United States Securities And Exchange Commission
Washington, DC 20549
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FORM 10-QSB
(Mark One)
|X| Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 2003
OR
|_| Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from __________ to _______________
Commission file number: 0-9410
Provectus Pharmaceuticals, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 90-0031917
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7327 Oak Ridge Highway Suite A, Knoxville, TN 37931
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(Address of Principal Executive Offices) (Zip Code)
865/769-4011
--------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
N/A
--------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes |X| No |_|
The number of shares outstanding of the issuer's stock, $0.001 par value
per share, as of May 6, 2003 was 9,487,689.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
Table of Contents
Page
Part I Financial Information...................................................1
Item 1. Financial Statements.............................................1
Index To Consolidated Financial Statements..............................1
Consolidated Balance Sheets.............................................2
Consolidated Statements of Operations...................................3
Consolidated Statements of Stockholders' Equity.........................4
Consolidated Statements of Cash Flows...................................5
Notes to Consolidated Financial Statements..............................6
Item 2. Management's Discussion and Analysis or Plan of Operation........8
Overview................................................................8
Going Concern..........................................................10
Plan of Operation......................................................11
Forward-Looking Statements.............................................14
Item 3. Controls and Procedures.........................................14
Part II Other Information.....................................................15
Item 1. Legal Proceedings...............................................15
Item 2. Changes in Securities and Use of Proceeds.......................15
Item 3. Defaults Upon Senior Securities.................................16
Item 4. Submission of Matters to a Vote of Security Holders.............16
Item 5. Other Information...............................................17
Item 6. Exhibits and Reports on Form 8-K................................17
Signatures....................................................................18
Certification of Chief Executive Officer......................................19
Certification of Chief Financial Officer......................................20
Exhibit Index................................................................X-1
i
Part I
Financial Information
Item 1. Financial Statements.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets...............................................2
Consolidated Statements of Operations.....................................3
Consolidated Statements of Stockholders' Equity...........................4
Consolidated Statements of Cash Flows.....................................5
Notes to Consolidated Financial Statements................................6
1
Provectus Pharmaceuticals, Inc.
(A Development-Stage Company)
Consolidated Balance Sheets
March 31, December 31,
2003 2002
------------------------------------------------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current Assets
Cash $ 140,261 $ 717,833
Prepaid expenses 32,982 35,481
Prepaid consulting expense (Note 6(b)) 74,917 -
------------------------------------------------------------------------------------------------------------------
Total Current Assets 248,160 753,314
Equipment and Furnishings, less accumulated depreciation of
$123,327 and $39,446 390,849 471,429
Patents, net of amortization of $420,879 and $133,916 19,616,681 19,903,644
Other Assets 27,000 27,000
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$ 20,282,690 $ 21,155,387
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Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable - trade $ 52,572 $ 98,874
Accrued expenses 85,250 77,781
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Total Current Liabilities 137,822 176,655
Loan From Stockholder 109,000 109,000
Convertible Long-Term Debt (net of debt discount of $104,774
and $120,344) (Note 5) 921,185 879,656
Stockholders' Equity
Common stock; par value $.001 per share; 100,000,000 shares
authorized; 9,487,689 and 9,423,689 shares issued and
outstanding, respectively 9,488 9,424
Paid-in capital 27,219,633 27,102,406
Accumulated deficit (8,114,438) (7,121,754)
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Total Stockholders' Equity 19,114,683 19,990,076
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$ 20,282,690 $ 21,155,387
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See accompanying notes to financial statements.
2
Provectus Pharmaceuticals, Inc.
(A Development-Stage Company)
Consolidated Statements of Operations
Three Three Cumulative
Months Ended Months Ended Through
March 31, March 31, March 31,
2003 2002 2003
-------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
Operating Expenses
Research and development $ 155,783 $ 1,000 $ 206,497
General and administrative 511,917 10,000 7,434,863
Amortization 286,963 - 420,879
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Total operating loss (954,663) (11,000) (8,062,239)
Net interest (expense) income (38,021) 34 (52,199)
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Net Loss Applicable to Common
Stockholders $ (992,684) $ (10,966) $(8,114,438)
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Basic and Diluted Loss Per Common Share (0.11) -
-------------------------------------------------------------------------------------------------
Weighted Average Number of Common
Shares Outstanding - Basic and Diluted 9,451,667 6,230,137
-------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
3
Provectus Pharmaceuticals, Inc.
(A Development-Stage Company)
Consolidated Statements of Stockholders' Equity
(unaudited)
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Common Stock
------------------------------
------------------------------
Number of Paid-in Accumulated
Shares Par Value Capital Deficit Total
------------------------------------------------------------------------------------------------------------------------------------
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Balance, at January 17, 2002 - $ - $ - $ - $ -
Issuance to founding stockholders 6,000,000 6,000 (6,000) - -
Sale of stock 50,000 50 24,950 - 25,000
Issuance of stock to employees 510,000 510 931,490 - 932,000
Issuance of stock for services 120,000 120 359,880 - 360,000
Net loss for the period from January 17, 2002
(inception)
to April 23, 2002 (date of reverse merger) - - - (1,316,198) (1,316,198)
------------------------------------------------------------------------------------------------------------------------------------
Balance, at April 23, 2002 6,680,000 6,680 1,310,320 (1,316,198) 802
Shares issued in reverse merger 265,763 266 (3,911) - (3,645)
Issuance of stock for services 1,900,000 1,900 5,142,100 - 5,144,000
Purchase and retirement of stock (400,000) (400) (47,600) - (48,000)
Stock issued for acquisition of Valley
Pharmaceuticals 500,007 500 20,547,935 - 20,548,435
Exercise of warrants 452,919 453 - - 453
Warrants issued in connection with convertible debt - - 126,587 - 126,587
Stock and warrants issued for acquisition of
Pure-ific 25,000 25 26,975 - 27,000
Net loss for the period from April 23, 2002 (date
of reverse merger) to December 31, 2002 - - - (5,805,556) (5,805,556)
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Balance, at December 31, 2002 9,423,689 9,424 27,102,406 (7,121,754) 19,990,076
Issuance of stock for services 64,000 64 22,736 - 22,800
Issuance of warrants for services - - 94,491 - 94,491
Net loss for the three months ended March 31, 2003 - - - (992,684) (992,684)
------------------------------------------------------------------------------------------------------------------------------------
9,487,689 $ 9,488 $ 27,219,633 $(8,114,438) $19,114,683
------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
4
Provectus Pharmaceuticals, Inc.
(A Development-Stage Company)
Consolidated Statements of Cash Flows
For the Period Cumulative
Three From January 17, Amounts From
Months Ended 2002 (Inception) to January 17, 2002
March 31, 2003 March 31, 2002 (Inception)
----------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
Cash Flows From Operating Activities
Net loss $ (992,684) $ (10,966) $(8,114,438)
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation 83,881 - 123,327
Amortization of patents 286,963 - 420,879
Amortization of original issue discount 15,570 - 21,813
Compensation through issuance of
stock - - 932,000
Issuance of stock for services 22,800 - 5,526,800
Issuance of warrants for services 19,574 - 19,574
(Increase) decrease in assets
Prepaid expenses 2,499 - (32,982)
Increase (decrease) in liabilities
Accounts payable (46,302) - 48,927
Accrued expenses 7,469 - 85,250
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Net cash used in operating activities (600,230) (10,966) (968,850)
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Cash Flows From Investing Activities
Capital expenditures (3,301) - (3,301)
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Net cash used in investing activities (3,301) - (3,301)
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Cash Flows From Financing Activities
Proceeds from loans from stockholder - - 109,000
Proceeds from convertible debt 25,959 - 1,025,959
Proceeds from sale of common stock - 25,000 25,000
Proceeds from exercise of warrants - - 453
Purchase and retirement of common stock - - (48,000)
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Net cash provided by financing activities 25,959 25,000 1,112,412
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Net Change in Cash $ (577,572) $ 14,034 $ 140,261
Cash, at beginning of period 717,833 - -
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Cash, at end of period $ 140,261 $ 14,034 $ 140,261
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Supplemental Noncash Financing Activities
Warrants issued to consultants for prepaid services of $74,917 in 2003.
See accompanying notes to financial statements.
5
Provectus Pharmaceuticals, Inc.
(A Development-Stage Company)
Notes to Consolidated Financial Statements
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information pursuant to Regulation S-K. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2003 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2003.
2. GOING CONCERN
The Company will continue to require additional capital to develop its
products and develop sales and distribution channels for its products. However,
the Company believes it lacks sufficient working capital to fund operations for
the entire fiscal year ending December 31, 2003. Management believes there are a
number of potential alternatives available to meet the Company's continuing
capital requirements, including proceeding as rapidly as possible with the
development of over-the-counter products that can be sold with a minimum of
regulatory compliance and developing revenue sources through licensing of the
Company's existing intellectual property portfolio. In addition, the Company is
pursuing actively additional debt and/or equity capital in order to support
ongoing operations. There can be no assurance that the Company will be able to
obtain sufficient additional working capital on commercially reasonable terms or
conditions, or at all.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. Continuing as a going concern is
dependent upon successfully obtaining additional working capital as described
above. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets and
amounts and classifications of liabilities that might result from the outcome of
this uncertainty.
3. RECAPITALIZATION AND MERGER
On April 23, 2002, Provectus Pharmaceutical, Inc., a Nevada corporation and
a "blank check" public company, acquired Provectus Pharmaceuticals, Inc., a
privately held Tennessee corporation ("PPI"), by issuing 6,680,000 shares of
common stock of Provectus Pharmaceutical to the stockholders of PPI in exchange
for all of the issued and outstanding shares of PPI, as a result of which
Provectus Pharmaceutical changed its name to Provectus Pharmaceuticals, Inc.
(the "Company") and PPI became a wholly owned subsidiary of the Company.
For financial reporting purposes, the transaction has been reflected in
the accompanying financial statements as a recapitalization of PPI and the
financial statements reflect the historical financial information of PPI, which
was incorporated on January 17, 2002.
The issuance of 6,680,000 shares of common stock of Provectus
Pharmaceutical, Inc. to the stockholders of PPI in exchange for all of the
issued and outstanding shares of PPI was done in anticipation of PPI acquiring
Valley Pharmaceuticals, Inc., which owned the intellectual property to be used
in the Company's operations.
4. BASIC AND DILUTED LOSS PER COMMON SHARE
Basic and diluted loss per common share is computed based on the weighted
average number of common shares outstanding. Loss per share excludes the impact
of outstanding options, warrants, and convertible debt as they are antidilutive.
Potential common shares excluded from the calculation at March 31, 2003 are
385,000 warrants and 1,442,984 shares issuable upon conversion of convertible
debt and interest. Additionally, the Company is committed to issue 80,000
warrants.
6
5. LONG-TERM CONVERTIBLE DEBT
On January 31, 2003, the Convertible Secured Promissory Note and Warrant
Agreement between the Company and Gryffindor Capital Partners I, L.L.C. was
amended to increase the $1,000,000 principal amount to $1,025,959.
6. EQUITY TRANSACTIONS
(a) In the first quarter of 2003, the Company issued 64,000 shares to
consultants in exchange for services rendered. Consulting costs charged to
operations were $22,800.
(b) The Company applies the recognition provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," in accounting for stock options and
warrants issued to nonemployees. In the first quarter of 2003, the Company
issued 385,000 warrants in exchange for consulting services rendered. As the
fair market value of these services was not readily determinable, these services
were valued based on the fair market value, determined using the Black-Scholes
option pricing model. Fair market value for warrants ranged from $0.07 to $0.24.
Consulting costs charged to operations were $19,574. At March 31, 2003, $74,917
has been classified as prepaid consulting expense as this amount represents
payments for services to be provided in the future.
7. CONTINGENCIES
On April 17, 2003, a suit was filed in the Third Judicial District Court,
Salt Lake County, Utah by Kelly Adams, on behalf of himself and "as
representatives of certain stockholders of Provectus Pharmaceuticals, Inc., a
Nevada corporation." The suit names PPI and Michael L. Labertew, an attorney in
Salt Lake City, Utah, as defendants, and seeks to rescind the Agreement and Plan
of Reorganization dated April 22, 2002 by which the Company acquired PPI and
PPI's former stockholders acquired majority ownership of the Company's common
stock. On April 29, 2003, without giving the Company or PPI notice of the motion
or an opportunity to respond to it, the Utah court granted Mr. Adams's motion
for a 10-day temporary restraining order (the "TRO"), preventing the Company
from issuing additional shares of stock for a 10-day period commencing on April
29, 2003 and ending on May 9, 2003.
7
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion is intended to assist in the understanding and
assessment of significant changes and trends related to our results of
operations and our financial condition together with our consolidated
subsidiaries. This discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto included elsewhere in
this Quarterly Report on Form 10-QSB. Historical results and percentage
relationships set forth in the statement of operations, including trends which
might appear, are not necessarily indicative of future operations.
OVERVIEW
History
Provectus Pharmaceuticals, Inc., formerly known as "Provectus
Pharmaceutical, Inc." and "SPM Group, Inc.," was incorporated under Colorado law
on May 1, 1978. SPM Group, Inc. ceased operations in 1991, and became a
development-stage company effective January 1, 1992, with the new corporate
purpose of seeking out acquisitions of properties, businesses, or merger
candidates, without limitation as to the nature of the business operations or
geographic location of the acquisition candidate.
On April 1, 2002, SPM Group, Inc. changed its name to "Provectus
Pharmaceutical, Inc." and reincorporated in Nevada in preparation for a
transaction with Provectus Pharmaceuticals, Inc., a privately-held Tennessee
corporation ("PPI"). On April 23, 2002, an Agreement and Plan of Reorganization
between Provectus Pharmaceutical and PPI was approved by the written consent of
a majority of the outstanding shares of Provectus Pharmaceutical, pursuant to
which 6,680,000 shares of common stock of Provectus Pharmaceutical were
exchanged for all of the issued and outstanding shares of PPI. As part of the
acquisition, Provectus Pharmaceutical changed its name to "Provectus
Pharmaceuticals, Inc." and PPI became a wholly owned subsidiary of the Company.
