energy Logics, a wind power company that developed projects
in Alberta, Canada and Montana. Mr. Blumberg holds a B.S. in Electrical Engineering and Computer Science from the University of
Illinois and received a J. D. from Stanford University. He also brings extensive experience as a venture capitalist specializing
in high-tech and life science companies. Mr. Blumberg is also a Managing Member of Shenghuo Medical, LLC. See Item 13, Certain
Relationships and Related Transactions and Director Independence.
John E. Imhoff, M.D.
has
served as a member of our Board of Directors since April 2006. Dr. Imhoff is an ophthalmic surgeon who specializes in cataract
and refractive surgery. He is one of our principal stockholders and invests in many other private and public companies. He has
a B.S. in Industrial Engineering from Oklahoma State University, an M.D. from the University of Oklahoma and completed his ophthalmic
residency at the Dean A. McGee Eye Institute. He has worked as an ophthalmic surgeon and owner of Southeast Eye Center since 1983.
Dr. Imhoff has experience in clinical
trials and in other technical aspects of a medical device company. His background in industrial engineering is especially helpful
to us, especially as Dr. Imhoff can combine this knowledge with clinical applications. His experience in the investment community
is invaluable to a public company often undertaking capital raising efforts.
Michael C. James
has
served as a member of our Board of Directors since March 2007 and as Chairman of the Board since October 2013. Mr. James is also
the Managing Partner of Kuekenhof Capital Management, LLC, a private investment management company, Chief Executive Officer and
the Chief Financial Officer of Inergetics, Inc., a nutraceutical supplements company and also the Chief Financial Officer of Terra
Tech Corporation, which is a hydroponic and agricultural company. He also holds the position of Managing Director of Kuekenhof
Equity Fund, L.P. and Kuekenhof Partners, L.P. Mr. James currently sits on the Board of Directors of Inergetics; Inc. Mr. James was
Chief Executive Officer of Nestor, Inc. from January 2009 to September 2009 and served on their Board of Directors from July
2006 to June 2009. He was employed by Moore Capital Management, Inc., a private investment management company from 1995 to 1999
and held position of Partner. He was employed by Buffalo Partners, L.P., a private investment management company from 1991 to 1994
and held the position of Chief Financial and Administrative Officer. He began his career in 1980 as a staff accountant with Eisner
LLP. Mr. James received a B.S. degree in Accounting from Farleigh Dickinson University in 1980.
Mr. James has experience both in the
areas of company finance and accounting, which is invaluable to us during financial audits and offerings. Mr. James has extensive
experience in the management of both small and large companies and his entrepreneurial background is relevant as we develop as
a company.
Code of Ethics
We have adopted a code of ethics that
applies to all of our directors, officers and employees. To obtain a copy without charge, contact our Chief Operating Officer,
Guided Therapeutics, Inc., 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092. If we amend our code of ethics, other
than a technical, administrative or non-substantive amendment, or we grant any waiver, including any implicit waiver, from a provision
of the code that applies to our principal executive officer, principal financial officer, principal accounting officer or controller,
we will disclose the nature of the amendment or waiver on our website, www.guidedinc.com, under the “Investor Relations”
tab under the tab “About Us.” Also, we may elect to disclose the amendment or waiver in a report on Form 8-K filed
with the Securities and Exchange Commission.
Board Qualifications
We believe that the collective skills,
experiences and qualifications of our directors provide our Board with the expertise and experience necessary to advance the interests
of our stockholders. While we do not have any specific, minimum qualifications that must be met by each of our directors, our Board
uses a variety of criteria to evaluate the qualifications and skills necessary for each member of the Board. In addition to the
individual attributes of each of our current directors described herein, we believe that our directors should have the highest
professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience
at the policy-making level in business, commitment to enhancing stockholder value and have sufficient time to carry out their duties
and to provide insight and practical wisdom based on their past experience.
Board Meetings
Our Board held 12 meetings in 2017.
No director attended fewer than 75% of the meetings of the Board during 2017. We encourage our directors to attend the annual meeting
of stockholders. In 2017, all of our directors attended our annual meeting. The Board works with its members and management to
identify new Board members, and will consider nominees recommended by stockholders. Any recommendation should be addressed in writing
to the Board of Directors, c/o Corporate Secretary, 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092.
We do not have an audit committee. Our
Board selects and engages the independent registered public accounting firm to audit our annual financial statements and pre-approves
all allowable audit services and any special assignments given to the accountants. The Board also determines the planned scope
of the annual audit, any changes in accounting principles, the effectiveness and efficiency of our internal accounting staff and
the independence of our external auditors.
The Board, in consultation with our
Chief Executive Officer, sets the compensation for our officers, reviews management organization and development, reviews significant
employee benefit programs and establishes and administers executive compensation programs.
The Board, in consultation with our
Chief Executive Officer, reviews and recommends individuals to be nominated as directors. Our Board has historically evaluated
all candidates based upon, among other factors, a candidate’s financial literacy, knowledge of our industry or other background
relevant to our needs, status as a stakeholder, independence, and willingness, ability and availability for service. Other than
the foregoing, there have been no stated minimum criteria for director nominees, although our Board has considered such other factors
as it has deemed to be in the best interests of us and our stockholders. The Board has considered diversity as it has deemed appropriate
in this context (without having a formal diversity policy), given current needs and the current needs of the Board to maintain
a balance of knowledge, experience and capability. When considering diversity, the Board has considered diversity as one factor,
of no greater or lesser importance than other factors and has considered diversity in a broad context of race, gender, age, business
experience, skills, international experience, education, other Board experience and other relevant factors.
Board Leadership Structure and Role in Risk Oversight
Dr. Cartwright, our President and Chief
Executive Officer, also serves as a director; our Board is led by the Chairman, Mr. James, one of our independent directors. Our
Board, as a whole, has responsibility for risk oversight. In addition, our management regularly communicates with the Board to
discuss important risks for their review and oversight, including regulatory risk and risks stemming from periodic litigation or
other legal matters in which we are involved. Given the small size of the Board, the Board feels that this structure for risk oversight
is appropriate (except for those risks that require risk oversight by independent directors only).
The Board is specifically charged with
discussing risk management (primarily financial and internal control risk), and receives regular reports from management, independent
auditors, internal audit and outside legal counsel on risks related to, among others, our financial controls and reporting. The
Board reviews risks related to compensation and makes recommendations to the Board with respect to whether our compensation policies
are properly aligned to discourage inappropriate risk-taking, and is regularly advised by management and, as deemed appropriate,
outside legal counsel.
Communication with Directors
Any stockholder is welcome to communicate
with any director or the Board by writing to a director or the Board as a whole, c/o Corporate Secretary, 5835 Peachtree Corners
East, Suite B, Norcross, Georgia 30092.
Compliance with Section 16 (a) of the Exchange Act
Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires our directors and executive officers and persons who beneficially own more than 10% of a registered
class of our equity securities to file reports of ownership and reports of changes in ownership with the Securities and Exchange
Commission. These persons are required by regulations of the Securities and Exchange Commission to furnish us with copies of all
Section 16(a) forms they file. Based solely on our review of the copies of these forms received by us, we believe that, with respect
to fiscal year 2016, our officers and directors were in compliance with all applicable filing requirements.
Executive Compensation
Summary Compensation Table
The following table lists specified
compensation we paid or accrued during each of the fiscal years ended December 31, 2017 and 2016 to the Chief Executive Officer
and our two other most highly compensated executive officers, collectively referred to as the “named executive officers”:
2017 and 2016 Summary Compensation
Table
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option Awards
($)
|
Total
($)
|
Gene S. Cartwright, Ph.D.
President, CEO, Acting CFO and Director (1)
|
2017
2016
|
-
104,990
|
150,000
150,000
|
-
-
|
-
254,990
|
Mark L. Faupel, Ph.D.
COO and Director(2)
|
2017
2016
|
-
132,557
|
-
-
|
-
-
|
-
132,557
|
Richard Fowler,
Senior Vice President of Engineering
|
2017
2016
|
107,500
129,995
|
-
-
|
-
-
|
107,500
129,995
|
(1) All amounts reported as accrued. Dr. Cartwright has elected
to get paid partial salary, due to our cash position.
(2) In 2016, Dr. Faupel was not employed by us, but instead
provided consulting services to us on an as-needed basis. On December 8, 2016, the Board appointed Dr. Faupel as our new COO and
director.
For 2017, Dr. Cartwright did not receive
salary compensation. While in 2016, Dr. Cartwright agreed to reduce his base salary compensation to $75,000 from $300,000. The
Board-granted performance bonus remained the same at $150,000 for both years, and he received usual customary company benefits.
During 2015, he also received 20,000 performance-based restricted shares of common stock, which will vest as follows: (1) seven
shares will vest if the stock price closes at or above $1,200 for 30 consecutive trading days, and an additional seven will vest
on the first anniversary of such vesting date, in each case subject to continuous employment through the applicable vesting date;
and (2) seven shares will vest if the stock price closes at or above $200,000 for 30 consecutive trading days, and an additional
seven will vest on the first anniversary of such vesting date, in each case subject to continuous employment through the applicable
vesting date. As of December 31, 2017, Dr. Cartwright’s deferred salary plus interest was $383,039 and his deferred bonus
was $600,000.
Dr. Faupel’s 2017 and 2016 compensation
consisted of a base salary of zero and $132,577, respectively, plus usual and customary company benefits. He received no bonus
in the years ended December 31, 2017 and 2016. In 2015, he received options to purchase 1,900 shares of common stock, which vest
over 48 months. As of December 31, 2017, Dr. Faupel’s remaining deferred salary plus interest and bonus was $178,035. He
also holds a promissory note of $346,960 for past un-paid salary.
For 2017, Mr. Fowler accrued base salary
of $88,894. On March 2016, Mr. Fowler began working half-time and agreed to reduce his base salary compensation to $107,500 from
$243,000 in 2015. For both years he received the usual and customary company benefits. He received no bonus in the years ended
December 31, 2017 and 2016. In 2015, he received options to purchase 1,930 shares of common stock, which vest over 48 months. As
of December 31, 2017, Mr. Fowler’s total deferred salary plus interest was approximately $429,053.