For accounting purposes, this transaction was treated as a recapitalization of
PPI and the issuance of shares of PPI for Provectus Pharmaceutical, Inc. The
historical financial information set forth in this report is PPI's historical
financial statements from the date of PPI's incorporation, January 17, 2002.
On November 19, 2002, Provectus Pharmaceuticals acquired Valley
Pharmaceuticals, Inc. ("Valley"), a privately-held Tennessee corporation
formerly known as Photogen, Inc., by merging its subsidiary PPI with and into
Valley and naming the surviving corporation "Xantech Pharmaceuticals, Inc." By
acquiring Valley, we acquired our most important intellectual property,
including issued U.S. patents and patentable inventions, which we intend to use
to develop:
o prescription drugs, medical and other devices (including laser
devices) and over-the-counter pharmaceutical products in the fields of
dermatology and oncology, and
o technologies for the preparation of human and animal vaccines,
diagnosis of infectious diseases and enhanced production of
genetically engineered drugs.
Prior to its acquisition, Valley was considered to be in the development
stage and had not generated any revenues from the assets we acquired.
On December 5, 2002, Provectus Pharmaceuticals acquired the assets of
Pure-ific L.L.C., a Utah limited liability company, and created a wholly owned
subsidiary, Pure-ific Corporation, to operate that business. By acquiring
Pure-ific L.L.C., we acquired the product formulations for Pure-ific personal
sanitizing sprays, along with the "Pure-ific" trademarks. With this acquisition,
we intend to continue development and begin to market a line of personal
sanitizing sprays and related products to be sold over the counter under the
"Pure-ific" brand name.
Description Of Business
Provectus Pharmaceuticals, Inc., a Nevada corporation ("Provectus"), and
its two wholly owned subsidiaries, Xantech Pharmaceuticals, Inc. ("Xantech") and
Pure-ific Corporation ("Pure-ific"), develop, license and market and plan to
sell products in three sectors of the healthcare industry:
8
o Over-the-counter ("OTC") products;
o Prescription drugs; and
o Medical device systems
We manage Provectus, Xantech and Pure-ific on an integrated basis, and when
we refer to "we" or "us" or "the Company" in this Quarterly Report on Form
10-QSB, we refer to all three corporations considered as a single unit. Our
principal executive offices are located at 7327 Oak Ridge Highway, Suite A,
Knoxville, Tennessee 37931, telephone 865/769-4011.
Through discovery and use of state-of-the-art scientific and medical
technologies, the founders of our pharmaceutical business have developed a suite
of core technologies that support multiple products in the prescription drug,
medical device and OTC products categories. Our prescription drug products
encompass the areas of dermatology and oncology and involve several types of
drugs, including those produced by advanced biotechnology methods. Our medical
device systems include therapeutic and cosmetic lasers, while our OTC products
address markets primarily involving skincare applications.
Over-the-Counter Pharmaceuticals
Our OTC products are designed to be safer and more specific than competing
products. Our technologies offer practical solutions for a number of intractable
maladies, using ingredients that have limited or no side effects compared with
existing products.
We have developed GloveAid, a hand cream with both antiperspirant and
antibacterial properties, to increase the comfort of users' hands during and
after the wearing of disposable gloves. Since the end of the first quarter of
2003, we have begun small-scale sales of GloveAid in U.S. and foreign markets,
and are focusing on reaching full-scale distribution of GloveAid by the fourth
quarter of 2003.
Our Pure-ific line of products includes two quick-drying sprays, Pure-ific
and Pure-ific Kids, that immediately kill up to 99.9% of germs on skin and
prevent regrowth for 6 hours. Pure-ific products help prevent the spread of
germs and thus complement our other OTC products designed to treat irritated
skin or skin conditions such as acne, eczema, dandruff and fungal infections. We
are beginning limited distribution of Pure-ific during the first quarter of
2003. We intend to continue developing our distribution network for these
products and expect to expand the Pure-ific product line to include additional
applications.
A number of dermatological conditions, including psoriasis, eczema, and
acne, result from a superficial infection which triggers an overwhelming immune
response. We anticipate developing OTC products similar to the GloveAid line for
the treatment of mild to moderate cases of psoriasis, eczema, and acne.
Prescription Drugs
We are developing a number of prescription drugs which we expect will
provide minimally invasive treatment of chronic severe skin afflictions such as
psoriasis, eczema, and acne; and several life-threatening cancers such as those
of the liver, breast and prostate. We believe that our products will be safer
and more specific than currently existing products. Use of topical or other
direct delivery formulations allows these potent products to be conveniently and
effectively delivered only to diseased tissues, thereby enhancing both safety
and effectiveness. All of these products are in the pre-clinical or clinical
trial stage.
Our most advanced prescription drug candidate for treatment of topical
diseases on the skin is Xantryl, a topical gel. PV-10, the active ingredient in
Xantryl, is "photoactive": it reacts to light of certain wavelengths, increasing
its therapeutic effects. PV-10 also concentrates in diseased or damaged tissue
but quickly dissipates from healthy tissue. By developing a "photodynamic"
treatment regimen (one which combines a photoactive substance with activation by
a source emitting a particular wavelength of light) around these two properties
of PV-10, we can deliver a higher therapeutic effect at lower dosages of active
9
ingredient, thus minimizing potential side effects including damage to nearby
healthy tissues. PV-10 is especially responsive to green light, which is
strongly absorbed by the skin and thus only penetrates the body to a depth of
about three to five millimeters. For this reason, we have developed Xantryl
combined with green-light activation for topical use in surface applications
where serious damage could result if medicinal effects were to occur in deeper
tissues. We are researching the use of Xantryl with green-light activation to
treat multiple dermatological conditions, including acute psoriasis, actinic
keratosis, and severe acne.
Oncology
Oncology is another major market where our planned products may afford
competitive advantage compared to currently available options. We are developing
Provecta, a sterile injectible form of PV-10, for direct injection into tumors.
Because PV-10 is retained in diseased or damaged tissue but quickly dissipates
from healthy tissue, we believe we can develop therapies that confine treatment
to cancerous tissue and reduce collateral impact on healthy tissue. We are
researching the use of PV-10 for the treatment of cancers of the liver, breast
and prostate.
Medical Devices
We are developing medical devices to address two major markets:
o cosmetic treatments, such as reduction of wrinkles and elimination of
spider veins and other cosmetic blemishes; and
o therapeutic uses, including photoactivation of Xantryl other
prescription drugs and non-surgical destruction of certain skin
cancers.
We expect to develop medical devices through partnerships with third-party
device manufacturers or, if appropriate opportunities arise, through acquisition
of one or more device manufacturers.
Research and Development
We have placed most research activities on hold as we attempt to conserve
available capital and achieve full capitalization of the Company through equity
and convertible debt offerings, generation of product revenues, and other means.
In the interim, we are maintaining our research facilities in anticipation of a
resumption of our research programs. All ongoing research and development
activities are directed toward supporting our OTC product launches and
maintaining our intellectual property portfolio.
GOING CONCERN
In connection with their audit report on our consolidated financial
statements as of December 31, 2002, BDO Seidman LLP, our independent certified
public accountants, expressed substantial doubt about our ability to continue as
a going concern because such continuance is dependent upon our ability to raise
capital or achieve profitable operations.
Our technologies are in early stages of development. We have not generated
revenues from sales or operations and we do not expect to generate sufficient
revenues to enable us to be profitable for several calendar quarters. In
November 2002, we obtained $1 million from Gryffindor Capital Partners I,
L.L.C., a Delaware limited liability company ("Gryffindor") through the sale,
pursuant to a Convertible Secured Promissory Note and Warrant Purchase Agreement
dated November 26, 2002 (the "Gryffindor Agreement") between the Company and
Gryffindor, of our Convertible Secured Promissory Note dated November 26, 2002
in the original principal amount of $1 million (the "Note") and Common Stock
Purchase Warrants dated November 26, 2002 (the "Warrants"). In addition, at
critical junctures during 2002 we obtained approximately $109,000 in additional
funding through short-term loans from Eric A. Wachter, our Vice President -
Pharmaceuticals, a member of our Board of Directors, and a major stockholder.
These funds allowed us to complete our planned corporate reorganization and
acquisitions, complete initial production runs for several of our OTC products,
and maintain our facilities and intellectual property portfolio. We require
additional funding to continue initial production and distribution of OTC
products in order to achieve meaningful sales volumes. In addition, we must
raise substantial additional funds in order to fully implement our integrated
business plan, including execution of the next phases in clinical development of
our pharmaceutical products and resumption of research programs currently
suspended.
Ultimately, we must achieve profitable operations if we are to be a viable
entity. We intend to proceed as rapidly as possible with the development of OTC
10
products that can be sold with a minimum of regulatory compliance and with the
development of revenue sources through licensing of our existing intellectual
property portfolio. Although we believe that there is a reasonable basis for our
expectation that we will successfully raise the needed funds, we cannot assure
you that we will be able to raise sufficient capital to sustain operations
before we can commence revenue generation or that we will be able to achieve, or
maintain, a level of profitability sufficient to meet our operating expenses.
PLAN OF OPERATION
With the reorganization of Provectus and PPI and the acquisition and
integration into the Company of Valley and Pure-ific, we believe we have
obtained a unique combination of OTC products and core intellectual properties.
This combination represents the foundation for a successful operating company
that we believe will provide both short-term profitability and long-term growth.
In 2003, through careful control of expenditures, commencing sales of OTC
products, and issuance of debt and equity, we plan to build on that foundation
to increase stockholder value.
In the short term, we intend to develop our business by marketing,
manufacturing, and distributing our existing OTC products, principally GloveAid
and Pure-ific. In the longer term, we expect to continue the process of
developing, testing and obtaining FDA approval of prescription drugs and medical
devices. Additionally, we intend to restart our research programs that will
identify additional conditions that our intellectual properties may be used to
treat and additional treatments for those and other conditions.
Cash Flow
As of March 31, 2003, we held approximately $140,000 in cash. At our
current cash expenditure rate, this amount will be sufficient to meet our needs
until the middle of June 2003. We have reduced our expenditure rate by
suspending most of our research programs; in addition, we are seeking to improve
our cash flow by commencing sales of OTC products. However, we cannot assure
that we will be successful either in commencing sales of OTC products or in
reducing expenditures. Moreover, even if we are successful in improving our
current cash flow position, we nonetheless will require additional funds to meet
our short-term and long-term needs. We anticipate these funds will come from the
proceeds of private placements or public offerings of debt or equity securities,
but we cannot assure you that we will be able to obtain such funds.
Capital Resources
As noted above, our present cash flow is not sufficient to meet our
short-term operating needs for initial production and distribution of OTC
products in order to achieve meaningful sales volumes, much less to meet our
longer-term needs for investment in our business through execution of the next
phases in clinical development of our pharmaceutical products and resumption of
our currently suspended research programs. We anticipate that the majority of
the funds for our operating and development needs in 2003 will come from the
proceeds of private placements or public offerings of debt or equity securities.
We are currently in discussions with multiple funding sources and feel confident
adequate operating funding and development funding will result. While we believe
that we have reasonable basis for our expectation that we will be able to raise
additional funds, we cannot give you an assurances that we will be able to do so
on commercially reasonable terms. In addition, any such financing may result in
significant dilution to stockholders.
Market Outlook
Our planned products are divided into three classes:
o OTC products addressing the skincare markets;
o Prescription pharmaceuticals addressing the dermatology and oncology
markets; and
o Medical devices
11
Our estimates of the size of the markets for each of these three
planned product classes are set forth in the following table:
Approximate Annual Value
of Sales in U.S. Market
Product Area (millions)
------------
OTC Products
Personal hygiene........................... $ 100
Disposable glove care...................... 100
Acne (all grades).......................... 1,000
Prescription Pharmaceuticals
Psoriasis.................................. 1,500
Liver, breast and prostate cancer.......... 1,000
Medical Devices
Medical device systems..................... 250
Skincare
We are developing OTC products for three areas in the skincare market:
1. personal hygiene products;
2. hand care products for workers who use disposable gloves; and
3. products for treatment of acne.
In the future, we expect to develop products for additional areas in the
skincare market, including treatments for psoriasis, eczema, and various fungal
infections such as dandruff and athlete's foot.
Personal Hygiene. Our Pure-ific brand of OTC products includes a number of
topical antibacterial products that address the personal hygiene market,
including a hand sanitizer that immediately kills germs on skin and prevents
regrowth for six hours. We believe that annual retail sales in the United States
of hand sanitizers are approximately $100 million; this figure excludes sales of
antibacterial sprays such as Lysol(R), which we estimate at more than $1.2
billion in annual U.S. sales. We anticipate extending our Pure-ific brand to
include additional products that leverage technologies utilized in our other
skincare products.
Disposable Glove Care. We estimate that annual wholesale sales of
disposable gloves in the U.S. are over $1.2 billion, including $530 million in
sales to the acute care or hospital market, $560 million in sales to the medical
laboratory and non-hospital market, and $100 million in sales to the dental
market. Use of gloves for protection in other areas, including airport security,
food preparation, sanitation, blood banks, research facilities, mail handling,
police and fire personnel, is rapidly growing as concerns over possible exposure
to biological or other hazards increase. We further anticipate that consumers
will spend comparable amounts on hand care products as on the gloves themselves.
Acne. Acne affects an estimated 20 million people in the U.S. at any given
time. 85% of all people aged 12 to 25 will experience acne problems, while 59%
of women aged 25 to 39 suffer from this affliction. 70% percent of adult acne
sufferers, and an even a higher fraction of teenagers, rely on self-medication
to treat their acne. OTC products for treatment of mild- to moderate-grade acne
generally are sold through department stores, supermarkets, and drug stores;
combined sales of these products are believed to have exceeded $800 million
dollars in the year 2000 and were expected to increase by approximately 10% per
year. In addition to these OTC products, Frost & Sullivan have estimated the
U.S. prescription acne care market at $1.3 billion, with over 7.7 million visits
to physicians in 2001 for treatment of severe acne.
12
Other Skincare. We anticipate that the formulations of our OTC products
and prescription drugs can be sued to treat other conditions of the skin,
including psoriasis, eczema, and fungal infections such as dandruff and
athlete's foot. There are approximately 5 million psoriasis patients in the
U.S., with over 150,000 new cases diagnosed every year. In the U.S., the total
cost of psoriasis treatment was $2.9 billion in 1995. The numbers are similar
for eczema and fungal infections. We believe these represent extremely large
future opportunities for our skincare products.
Prescription Pharmaceuticals
We are developing prescription drugs for the treatment of certain severe
dermatological conditions such as psoriasis, and for the treatment of serious
cancers, including those of the liver, breast, and prostate.
Acute Psoriasis. Psoriasis is a chronic skin disease affecting
approximately 5 million Americans, with over 150,000 new cases diagnosed
annually. The cause of psoriasis is unknown and there is no cure. Thus, patients
typically undergo prolonged care over a period of years to decades.
Approximately 2.5 million psoriasis patients are treated annually by U.S.
physicians (primarily dermatologists), comprising an estimated annual
expenditure of $1.5 billion for treatment in the mid-1990s. More recent
estimates project a $1-2 billion market opportunity for new therapies divided
among several multi-hundred-million dollar products.
Liver Cancer. Hepatocellular carcinoma, or HCC, accounts for approximately
90% of all liver tumors and is the most common solid-organ tumor worldwide,
causing over 1 million deaths annually. HCC is associated with chronic liver
injury from viral hepatitis (hepatitis B and C), and has attained epidemic
proportions among men aged 25 to 34 in eastern Asia, tropical Africa, and
southern Italy. Although currently of relatively low incidence in the U.S. and
Europe, the rapid rise in hepatitis infection in these regions signifies that
this may soon change. In contrast, the primary form of liver cancer in the U.S.
currently is metastatic colorectal carcinoma (155,000 new cases and 60,000
deaths annually, with a 6% five-year survival rate). The current standard of
care for these forms of liver cancer is ablative therapy (via localized ethanol
injection, cryosurgery, or radiofrequency ablation). A combined five-year
survival rate of 33% for these therapies demonstrates the pressing need for new
therapeutic approaches in a worldwide market estimated at over $500 million.
Breast Cancer. The American Cancer Society estimates that approximately
205,000 new cases of invasive breast cancer, and over 54,000 new cases of in
situ breast cancer, will occur in the U.S. in 2002, leading to approximately
40,000 deaths. Current treatments (lumpectomy, mastectomy, removal of regional
lymph nodes, radiation therapy, chemotherapy, and hormone therapy) are expensive
and associated with unacceptable side effects. While five-year survival rates
are excellent for localized tumors (96%), this rate drops to 21% once distant
metastasis has occurred. This illustrates that surgical excision and standard
adjuvant treatments (such as chemotherapy and radiation) are ineffective at
eliminating metastatic cells that have migrated from the primary treatment site.
New, minimally-invasive treatment modalities for breast cancer may have broad
applicability to this therapeutic market estimated at well over $1 billion.
Prostate Cancer. The American Cancer Society estimates that approximately
190,000 U.S. men are afflicted annually with cancer of the prostate, leading to
over 30,000 deaths. As with breast cancer, surgical resection, chemotherapy,
radiation therapy, and immunotherapy comprise the standard treatments for the
majority of cases, and can result in serious, permanent side effects. We believe
that new, minimally-invasive modalities - such as direct injection of our
prescription drug Provecta into prostate tumors - may have broad applicability
to this therapeutic market as an adjuvant or primary form of therapy, providing
an entry into a therapeutic market estimated at well over $500 million.
Medical Device Systems
This market area comprises two sectors: cosmetic treatments, such as
non-ablative wrinkle reduction, elimination of spider veins and other cosmetic
blemishes, and laser hair reduction; and therapeutic uses, including activation
of certain of the Company's light-activated drugs. Additional areas include
13
non-surgical destruction of skin cancers and removal of unwanted moles and other
hyperpigmented features. The U.S. medical laser market exceeded $1.6 billion in
2000, while the market for wrinkle reduction and hair reduction systems alone is
currently in excess of $100 million annually. We believe that we can develop new
markets for laser devices, significantly in addition to the current market for
these devices, as a result of the development of therapies consisting of
photoactivation of the our prescription drug products.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-QSB contains forward-looking statements
regarding, among other things, our anticipated financial and operating results.
Forward-looking statements reflect our management's current assumptions,
beliefs, and expectations. Words such as "anticipate," "believe, "estimate,"
"expect," "intend," "plan," and similar expressions are intended to identify
forward-looking statements. While we believe that the expectations reflected in
our forward-looking statements are reasonable, we can give no assurance that
such expectations will prove correct. Forward-looking statements are subject to
risks and uncertainties that could cause our actual results to differ materially
from the future results, performance, or achievements expressed in or implied by
any forward-looking statement we make. Some of the relevant risks and
uncertainties that could cause our actual performance to differ materially from
the forward-looking statements contained in this report are discussed under the
heading "Risk Factors" and elsewhere in our Annual Report on Form 10-KSB, which
was filed with the SEC on April 15, 2003. We caution investors that these
discussions of important risks and uncertainties are not exclusive, and our
business may be subject to other risks and uncertainties which are not detailed
there.
Investors are cautioned not to place undue reliance on our forward-looking
statements. We make forward-looking statements as of the date on which this
Quarterly Report on Form 10-QSB is filed with the SEC, and we assume no
obligation to update the forward-looking statements after the date hereof
whether as a result of new information or events, changed circumstances, or
otherwise, except as required by law.
Item 3. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. Our chief executive
officer and chief financial officer have evaluated the effectiveness of the
design and operation of our "disclosure controls and procedures" (as that
term is defined in Rule 13a-14(c) under the Exchange Act) as of a date
within 90 days of the filing date of this Quarterly Report on Form 10-QSB.
Based on that evaluation, the chief executive officer and chief financial
officer have concluded that our disclosure controls and procedures are
effective to ensure that material information relating to the Company and
the Company's consolidated subsidiaries is made known to such officers by
others within these entities, particularly during the period this Quarterly
Report on Form 10-QSB was prepared, in order to allow timely decisions
regarding required disclosure.
(b) Changes in Internal Controls. There have not been any significant changes
in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
14
Part II
Other Information
Item 1. Legal Proceedings.
On April 17, 2003, subsequent to the end of the fiscal quarter covered by
this Quarterly Report on Form 10-QSB but prior to the date on which we filed
this report with the Securities and Exchange Commission, a suit was filed in the
Third Judicial District Court, Salt Lake County, Utah by Kelly Adams, on behalf
of himself and "as representative of certain Stockholders of Provectus
Pharmaceuticals, Inc., a Nevada corporation." The suit names PPI and Michael L.
Labertew, an attorney in Salt Lake City, Utah, as defendants, and seeks to
rescind the Agreement and Plan of Reorganization dated April 22, 2002 by which
we acquired PPI and PPI's former stockholders acquired majority ownership of our
common stock. (This transaction is discussed in more detail in Part I above
under the heading "Management's Discussion and Analysis or Plan of
Operation.-Overview-History.") On April 29, 2003, without giving the Company or
PPI notice of the motion or an opportunity to respond to it, the Utah court
granted Mr. Adams's motion for a 10-day temporary restraining order (the "TRO"),
preventing us from issuing additional shares of stock for a 10-day period
commencing on April 29, 2003 and ending on May 9, 2003. Mr. Adams also has moved
for a preliminary injunction that would impose the same restrictions until the
completion of the proceedings. The Utah court has scheduled a hearing on the
motion for May 13, 2003, at which the court will determine whether or not to
issue the requested preliminary injunction.
We believe the TRO was issued without reason or due process, and we believe
that the claims made by Mr. Adams and the "certain Stockholders" in their
complaint are groundless. We have retained counsel in Utah, and we intend to
contest vigorously the motion for a preliminary injunction and the remainder of
the suit.
Item 2. Changes in Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
During the three months ended March 31, 2003, we did not sell any
securities which were not registered under the Securities Act of 1933, as
amended (the "Securities Act") except as follows:
1. Pursuant to a letter agreement dated January 8, 2003 between the
Company and Investor-Gate.com ("Investor-Gate"), the Company retained
Investor-Gate to provide investor relations services. For these
services, the Company agreed to pay Investor-Gate a monthly fee of
$7,250 for the first three months of the agreement and a monthly fee
of $6,000 per month thereafter. The monthly fee for the first three
months was paid by the issuance and delivery to Investor-Gate of
29,000 shares of our common stock at an agreed-upon value of $0.75 per
share. In addition, we agreed to grant Investor-Gate warrants for the
purchase of additional shares of our common stock. As of the close of
business on January 8, 2003, the value of our common stock was $0.40
per share.
On February 28, 2003, we terminated the agreement with Investor-Gate
as a result of Investor-Gate's failure to perform the contracted-for
investor relations services. Investor-Gate retained the 29,000 shares
initially issued to it, as well as a warrant exercisable for the
purchase of 25,000 shares of our common stock at an exercise price of
$0.75 per share. In addition, we remained obligated to issue
additional warrants to Investor-Gate on the following terms:
Number of Shares Exercise Price Issue Date Termination Date
---------------- -------------- ---------- ----------------
25,000 shares $2.00 April 8, 2003 September 8, 2004
25,000 shares $5.00 January 8, 2004 July 8, 2005
We relied on an exemption from registration pursuant to Section 4(2)
of the Securities Act, based on the sale of the shares and warrants,
and the issuance of the shares of common stock issuable upon exercise
of the warrants, to a single purchaser in a transaction not involving
any general solicitation or general advertising.
15
2. Pursuant to a letter agreement dated January 31, 2003 between the
Company and Gryffindor, the Company issued Gryffindor an Amended and
Restated Senior Secured Convertible Note dated January 31, 2003 in the
original principal amount of $1,025,959 (the "Amended Note"). The
Amended Note bears interest at 8% per annum, payable quarterly in
arrears, is due and payable in full on November 26, 2004, and amends
and restated the original Note in its entirety. As with the Note, our
obligations under the Amended Note are secured by a first priority
security interest in all of our Company's assets, including the assets
held by our Xantech and Pure-ific subsidiaries. Subject to certain
exceptions, the Amended Note is convertible into shares of our common
stock beginning on the November 26, 2003; the principal amount of the
Note is convertible at the rate of one share of common stock for each
$0.73655655 of principal converted, while accrued but unpaid interest
on the Note is convertible at the rate of one share of common stock
for each $0.55 of accrued but unpaid interest converted. We relied on
an exemption from registration pursuant to Section 4(2) of the
Securities Act, based on the issuance of the Amended Note, and the
issuance of the shares of common stock issuable upon conversion of the
Amended Note, to a limited number of purchasers in a transaction not
involving any general solicitation or general advertising.
3. Pursuant to a letter agreement dated February 20, 2003 between the
Company and Strategic Growth International, Inc. ("SGI"), the Company
retained SGI as its investor relations consultant. For services under
the Agreement, the Company issued SGI warrants on the following terms:
Number of Shares Exercise Price Issue Date Termination Date
---------------- -------------- ---------- ----------------
120,000 shares $0.25 February 20, 2003 February 20, 2008
120,000 shares $0.35 February 20, 2003 February 20, 2008
120,000 shares $0.50 February 20, 2003 February 20, 2008
In addition, at the Company's option, during the first three months of
the agreement the Company may elect to issue SGI 30,000 shares per
month in lieu of payment of $3,000 of the monthly cash fee payable
under the agreement. As of the close of business on February 18, the
last day on which a trade was reported prior to the execution of the
agreement with SGI, the value of our common stock was $0.26 per share.
During the quarter ended March 31, 2003, we did not exercise our
option to issue shares in lieu of payment of fees. We relied on an
exemption from registration pursuant to Section 4(2) of the Securities
Act, based on the sale of the shares and warrants, and the issuance of
the shares of common stock issuable upon exercise of the warrants, to
a single purchaser in a transaction not involving any general
solicitation or general advertising.
4. Pursuant to a letter agreement dated March 27, 2003 between the
Company and Josephberg Grosz & Co., Inc. ("JGC"), the Company issued
JG Capital, Inc., an affiliate of JGC, 35,000 shares of common stock
as consideration for JGC's agreement to assist the Company in
obtaining additional capital. As of the close of business on March 21,
2003, the last day on which a trade was reported prior to the
execution of the agreement with JGC, the value of our common stock was
$0.32 per share. We relied on an exemption from registration pursuant
to Section 4(2) of the Securities Act, based on the sale of these
shares to a single purchaser in a transaction not involving any
general solicitation or general advertising.
Item 3. Defaults Upon Senior Securities.
No response is required to this item.
Item 4. Submission of Matters to a Vote of Security Holders.
During the three months ended March 31, 2003, we did not submit any matters
to a vote of our stockholders.
16
Item 5. Other Information.
There are no new matters to report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. Exhibits required by Item 601 of Regulation S-B are incorporated
herein by reference and are listed on the attached Exhibit Index, which
begins on page X-1 of this Quarterly Report on Form 10-QSB.