Outstanding Equity Awards
Outstanding Equity
Awards to Officers at December 31, 2017
|
Option Awards
|
Name and Principal
Position
|
Number of
Securities
Underlying
Options
Exercisable (#)(1)
|
Number of Securities Underlying
Options Un-exercisable (#)
|
Equity Incentive Plan Awards: Number
of Securities Under-
lying Unexercised
Unearned Options (#)
|
Option
Exercise
Price
($)(2)
|
Option
Expiration
Date
|
Gene S. Cartwright, Ph.D.
President, CEO, Acting CFO and Director
|
2
|
-
|
3
|
21,600.00
|
12/31/2024
|
Mark L. Faupel, Ph.D.
COO and Director
|
32
|
-
|
3
|
57,600.00
|
12/31/2024
|
Richard Fowler
Senior Vice President of Engineering
|
11
|
-
|
3
|
47,200.00
|
12/31/2024
|
(1) Represents fully vested options.
(2) Based on all outstanding options.
Outstanding Equity Awards to Directors
at December 31, 2017
|
Option Awards
|
Name and Principal Position
|
Option Awards
(#)
|
Exercise Price
($)
|
John E. Imhoff, M.D., Director
|
16
|
26,400.00
|
Michael C. James, Chairman and Director
|
13
|
16,000.00
|
Richard P. Blumberg, Director
|
-
|
-
|
Jonathan Niloff, M.D., former Director
|
14
|
17,600.00
|
Linda Rosenstock, M.D., former Director
|
14
|
16,800.00
|
Director Compensation
For
the fiscal years ended December 31, 2017 and 2016, none of our directors received any form of compensation.
Certain
Relationships and Related Transactions
Our Board recognizes that related person
transactions present a heightened risk of conflicts of interest. The Board has the authority to review and approve all related
party transactions involving our directors or executive officers.
Under the policy, when management becomes
aware of a related person transaction, management reports the transaction to the Board and requests approval or ratification of
the transaction. Generally, the Board will approve only related party transactions that are on terms comparable to those that could
be obtained in arm’s length dealings with an unrelated third person.
John E. Imhoff is one of our directors.
In June 2015, Dr. Imhoff agreed to exchange certain of his warrants, originally issued in December 2014 and exercisable for 1 share
of our common stock, for two new warrants that, unlike the original warrant, do not contain any price or share reset provisions.
Each new warrant is exercisable for the same number of shares of our common stock as the original warrant, at any time until December
2, 2020. The exercise price of the first new warrant is $72 per share and the second new warrant is $88 per share but, aside from
the exercise price, the new warrants are identical in terms to each other. As additional consideration, we issued Dr. Imhoff an
additional 1 share of common stock. Dr. Imhoff participated on terms equal to those of other holders of the December 2014 warrants.
As a result of these transactions, Dr. Imhoff’s beneficial ownership of our common stock increased from approximately 11.7%
immediately prior to the exchange, to approximately 11.8% immediately afterward.
In September 2015, Dr. Imhoff participated
in our Series C preferred stock issuance by exchanging all of his shares of Series B preferred stock and investing $300,000 in
cash, for a total of 1,067 shares of Series C preferred stock and warrants to purchase 211 shares of common stock. Dr. Imhoff participated
on terms equal to those of other Series C investors. As a result of these transactions, Dr. Imhoff’s beneficial ownership
of our common stock increased from approximately 14% immediately prior to his first acquisition of shares of Series C preferred
stock, to 25% immediately afterward.
On March 11, 2016, Dr. Imhoff received
24 shares of common stock as a dividend on his Series B preferred stock (previously accrued but unpaid), in accordance with the
terms of the Series B preferred stock.
In April 2016, Dr. Imhoff exchanged
his shares of Series C preferred stock for a total of 2,400.75 shares of Series C1 preferred stock and 12,804 shares of common
stock. Dr. Imhoff participated on terms equal to those of other Series C1 investors. As a result of this transaction, Dr. Imhoff’s
beneficial ownership of our common stock increased from approximately 25% immediately prior to the transaction, to 77% immediately
afterward.
In June 2016, Dr. Imhoff agreed to exchange
certain of his warrants, exercisable for 4,560 shares of our common stock and subject to certain anti-dilution provisions, in exchange
for new warrants, exercisable for 9,120 shares of our common stock, but without those anti-dilution provisions. Dr. Imhoff will
be required to surrender his old warrants upon consummation of our next financing resulting in net cash proceeds to us of at least
$1 million. The new warrants will have an initial exercise price equal to the exercise price of the surrendered warrants as of
immediately prior to consummation of the financing, subject to customary “downside price protection” for as long as
our common stock is not listed on a national securities exchange, and will expire five years from the date of issuance.
On September 6, 2016, we entered into
a royalty agreement with Dr. Imhoff and another party. Pursuant to the royalty agreement, in exchange for a payment of $50,000
by Dr. Imhoff and the other party, we granted them a royalty on future sales of our single-use cervical guides. The royalty rate
was initially $0.10 per disposable, until October 2, 2016, at which point the royalty rate increased to $0.20 per disposable. Any
royalty payments will be split evenly between Dr. Imhoff and the other party.
Lynne Imhoff (no relation) currently
beneficially owns in excess of 10% of our outstanding common stock. In September 2015, Ms. Imhoff participated in our Series C
preferred stock issuance by exchanging all of her shares of Series B preferred stock and investing $125,000 in cash, for a total
of 300 shares of Series C preferred stock and warrants to purchase 592 shares of common stock. Ms. Imhoff participated on terms
equal to those of other Series C investors. As a result of these transactions, Ms. Imhoff’s beneficial ownership of our common
stock increased from approximately 2% immediately prior to her first acquisition of shares of Series C preferred stock, to 4% immediately
afterward.
In April 2016, Ms. Imhoff exchanged
her shares of Series C preferred stock for a total of 675 shares of Series C1 preferred stock and 3,600 shares of common stock.
Ms. Imhoff participated on terms equal to those of other Series C1 investors. As a result of this transaction, Ms. Imhoff’s
beneficial ownership of our common stock increased from approximately 4% immediately prior to the transaction, to 45% immediately
afterward.
In June 2016, Ms. Imhoff agreed to exchange
certain of her warrants, exercisable for 912 shares of our common stock and subject to certain anti-dilution provisions, in exchange
for new warrants, exercisable for 1,824 shares of our common stock, but without those anti-dilution provisions. Ms. Imhoff will
be required to surrender her old warrants upon consummation of our next financing resulting in net cash proceeds to us of at least
$1 million. The new warrants will have an initial exercise price equal to the exercise price of the surrendered warrants as of
immediately prior to consummation of the financing, subject to customary “downside price protection” for as long as
our common stock is not listed on a national securities exchange, and will expire five years from the date of issuance.
Mark L. Faupel is one of our directors
and our Chief Operating Officer, and Richard Blumberg is another one of our directors. Dr. Faupel is a shareholder of Shenghuo,
and Mr. Blumberg, is a managing member of Shenghuo. We entered into a license agreement with Shenghuo pursuant to which we granted
Shenghuo an exclusive license to manufacture, sell and distribute our LuViva Advanced Cervical Cancer device and related disposables
in Taiwan, Brunei Darussalam, Cambodia, Laos, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Shenghuo has been our exclusive
distributor in China, Macau and Hong Kong, and the license extends to manufacturing in those countries as well. Pursuant to the
license agreement, Shenghuo had the option to have a designee appointed to our Board. As partial consideration for, and as a condition
to, the license, and to further align the strategic interests of the parties, we agreed to issue a convertible note to Shenghuo,
in exchange for an aggregate cash investment of $200,000. The note will provide for a payment to Shenghuo of $300,000, expected
to be due the earlier of 90 days from issuance and consummation of any capital raising transaction by us with net cash proceeds
of at least $1.0 million. The note will accrue interest at 20% per year on any unpaid amounts due after that date. The note will
be convertible into shares of our common stock at a conversion price per share of $13.92, subject to customary anti-dilution adjustment.
The note will be unsecured, and is expected to provide for customary events of default. We will also issue Shenghuo a five-year
warrant exercisable immediately for 17,239 shares of common stock at an exercise price equal to the conversion price of the note,
subject to customary anti-dilution adjustment.
In September 2015, Dr. Faupel participated
in our Series C preferred stock issuance by investing $100,000 in cash, for a total of 133 shares of Series C preferred stock and
warrants to purchase 46 shares of common stock. Dr. Faupel participated on terms equal to those of other Series C investors. In
April 2016, Dr. Faupel exchanged his shares of Series C preferred stock for a total of 300 shares of Series C1 preferred stock
and 1,600 shares of common stock. Dr. Faupel participated on terms equal to those of other Series C1 investors.