(b) Reports on Form 8-K. During the fiscal quarter ended March 31, 2003, we
filed the following Current Reports on Form 8-K:
1. On January 3, 2003 we filed, and on January 9, 2003 we amended, a
Current Report on Form 8-K reporting that on December 20, 2002 we
engaged BDO Seidman, LLP to audit our books and records for 2002 and
dismissed Bierwolf, Nilson & Associates, formerly Crouch, Bierwolf &
Associates, as our independent auditors.
17
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Provectus Pharmaceuticals, Inc.
By: /s/H. Craig Dees
----------------------------
H. Craig Dees, Ph.D.
Chief Executive Officer
Date: May 9, 2003
18
Certification of Chief Executive Officer
I, H. Craig Dees, Ph.D., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Provectus
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Provectus Pharmaceuticals, Inc. as of, and for, the
periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 9, 2003 /s/Craig Dees
------------------------------
H. Craig Dees, Ph.D.
Chairman of the Board and
Chief Executive Officer
19
Certification of Chief Financial Officer
I, Daniel R. Hamilton, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Provectus
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Provectus Pharmaceuticals, Inc. as of, and for, the
periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 9, 2003 /s/Daniel R. Hamilton
-----------------------
Daniel R. Hamilton
Chief Financial Officer
20
Exhibit Index
Exhibit No. Description
3.1.1 Articles of Incorporation of Provectus Pharmaceuticals, Inc.
("Provectus"), incorporated herein by reference to Exhibit 3.i.2
to the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2001, as filed with the SEC on April 17, 2002.
3.1.2 Articles of Merger of Provectus Pharmaceuticals, Inc., a
Colorado corporation, with and into Provectus, incorporated
herein by reference to Exhibit 3.i.3 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31,
2001, as filed with the SEC on April 17, 2002.
3.1.3 Certificate of Amendment of Articles of Incorporation of
Provectus, incorporated herein by reference to Exhibit 3.1.3 to
the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2002, as filed with the SEC on April 15, 2003.
3.2+ Bylaws of Provectus Pharmaceuticals, Inc. (the "Company")
4.2.1* Convertible Secured Promissory Note and Warrant Purchase
Agreement dated as of November 26, 2002 between the Company and
Gryffindor Capital Partners I, L.L.C. ("Gryffindor"),
incorporated herein by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated November 26, 2002, as filed with
the SEC on December 10, 2002.
4.2.2+ Letter Agreement dated January 31, 2003 between the Company and
Gryffindor.
4.3+ Amended and Restated Convertible Secured Promissory Note of the
Company dated January 31, 2003, issued to Gryffindor.
4.6* Stock Pledge Agreement dated as of November 26, 2002 between the
Company and Gryffindor, incorporated herein by reference to
Exhibit 4.5 to the Company's Current Report on Form 8-K dated
November 26, 2002, as filed with the SEC on December 10, 2002.
4.7 Guaranty dated November 26, 2002 from Xantech Pharmaceuticals,
Inc., a Tennessee corporation and a wholly owned subsidiary of
Provectus ("Xantech"), to Gryffindor, incorporated herein by
reference to Exhibit 4.6 to the Company's Current Report on Form
8-K dated November 26, 2002, as filed with the SEC on December
10, 2002.
4.8 Form of Security Agreement between the Company and Gryffindor,
incorporated herein by reference to Exhibit 4.7 to the Company's
Current Report on Form 8-K dated November 26, 2002, as filed with
the SEC on December 10, 2002.
4.9 Form of Patent and License Security Agreement between the Company
and Gryffindor, incorporated herein by reference to Exhibit 4.8
to the Company's Current Report on Form 8-K dated November 26,
2002, as filed with the SEC on December 10, 2002.
4.10 Form of Trademark Collateral Assignment and Security Agreement
between the Company and Gryffindor, incorporated herein by
reference to Exhibit 4.9 to the Company's Current Report on Form
8-K dated November 26, 2002, as filed with the SEC on December
10, 2002.
4.11 Form of Copyright Security Agreement between the Company and
Gryffindor, incorporated herein by reference to Exhibit 4.10 to
the Company's Current Report on Form 8-K dated November 26, 2002,
as filed with the SEC on December 10, 2002.
4.17*+ Common Share Purchase Warrant dated January 29, 2003, issued to
Investor-Gate.com ("Investor-Gate").
10.11.1+ Letter Agreement dated January 8, 2003 between the Company
and Investor-Gate.
X-1
10.11.2+ Termination Letter dated February 28, 2003 from the Company
to Investor-Gate.
10.12+ Letter Agreement dated February 20, 2003 between the Company
and SGI.
10.13+ Letter Agreement dated March 27, 2003 between the Company and
Josephberg Grosz & Co., Inc.
16.1 Letter of Bierwolf Nilson & Associates dated January 8, 2003,
pursuant to Item 304(a)(3) of Regulation S-B, regarding change of
certifying accountant, incorporated herein by reference to
Exhibit 16.1 to the Company's Current Report on Form 8-K dated
December 20, 2003.
99.1+ Certification Pursuant to 18 U.S.C.ss. 1350 (enacted by Section
906 of the Sarbanes-Oxley Act of 2002, Public Law 107-204), dated
May 9, 2003, executed by H. Craig Dees, Ph.D., Chief Executive
Officer of the Company, and Daniel R. Hamilton, Chief Financial
Officer of the Company.
------------------------------------
* The Company agrees by this filing to supplementally furnish to the
SEC, upon request, a copy of the exhibits and/or schedules to this
agreement.
** Management compensation contract or plan.
+ Filed herewith.
X-2
Exhibit 3.2
Bylaws
of
Provectus Pharmaceuticals, Inc.
--------------------------------------------------------------------------------
Article I
STOCKHOLDERS
Section 1.1. Annual Meetings
An annual meeting of stockholders shall be held for the election of
directors at such date as may be designated by resolution of the Board of
Directors from time to time. Any other proper business may be transacted at the
annual meeting.
Section 1.2. Special Meetings
Special meetings of stockholders for any purpose or purposes may be called
at any time by the Board of Directors, or by a committee that has been duly
designated by the Board of Directors and has the power and authority to call
such meetings, but such special meetings may not be called by any other person
or persons.
Section 1.3. Time and Place of Meetings
All meetings of stockholders shall be held at such time and place, whether
within or without the State of Nevada, as determined by the Board of Directors.
If authorized by the Board of Directors in its sole discretion, and subject to
such guidelines and procedures as the Board of Directors may adopt, stockholders
and proxyholders not physically present at a meeting of stockholders may, by
means of remote communication: (a) participate in a meeting of stockholders; and
(b) be deemed present and in person and vote at a meeting of stockholders
whether such meeting is to be held at a designated place or solely by means of
remote communication; provided, that (i) the Corporation shall implement
reasonable measures to verify that each person deemed present and permitted to
vote at the meeting by means of remote communication is a stockholder or
proxyholder; (ii) the Corporation shall implement measures to provide such
stockholders a reasonable opportunity to participate in the meeting and to vote
on matters submitted to the stockholders, including an opportunity to read or
hear the proceedings of the meeting substantially concurrently with such
proceedings, and (iii) if any stockholder or proxyholder votes or takes other
action at the meeting by means of remote communication, a record of such vote or
other action shall be maintained by the Corporation.
Section 1.4. Notice of Meetings
(a) Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
place, if any, date and hour of the meeting, the means of remote communications,
if any, by which stockholders and proxyholders may be deemed to be present in
person and vote at such meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less than 10 nor
more than 60 days before the date of the meeting to each stockholder entitled to
vote at such meeting. If mailed, such notice shall be deemed to be given when
deposited in the mail, postage prepaid, directed to the stockholder at his or
her address as it appears on the records of the Corporation.
(b) Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the Corporation
shall be effective if given by a form of electronic transmission consented to by
the stockholder to whom the notice is given. Any such consent shall be revocable
by the stockholder by written notice to the Corporation. Any such consent shall
be deemed revoked if (i) the Corporation is unable to deliver by electronic
transmission two consecutive notices given by the Corporation in accordance with
such consent and (ii) such inability becomes known to the secretary or an
assistant secretary of the Corporation or to the transfer agent, or other person
responsible for the giving of notice; provided, however, the inadvertent failure
to treat such inability as a revocation shall not invalidate any meeting or
other action.
1
(c) Notice given pursuant to Section 1.4(b) shall be deemed given: (i) if
by facsimile telecommunication, when directed to a number at which the
stockholder has consented to receive notice; (ii) if by electronic mail, when
directed to an electronic mail address at which the stockholder has consented to
receive notice; (iii) if by a posting on an electronic network together with
separate notice to the stockholder of such specific posting, upon the later of
(A) such posting and (B) the giving of such separate notice; and (iv) if by any
other form of electronic transmission, when directed to the stockholder. An
affidavit of the secretary or an assistant secretary or of the transfer agent or
other agent of the Corporation that the notice has been given by a form of
electronic transmission shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.
Section 1.5. Adjournments
Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the time, place, if any, thereof, and the means
of remote communication, if any, by which stockholders and proxyholders may be
deemed to be present in person and vote at such adjourned meeting are announced
at the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 1.6. Quorum
At each meeting of stockholders, except where otherwise provided by law or
the Articles of Incorporation or these Bylaws, the holders of a majority of the
outstanding shares of stock entitled to vote at the meeting, present in person
or by proxy, shall constitute a quorum. In the absence of a quorum, the
stockholders so present may, by majority vote, adjourn the meeting from time to
time in the manner provided in Section 1.5 of these Bylaws until a quorum shall
attend. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of any
corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
Section 1.7. Administration of Meetings
Meetings of stockholders shall be presided over by the Chairman of the
Board, if any, or in his or her absence by the Vice Chairman of the Board, if
any, or in his or her absence by the President, or in his or her absence by a
Vice President, or in the absence of the foregoing persons, by a chairman
designated by the Board of Directors, or in the absence of such designation, by
a chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 1.8. Voting; Proxies
Except as otherwise provided by the Articles of Incorporation, each
stockholder entitled to vote at any meeting of stockholders shall be entitled to
one vote for each share of stock held by him which has voting power upon the
matter in question. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by proxy,
but no such proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
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the Corporation. Voting at meetings of stockholders need not be by written
ballot and need not be conducted by inspectors unless the Board of Directors, or
holders of a majority of the outstanding shares of all classes of stock entitled
to vote thereon present in person or by proxy at such meeting shall so
determine. If voting at a meeting of stockholders is conducted by written
ballot, such ballots may be transmitted electronically, provided that any such
electronic transmission must either set forth or be submitted with information
from which in can be determined that the electronic transmission was authorized
by the stockholder or proxyholder. At all meetings of stockholders for the
election of directors a plurality of the votes cast shall be sufficient to
elect. All other elections and questions shall, unless otherwise provided by law
or by the Articles of Incorporation or these Bylaws, be decided by the vote of
the holders of a majority of the outstanding shares of stock entitled to vote
thereon present in person or by proxy at the meeting.
Section 1.9. Fixing Date for Determination of Stockholders of Record
For the purpose of determining the stockholders entitled to notice of, or
to vote at any meeting of stockholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or to receive notice
that any such corporate action was taken without a meeting or for the purpose of
determining the stockholders entitled to receive payment of any dividend or the
allotment of any rights, or to exercise any rights in respect of any conversion
or exchange of stock or for the purpose of any other lawful action affecting the
interests of stockholders, the Board of Directors may fix, in advance, a date as
the record date for any such determination of stockholders. Such date shall be
not be more than 60 nor less than 10 days before the date of any such meeting
nor more than 60 days before any such other actions. If no record date is fixed,
(a) the record date for determining the stockholders entitled to notice of or to
vote at a meeting shall be at the close of business on the day next preceding
the date on which notice is given, or, if no notice is given, on the day next
preceding the day on which the meeting is held; (b) the record date for
determining the stockholders entitled to express written consent to the taking
of any corporate action without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the first written consent is
expressed; and (c) the record date for determining stockholders for any purpose
other than those specified in (a) and (b) above shall be the close of business
on the day on which the resolution of the Board of Directors relating thereto is
adopted.
Section 1.10. List of Stockholders Entitled to Vote
The Secretary shall prepare and make, at least 10 days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
The Corporation shall not be required to include electronic mail addresses or
other electronic contact information on such list. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting for a
period of at least 10 days prior to the meeting, either (a) on a reasonably
accessible electronic network, provided that the information required to gain
access to such list is provided with the notice of the meeting, or (b) during
ordinary business hours, at the principal place of business of the Corporation.
In the event that the Corporation determines to make the list available on an
electronic network, the Corporation may take reasonable steps to ensure that
such information is available only to stockholders of the Corporation. If the
meeting is to be held at a place, then the list shall be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. If the meeting is to be held solely
by means of remote communication, then the list shall also be open to the
examination of any stockholder during the whole time of the meeting on a
reasonably accessible electronic network, and the information required to access
such list shall be provided with the notice of the meeting. The stock ledger
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list of stockholders or the books of the Corporation, or
to vote in person or by proxy at any meeting of stockholders.
Section 1.11. Action by Consent of Stockholders
(a) Unless otherwise restricted by the Articles of Incorporation, any
action required or permitted to be taken at any annual or special meeting of the
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
(b) A telegram, cablegram or other electronic transmission consenting to an
action to be taken and transmitted by a stockholder or proxyholder, or by a
person or persons authorized to act for a stockholder or proxyholder, shall be
deemed to be written, signed and dated for the purposes of this section,
provided that any such telegram, cablegram or other electronic transmission sets
forth or is delivered with information from which the Corporation can determine
(i) that the telegram, cablegram or other electronic transmission was
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transmitted by the stockholder or proxyholder or by a person or persons
authorized to act for the stockholder or proxyholder and (ii) the date on which
such stockholder or proxyholder or authorized person or persons transmitted such
telegram, cablegram or electronic transmission. The date on which such telegram,
cablegram or electronic transmission is transmitted shall be deemed to be the
date on which such consent was signed. No consent given by telegram, cablegram
or other electronic transmission shall be deemed to have been delivered until
such consent is reproduced in paper form and until such paper form shall be
delivered to the Corporation by delivery to its registered office in the State
of Nevada, its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
in the State of Nevada shall be made by hand or by certified or registered mail,
return receipt requested. Notwithstanding the foregoing limitations on delivery,
consents given by telegram, cablegram or other electronic transmission may be
otherwise delivered to the principal place of business of the Corporation or to
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded if, to the extent and in
the manner provided by resolution of the board of directors of the Corporation.
Any copy, facsimile or other reliable reproduction of a consent in writing may
be substituted or used in lieu of the original writing for any and all purposes
for which the original writing could be used, provided that such copy, facsimile
or other reproduction shall be a complete reproduction of the entire original
writing.
Article II
BOARD OF DIRECTORS
Section 2.1. Election; Resignation; Removal; Vacancies
At the first annual meeting of stockholders and at each annual meeting
thereafter, the stockholders shall elect Directors to replace those Directors
whose terms then expire. Any Director may resign at any time upon notice given
in writing or by electronic transmission to the Corporation. Any director or the
whole Board of Directors may be removed for cause or without cause by vote of a
majority of the stockholders at a special meeting called for that purpose. Any
vacancy occurring in the Board of Directors, whether resulting from the
resignation or removal of a Director or from an increase in the number of
Directors as provided in the Articles, may be filled by the affirmative vote of
a majority of the Board, although such majority is less than a quorum, or by a
plurality of the votes cast at a meeting of stockholders, and any Director so
elected shall hold office until the expiration of his or her term.
Section 2.2. Regular Meetings
Regular meetings of the Board of Directors may be held at such places
within or without the State of Nevada and at such times as the Board of
Directors may from time to time determine, and if so determined notices thereof
need not be given.
Section 2.3. Special Meetings
Special meetings of the Board of Directors may be held at any time or place
within or without the State of Nevada whenever called by the President, any Vice
President, the Secretary, or by any member of the Board of Directors. Reasonable
notice thereof shall be given by the person or persons calling the meeting, not
later than the second day before the date of the special meeting.
Section 2.4. Telephonic Meetings Permitted
Members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting of such Board or committee by means of
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this bylaw shall constitute presence in person at such
meeting.
Section 2.5. Quorum; Vote Required for Action
At all meetings of the Board of Directors a majority of the whole Board
shall constitute a quorum for the transaction of business. Except in cases in
which the Articles of Incorporation or these Bylaws otherwise provide, the vote
of a majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
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Section 2.6. Administration of Meetings
Meetings of the Board of Directors shall be presided over by the Chairman
of the Board, if any, or in his or her absence by the Vice Chairman of the
Board, if any, or in his or her absence by the President, or in their absence by
a chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 2.7. Informal Action by Directors
Unless otherwise restricted by the Articles of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee may be taken without a meeting if all members
of the Board of Directors or such committee, as the case may be, consent thereto
in writing or by electronic transmission, and the writing or writings or
electronic transmission or transmissions are filed with the minutes of
proceedings of the Board of Directors or committee. Such filing shall be in
paper form if the minutes are maintained in paper form and shall be in
electronic form if the minutes are maintained in electronic form.
Section 2.8. Chairman
The Board of Directors may designate a Chairman (or one or more
Co-Chairmen). The Chairman shall preside over the meetings of the Board of
Directors and of the shareholders at which he or she shall be present. If there
be more than one, the Co-Chairmen designated by the Board of Directors will
perform such duties. The Chairman or Co-Chairmen shall perform such other duties
as may be assigned to him, her or them by the Board of Directors.
Section 2.9. Committees
The Board of Directors may, by resolution passed by a majority of the whole
Board of Directors, designate one or more committees. Each committee shall
include one or more of the directors of the Corporation and may include natural
persons who are not directors of the Corporation. The Board of Directors may
designate one or more directors or other persons as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of the committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in a place of any
such absent or disqualified member. Any such committee, to the extent permitted
by law and to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. Unless the Board of Directors otherwise provides, each committee
designated by the Board of Directors may make, alter and repeal rules for the
conduct of its business. In the absence of such rules, each committee shall
conduct its business in the same manner as the Board of Directors conducts its
business pursuant to Article II of these Bylaws.
Article III
OFFICERS
Section 3.1. Election of Executive Officers; Term of Office
The officers of the Corporation shall include a President, a Secretary and
a Treasurer, and may include a Chairman (or one or more Co-Chairmen of the
Board), a Vice Chairman, one or more Vice Presidents, a Chief Operating Officer,
a Chief Financial Officer, one or more Assistant Secretaries and one or more
Assistant Treasurers. In addition, the Board of Directors may from time to time
appoint such other officers with such powers and duties as they shall seem
necessary or desirable. Any number of offices may be held by the same person.
Each such officer shall hold office until the first meeting of the Board of
Directors after the annual meeting of shareholders next succeeding his or her
election, and until his or her successor is elected and qualified or until his
or her earlier resignation or removal.
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Section 3.2. Resignation; Removal; Vacancies
Any officer may resign at any time upon written notice to the Corporation.
The Board of Directors may remove any officer with or without cause at any time,
but such removal shall be without prejudice to the contractual rights of such
officer, if any, with the Corporation. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 3.3. Powers and Duties of Executive Officers
The officers of the Corporation shall have such powers and duties in the
management of the Corporation as may be prescribed by the Board of Directors
and, to the extent not so provided, as set forth below (subject to the control
of the Board of Directors):
(a) Chief Executive Officer. The Board of Directors may designate a Chief
Executive Officer. In the absence of such designation, the President shall be
the Chief Executive Officer of the Corporation. The Chief Executive Officer
shall have general and active management and control of the overall business and
affairs of the Corporation subject to the control of the Board. He or she shall
see that all orders and resolutions of the Board are carried into effect and, in
connection therewith, shall be authorized to delegate to the President and other
executive officers such of his or her powers and duties as the Chief Executive
Officer may deem advisable. He or she shall also have such other powers and
duties as may be assigned from time to time by the Board.
(b) President. The President shall have general and active management and
control over the daily operations of the Corporation, including the right to
hire and discharge employees other than elective officers, subject however to
the control of the Board and the Chief Executive Officer if designated. In the
absence of a designation of a Chief Executive Officer by the Board of Directors,
the President shall be the Chief Executive Officer; and in the absence of a
designation of a Chief Operating Officer by the Board of Directors, the
President shall be the Chief Operating Officer. The President shall, when
present and in the absence or disability of the Chairman or the Chief Executive
Officer, preside at all meetings of the shareholders and of the Board of
Directors. The President may sign, either alone or with the Secretary, an
Assistant Secretary or any other proper officer of the Corporation thereunto
authorized by the Board of Directors, certificates for shares of the Corporation
and any deeds, mortgages, bonds, contracts, or other instruments which the Board
of Directors has authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the Board of Directors or
by these Bylaws to some other officer or agent of the Corporation, or shall be
required by law to be otherwise signed or executed. He or she shall also have
such other powers and duties as are incident to the office of President or as
may be assigned from time to time by the Board or the Chief Executive Officer.
(c) Chief Operating Officer. The Board of Directors may designate a Chief
Operating Officer. In the absence of such designation, the President shall be
the Chief Operating Officer. The Chief Operating Officer shall have such powers
and duties as may be assigned from time to time by the Board or the Chief
Executive Officer.
(d) Chief Financial Officer. The Board of Directors may designate a Chief
Financial Officer. In the absence of a designation of a Treasurer by the Board
of Directors, the Chief Financial Officer Treasurer shall be the Treasurer of
the Corporation. The Chief Financial Officer shall have such powers and duties
as may be assigned from time to time by the Board or the Chief Executive
Officer.
(e) Vice-Presidents. The Vice-Presidents, if any, in order of their
seniority or in any other order determined by the Board of Directors shall, in
the absence or disability of the President, perform the duties and exercise the
powers of the President and shall severally assist the President in the
management of the business of the Corporation and the implementation of
resolutions of the Board, and in the performance of such other duties as the
President may from time to time prescribe. The duties of any assistant vice
presidents shall be as set by the President.
(f) Secretary. The Secretary shall: (i) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (iii) be
custodian of the corporate records and of the seal (if any) of the Corporation
and see that said seal is affixed to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized; (iv) keep a
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register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (v) sign, with the President or a
Vice-President, certificates for shares of the Corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors; (vi)
have general charge of the share transfer books of the Corporation; and (vii) in
general perform all duties as from time to time may be assigned to the Secretary
by the Board of Directors, the Chief Executive Officer or the President.
(g) Assistant Secretaries. The Assistant Secretaries, if any, in order of
their seniority or in any other order determined by the Board shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties as the Board of
Directors or the Secretary may from time to time prescribe.
(h) Treasurer. The Treasurer shall have the custody of the funds and
securities of the Corporation and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as may be
designated by the Board of Directors. In the absence of a designation of a Chief
Financial Officer by the Board of Directors, the Treasurer shall be the Chief
Financial Officer of the Corporation. The Treasurer shall disburse the funds of
the Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the Chief Executive Officer, President and
directors, at the regular meetings of the Board, or whenever they may require
it, an account of all his or her transactions as Treasurer and of the financial
condition of the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond for such term, in such sum and with
such surety or sureties as shall be satisfactory to the Board for the faithful
performance of the duties of his or her office and for the restoration to the
Corporation, in case of his or her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his or her possession or under his or her control belonging to
the Corporation.
(i) Assistant Treasurers. The Assistant Treasurers, if any, in the order of
their seniority or in any other order determined by the Board, shall in the
absence or disability of the Treasurer, perform the duties and exercise the
power of the Treasurer and shall perform such other duties as the Board of
Directors or the Treasurer shall prescribe.
Article IV
STOCK
Section 4.1. Certificates
Every holder of stock shall be entitled to have a certificate signed by or
in the name of the Corporation by the Chairman, the Chief Executive Officer, the
President or a Vice President of the Corporation, and by the Secretary, the
Treasurer or an Assistant Secretary or an Assistant Treasurer of the
Corporation, certifying the number of shares owned by him in the Corporation. In
case any officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Section 4.2. Lost, Stolen or Destroyed Stock Certificates
The Corporation may issue a new certificate of stock in the place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his or her legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 4.3. Registration of Transfer
Upon surrender to the Corporation or any transfer agent of the Corporation
of a certificate for stock duly endorsed or accompanied by proper evidence of
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succession, assignment or authority to transfer, the Corporation shall issue or
cause its transfer agent to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 4.4. Registered Stockholders
Except as otherwise provided by law, the Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of stock to receive dividends or other distributions, and to vote as such owner,
and to hold liable for calls and assessments a person registered on its books as
the owner of stock, and shall not be bound to recognize any equitable or legal
claim to or interest in such stock on the part of any other person.
Article V
MISCELLANEOUS
Section 5.1. Fiscal Year
The fiscal year of the Corporation shall be determined by resolution of the
Board of Directors.
Section 5.2. Seal
The corporate seal, if one, shall have the name of the Corporation
inscribed thereon and shall be in such form as may be approved from time to time
by the Board of Directors.
Section 5.3. Waiver of Notice of Meetings of Stockholders, Directors and
Committees
Any written waiver of notice, signed by the person entitled to notice, or a
waiver by electronic transmission by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of any regular or special meeting of the
stockholders, directors, or members of a committee need be specified in any
written waiver of notice or any waiver by electronic transmission.
Section 5.4. Interested Directors; Quorum
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee which authorizes the contract or transaction, or solely because his or
her or their votes are counted for such purpose, if: (a) the material facts as
to his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (b) the material facts as to
his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (c) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee, or the stockholders. Common or interested directors may be counted
in determining the presence of a quorum at a meeting of the Board of Directors
or of a committee which authorizes the contract or transaction.
Section 5.5. Form of Records
Any records maintained by the Corporation in the regular course of its
business, including its stock ledger, books of account, and minute books, may be
kept on, or by means of, or be in the form of any information storage device or
method, provided that the records so kept can be converted into clearly legible
paper form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect such records
pursuant to any provision of this chapter.
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Section 5.6. Dividends and Distributions
Subject to all applicable requirements of law and to any applicable
provisions of the Articles of Incorporation, these Bylaws and any indenture or
other agreement to which the Corporation is a party or by which it is bound, the
Board of Directors may declare to be payable, in cash, in other property or in
shares of the Corporation's stock of any class or series, such dividends and
distributions upon or in respect of outstanding stock of the Corporation of any
class or series as the Board may at any time or from time to time deem to be
advisable. Before declaring any such dividend or distribution, the Board of
Directors may cause to be set aside, out of any funds or other property or
assets of the Corporation legally available for the payment of dividends or
distributions, such sum or sums as the Board, in the absolute discretion of its
members, may consider to be proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the Board may deem
conducive to the interest of the Corporation, and the Board may modify or
abolish any such reserve in the manner in which it was created.
Section 5.7. Checks, Notes, etc.
All checks or other orders for payment of money and notes or other
instrument evidencing indebtedness or obligations of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
Section 5.8. Securities of other Corporations; Acting as General Partner
Unless otherwise ordered by the Board of Directors, the Chief Executive
Officer or the President shall have full power and authority on behalf of the
Corporation: (a) to attend and to act and to vote, or to execute proxies to
vote, at any meetings of stockholders of any corporation in which the
Corporation may hold stock, and at any such meeting shall possess and may
exercise, in person or by proxy, any and all rights, powers and privileges
incident to the ownership of such stock; and (b) to exercise all rights of the
general partner in any partnership of which the Corporation shall be a general
partner. The Board of Directors may, by resolution, from time to time, confer
like powers upon any other person or persons.
Section 5.9. Electronic Transmissions
The term "electronic transmission", where used herein, shall mean any form
of communication, not directly involving the physical transmission of paper,
that creates a record that may be retained, retrieved, and reviewed by a
recipient thereof, and that may be directly reproduced in paper form by such a
recipient through an automated process.