OTHER INFORMATION
The following table lists information
regarding the beneficial ownership of our equity securities as of August 30, 2018 by (1) each person whom we know to beneficially
own more than 5% of the outstanding shares of our common stock, (2) each director, (3) each officer named in the summary compensation
table below, and (4) all directors and executive officers as a group. Unless otherwise indicated, the address of each officer and
director is 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092.
|
Common
Stock (2)
|
Series
C
Preferred Stock (3)
|
Series
C1
Preferred Stock (4)
|
Series
C2
Preferred Stock (5)
|
Name
and Address of Beneficial Owner (1)
|
Number
of Shares
|
Percentage
|
Number
of Shares
|
Percentage
|
Number
of Shares
|
Percentage
|
Number
of Shares
|
Percentage
|
John E. Imhoff (5)
|
916,687,850
|
74.08%
|
-
|
-
|
-
|
-
|
2,400.75
|
73.57%
|
Lynne Imhoff (6)
|
257,245,439
|
44.51%
|
-
|
-
|
675.00
|
64.33%
|
-
|
-
|
Michael C. James/Kuekenhof Equity Fund, LLP (7)
|
28
|
*
|
-
|
-
|
-
|
-
|
-
|
-
|
Gene Cartwright (8)
|
38
|
*
|
-
|
-
|
-
|
-
|
-
|
-
|
Richard L. Fowler (9)
|
16
|
*
|
-
|
-
|
-
|
-
|
-
|
-
|
Richard P. Blumberg (10)
|
700,037
|
*
|
-
|
-
|
-
|
-
|
-
|
-
|
Mark L. Faupel (11)
|
114,330,306
|
26.28%
|
|
|
-
|
-
|
300.00
|
9.19%
|
All directors and executive officers as a group (4 persons) (12)
|
1,031,718,275
|
76.29%
|
-
|
-
|
-
|
-
|
2,700.75
|
82.77%
|
|
|
|
|
|
|
(*)
|
Less than 1%.
|
|
|
|
(1)
|
Except as otherwise indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock.
|
|
(2)
|
Percentage ownership is based on 320,715,101 shares of common stock outstanding as of August 30, 2018. Beneficial ownership is determined in accordance with the rules of the SEC, based on factors that include voting and investment power with respect to shares. Shares of common stock subject to convertible securities convertible or exercisable within 60 days after the record date, are deemed outstanding for purposes of computing the percentage ownership of the person holding those securities, but are not deemed outstanding for purposes of computing the percentage ownership of any other person. Note that certain of our outstanding securities, including certain warrants and the shares of Series C1 preferred stock held by the persons listed in this table, have anti-dilution “ratchet” or “price-protection” provisions that, when triggered, will increase the number of shares of common stock underlying such securities. Subject to customary exceptions, these provisions are triggered anytime we issue shares of common stock to third parties at a price lower than the then-current conversion price or exercise price of the subject securities. As a result, the beneficial ownership reported in this table is only as of the date presented, and the beneficial ownership amounts of the persons in this table may increase on a future date, even though such persons have not actually acquired any additional shares of common stock.
|
|
(3)
|
As of August 30, 2018, there were 286 shares of Series C preferred stock outstanding, and each such share was convertible into approximately 381,098 shares of common stock.
|
|
(4)
|
As of August 30, 2018, there were 1,049.25 shares of Series C1 preferred stock outstanding, and each such share was convertible into approximately 381,098 shares of common stock. Three shareholders elected to convert 3,263.00 of their Series C1 preferred stock for Series C2 preferred stock.
|
|
(5)
|
As of August 30, 2018, there were 3,263.00 shares of Series C2 preferred stock outstanding, and each such share was convertible into approximately 381,098 shares of common stock.
|
|
(6)
|
Shares of common stock consist of 12,952 shares of common stock directly held, 1,754,912 shares issuable upon exercise of warrants, 16 shares subject to options, and 914,919,970 shares issuable upon conversion of 2,400.75 shares of Series C2 preferred stock. Dr. Imhoff is on the board of directors.
|
|
(7)
|
Shares of common stock consist of 3,612 shares of common stock directly held, 973 shares issuable upon exercise of warrants, and 257,240,854 shares issuable upon conversion of 675.00 shares of Series C1 preferred stock.
|
|
(8)
|
Shares of commons stock consist of 10 shares of common stock directly held, 4 shares issuable upon exercise of warrants, and 14 shares subject to options. Mr. James is on the board of directors.
|
|
(9)
|
Shares of commons stock consist of 29 shares of common stock directly held, 4 shares issuable upon exercise of warrants, and 5 shares subject to options.
Dr. Cartwright is the CEO and on the board of directors.
|
|
(10)
|
Shares of commons stock consist of 2 shares of common stock directly held and 14
shares subject to options.
|
|
(11)
|
Shares of common stock consist of 23 shares of common stock directly held and 700,014 shares issuable upon exercise of warrants. Mr. Blumberg is on the board of directors.
|
|
(12)
|
Shares of common stock consist of 1,600 shares of common stock directly held, 46 shares issuable upon exercise of warrants, 27 shares subject to options, and 114,328,633 shares issuable upon conversion of 300.00 shares of Series C2 preferred stock. Dr. Faupel is the COO and on the board of directors.
|
|
(13)
|
Shares of commons stock consists of 14,616 shares of common stock directly held, 2,454,980 shares issuable upon exercise of warrants, 76 shares subject to options, and 1,029,248,603 shares issuable upon conversion of 2,700.75 shares of Series C2 preferred stock.
|
|
|
|
|
|
|
|
|
|
|
|
Deadline for Submission of Stockholder Proposals for 2019
Annual Meeting of Stockholders
For any proposal to be considered for
inclusion in our proxy statement and form of proxy for submission to the stockholders at our 2019 Annual Meeting of Stockholders,
it must be submitted in writing and comply with the requirements of Rule 14a-8 of the Securities Exchange Act. Such proposals must
be received by the Company at its offices at 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092 no later than [●],
2019.
Stockholders may present proposals intended
for inclusion in our proxy statement for our 2019 Annual Meeting of Stockholders provided that such proposals are received by the
Secretary of the Company in accordance with the time schedules set forth herein, and otherwise in compliance with, applicable SEC
regulations, and the Company’s Bylaws, as applicable. Proposals submitted not in accordance with such regulations will be
deemed untimely or otherwise deficient; however, the Company will have discretionary authority to include such proposals in the
2019 proxy statement.
Stockholder Communications
Stockholders wishing to communicate with
the Board may direct such communications to the Board c/o the Company, Attn: Gene S. Cartwright. Mr. Cartwright will present a
summary of all stockholder communications to the Board at subsequent Board meetings. The directors will have the opportunity to
review the actual communications at their discretion.
Additional Information
Accompanying this proxy statement is a
copy of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2017. Such Annual Report includes the Company’s
audited financial statements for the 2017 fiscal year and certain other financial information, which is incorporated by reference
herein.
In addition, we are subject to certain
informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information
with the SEC. Such reports, proxy statements and other information are available on the SEC’s website at
www.sec.gov
.
Stockholders who have questions in regard to any aspect of the matters discussed in this proxy statement should contact Mark L.
Faupel, Chief Operating Officer of the Company, at 5835 Peachtree Corners East, Suite B, Norcross, Georgia 30092.
ANNEX A
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF GUIDED THERAPEUTICS, INC.
The undersigned, for the purposes of
amending the Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”) of Guided Therapeutics,
Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of
the State of Delaware, does hereby certify that:
FIRST
: The Board of Directors
of the Corporation (the “
Board
”) duly adopted in accordance with Section 141(f) of the DCGL by unanimous
written consent of the Board on _______, 2018, a resolution proposing and declaring advisable the following amendment be added
to the end of Article IV of the Certificate of Incorporation of said Corporation:
“Upon the effectiveness of the amendment
to the certificate of incorporation containing this sentence (the “Split Effective Time”) each share of the Common
Stock issued and outstanding immediately prior to the date and time of the filing hereof with the Secretary of State of Delaware
shall be automatically changed and reclassified into a smaller number of shares such that each ___ shares of issued Common Stock
is reclassified into one share of Common Stock. Notwithstanding the immediately preceding sentence, there shall be no fractional
shares issued and, in lieu thereof, a holder of Common Stock on the Split Effective Time who would otherwise be entitled to a fraction
of a share as a result of the reclassification, following the Split Effective Time, shall receive a full share of Common Stock
upon the surrender of such stockholders' old stock certificate. No stockholders will receive cash in lieu of fractional shares.”
SECOND
: The holders of a majority
of the issued and outstanding voting stock of the Corporation have voted in favor of said amendment at a duly convened meeting
of the stockholders of the Corporation.
THIRD
: The aforesaid amendment
was duly adopted in accordance with the applicable provisions of Section 242 of the DGCL.
IN WITNESS WHEREOF, the Corporation
has caused this Amendment to the Certificate of Incorporation of the Corporation to be duly executed by the undersigned this day
of ________, 2018.
|
GUIDED THERAPEUTICS, INC.
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
ANNEX
B
GUIDED
THERAPEUTICS, INC.
2018 STOCK OPTION PLAN
1.
Purpose
. The purpose of the Guided Therapeutics, Inc. 2018 Equity Incentive Plan is to provide a means through which the
Company and its Affiliates may attract and retain key personnel and to provide a means whereby directors, officers, managers,
employees, consultants and advisors of the Company and its Affiliates can acquire and maintain an equity interest in the Company,
or be paid incentive compensation, which may (but need not) be measured by reference to the value of Common Shares, thereby strengthening
their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s
stockholders.
2.
Definitions
. The following definitions shall be applicable throughout this Plan:
(a)
“
Affiliate
” means (i) any person or entity that directly or indirectly controls, is controlled by or
is under common control with the Company and/or (ii) to the extent provided by the Committee, any person or entity in which the
Company has a significant interest as determined by the Committee in its discretion. The term “control” (including,
with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any
person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise.
(b)
“
Award
” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option,
Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Stock Bonus Award granted under this Plan.
(c)
“
Award Agreement
” means an agreement made and delivered in accordance with Section 15(a) of this Plan
evidencing the grant of an Award hereunder.
(d)
“
Board
” means the Board of Directors of the Company.
(e)
“
Business Day
”
means any day other than a Saturday, a Sunday or a day on which banking institutions
in New York City are authorized or obligated by federal law or executive order to be closed.
(f)
“
Cause
”
means, in the case of a particular Award, unless the applicable Award Agreement states
otherwise, (i) the Company or an Affiliate having “cause” to terminate a Participant’s employment or service,
as defined in any employment or consulting agreement or similar document or policy between the Participant and the Company or
an Affiliate in effect at the time of such termination or (ii) in the absence of any such employment or consulting agreement,
document or policy (or the absence of any definition of “Cause” contained therein), (A) a continuing material breach
or material default (including, without limitation, any material dereliction of duty) by Participant of any agreement between
the Participant and the Company, except for any such breach or default which is caused by the physical disability of the Participant
(as determined by a neutral physician), or a continuing failure by the Participant to follow the direction of a duly authorized
representative of the Company; (B) gross negligence, willful misfeasance or breach of fiduciary duty to the Company or Affiliate
of the Company by the Participant
; (C) th
e commission by the Participant of an act
of fraud, embezzlement or any felony or other crime of dishonesty in connection with the Participant’s duties to the Company
or Affiliate of the Company; or (D)
conviction of
the Participant
of
a felony or any other
crime that would
materially and adversely affect: (i) the business
reputation of the Company or Affiliate of the Company or (ii) the
performance
of the
Participant
’s duties to the Company or an Affiliate of the Company.