Section 5.10. Amendment of Bylaws
These Bylaws may be altered or repealed, and new Bylaws made, only as set
forth in the Articles of Incorporation.
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Exhibit 4.2.2
January 31, 2003
Mr. Stuart Fuchs
Managing Principal
Gryffindor Capital Partners I, L.L.C.
150 North Wacker Drive, Suite 800
Chicago, Illinois 60606
Re: Amendment to Transaction Documents
Dear Mr. Fuchs,
This letter is to confirm that the Transaction Documents (as defined in the
Amended and Restated Senior Secured Convertible Note dated as of January 31,
2003 from Provectus Pharmaceuticals, Inc. ("Provectus") to Gryffindor Capital
Partners I, L.L.C.) and the Certificate of the President of Provectus dated as
of November 26, 2002 (the "Certificate") shall be amended by modifying in the
Transaction Documents and Certificate all references to the amount of One
Million and 00/100 Dollars ($1,000,000), to the amount of One Million Twenty
Five Thousand Nine Hundred and Fifty Nine Dollars ($1,025,959).
If the terms of this letter are acceptable, please so indicate by signing
this letter below and returning it to me.
Very truly yours,
PROVECTUS PHARMACEUTICALS, INC
By: /s/ Timothy C. Scott
-----------------------------
Name: Timothy C. Scott, Ph.D.
Its: President
ACCEPTED AND AGREED:
GRYFFINDOR CAPITAL PARTNERS I, L.L.C.
By: /s/ Stuart Fuchs
-------------------------------------------------
Name: Stuart Fuchs
Its: Managing Principal
Exhibit 4.3
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 ("ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER THAT SUCH REGISTRATION IS
NOT REQUIRED.
AMENDED AND RESTATED SENIOR SECURED CONVERTIBLE NOTE
$1,025,959 January 31, 2003
FOR VALUE RECEIVED, PROVECTUS PHARMACEUTICALS, INC. (the "Borrower"),
promises to pay to the order of GRYFFINDOR CAPITAL PARTNERS I, L.L.C.
("Lender"), at the Borrower's office at 7327 Oak Ridge Highway, Suite A,
Knoxville, TN 37931, or such other place as the holder hereof may from time to
time appoint in writing, in lawful money of the United States of America, the
principal sum of One Million Twenty Five Thousand Nine Hundred and Fifty Nine
Dollars ($1,025,959), or such lesser principal amount as may be outstanding
hereunder, together with interest payable quarterly in arrears on the principal
balance from time to time unpaid at the rate of eight percent (8%) per annum
(the "Loan Rate") until maturity. From and after the occurrence of an Event of
Default (as hereinafter defined), the outstanding principal amount hereof shall
bear interest at the rate of twelve percent (12%) per annum (the "Default
Rate"). Interest will be computed on the daily principal balance outstanding
during the period from the last payment date to the current payment date.
Interest shall be the product resulting when multiplying the rate of interest by
the principal balance outstanding, dividing by 360, and then multiplying by the
actual number of days interest has accrued.
This Amended and Restated Senior Secured Convertible Note amends and
restates that certain Senior Secured Convertible Note dated November 26, 2002
from the Borrower in favor of the Lender in the original principal amount of One
Million and 00/100 Dollars ($1,000,000) (the "Prior Note") and is not a
repayment or novation of the Prior Note.
The following is a statement of the rights of Lender under this Note and
the conditions to which this Note and the Borrower are subject, and to which the
Borrower hereby agrees as follows:
1. Purchase Agreement. This Senior Secured Convertible Promissory Note
(this "Note") is executed and delivered by the Borrower pursuant to the terms
and conditions of the Convertible Secured Promissory Note and Warrant Purchase
Agreement of even date herewith between, among others, the Borrower and Lender
(the "Purchase Agreement"). This Note is subject to the terms and conditions of
the Purchase Agreement. Any capitalized term used herein and not otherwise
defined herein shall have the meaning given to it in the Purchase Agreement.
2. Repayment Terms. Subject to Lender's conversion rights set forth below,
the Borrower shall pay the outstanding principal balance and all accrued and
unpaid interest due hereunder on November 26, 2004 (the "Maturity Date").
Notwithstanding anything to the contrary contained herein, if at any time
prior to the Conversion Start Date (as hereinafter defined), the Borrower shall
fail to make any quarterly payment of interest due hereunder (each, a
"Pre-Conversion Unmatured Interest Default"), the Borrower shall forfeit any
right to pay the amount of such Pre-Conversion Unmatured Interest Default (or
cause any other entity or affiliate of the Borrower, including any guarantor, to
pay such amount) and the outstanding principal amount hereof shall bear interest
at the Default Rate until such time as this Note is repaid in full or the full
amount due under this Note is converted in accordance with the terms herein;
provided, further, that, at any time after the Conversion Start Date, the
Borrower shall fail to make any quarterly payment of interest due hereunder,
such failure shall constitute an Event of Default under Section 7(a) hereof.
3. Optional Conversion. Subject to Lender's conversion right pursuant to
Section 4.1.6 of the Shareholders' Agreement, dated as of even date herewith, by
and among, Borrower, Lender and certain other shareholders, commencing on
November 26, 2003 (the "Conversion Start Date") through and including the
Maturity Date, Lender, in its sole discretion, shall have the right to convert
the outstanding principal and accrued and unpaid interest on this Note, in whole
or in part, into certain shares of stock of the Borrower as follows:
a) Principal. Lender shall have the right to convert all or any
portion of the outstanding principal amount under the Note into that number
of common shares of the Borrower equal to the amount of principal to be
converted divided by the conversion price of $0.73655655 (the "Principal
Shares"), which conversion price was determined based on (i) Lender owning
that number of shares of common stock of the Borrower constituting twelve
and seven hundred eighty-three thousandths percent (12.783%) (the
"Ownership Percent") of the Borrower (assuming that the Principal Shares
are converted and the shares under the Warrant are exercised at the same
time) at a pre-money valuation of Five Million Dollars ($5,000,000), and
(ii) (a) outstanding shares and commitments to issue shares, in the amount
of 9,050,763 for twelve and one-half percent (12.50%) of the Ownership
Percent, and (b) outstanding shares and commitments to issue shares, in the
amount of 10,896,595 for two hundred eighty three thousandths percent
(0.283%) of the Ownership Percent, as represented by the Borrower in the
Purchase Agreement, which amounts exclude those shares reserved for
issuance under the Borrower's employee stock option plan.
b) Interest. Lender also shall have the right to convert all or any
portion of the accrued and unpaid interest under the Note into that number
of common shares of the Borrower equal to the amount of principal to be
converted divided by the conversion price of $0.55 (the "Interest Shares"),
which conversion price was determined based on (i) a pre-money valuation of
Five Million Dollars ($5,000,000), and (ii) outstanding shares and
commitments to issue shares, in the amount of 9,050,763, as represented by
the Borrower in the Purchase Agreement, which amount excludes those shares
reserved for issuance under the Borrower's employee stock option plan.
c) Mechanics of Conversion. Before Lender shall be entitled to convert
this Note into the Principal Shares and/or the Interest Shares
(collectively, the "Acquired Securities"), as applicable, Lender shall
surrender this Note, duly endorsed, at the office of the Borrower, and
shall give written notice to the Borrower at its principal corporate office
of the election to the same and shall state therein the name or names in
which the certificate or certificates for the Acquired Securities are to be
issued. The Borrower, promptly thereafter, shall issue and deliver to such
persons at the address specified by Lender, a certificate or certificates
for the Acquired Securities to which the Holder is entitled. Such
conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of this Note, and the persons
entitled to receive the Acquired Securities issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
Acquired Securities as of such date. No fractional shares shall be issued
upon conversion of the principal and/or interest due under this Note and
the number of Acquired Securities to be issued shall be rounded up to the
nearest whole share.
d) Effect of Reorganization, Reclassification, Consolidation, Merger
or Sale. If at any time while this Note is outstanding there shall be any
reorganization or reclassification of the capital stock of the Borrower or
any consolidation or merger of the Borrower with another corporation (other
than a consolidation or merger in which the Borrower is the surviving
entity and which does not result in any change in the Common Stock), or any
sale or other disposition by the Borrower of all or substantially all of
its assets to any other corporation, the holder of this Note shall
thereafter upon conversion of this Note be entitled to receive the number
of shares of stock or other securities or property of the Borrower, or of
the successor corporation resulting from such consolidation or merger, as
the case may be, to which the Acquired Securities (and any other securities
and property) of the Borrower, deliverable upon the exercise of the
conversion under this Note, would have been entitled upon such
reorganization, reclassification of capital stock, consolidation, merger,
sale or other disposition if this Note had been exercised immediately prior
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to such reorganization, reclassification of capital stock, consolidation,
merger, sale or other disposition. In any such case, appropriate adjustment
(as determined in good faith by the Board of Directors of the Borrower)
shall be made in the application of the provisions set forth in this Note
with respect to the rights and interests thereafter of the holder of this
Note to the end that the provisions set forth in this Note (including those
relating to adjustments of the number of shares issuable upon the
conversion of this Note) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
deliverable upon the conversion hereof as if this Note had been converted
immediately prior to such reorganization, reclassification of capital
stock, consolidation, merger, sale or other disposition and the holder
hereof had carried out the terms of the exchange as provided for by such
reorganization, reclassification of capital stock, consolidation or merger.
The Borrower shall not effect any such reorganization, consolidation or
merger unless, upon or prior to the consummation thereof, the successor
corporation shall assume by written instrument the obligation to deliver to
the holder hereof such shares of stock, securities, cash or property as
such holder shall be entitled to purchase in accordance with the foregoing
provisions.
e) Effect of a Stock Dividends, Splits, Etc. If the Borrower shall at
any time after the date hereof fix a record date for the subdivision,
split-up or stock dividend of shares of its Common Stock, then,
concurrently with the effectiveness of such subdivision, split-up or
dividend, the number of shares of Common Stock issuable on conversion of
this Note shall be increased in proportion to such increase in outstanding
shares of Common Stock.
f) Prior Notice as to Certain Events. In case at any time:
(i) the Borrower shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or any other rights; or
(ii) there shall be any reorganization or reclassification of the
capital stock of the Borrower, or consolidation or merger of the
Borrower with another corporation or a sale or disposition of all or
substantially all its assets; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Borrower;
then, in each of said cases, the Borrower shall give prior written notice,
by first class mail, postage prepaid, addressed to the holder of this Note
at the address of such holder as shown in Section 9(k) below, of the date
on which (iv) the books of the Borrower shall close or a record shall be
taken for such stock dividend, distribution or subscription rights or (v)
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may
be. Such notice also shall specify the date as of which the holders of the
Common Stock of record shall participate in said stock dividend,
distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
given at least ten (10) days prior to the action in question and not less
than ten (10) days prior to the record date or the date on which the
Borrower's transfer books are closed in respect thereto.
g) Reservation of Common Stock. The Borrower will at all times after
the date hereof reserve and keep available for issuance upon the
conversions described herein such number of authorized and unissued shares
of Common Stock as will be sufficient to permit the conversions described
herein, and upon such issuance such shares of Common Stock will be validly
issued, fully paid and nonassessable, and free from all liens and charges
with respect to the issuance thereof.
4. Prepayment. The Borrower will not have the right at any time to prepay
this Note in whole or in part, except in the event that the Borrower obtains a
commitment from another investor for an amount not less than Three Million
Dollars ($3,000,000) in exchange for shares of the Borrower, which commitment
shall include an obligation on the part of such investor to repay in full the
outstanding principal balance plus all accrued and unpaid interest thereon owing
hereunder (the "Obligations"), and such commitment is on terms reasonably
acceptable to Lender. In such event, the Borrower may prepay this Note in full;
provided, however, such prepayment shall, as determined by Lender in its sole
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discretion, take the form of either: (a) repayment in full of the Obligations or
(b) conversion of the Obligations into shares of common stock of the Borrower in
accordance with the conversion terms set forth in Section 3 above; further
provided, however, if the market price of the Borrower's common shares are less
than the conversion price of the Principal Shares under this Note, Lender shall
have the right to convert the Obligations into the same series of preferred
stock that such investor is purchasing with the same rights, privileges and
preferences granted to such investor, except with respect to the conversion
price which, for Lender, will be the conversion price hereunder.
5. Security. This Note is secured by, among other things, the following:
a) a Security Agreement, dated the date hereof between the Borrower
and Lender (the "Provectus Security Agreement"), which encumbers certain
collateral described therein;
b) a Stock Pledge Agreement, dated the date hereof from the Borrower
in favor of Lender (the "Stock Pledge Agreement") providing for a pledge of
all of the common stock of Xantech Pharmaceuticals, Inc. ("Xantech");
c) a Trademark Collateral Security Agreement, dated the date hereof
between Provectus and Lender which encumbers certain collateral described
therein (the "Trademark Security Agreement");
d) a Patent and License Security Agreement, dated the date hereof
between Provectus and Lender which encumbers certain collateral described
therein (the "Patent Security Agreement");
e) a Copyright Security Agreement, dated the date hereof between
Provectus and Lender which encumbers certain collateral described therein
(the "Copyright Security Agreement" and together with the Patent Security
Agreement, the Stock Pledge Agreement, the Trademark Security Agreement and
the Provectus Security Agreement, the "Security Documents"); and
f) such other agreements and documents as Lender shall require,
including, without limitation that certain Guaranty of even date herewith
from Xantech in favor of Lender (the "Guaranty").
The Purchase Agreement, this Note, the Guaranty, the Security Documents and
any and all other agreements presently existing or hereafter entered into in
connection therewith or which evidence and/or secure any indebtedness from the
Borrower to Lender shall hereinafter be collectively referred to as the
"Transaction Documents." Any and all collateral referred to in or granted by the
Security Documents is hereinafter collectively referred to as the "Collateral."