Any
determination of whether Cause exists shall be made by the Committee in its sole discretion.
(g)
“
Change in Control
” shall, in the case of a particular Award, unless the applicable Award Agreement
states otherwise or contains a different definition of “Change in Control,” be deemed to occur upon:
(i) A
tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting
securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving
or resulting corporation or entity shall be owned in the aggregate by (A) the shareholders of the Company (as of the time immediately
prior to the commencement of such offer), or (B) any employee benefit plan of the Company or its Subsidiaries, and their Affiliates;
(ii) The
Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than
50% of the outstanding voting securities of the surviving or resulting corporation or entity shall be owned in the aggregate by
(A) the shareholders of the Company (as of the time immediately prior to such transaction); provided, that a merger or consolidation
of the Company with another company which is controlled by persons owning more than 50% of the outstanding voting securities of
the Company shall constitute a Change in Control unless the Committee, in its discretion, determine otherwise, or (B) any employee
benefit plan of the Company or its Subsidiaries, and their Affiliates;
(iii) The
Company shall sell substantially all of its assets to another entity that is not wholly owned by the Company, unless as a result
of such sale more than 50% of such assets shall be owned in the aggregate by (A) the shareholders of the Company (as of the time
immediately prior to such transaction), or (B) any employee benefit plan of the Company or its Subsidiaries, and their Affiliates;
(iv) A
Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving
or resulting corporation or entity shall be owned in the aggregate by (A) the shareholders of the Company (as of the time immediately
prior to the first acquisition of such securities by such Person), or (B) any employee benefit plan of the Company or its Subsidiaries,
and their Affiliates; or
(v) The
individuals who, as of the date hereof, constitute the members of the Board (the “Current Board Members”) cease, by
reason of a financing, merger, combination, acquisition, takeover or other non-ordinary course transaction affecting the Company,
to constitute at least a majority of the members of the Board unless such change is approved by the Current Board Members.
For
purposes of this Section 2(g), ownership of voting securities shall take into account and shall include ownership as determined
by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). In addition, for such purposes, “Person” shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not
include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such
securities; or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportion
as their ownership of stock of the Company.
(h)
“
Code
” means the Internal Revenue Code of 1986, as amended, and any successor thereto. References in
this Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance issued by any
governmental authority under such section, and any amendments or successor provisions to such section, regulations or guidance.
(i)
“
Committee
” means a committee of at least two people as the Board may appoint to administer this Plan
or, if no such committee has been appointed by the Board, the Board. Unless altered by an action of the Board, the Committee shall
be the Compensation Committee of the Board.
(j)
“
Common Shares
” means the common stock, par value $0.001 per share, of the Company (and any stock or
other securities into which such common shares may be converted or into which they may be exchanged.
(k)
“
Company
” means Guided Therapeutics, Inc., a Delaware corporation, together with its successors and
assigns.
(l)
“
Current Board Members
” has the meaning given such term in the definition of “Change in Control.”
(m)
“
Date of Grant
” means the date on which the granting of an Award is authorized, or such other date as
may be specified in such authorization.
(n)
“
Disability
” means a “permanent and total” disability incurred by a Participant while in
the employ or service of the Company or an Affiliate. For this purpose, a permanent and total disability shall mean that the Participant
is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.
The determination of whether a Participant has incurred a permanent and total disability shall be made by a physician designated
by the Committee, whose determination shall be final and binding.
(o)
“
Effective Date
” means the date as of which this Plan is adopted by the Board, subject to Section 3
of this Plan.
(p)
“
Eligible Director
” means a person who is a “non-employee director” within the meaning of
Rule 16b-3 under the Exchange Act.
(q)
“
Eligible Person
” means any (i) individual employed by the Company or an Affiliate;
provided
,
however
, that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and
to the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) director of the Company or an Affiliate; or (iii) consultant or advisor to the Company or an Affiliate, provided
that if the Securities Act applies such persons must be eligible to be offered securities registrable on Form S-8 under the Securities
Act.
(r)
“
Exchange Act
” has the meaning given such term in the definition of “Change in Control,”
and any reference in this Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules,
regulations or other interpretative guidance issued by any governmental authority under such section or rule, and any amendments
or successor provisions to such section, rules, regulations or guidance.
(s)
“
Exercise Price
” has the meaning given such term in Section 7(b) of this Plan.
(t)
“
Fair Market Value
”, unless otherwise provided by the Committee in accordance with all applicable laws,
rules regulations and standards, means, on a given date, (i) if the Common Shares are listed on a national securities exchange,
the closing sales price on the principal exchange of the Common Shares on such date or, in the absence of reported sales on such
date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the Common Shares are
not listed on a national securities exchange, the mean between the bid and offered prices as quoted by any nationally recognized
interdealer quotation system for such date, provided that if the Common Shares are not quoted on an interdealer quotation system
or it is determined that the fair market value is not properly reflected by such quotations, Fair Market Value will be determined
by such other method as the Committee determines in good faith to be reasonable and in compliance with Code Section 409A, if applicable.
(u)
“
Immediate Family Members
” shall have the meaning set forth in Section 14(b) of this Plan.
(v)
“
Incentive Stock Option
” means an Option that is designated by the Committee as an incentive stock option
as described in Section 422 of the Code and otherwise meets the requirements set forth in this Plan.
(w)
“
Indemnifiable Person
” shall have the meaning set forth in Section 4(e) of this Plan.
(x)
“
Nonqualified Stock Option
” means an Option that is not designated by the Committee as an Incentive
Stock Option.
(y)
“
Option
” means an Award granted under Section 7 of this Plan.
(z)
“
Option Period
” has the meaning given such term in Section 7(c) of this Plan.
(aa)
“
Participant
” means an Eligible Person who has been selected by the Committee to participate in this
Plan and to receive an Award pursuant to Section 6 of this Plan.
(bb)
“
Performance Criteria
” means any of the following factors: (i) revenue; (ii) sales; (iii) profit (net
profit, gross profit, operating profit, economic profit, profit margins or other corporate profit measures); (iv) earnings (EBIT,
EBITDA, earnings per share, or other corporate earnings measures); (v) net income (before or after taxes, operating income or
other income measures); (vi) cash (cash flow, cash generation or other cash measures); (vii) stock price or performance; (viii)
total stockholder return (stock price appreciation plus reinvested dividends divided by beginning share price); (ix) economic
value added; (x) return measures (including, but not limited to, return on assets, capital, equity, investments or sales, and
cash flow return on assets, capital, equity, or sales); (xi) market share; (xii) improvements in capital structure; (xiii) expenses
(expense management, expense ratio, expense efficiency ratios or other expense measures); (xiv) business expansion or consolidation
(acquisitions and divestitures); (xv) internal rate of return or increase in net present value; (xvi) working capital targets
relating to inventory and/or accounts receivable; (xvii) inventory management; (xviii) service or product delivery or quality;
(xix) customer satisfaction; (xx) employee retention; (xxi) safety standards; (xxii) productivity measures; (xxiii) cost reduction
measures; and/or (xxiv) strategic plan development and implementation.
(cc)
“
Permitted Transferee
” shall have the meaning set forth in Section 14(b) of this Plan.
(dd)
“
Person
” has the meaning given such term in the definition of “Change in Control.”
(ee)
“
Plan
” means this Guided Therapeutics, Inc., 2018 Equity Incentive Plan, as amended from time to time.
(ff)
“
Restricted Period
” means the period of time determined by the Committee during which an Award is subject
to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether
an Award has been earned.
(gg)
“
Restricted Stock Unit
” means an unfunded and unsecured promise to deliver Common Shares, cash, other
securities or other property, subject to certain restrictions (including, without limitation, a requirement that the Participant
remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of this Plan.
(hh)
“
Restricted Stock
” means Common Shares, subject to certain specified restrictions (including, without
limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period
of time), granted under Section 9 of this Plan.
(ii)
“
SAR Period
” has the meaning given such term in Section 8(c) of this Plan.
(jj)
“
Securities Act
” means the Securities Act of 1933, as amended, and any successor thereto. Reference
in this Plan to any section of the Securities Act shall be deemed to include any rules, regulations or other official interpretative
guidance issued by any governmental authority under such section, and any amendments or successor provisions to such section,
rules, regulations or guidance.
(kk)
“
Stock Appreciation Right
” or
“
SAR
”
means an Award granted under Section 8
of this Plan which meets all of the requirements of Section 1.409A-1(b)(5)(i)(B) of the Treasury Regulations.
(ll)
“
Stock Bonus Award
” means an Award granted under Section 10 of this Plan.
(mm)
“
Strike Price
” means, except as otherwise provided by the Committee in the case of Substitute Awards,
(i) in the case of a SAR granted in tandem with an Option, the Exercise Price of the related Option, or (ii) in the case of a
SAR granted independent of an Option, the Fair Market Value of Common Shares on the Date of Grant.
(nn)
“
Subsidiary
” means, with respect to any specified Person:
(i)
any corporation, association or other business entity of which more than 50% of the total voting power of shares of voting securities
(without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement
that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person (or a combination thereof); and
(ii)
any partnership or limited liability company (or any comparable foreign entity) (a) the sole general partner or managing member
(or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (b)
the only general partners or managing members (or functional equivalents thereof) of which are that Person or one or more Subsidiaries
of that Person (or any combination thereof).
(oo)
“
Substitute Award
” has the meaning given such term in Section 5(e).
(pp)
“
Treasury Regulations
” means any regulations, whether proposed, temporary or final, promulgated by the
U.S. Department of Treasury under the Code, and any successor provisions.
3.
Effective Date; Duration
. The Plan shall be effective upon its approval by the stockholders of the Company, which date
shall be within twelve (12) months before or after the date of the Plan’s adoption by the Board. The expiration date of
this Plan, on and after which date no Awards may be granted hereunder, shall be the tenth anniversary of the date on which the
Plan was approved by the stockholders of the Company;
provided
,
however
, that such expiration shall not affect
Awards then outstanding, and the terms and conditions of this Plan shall continue to apply to such Awards.
4.
Administration
.
(a)
The Committee shall administer this Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under
the Exchange Act (if the Board is not acting as the Committee under this Plan), it is intended that each member of the Committee
shall, at the time he takes any action with respect to an Award under this Plan, be an Eligible Director. However, the fact that
a Committee member shall fail to qualify as an Eligible Director shall not invalidate any Award granted by the Committee that
is otherwise validly granted under this Plan. The acts of a majority of the members present at any meeting at which a quorum is
present or acts approved in writing by a majority of the Committee shall be deemed the acts of the Committee. Whether a quorum
is present shall be determined based on the Committee’s charter as approved by the Board.
(b)
Subject to the provisions of this Plan and applicable law, the Committee shall have the sole and plenary authority, in addition
to other express powers and authorizations conferred on the Committee by this Plan and its charter, to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Common Shares to be covered
by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award, including, without limitation, vesting terms and conditions for any Award hereunder which
may include the achievement of any Performance Criteria selected by the Committee; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash, Common Shares, other securities, other Awards or other property,
or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited,
or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash, Common Shares, other
securities, other Awards or other property and other amounts payable with respect to an Award shall be made; (vii) interpret,
administer, reconcile any inconsistency in, settle any controversy regarding, correct any defect in and/or complete any omission
in this Plan and any instrument or agreement relating to, or Award granted under, this Plan; (viii) establish, amend, suspend,
or waive any rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration
of this Plan; (ix) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards; (x) reprice existing
Awards or to grant Awards in connection with or in consideration of the cancellation of an outstanding Award with a higher price;
and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration
of this Plan.
(c)
The Committee may, by resolution, expressly delegate to a special committee, consisting of one or more directors who may but need
not be officers of the Company, the authority, within specified parameters as to the number and types of Awards, to (i) designate
officers and/or employees of the Company or any of its Affiliates to be recipients of Awards under this Plan, and (ii) to determine
the number of such Awards to be received by any such Participants; provided, however, that such delegation of duties and responsibilities
may not be made with respect to grants of Awards to persons subject to Section 16 of the Exchange Act. The acts of such delegates
shall be treated as acts of the Committee, and such delegates shall report regularly to the Board and the Committee regarding
the delegated duties and responsibilities and any Awards granted.
(d)
Unless otherwise expressly provided in this Plan, all designations, determinations, interpretations, and other decisions under
or with respect to this Plan or any Award or any documents evidencing Awards granted pursuant to this Plan shall be within the
sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities,
including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder
of the Company.
(e)
No member of the Board, the Committee, delegate of the Committee or any employee, advisor or agent of the Company or the Board
or the Committee (each such person, an “
Indemnifiable Person
”) shall be liable for any action taken
or omitted to be taken or any determination made in good faith with respect to this Plan or any Award hereunder. Each Indemnifiable
Person shall be indemnified and held harmless by the Company against and from (and the Company shall pay or reimburse on demand
for) any loss, cost, liability, or expense (including court costs and attorneys’ fees) that may be imposed upon or incurred
by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person
may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken under
this Plan or any Award Agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s
approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit
or proceeding against such Indemnifiable Person,
provided
, that the Company shall have the right, at its own expense, to
assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the
Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification
shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case
not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions of such Indemnifiable
Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s bad faith, fraud or willful criminal
act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of
Incorporation or Bylaws. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification
to which any such Indemnifiable Person may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them
harmless.
(f)
Notwithstanding anything to the contrary contained in this Plan, the Board may, in its sole discretion, at any time and from time
to time, grant Awards and administer this Plan with respect to such Awards. In any such case, the Board shall have all the authority
granted to the Committee under this Plan.
5.
Grant of Awards; Shares Subject to this Plan; Limitations
.
(a)
The Committee may, from time to time, grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, and/or
Stock Bonus Awards to one or more Eligible Persons. Subject to Section 12 of this Plan, the Committee is authorized to deliver
under this Plan an aggregate of 2,500,000 Common Shares. Notwithstanding the foregoing, directors of the Company or an Affiliate
who are not employees of the Company or an Affiliate may not be granted Awards denominated in Common Shares that exceed in the
aggregate 500,000 Common Shares; provided, that the foregoing limitation shall not apply to any Award made pursuant to an election
by a director to receive an Award in lieu of all or a portion of the annual and/or committee retainers and annual meeting fee
payable to such director.
(b)
Common Shares underlying Awards under this Plan that are forfeited, cancelled, expire unexercised, or are settled in cash shall
be available again for Awards under this Plan at the same ratio at which they were previously granted. Notwithstanding the foregoing,
the following Common Shares shall not be available again for Awards under the Plan: (i) shares tendered or held back upon the
exercise of an Option or settlement of an Award to cover the Exercise Price of an Award; (ii) shares that are used or withheld
to satisfy tax withholding obligations of the Participant; and (iii) shares subject to a Stock Appreciation Right that are not
issued in connection with the stock settlement of the SAR upon exercise thereof.
(c)
Awards that do not entitle the holder thereof to receive or purchase Common Shares shall not be counted against the aggregate
number of Common Shares available for Awards under the Plan.
(d)
Common Shares delivered by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury
of the Company, shares purchased on the open market or by private purchase, or any combination of the foregoing.
(e)
Subject to compliance with Section 1.409A-3(f) of the Treasury Regulations, Awards may, in the sole discretion of the Committee,
be granted under this Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired
by the Company or with which the Company combines (“
Substitute Awards
”). The number of Common Shares
underlying any Substitute Awards shall be counted against the aggregate number of Common Shares available for Awards under this
Plan; provided, however that Common Shares issued under Substitute Awards granted in substitution for awards previously granted
by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number
of Common Shares available for Awards under the Plan.
6.
Eligibility
. Participation shall be limited to Eligible Persons who have entered into an Award Agreement or who have received
written notification from the Committee, or from a person designated by the Committee, that they have been selected to participate
in this Plan.
7.
Options
.
(a)
Generally
. Each Option granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic
medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)).
Each Option so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent
with this Plan as may be reflected in the applicable Award Agreement. All Options granted under this Plan shall be Nonqualified
Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option.
Notwithstanding any designation of an Option, to the extent that the aggregate Fair Market Value of Common Shares with respect
to which Options designated as Incentive Stock Options are exercisable for the first time by any Participant during any calendar
year (under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonqualified
Stock Options. Incentive Stock Options shall be granted only to Eligible Persons who are employees of the Company and its Affiliates,
and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under
the Code. No Option shall be treated as an Incentive Stock Option unless this Plan has been approved by the stockholders of the
Company in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of the Code, provided that
any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such
approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained. In
the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to and comply with such rules as
may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or portion
thereof shall be regarded as a Nonqualified Stock Option appropriately granted under this Plan.
(b)
Exercise Price
. The exercise price (“
Exercise Price
”) per Common Share for each Option
shall not be less than 100% of the Fair Market Value of such share determined as of the Date of Grant;
provided, however
,
that in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns shares
representing more than 10% of the voting power of all classes of shares of the Company or any Affiliate, the Exercise Price per
share shall not be less than 110% of the Fair Market Value per share on the Date of Grant.
(c)
Vesting and Expiration
. Options shall vest and become exercisable in such manner and on such date or dates determined
by the Committee and as set forth in the applicable Award Agreement, and shall expire after such period, not to exceed ten (10)
years from the Date of Grant, as may be determined by the Committee (the “
Option Period
”);
provided
,
however
, that the Option Period shall not exceed five (5) years from the Date of Grant in the case of an Incentive
Stock Option granted to a Participant who on the Date of Grant owns shares representing more than 10% of the voting power of all
classes of shares of the Company or any Affiliate;
and,
provided
,
further
, that notwithstanding any vesting
dates set by the Committee, the Committee may, in its sole discretion, accelerate the exercisability of any Option, which acceleration
shall not affect the terms and conditions of such Option other than with respect to exercisability. Unless otherwise provided
by the Committee in an Award Agreement:
(i)
an Option shall vest and become exercisable with respect to one-third of the Common Shares subject to such Option on each of the
first three anniversaries of the Date of Grant;
provided, however,
that the Committee may designate a purchase price below
Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity
that is acquired by or merged with the Company or an Affiliate;
(ii)
the unvested portion of an Option shall expire upon termination of employment or service of the Participant granted the Option,
and the vested portion of such Option shall remain exercisable for:
(A)
one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination
of Disability to be made by the Committee on a case by case basis), but not later than the expiration of the Option Period; and
(B)
90 calendar days following termination of employment or service for any reason other than such Participant’s death or Disability,
and other than such Participant’s termination of employment or service for Cause, but not later than the expiration of the
Option Period; and
(iii)
both the unvested and the vested portion of an Option shall immediately expire upon the termination of the Participant’s
employment or service by the Company for Cause.
Notwithstanding
the foregoing provisions of Section 7(c) and consistent with the requirements of applicable law, the Committee, in its sole discretion,
may extend the post-termination of employment period during which a Participant may exercise vested Options.