The terms, covenants, conditions, provisions, stipulations and agreements of the
Transaction Documents are hereby made a part of this Note, to the same extent
and with the same effect as if they were fully set forth herein. The Borrower
does hereby covenant to abide by and comply with each and every term, covenant,
condition, provision, stipulation and agreement set forth in the Transaction
Documents.
The Borrower shall remain liable for the payment of this Note, including
interest, notwithstanding any extensions of time of payment or any indulgence of
any kind or nature that Lender may grant to the Borrower or any subsequent owner
of the Collateral, whether with or without notice to the Borrower, and the
Borrower hereby expressly waives such notice. No release of any or all of the
security given for this obligation shall release any other maker, co-maker,
surety, guarantor, or other party hereto in any capacity. Lender shall not be
required to look first to the Collateral for payment of this Note, but may
proceed against the Borrower in such manner as it deems desirable.
6. Use of Proceeds. The proceeds of the loan evidenced by this Note will be
used for working capital purposes of the Borrower pursuant to the Budget
attached to the Purchase Agreement as Schedule 2; provided, that at least
seventy percent (70%) of such proceeds must be used for product production,
general operating expenses (including salaries or other employment costs),
advertising and marketing for the Borrower; and, provided, further, that not
more than thirty percent (30%) of such proceeds may be used by the Borrower for
back compensation due to the Borrower's employees or consultants.
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7. Event of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder:
(a) The Borrower shall fail to make any payment of principal of, or
interest on this Note when due and payable or declared due and payable
(other than any Pre-Conversion Unmatured Interest Payment).
(b) The Borrower or Xantech shall fail or neglect to perform, keep or
observe any provision of this Note, the Guaranty, the Security Documents or
any other Loan Document.
(c) Lender shall fail to have an enforceable first priority lien on
and security interest in the Collateral or any default or event of default
occurs under any of the Security Documents.
(d) The Borrower or Xantech files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower which remains undismissed or
unstayed for sixty (60) consecutive days, or Borrower makes a general
assignment for the benefit of creditors.
(e) Any default by the Borrower or Xantech, as applicable, occurs
under the Purchase Agreement or any other Transaction Document.
Upon the occurrence of any Event of Default, Lender may, in its sole
discretion, do one or more of the following: (i) declare all indebtedness
evidenced by this Note to be immediately due and payable, whereupon all such
indebtedness shall become due and payable, without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by the
Borrower, and/or (ii) continue to exercise any of its conversion rights pursuant
to Section 3 hereof, and/or (iii) exercise any or all of its rights and remedies
available hereunder or under any of the Security Documents, the Guaranty or any
other Transaction Documents and applicable law.
8. Replacement. Upon receipt of evidence reasonably satisfactory to the
Borrower (an affidavit of Lender shall be satisfactory) of the ownership and the
loss, theft, destruction or mutilation of this Note, and in the case of any such
loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to
the Borrower or, in the case of any such mutilation upon surrender of this Note,
the Borrower shall (at its expense) execute and deliver in lieu of such Note, a
Note of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated Note and dated as of the date to which interest has been
paid on the unpaid principal amount of the Note so lost stolen, destroyed, or
mutilated, or, if no interest has been paid thereon, then dated as of the date
of the Note so lost, stolen, destroyed or mutilated.
9. Miscellaneous
a) In the event that Lender institutes legal proceedings to enforce
the Transaction Documents, the Borrower agrees to pay to Lender, in
addition to any indebtedness due and unpaid, all costs and expenses of such
proceedings, including reasonable attorneys' fees.
b) Lender shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in
writing and signed by an authorized officer of Lender and then only to the
extent specifically set forth therein. A waiver on one occasion shall not
be construed as continuing or as a bar to or waiver of such right or remedy
on any other occasion. All remedies conferred upon Lender by the
Transaction Documents shall be cumulative and none is exclusive, and such
remedies may be exercised concurrently or consecutively at Lender's option.
c) Except as expressly provided for in this Note or any other Loan
Document, every person at any time liable for the payment of the debt
evidenced hereby waives presentment for payment, demand, notice of
nonpayment of this Note, protest and notice of protest, all exemptions and
homestead laws and all rights thereunder and consents that Lender may
extend the time of payment of any part or the whole of the debt, or grant
any other modifications or indulgence pertaining to payment of this Note at
any time, at the request of any other person liable for said debt.
5
d) This Note is hereby expressly limited so that in no contingency or
event whatsoever, whether by acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid
to Lender for the use, forbearance or detention of the money advanced or to
be advanced hereunder exceed the highest lawful rate permissible under the
laws of the State of Illinois as applicable to the Borrower. If, from any
circumstances whatsoever, fulfillment of any provision of this Note or of
any of the other Transaction Documents shall, at the time performance of
such provisions shall be due, involve the payment of interest in excess of
that authorized by law, the obligation to be fulfilled shall be reduced to
the limit so authorized by law, and if, from any circumstances, Lender
shall ever receive as interest an amount which would exceed the highest
lawful rate applicable to the Borrower, such amount which would be
excessive interest shall be applied to the reduction of the unpaid
principal balance of the indebtedness evidenced hereby and not to the
payment of interest.
e) All covenants, agreements, representations and warranties made
herein and any other Transaction Documents are deemed to have been relied
upon by Lender, notwithstanding any investigation by Lender.
f) This Note is given and accepted as evidence of indebtedness only
and not in payment or satisfaction of any indebtedness or obligation.
g) The form and essential validity of this Note shall be governed by
the laws of the State of Illinois. If any provision of this Note is
prohibited by, or is unlawful or unenforceable under, any applicable law of
any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such prohibition without invalidating the
remaining provisions hereof; provided that where the provisions of any such
applicable law may be waived, they hereby are waived by the Borrower to the
full extent permitted by law in order that this Note shall be deemed to be
a valid and binding promissory note in accordance with its terms.
h) Time is of the essence with respect to all the Borrower's
obligations and agreements under this Note.
i) This Note and all the provisions, conditions, promises and
covenants hereof shall inure to the benefit of Lender, its successors and
assigns, and shall be binding in accordance with the terms hereof upon the
Borrower, its successors and assigns, provided nothing herein shall be
deemed consent to any assignment restricted or prohibited by the terms of
the Transaction Documents.
j) All notices required under this Note shall be provided in
accordance with the terms of the Purchase Agreement.
k) To induce Lender to extend to the Borrower the loan evidenced by
this Note, Borrower irrevocably agrees that, subject to Lender's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR
RELATED TO THIS NOTE OR ANY LOAN DOCUMENT WILL BE LITIGATED IN COURTS
HAVING SITUS IN CHICAGO, ILLINOIS. THE BORROWER HEREBY CONSENTS AND SUBMITS
TO THE JURISDICTION OF ANY COURT LOCATED WITHIN CHICAGO, ILLINOIS, WAIVES
PERSONAL SERVICE OF PROCESS UPON THE BORROWER, AND AGREES THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO THE BORROWER
AT THE ADDRESS STATED ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE WILL
BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.
l) THE BORROWER AND LENDER EACH WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR
ANY DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS
NOTE AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A
6
COURT AND NOT BEFORE A JURY. THE BORROWER AGREES THAT THE BORROWER WILL NOT
ASSERT ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL,
INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, this Note is executed as of the date and year first
set forth above.
PROVECTUS PHARMACEUTICALS, INC.
By: /s/ Craig Dees
---------------------------------
Name: H. Craig Dees, Ph.D.
Its: Chief Executive Officer
GRYFFINDOR CAPITAL PARTNERS I, L.L.C.
By: /s/ Stuart Fuchs
---------------------------------
Name: Stuart Fuchs
Its: Managing Principal
8
Exhibit 4.17
Neither this Warrant represented by this certificate nor this Warrant Shares
issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered, sold or otherwise transferred, pledged or hypothecated unless and until
such shares are registered under the Securities Act or an opinion of counsel or
other evidence, in either case reasonably satisfactory to the Corporation, is
obtained to the effect that such registration is not required.
Common Share Purchase Warrant
Date: January 29, 2003
--------------------------------------------------------------------------------
Transfer Restricted - See Section Article IX
Provectus Pharmaceuticals, Inc., a Nevada corporation (the "Corporation"),
hereby certifies that, for value received, Investor-Gate.com (the "Holder"), is
entitled, on the terms and subject to the conditions set forth herein, to
purchase from the Corporation, up to Twenty-Five Thousand (25,000) of the
Corporation's Common Shares, as defined in Section Section 6.4 (the "Warrant
Shares"), at a price of Seventy-Five Cents ($0.75) per Warrant Share (the
"Exercise Price"). This Warrant shall be exercisable at any time and from time
to time during the period beginning on the date set forth above and ending on
the date which is 18 months thereafter (the "Exercise Period"). The number of
Common Shares issuable upon the exercise of this Warrant and the Exercise Price
per share shall be subject to adjustment from time to time as set forth herein.
1. CERTAIN DEFINITIONS
Whenever used in this Warrant, the following terms shall have the following
meanings:
(a) "Affiliate" means any Person who now or hereafter, directly or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, another Person.
(b) "Business Day" means a day other than Saturday, Sunday or a day on
which banks are not open for business in Knoxville, Tennessee.
(c) "Combination" means an event in which the Corporation consolidates
with, merges with or into, or sells all or substantially all of its assets to
another Person.
(d) "Common Shares" means the Corporation's common shares, $.001 par value.
(e) "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting stock or interests, by contract or
otherwise.
(f) "Exchange Act" means the Securities Exchange Act of 1934.
(g) "Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or a government or agency or political subdivision thereof.
(h) "Securities Act" means the Securities Act of 1933.
2. EXERCISE OF WARRANT
(a) This Warrant may be exercised, in whole or in part, at any time during
the Exercise Period, by the Holder providing written notice thereof to the
Corporation, in the form attached hereto as Exhibit A (the "Notice of
Exercise"), in accordance with Section Article XII hereof, accompanied by
payment of the aggregate Warrant Price for the number of Warrant Shares to be
purchased (i) in cash or by check, payable to the order of the Corporation or
(ii) by wire transfer in accordance with instructions provided by the
Corporation.
1
(b) Subject to Section Article IX hereof, upon the surrender of this
Warrant and payment of the aggregate Exercise Price in accordance with Section
2(a), the Corporation shall issue, and shall deliver to or upon the written
order of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of whole Warrant Shares so purchased
(or the other securities or property to which the Holder is entitled pursuant to
Section 3 of this Warrant), together with cash as provided in Section Section
2(d) in respect of any fractional Warrant Shares otherwise issuable upon such
exercise.
(c)Certificates for Warrant Shares shall be deemed to have been issued, and
any Person so designated to be named therein shall be deemed to have become a
holder of record of the Warrant Shares, as of the date of the surrender of the
Warrant Certificate and payment of the aggregate Exercise Price in Shares shall
be closed, certificates for Warrant Shares shall be issuable as of the date on
which such books next shall be opened, and until such date the Corporation shall
be under no duty to deliver any certificates for Warrant Shares. Each
certificate representing Warrant Shares shall bear the Private Placement Legend
except as otherwise provided in Section 4(c).
(d) The Corporation shall not be required to issue fractional Warrant
Shares on the exercise of Warrants. If, except for the provisions of this
Section Section 2(d), any fraction of a Warrant Share would be exercisable upon
the exercise of any Warrant or specified portion thereof, the Corporation shall
pay at the time of exercise an amount in cash equal to such fraction of a
Warrant Share, multiplied by the fair market value of a Common Share on the
Business Day prior to the date of exercise, computed to the nearest whole cent.
3. ANTIDILUTION PROVISIONS
(a) In the event that, at any time or from time to time after the Effective
Date, the Corporation (i) shall pay a dividend or make a distribution on the
Common Shares payable in Common Shares or other shares of the Corporation's
capital stock, (ii) shall subdivide the outstanding Common Shares into a larger
number of Common Shares or other equity securities of the Corporation, (iii)
shall combine the outstanding Common Shares into a smaller number of Common
Shares or other equity securities of the Corporation, or (iv) shall increase or
decrease the number of Common Shares outstanding by reclassification of the
Common Shares; then:
(A) the number of Common Shares issuable upon the exercise of any
Warrant shall be a number of shares equal to the product of (I) the number
of Common Shares that the Holder of this Warrant would have been entitled
to receive if this Warrant had been exercised immediately prior to the
event (or, in the case of a dividend or distribution described in clause
(i) above, immediately prior to the record date therefor) and (II) a
fraction, the numerator of which shall be the total number of Common Shares
outstanding immediately after the completion of the event described above
and the denominator of which shall be the total number of Common Shares
outstanding immediately prior to the happening of the event described
above; and
(B) subject to Section Section 3(e), the Exercise Price shall be a
price per share equal to the Exercise Price in effect immediately prior to
the event, divided by the fraction calculated in accordance with clause
(A)(II) above.
An adjustment made pursuant to this Section 3(a) shall become effective
immediately after the effective date of the event, retroactive to the record
date for the event in the case of a dividend or distribution in Common Shares or
other shares of the Corporation's capital stock.
(b) Except as provided in Section Section 3(c), in the event of a
Combination, the Holder shall have the right to receive, upon exercise of this
Warrant, the kind and amount of shares of capital stock or other securities or
property which such Holder would have been entitled to receive upon or as a
result of such Combination had this Warrant been exercised immediately prior to
the Combination. Unless Section 3(c) applies to the Combination, the Corporation
shall provide that the surviving or acquiring Person in the Combination (the
"Successor Corporation") will confirm the Holder's rights pursuant to this
Section 3(b) and provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 3. The
provisions of this Section 3(b) shall apply to successive Combinations involving
any Successor Corporation.