(d)
Method of Exercise and Form of Payment
. No Common Shares shall be delivered pursuant to the exercise of an Option
until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an
amount equal to any applicable federal, state, local and/or foreign income and employment taxes withheld. Options that have become
exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms
of the Award Agreement accompanied by payment of the Exercise Price. The Exercise Price shall be payable (i) in cash, check (subject
to collection), cash equivalent and/or vested Common Shares valued at the Fair Market Value at the time the Option is exercised
(including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of Common
Shares in lieu of actual delivery of such shares to the Company);
provided
, however,
that such Common Shares are
not subject to any pledge or other security interest; and (ii) by such other method as the Committee may permit in accordance
with applicable law, in its sole discretion, including without limitation: (A) in other property having a fair market value (as
determined by the Committee in its discretion) on the date of exercise equal to the Exercise Price or (B) if there is a public
market for the Common Shares at such time, by means of a broker-assisted “cashless exercise” pursuant to which the
Company is delivered a copy of irrevocable instructions to a stockbroker to sell the Common Shares otherwise deliverable upon
the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price or (C) by a “net
exercise” method whereby the Company withholds from the delivery of the Common Shares for which the Option was exercised
that number of Common Shares having a Fair Market Value equal to the aggregate Exercise Price for the Common Shares for which
the Option was exercised. Any fractional Common Shares shall be settled in cash.
(e)
Notification upon Disqualifying Disposition of an Incentive Stock Option
. Each Participant awarded an Incentive
Stock Option under this Plan shall notify the Company in writing immediately after the date he makes a disqualifying disposition
of any Common Shares acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition
(including, without limitation, any sale) of such Common Shares before the later of (A) two years after the Date of Grant of the
Incentive Stock Option or (B) one year after the transfer of such Common Shares to the Participant pursuant to his exercise of
the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the
Committee, retain possession of any Common Shares acquired pursuant to the exercise of an Incentive Stock Option as agent for
the applicable Participant until the end of the period described in the preceding sentence.
(f)
Compliance with Laws, etc
. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise
an Option in a manner that the Committee determines would violate the Sarbanes-Oxley Act of 2002, if applicable, or any other
applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations
of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.
8.
Stock Appreciation Rights
.
(a)
Generally
. Each SAR granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic
medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)).
Each SAR so granted shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent
with this Plan as may be reflected in the applicable Award Agreement. Any Option granted under this Plan may include tandem SARs
(i.e., SARs granted in conjunction with an Award of Options under this Plan). The Committee also may award SARs to Eligible Persons
independent of any Option.
(b)
Exercise Price.
The Exercise Price per Common Share for each Option granted in connection with a SAR shall not be
less than 100% of the Fair Market Value of such share determined as of the Date of Grant; provided, however, that the Committee
may designate a purchase price below Fair Market Value on the date of grant if the SAR is granted in substitution for an appreciation
right previously granted by an entity that is acquired by or merged with the Company or an Affiliate.
(c)
Vesting and Expiration
. A SAR granted in connection with an Option shall become exercisable and shall expire according
to the same vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall
vest and become exercisable and shall expire in such manner and on such date or dates determined by the Committee and shall expire
after such period, not to exceed ten years, as may be determined by the Committee (the “
SAR Period
”);
provided, however
, that notwithstanding any vesting dates set by the Committee, the Committee may, in its sole discretion,
accelerate the exercisability of any SAR, which acceleration shall not affect the terms and conditions of such SAR other than
with respect to exercisability. Unless otherwise provided by the Committee in an Award Agreement:
(i)
a SAR shall vest and become exercisable with respect to one-third of the Common Shares subject to such SAR on each of the first
three anniversaries of the Date of Grant;
(ii)
the unvested portion of a SAR shall expire upon termination of employment or service of the Participant granted the SAR, and the
vested portion of such SAR shall remain exercisable for:
(A)
one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination
of Disability to be made by the Committee on a case by case basis), but not later than the expiration of the SAR Period; and
(B)
90 calendar days following termination of employment or service for any reason other than such Participant’s death or Disability,
and other than such Participant’s termination of employment or service for Cause, but not later than the expiration of the
SAR Period; and
(iii)
both the unvested and the vested portion of a SAR shall expire immediately upon the termination of the Participant’s employment
or service by the Company for Cause.
(d)
Method of Exercise
. SARs that have become exercisable may be exercised by delivery of written or electronic notice
of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date
on which such SARs were awarded. Notwithstanding the foregoing, if on the last day of the Option Period (or in the case of a SAR
independent of an Option, the SAR Period), the Fair Market Value exceeds the Strike Price, the Participant has not exercised the
SAR or the corresponding Option (if applicable), and neither the SAR nor the corresponding Option (if applicable) has expired,
such SAR shall be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate
payment therefor.
(e)
Payment
. Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of Common
Shares subject to the SAR that are being exercised multiplied by the excess, if any, of the Fair Market Value of one Common Share
on the exercise date over the Strike Price, less an amount equal to any applicable federal, state, local and non-U.S. income and
employment taxes withheld. The Company shall pay such amount in cash, in Common Shares valued at Fair Market Value, or any combination
thereof, as determined by the Committee. Any fractional Common Share shall be settled in cash.
9.
Restricted Stock and Restricted Stock Units
.
(a)
Generally
. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement (whether
in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract
with the Company)). Each such grant shall be subject to the conditions set forth in this Section 9, and to such other conditions
not inconsistent with this Plan as may be reflected in the applicable Award Agreement. Restricted Stock and Restricted Stock Units
shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, for example,
limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions
may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of
performance goals or otherwise, as the Committee determines at the time of the grant of an Award or thereafter. Except as otherwise
provided in an Award Agreement, a Participant shall have none of the rights of a stockholder with respect to Restricted Stock
Units until such time as Common Shares are paid in settlement of such Awards.
(b)
Restricted Accounts; Escrow or Similar Arrangement
. Unless otherwise determined by the Committee, upon the grant
of Restricted Stock, a book entry in a restricted account shall be established in the Participant’s name at the Company’s
transfer agent and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than
held in such restricted account pending the release of the applicable restrictions, the Committee may require the Participant
to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable, and (ii)
the appropriate share power (endorsed in blank) with respect to the Restricted Stock covered by such agreement. If a Participant
shall fail to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank share
power within the amount of time specified by the Committee, the Award shall be null and void
ab initio
. Subject to the
restrictions set forth in this Section 9 and the applicable Award Agreement, the Participant generally shall have the rights and
privileges of a stockholder as to such Restricted Stock, including without limitation the right to vote such Restricted Stock
and the right to receive dividends, if applicable. To the extent shares of Restricted Stock are forfeited, any share certificates
issued to the Participant evidencing such shares shall be returned to the Company, and all rights of the Participant to such shares
and as a stockholder with respect thereto shall terminate without further obligation on the part of the Company.
(c)
Vesting; Acceleration of Lapse of Restrictions
. Unless otherwise provided by the Committee in an Award Agreement:
(i) the Restricted Period shall lapse with respect to one-third of the Restricted Stock and Restricted Stock Units on each of
the first three anniversaries of the Date of Grant; and (ii) the unvested portion of Restricted Stock and Restricted Stock Units
shall terminate and be forfeited upon the termination of employment or service of the Participant granted the applicable Award.
(d)
Delivery of Restricted Stock and Settlement of Restricted Stock Units
. (i) Upon the expiration of the Restricted
Period with respect to any shares of Restricted Stock, the restrictions set forth in the applicable Award Agreement shall be of
no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement
is used, upon such expiration, the Company shall deliver to the Participant, or his beneficiary, without charge, the share certificate
evidencing the shares of Restricted Stock that have not then been forfeited and with respect to which the Restricted Period has
expired (rounded down to the nearest full share).
Dividends, if any, that may have been withheld by the Committee and attributable
to any particular share of Restricted Stock shall be distributed to the Participant in cash or, at the sole discretion of the
Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such dividends, upon the release of restrictions
on such shares of Restricted Stock and, if such shares of Restricted Stock are forfeited, the Participant shall have no right
to such dividends (except as otherwise set forth by the Committee in the applicable Award Agreement).
(ii)
Unless otherwise provided by the Committee in an Award Agreement, upon the expiration of the Restricted Period with respect to
any outstanding Restricted Stock Units and no later than the 75
th
day of the calendar year following the calendar year
in which such expiration occurs, the Company shall deliver to the Participant, or his beneficiary, without charge, one Common
Share for each such outstanding Restricted Stock Unit;
provided
,
however
, that the Committee may, in its
sole discretion and subject to the requirements of Section 409A of the Code, elect to (i) pay cash or part cash and part Common
Share in lieu of delivering only Common Shares in respect of such Restricted Stock Units or (ii) defer the delivery of Common
Shares (or cash or part Common Shares and part cash, as the case may be) beyond the 75
th
day of the calendar year following
the calendar year in which the expiration of the Restricted Period occurs if such delivery would result in a violation of applicable
law until such time as is no longer the case. If a cash payment is made in lieu of delivering Common Shares, the amount of such
payment shall be equal to the Fair Market Value of the Common Shares as of the date on which the Restricted Period lapsed with
respect to such Restricted Stock Units, less an amount equal to any applicable federal, state, local and non-U.S. income and employment
taxes withheld. Notwithstanding anything contained herein to the contrary, the Committee in an Award Agreement may, in a manner
consistent with the applicable requirements of Section 409A of the Code, enable a Participant to elect to defer the date on which
settlement of the Restricted Stock Units shall occur.
10.
Stock Bonus Awards
. The Committee may issue unrestricted Common Shares, or other Awards denominated in Common Shares, under
this Plan to Eligible Persons, either alone or in tandem with other awards, in such amounts as the Committee shall from time to
time in its sole discretion determine. Each Stock Bonus Award granted under this Plan shall be evidenced by an Award Agreement
(whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party
under contract with the Company)). Each Stock Bonus Award so granted shall be subject to such conditions not inconsistent with
this Plan as may be reflected in the applicable Award Agreement.
11.
Changes in Capital Structure and Similar Events
. In the event of (a) any dividend or other distribution (whether in the
form of cash, Common Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization,
merger, amalgamation, consolidation, split-up, split-off, combination, repurchase or exchange of Common Shares or other securities
of the Company, issuance of warrants or other rights to acquire Common Shares or other securities of the Company, or other similar
corporate transaction or event (including, without limitation, a Change in Control) that affects the Common Shares, or (b) unusual
or nonrecurring events (including, without limitation, a Change in Control) affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any
governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case
an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate in order to prevent dilution
or enlargement of rights, then the Committee shall make any such adjustments that are equitable, including without limitation
any or all of the following:
(i)
adjusting any or all of (A) the number of Common Shares or other securities of the Company (or number and kind of other securities
or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under this Plan (including,
without limitation, adjusting any or all of the limitations under Section 5 of this Plan) and (B) the terms of any outstanding
Award, including, without limitation, (1) the number of Common Shares or other securities of the Company (or number and kind of
other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the Exercise Price
or Strike Price with respect to any Award or (3) any applicable performance measures;
(ii)
subject to the requirements of Section 409A of the Code, providing for a substitution or assumption of Awards, accelerating the
exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to
the occurrence of such event; and
(iii)
subject to the requirements of Section 409A of the Code, canceling any one or more outstanding Awards and causing to be paid to
the holders thereof, in cash, Common Shares, other securities or other property, or any combination thereof, the value of such
Awards, if any, as determined by the Committee (which if applicable may be based upon the price per Common Share received or to
be received by other stockholders of the Company in such event), including without limitation, in the case of an outstanding Option
or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee)
of the Common Shares subject to such Option or SAR over the aggregate Exercise Price or Strike Price of such Option or SAR, respectively
(it being understood that, in such event, any Option or SAR having a per share Exercise Price or Strike Price equal to, or in
excess of, the Fair Market Value of a Common Share subject thereto may be canceled and terminated without any payment or consideration
therefor);
provided
,
however
, that in the case of any “equity restructuring” (within the meaning
of the FASB Statement of Financial Accounting Standards No. 123 (revised 2004) or ASC Topic 718, or any successor thereto), the
Committee shall make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring. Any
adjustment in Incentive Stock Options under this Section 11 (other than any cancellation of Incentive Stock Options) shall be
made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code, and
any adjustments under this Section 11 shall be made in a manner that does not adversely affect the exemption provided pursuant
to Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice,
such adjustment shall be conclusive and binding for all purposes.
12.
Effect of Change in Control. Except to the extent otherwise provided in an Award Agreement, in the event of a Change in Control,
notwithstanding any provision of this Plan to the contrary, with respect to all or any portion of a particular outstanding Award
or Awards:
(a)
all of the then outstanding Options and SARs shall immediately vest and become immediately exercisable as of a time prior to
the Change in Control; and
(b)
the Restricted Period shall expire as of a time prior to the Change in Control (including without limitation a waiver of any
applicable Performance Goals).
To
the extent practicable, any actions taken by the Committee under the immediately preceding clauses (a) and/or (b) shall occur
in a manner and at a time which allows affected Participants the ability to participate in the Change in Control transactions
with respect to the Common Shares subject to their Awards.
13.
Amendments and Termination
.
(a)
Amendment and Termination of this Plan
. The Board may amend, alter, suspend, discontinue, or terminate this
Plan or any portion thereof at any time;
provided
, that (i) no amendment to the definition of Eligible Person in
Section 2(q), Section 5(b), or Section 13(b) (to the extent required by the proviso in such Section 13(b)) shall be made without
stockholder approval and (ii) no such amendment, alteration, suspension, discontinuation or termination shall be made without
stockholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to this Plan (including,
without limitation, as necessary to comply with any rules or requirements of any national securities exchange or inter-dealer
quotation system on which the Common Shares may be listed or quoted);
and,
provided
,
further
, that
any such amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights
of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without
the prior written consent of the affected Participant, holder or beneficiary.
(b)
Amendment
of Award Agreements
. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive
any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted or the associated Award Agreement, prospectively or retroactively;
provided, however
,
that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect
the rights of any Participant with respect to any Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant.
14.
General
.
(a)
Award Agreements
. Each Award under this Plan shall be evidenced by an Award Agreement, which shall be delivered
to the Participant (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company
or a third party under contract with the Company)) and shall specify the terms and conditions of the Award and any rules applicable
thereto, including without limitation, the effect on such Award of the death, Disability or termination of employment or service
of a Participant, or of such other events as may be determined by the Committee. The Company’s failure to specify any term
of any Award in any particular Award Agreement shall not invalidate such term, provided such terms was duly adopted by the Board
or the Committee.
(b)
Nontransferability; Trading Restrictions
.
(i)
Each Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable
law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any
such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against
the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.
(ii)
Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to
be transferred by a Participant, with or without consideration, subject to such rules as the Committee may adopt consistent with
any applicable Award Agreement to preserve the purposes of this Plan, to: (A) any person who is a “family member”
of the Participant, as such term is used in the instructions to Form S-8 under the Securities Act (collectively, the “
Immediate
Family Members
”); (B) a trust solely for the benefit of the Participant and his Immediate Family Members; (C) a
partnership or limited liability company whose only partners or stockholders are the Participant and his Immediate Family Members;
or (D) any other transferee as may be approved either (I) by the Board or the Committee in its sole discretion, or (II) as provided
in the applicable Award Agreement (each transferee described in clauses (A), (B), (C) and (D) above is hereinafter referred to
as a “
Permitted Transferee
”);
provided,
that the Participant gives the Committee advance written
notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that
such a transfer would comply with the requirements of this Plan.
(iii)
The terms of any Award transferred in accordance with subparagraph (ii) above shall apply to the Permitted Transferee and any
reference in this Plan, or in any applicable Award Agreement, to a Participant shall be deemed to refer to the Permitted Transferee,
except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and
distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect
a registration statement on an appropriate form covering the Common Shares to be acquired pursuant to the exercise of such Option
if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or
appropriate; (C) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or
not such notice is or would otherwise have been required to be given to the Participant under this Plan or otherwise; and (D)
the consequences of the termination of the Participant’s employment by, or services to, the Company or an Affiliate under
the terms of this Plan and the applicable Award Agreement shall continue to be applied with respect to the Participant, including,
without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified
in this Plan and the applicable Award Agreement.
(iv)
The Committee shall have the right, either on an Award-by-Award basis or as a matter of policy for all Awards or one or more classes
of Awards, to condition the delivery of vested Common Shares received in connection with such Award on the Participant’s
agreement to such restrictions as the Committee may determine.
(c)
Tax Withholding
.
(i)
A Participant shall be required to pay to the Company or any Affiliate, or the Company or any Affiliate shall have the right and
is hereby authorized to withhold, from any cash, Common Shares, other securities or other property deliverable under any Award
or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Shares, other securities or other
property) of any required withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or
under this Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all
obligations for the payment of such withholding and taxes. In addition, the Committee, in its discretion, may make arrangements
mutually agreeable with a Participant who is not an employee of the Company or an Affiliate to facilitate the payment of applicable
income and self-employment taxes.
(ii)
Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy,
in whole or in part, the foregoing withholding liability by (A) the delivery of Common Shares (which are not subject to any pledge
or other security interest) owned by the Participant having a fair market value equal to such withholding liability or (B) having
the Company withhold from the number of Common Shares otherwise issuable or deliverable pursuant to the exercise or settlement
of the Award a number of shares with a fair market value equal to such withholding liability (but no more than the maximum individual
statutory rate for the applicable tax jurisdiction).
(d)
No Claim to Awards; No Rights to Continued Employment; Waiver
. No employee of the Company or an Affiliate, or other
person, shall have any claim or right to be granted an Award under this Plan or, having been selected for the grant of an Award,
to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or
beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with
respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether
or not such Participants are similarly situated. Neither this Plan nor any action taken hereunder shall be construed as giving
any Participant any right to be retained in the employ or service of the Company or an Affiliate, nor shall it be construed as
giving any Participant any rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss
a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under this Plan,
unless otherwise expressly provided in this Plan or any Award Agreement. By accepting an Award under this Plan, a Participant
shall thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement
related to non-continuation of the Award beyond the period provided under this Plan or any Award Agreement, notwithstanding any
provision to the contrary in any written employment contract or other agreement between the Company and its Affiliates and the
Participant, whether any such agreement is executed before, on or after the Date of Grant.
(e)
International Participants
. With respect to Participants who reside or work outside of the United States of America,
the Committee may in its sole discretion amend the terms of this Plan or outstanding Awards (or establish a sub-plan) with respect
to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other
treatment for such Participants, the Company or its Affiliates.
(f)
Designation and Change of Beneficiary
. Unless otherwise provided by the Committee in an Award Agreement, each Participant
may file with the Committee a written designation of one or more persons as the beneficiary(ies) who shall be entitled to receive
the amounts payable with respect to an Award, if any, due under this Plan upon his death. A Participant may, from time to time,
revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with the
Committee. The last such designation filed with the Committee shall be controlling;
provided
,
however
, that
no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s
death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant,
the beneficiary shall be deemed to be his spouse or, if the Participant is unmarried at the time of death, his estate. Upon the
occurrence of a Participant’s divorce (as evidenced by a final order or decree of divorce), any spousal designation previously
given by such Participant shall automatically terminate.
(g)
Termination of Employment/Service
. Unless determined otherwise by the Committee at any point following such event:
(i) neither a temporary absence from employment or service due to illness, vacation or leave of absence nor a transfer from employment
or service with the Company to employment or service with an Affiliate (or vice-versa) shall be considered a termination of employment
or service with the Company or an Affiliate; and (ii) if a Participant’s employment with the Company and its Affiliates
terminates, but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity (or
vice-versa), such change in status shall not be considered a termination of employment with the Company or an Affiliate for purposes
of this Plan unless the Committee, in its discretion, determines otherwise.
(h)
No Rights as a Stockholder
. Except as otherwise specifically provided in this Plan or any Award Agreement, no person
shall be entitled to the privileges of ownership in respect of Common Shares that are subject to Awards hereunder until such shares
have been issued or delivered to that person.
(i)
Government and Other Regulations
.
(i)
The obligation of the Company to settle Awards in Common Shares or other consideration shall be subject to all applicable laws,
rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions
of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from
offering to sell or selling, any Common Shares pursuant to an Award unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption
therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation
to register for sale under the Securities Act any of the Common Shares to be offered or sold under this Plan. The Committee shall
have the authority to provide that all certificates for Common Shares or other securities of the Company or any Affiliate delivered
under this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under
this Plan, the applicable Award Agreement, the federal securities laws, or the rules, regulations and other requirements of the
Securities and Exchange Commission, any securities exchange or inter-dealer quotation system upon which such shares or other securities
are then listed or quoted and any other applicable federal, state, local or non-U.S. laws, and, without limiting the generality
of Section 9 of this Plan, the Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. Notwithstanding any provision in this Plan to the contrary, the Committee reserves the right to
add any additional terms or provisions to any Award granted under this Plan that it in its sole discretion deems necessary or
advisable in order that such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award
is subject.
(ii)
The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions
and/or blockage and/or other market considerations would make the Company’s acquisition of Common Shares from the public
markets, the Company’s issuance of Common Shares to the Participant, the Participant’s acquisition of Common Shares
from the Company and/or the Participant’s sale of Common Shares to the public markets, illegal, impracticable or inadvisable.
If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, unless doing so would violate
Section 409A of the Code, the Company shall pay to the Participant an amount equal to the excess of (A) the aggregate Fair Market
Value of the Common Shares subject to such Award or portion thereof canceled (determined as of the applicable exercise date, or
the date that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike
Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Common Shares (in the
case of any other Award). Such amount shall be delivered to the Participant as soon as practicable following the cancellation
of such Award or portion thereof. The Committee shall have the discretion to consider and take action to mitigate the tax consequence
to the Participant in cancelling an Award in accordance with this clause.
(j)
Payments to Persons Other Than Participants
. If the Committee shall find that any person to whom any amount is payable
under this Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment
due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if
the Committee so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of
such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.
(k)
Nonexclusivity of this Plan
. Neither the adoption of this Plan by the Board nor the submission of this Plan to the
stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options or other equity-based
awards otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.
(l)
No Trust or Fund Created
. Neither this Plan nor any Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other
person or entity, on the other hand. No provision of this Plan or any Award shall require the Company, for the purpose of satisfying
any obligations under this Plan, to purchase assets or place any assets in a trust or other entity to which contributions are
made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights
under this Plan other than as general unsecured creditors of the Company, except that insofar as they may have become entitled
to payment of additional compensation by performance of services, they shall have the same rights as other employees under general
law.
(m)
Reliance on Reports
. Each member of the Committee and each member of the Board shall be fully justified in acting
or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance
upon any report made by the independent public accountant of the Company and/or its Affiliates and/or any other information furnished
in connection with this Plan by any agent of the Company or the Committee or the Board, other than himself.
(n)
Relationship to Other Benefits
. No payment under this Plan shall be taken into account in determining any benefits
under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically
provided in such other plan.
(o)
Governing Law
. The Plan shall be governed by and construed in accordance with the internal laws of the State of
Delaware, without giving effect to the conflict of laws provisions.
(p)
Severability
. If any provision of this Plan or any Award or Award Agreement is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify this Plan or any Award
under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable
laws in the manner that most closely reflects the original intent of the Award or the Plan, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the intent of this Plan or the Award, such provision
shall be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of this Plan and any
such Award shall remain in full force and effect.
(q)
Obligations Binding on Successors
. The obligations of the Company under this Plan shall be binding upon any successor
corporation or organization resulting from the merger, amalgamation, consolidation or other reorganization of the Company, or
upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.
(r)
Expenses; Gender; Titles and Headings
. The expenses of administering this Plan shall be borne by the Company and
its Affiliates. Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings
of the sections in this Plan are for convenience of reference only, and in the event of any conflict, the text of this Plan, rather
than such titles or headings shall control.
(s)
Other Agreements
. Notwithstanding the above, the Committee may require, as a condition to the grant of and/or the
receipt of Common Shares under an Award, that the Participant execute lock-up, stockholder or other agreements, as it may determine
in its sole and absolute discretion.
(t)
Section 409A
.
The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from,
the requirements of Section 409A of the Code. The Plan and all Awards granted under this Plan shall be administered, interpreted,
and construed in a manner consistent with Section 409A of the Code to the extent necessary to avoid the imposition of additional
taxes under Section 409A(a)(1)(B) of the Code. Notwithstanding anything in this Plan to the contrary, in no event shall the Committee
exercise its discretion to accelerate the payment or settlement of an Award where such payment or settlement constitutes deferred
compensation within the meaning of Section 409A of the Code unless, and solely to the extent that, such accelerated payment or
settlement is permissible under Section 1.409A-3(j)(4) of the Treasury Regulations. If a Participant is a “specified employee”
(within the meaning of Section 1.409A-1(i) of the Treasury Regulations) at any time during the twelve (12)-month period ending
on the date of his termination of employment, and any Award hereunder subject to the requirements of Section 409A of the Code
is to be satisfied on account of the Participant’s termination of employment, satisfaction of such Award shall be suspended
until the date that is six (6) months after the date of such termination of employment. In no event shall the Company or any of
its Affiliates be liable for any taxes, penalities, interest, or other expenses that may be incurred by a Participant under Section
409A of the Code.
(u)
Payments
.
Participants shall be required to pay, to the extent required by applicable law, any amounts required
to receive Common Shares under any Award made under this Plan.
COMMON
STOCK PROXY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HOLDER OF
COMMON STOCK OF GUIDED THERAPEUTICS, INC. (THE “COMPANY”) HEREBY APPOINTS GENE S. CARTWRIGHT AND MARK L. FAUPEL, AND
EACH OF THEM, AS PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE ALL THE SHARES OF COMMON STOCK OF THE COMPANY
HELD OF RECORD BY THE UNDERSIGNED ON SEPTEMBER 4, 2018, AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON [●], 2018, OR
ANY ADJOURNMENT THEREOF.
1. To
elect five directors to the Company’s Board of Directors to serve until the next Annual Meeting of Stockholders or until
their successors are elected and qualified.
|
FOR ALL
¨
|
WITHHOLD
ALL
¨
|
FOR
ALL
EXCEPT
¨
|
To
withhold authority to vote for an individual nominee, mark “For All Except” and write the name of the excepted
nominee on the line below.
|
Gene
S. Cartwright
Michael
C. James
John
E. Imhoff
Richard
P. Blumberg
Mark
L. Faupel
2. To
ratify the appointment by the Board of Directors of UHY LLP as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2018:
¨
FOR
¨
AGAINST
¨
ABSTAIN
3. To
approve an amendment to the Company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s
outstanding common stock, at a ratio of between 1-for-25 and 1-for-200, with such ratio to be determined at the sole discretion
of the Board with such reverse stock split to be effected at such time and date on or before March 31, 2019, if at all, as determined
by the Board in its sole discretion.
¨
FOR
¨
AGAINST
¨
ABSTAIN
4. To
approve Guided Therapeutics, Inc. 2018 Stock Option Plan.
¨
FOR
¨
AGAINST
¨
ABSTAIN
The shares represented
by this proxy, when properly executed, will be voted as specified by the undersigned stockholder(s). If this card contains no
specific voting instructions, the shares will be voted
FOR
the director nominees and
FOR
each
of the other proposals described on this card.
In their discretion, the
proxies are authorized to vote upon such other business as may properly come before the meeting.
Please mark, sign, date
and return this proxy promptly using the accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF GUIDED THERAPEUTICS, INC.
|
|
|
Signature of Stockholder(s)
|
|
|
|
|
|
Date
|
When
shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign the corporate name by the president or other authorized officer. If a partnership,
please sign in the partnership name by an authorized person.
Use the
internet to transmit your voting instructions and for electronic delivery of information up until 12:00 A.M. Eastern Time the
day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form.
SERIES
C2 PREFERRED STOCK PROXY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HOLDER OF
SERIES C2 PREFERRED STOCK OF GUIDED THERAPEUTICS, INC. (THE “COMPANY”) HEREBY APPOINTS GENE S. CARTWRIGHT AND MARK
L. FAUPEL, AND EACH OF THEM, AS PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE ALL THE SHARES OF SERIES
C2 PREFERRED STOCK OF THE COMPANY HELD OF RECORD BY THE UNDERSIGNED ON SEPTEMBER 4, 2018, AT THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [●], 2018, OR ANY ADJOURNMENT THEREOF.
1. To
elect five directors to the Company’s Board of Directors to serve until the next Annual Meeting of Stockholders or until
their successors are elected and qualified.
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FOR ALL
¨
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WITHHOLD
ALL
¨
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FOR
ALL
EXCEPT
¨
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To
withhold authority to vote for an individual nominee, mark “For All Except” and write the name of the excepted
nominee on the line below.
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Gene
S. Cartwright
Michael
C. James
John
E. Imhoff
Richard
P. Blumberg
Mark
L. Faupel
2. To
ratify the appointment by the Board of Directors of UHY LLP as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2018:
¨
FOR
¨
AGAINST
¨
ABSTAIN
3. To
approve an amendment to the Company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s
outstanding common stock, at a ratio of between 1-for-25 and 1-for-200, with such ratio to be determined at the sole discretion
of the Board with such reverse stock split to be effected at such time and date on or before March 31, 2019, if at all, as determined
by the Board in its sole discretion.
¨
FOR
¨
AGAINST
¨
ABSTAIN
4. To
approve Guided Therapeutics, Inc. 2018 Stock Option Plan.
¨
FOR
¨
AGAINST
¨
ABSTAIN
The shares represented
by this proxy, when properly executed, will be voted as specified by the undersigned stockholder(s). If this card contains no
specific voting instructions, the shares will be voted
FOR
the director nominees and
FOR
each
of the other proposals described on this card.
In their discretion, the
proxies are authorized to vote upon such other business as may properly come before the meeting.
Please mark, sign, date
and return this proxy promptly using the accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF GUIDED THERAPEUTICS, INC.
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Signature of Stockholder(s)
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Date
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When
shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign the corporate name by the president or other authorized officer. If a partnership,
please sign in the partnership name by an authorized person.
Use the
internet to transmit your voting instructions and for electronic delivery of information up until 12:00 A.M. Eastern Time the
day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form.
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