(c) In the event of (i) a Combination in which consideration is to be paid
to the holders of Common Shares in exchange for their shares solely in cash or
(ii) the dissolution, liquidation or winding-up of the Corporation, Holder shall
be entitled to receive, upon surrender of their Warrant Certificates,
2
distributions on an equal basis with the holders of Common Shares, or other
securities issuable upon the exercise of this Warrants, as if this Warrants had
been exercised immediately prior to the event, less the aggregate Exercise Price
payable by the Holder.
(d) In the event of a Combination pursuant to which Holder become entitled
to receive, upon exercise of this Warrants, capital stock, other securities,
property, cash or other distributions pursuant to Sections 3(b) or 3(c), Holder
thereafter shall not be entitled to receive Common Shares upon exercise of this
Warrants.
(e) The adjustments required by this Section 3 shall be made whenever and
as often as any specified event requiring an adjustment shall occur, except that
no adjustment of the Exercise Price or the number of Common Shares issuable upon
the exercise of Warrants that otherwise would be required to made unless and
until such adjustment, either by itself or with other adjustments not previously
made, increases or decreases by at least 1% of the Exercise Price or the number
of Common Shares issuable upon the exercise of Warrants as in effect immediately
prior to the making of such adjustment (the "Minimum Adjustment"). Any
adjustment smaller than the Minimum Adjustment shall be carried forward and made
as soon as such adjustment, together with other adjustments required by this
Section 3 and not previously made, would result in an adjustment at least as
large as the Minimum Adjustment. For the purpose of any adjustment, except as
specified in the final paragraph of Section 3(a), any event requiring an
adjustment shall be deemed to have occurred at the close of business on the date
of its occurrence. In computing adjustments under this Section 3, fractional
interests in Common Shares shall be taken into account to the nearest
one-hundredth of a share.
(f) Whenever the Exercise Price or the number of Common Shares and other
securities or property, if any, issuable upon the exercise of this Warrant is
adjusted pursuant to this Section 3, the Corporation shall deliver to the Holder
a certificate describing in reasonable detail the event requiring the adjustment
and the method by which the adjustment was calculated and setting forth the
Exercise Price and the number of Common Shares issuable upon the exercise of
this Warrant after giving effect to such adjustment.
(g) In the event that the Corporation shall propose (i) to pay a dividend
or make a distribution on the Common Shares payable in Common Shares or other
shares of the Corporation's capital stock, (ii) to subdivide, combine or
reclassify the outstanding Common Shares, (iii) effect any reorganization of the
Corporation or any Combination, (iv) to effect the voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation, or (v) to make any
tender offer or exchange offer with respect to the Common Shares, then the
Corporation shall give the Holder notice of such proposed action or offer,
specifying the record date for the action or offer and the date of participation
therein by the holders of Common Shares, if any such date is to be fixed, and
briefly describing the effect of such action on the Common Shares and on the
Exercise Price and the number and kind of any other shares of stock and the
other property, if any, issuable upon exercise of this Warrant after giving
effect to any adjustment pursuant to this Section 3 that will be required as a
result of such action. Notice in accordance with the foregoing shall be given as
promptly as possible and in any event (A) at least 10 days prior to the record
date for the action, in the case of an action described in clause (i); or (B) at
least 20 days prior to the date of the taking of the action or the date of
participation therein by the holders of Common Shares, whichever is earlier, in
the case of any other action.
4. TRANSFER; LEGENDS
(a) This Warrant shall not be transferable, nor may it be the subject of
any sale, assignment, pledge or other conveyance.
(b) The Warrant Shares may not be offered or sold except (i) pursuant to an
effective registration statement under the Securities Act or (ii) if the
Corporation first shall have been furnished with an opinion of legal counsel or
other evidence, in either case reasonably satisfactory to the Corporation, to
the effect that such sale or transfer is exempt from the registration
requirements of the Securities Act.
(c) Notwithstanding the provisions of Section 4(b) of this Warrant,
no registration or opinion of counsel shall be required for a transfer of
Warrant Shares made in accordance with Rule 144 under the Securities Act.
3
(d) Except as provided in Section Section 9.5 of this Warrant, this
Warrant, any Warrant issued in replacement of this Warrant and each certificate
representing Warrant Shares issued upon exercise of this Warrant shall bear the
following legend (the "Private Placement Legend") on the face thereof:
Neither the Warrants represented by this certificate nor the shares
issuable upon the exercise of these Warrants have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered, sold or otherwise transferred, pledged or hypothecated unless and
until such shares are registered under the Securities Act or an opinion of
counsel or other evidence, in either case reasonably satisfactory to the
Corporation, is obtained to the effect that such registration is not
required.
(e) Upon the exchange or replacement of Warrants or Warrant Shares bearing
the Private Placement Legend, the Corporation shall deliver only Warrants or
Warrant Shares, as applicable, that bear the Private Placement Legend, unless:
(i) such transfer or exchange is effected pursuant to an effective registration
statement under the Securities Act; or (ii) in the case of Warrant Shares, such
Warrant Shares were acquired pursuant to an effective registration statement
under the Securities Act; or (iii) there is delivered to the Corporation an
opinion of legal counsel or other evidence, in either case reasonably
satisfactory to the Corporation, to the effect that such sale or transfer is
exempt from the registration requirements of the Securities Act.
(f) By its acceptance of this Warrant or any Warrant Share bearing the
Private Placement Legend, the Holder acknowledges the restrictions on transfer
of this Warrant and the Warrant Shares, as applicable, set forth in this Warrant
and agrees that it shall transfer this Warrant or the Warrant Shares, as
applicable, only as provided in this Warrant.
5. RIGHTS OF HOLDER
Prior to the exercise of this Warrant, the Holder shall not be entitled (i)
to receive dividends or other distributions payable on Common Shares, (ii) to
receive notice of or vote at any meeting of the Corporation's stockholders,
(iii) to consent to any action of the stockholders, (iv) to receive notice as
stockholders of the Corporation of any other proceedings of the Corporation, (v)
to exercise any preemptive rights, or (vi) to exercise any other rights
whatsoever as stockholders of the Corporation.
6. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Nevada, and has the full right,
power and authority to execute and deliver this Warrant and to consummate the
transactions contemplated hereby. The execution and delivery of this Warrant and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the Corporation and no
other proceedings on the part of the Corporation are necessary to authorize this
Warrant or the consummation of the transactions contemplated hereby.
7. NOTICES
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been made (x) upon actual receipt, when
given by hand or confirmed facsimile or electronic mail transmission, (y) one
day after delivery to the carrier, when given by overnight delivery service or
(z) two days after mailing, when given by first-class registered or certified
mail, postage prepaid, return receipt requested; in any case to the following
address, or to such other address as a party, by notice to the other parties
given pursuant to this Section 7, may designate from time to time:
4
(a) If to the Holder, to:
Investor-Gate.com
Attention: Kevin Leigh, President
18533 Roscoe Blvd #142
Northridge CA 91324
Facsimile:
email:
(b) If to the Corporation, to: With a copy to:
Provectus Pharmaceuticals, Inc. Baker, Donelson, Bearman & Caldwell
Attention: President Attention: David L. Morehous, Esq.
7327 Oak Ridge Highway, Suite A Riverview Tower, Suite 2200
Knoxville, TN 37931 900 South Gay Street
Facsimile: 865.539.9654 Knoxville, TN 37902
email: scott@provectuscorp.com Facsimile: 865.525.8569
Email: dmorehous@bdbc.com
8. GOVERNING LAW; VENUE OF ACTIONS
(a) This Warrant shall be governed and construed in accordance with the
internal laws of the State of Nevada as applied to contracts made and performed
within the State of Nevada, without regard to the principles thereof regarding
resolution of conflicts of law.
(b) The Corporation and the Holder each hereby (i) submit to the
jurisdiction of any state court of competent jurisdiction in and for Knox
County, Tennessee, or in the United States District Court for the Eastern
District of Tennessee sitting at Knoxville in any action or proceeding arising
out of or relating to this Warrant and agree that all claims in respect of the
action or proceeding may be heard and determined in any such court; (ii) agree
not to bring any action or proceeding arising out of or relating to this Warrant
in any other court; (iii) waive any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waive any bond, surety,
or other security that might be required of any other Party with respect
thereto; and (iv) agree that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or in equity.
9. GENERAL PROVISIONS
(a) This Warrant embodies the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
(b) Except as otherwise expressly set forth in this Warrant, any term
hereof may be amended and the observance of any term hereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the parties hereto. No waivers of or
exceptions to any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
(c) The invalidity or unenforceability of any provision hereof shall not
affect the validity or enforceability of any other provision hereof.
* Signatures appear on following page *
5
Signatures
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly
executed and delivered as of the date first set forth above.
PROVECTUS PHARMACEUTICALS, INC.,
a Nevada corporation
By: /s/ Timothy C. Scott
-----------------------------
Name: Timothy C. Scott
---------------------------
Title: President
--------------------------
ACCEPTED AND AGREED to as of the date first set forth above:
INVESTOR-GATE.COM
By: /s/ Kevin Leigh
-----------------
Name: Kevin Leigh
---------------
Title: President
--------------
6
Exhibit 10.11.1
January 8, 2003
Timothy C. Scott, Ph.D.
President
Provectus Pharmaceuticals, Inc.
7327 Oak Ridge Highway #A
Knoxville, TN 37931
Dear Mr. Scott:
This letter agreement (the "Agreement") confirms the terms and conditions
of the engagement of INVESTOR-GATE.COM, by Provectus Pharmaceuticals, Inc. (the
"Company") to render certain investor relations and financial communication
services to the Company which are referred to herein.
1. Services. INVESTOR-GATE.COM agrees to perform investor relations
services for the Company which are ordinarily and customarily performed by an
investor relations firm on behalf of a corporate client. These services include,
but are not limited to, (a) distribution of financial and general press
releases; (b) (if needed) drafting of a corporate profile for distribution to
the Company's shareholders and the public; (c) Profiling PROVECTUS
PHARMACEUTICALS (PVCT) Corporation and links to PROVECTUS PHARMACEUTICALS (PVCT)
Corporation website hosted by Investor-gate.com's financial website; (d)
handling new and existing investors through personal contact via phone, fax and
computer (e) Setting up broker presentations utilizing a variety of shows funded
by PROVECTUS PHARMACEUTICALS (PVCT) and most importantly (f) introduction of the
Company to the financial brokerage community and investors.
2. Non-exclusive Relationship; No Guarantee. Commencing January 8, 2003
(the "Commencement Date"), INVESTOR-GATE.COM will act as a non-exclusive agent
of the Company and shall use its best efforts in the performance of its services
described above. Nothing in this Agreement shall be construed as limiting
INVESTOR-GATE.COM's right to represent other clients, except that
INVESTOR-GATE.COM agrees not to represent any other person or entity which is in
direct competition with the Company unless INVESTOR-GATE.COM first obtains the
Company's written consent, which shall not be unreasonably withheld.
3. Fees. During the period of 90 days after the Commencement Date (the
"Start-up Period"), the Company shall pay to INVESTOR-GATE.COM, for its
services, a monthly fee of $7,250.00 per month. The monthly fee shall be paid by
the issuance and delivery to INVESTOR-GATE.COM of a number of the Company's
common shares, $.001 par value, equal to the amount of the monthly fee. During
the Start-up Period, the value of the Company's common shares hereby is agreed
to be $0.75 per share. The monthly fees for the Start-up Period shall be prepaid
by the Company; the Company and INVESTOR-GATE.COM hereby agree that the
Company's obligations shall be satisfied by the execution of a written
instruction from the Company or its attorney to the transfer agent for the
Company's common shares, on or before the third business day following the date
of this Agreement, ordering the issuance of the appropriate number of common
shares to INVESTOR-GATE.COM.
Following the end of the Start-up Period, during the term of this Agreement
the Company shall pay to INVESTOR-GATE.COM, for its services, a monthly fee in
the amount of $6,000. The monthly fee shall be paid by the issuance and delivery
to INVESTOR-GATE.COM of a number of the Company's common shares equal to the
amount of the monthly fee. For each month after the Start-up Period, the value
of the Company's common shares hereby is agreed to be the greater of (i) an
amount per share equal to the average closing price of one of the Company's
common shares on the Over-the-Counter Bulletin Board (or any other trading
system or exchange on which the Company's common shares may be traded) during
the five trading days prior to the commencement of such month, or (ii) $0.75 per
share. The monthly fees for each month shall be prepaid by the Company; the
Company and INVESTOR-GATE.COM hereby agree that the Company's obligations shall
be satisfied by the execution of a written instruction from the Company or its
attorney to the transfer agent for the Company's common shares, on or before the
second business day of each month, ordering the issuance of the appropriate
number of common shares to INVESTOR-GATE.COM.
As additional fees, the Company shall grant to INVESTOR-GATE.COM warrants
for the purchase of common shares in accordance with this paragraph. Upon
execution of this Agreement, the Company will grant to INVESTOR-GATE.COM
warrants for the purchase of 25,000 common shares at a price of $0.75 per share.
Upon the completion of the Start-up Period, the Company will to
INVESTOR-GATE.COM warrants for the purchase of 25,000 common shares at a price
of $2.00. Upon the first anniversary of the date of this Agreement, the Company
will grant to INVESTOR-GATE.COM warrants for the purchase of 25,000 common
shares at a price of $5.00. All warrants granted pursuant to this paragraph
shall expire 18 months from the date of grant.
All of the Company's common shares issued to INVESTOR-GATE.COM pursuant to
this Section 3 shall be issued pursuant to one or more exemptions from the
registration requirements of the Securities Act of 1933, as amended, and
applicable state securities laws and shall be "restricted stock" within the
meaning of Rule 144 under the Securities Act of 1933. The Company hereby grants
to INVESTOR-GATE.COM Piggy-Back Rights (as defined in Section 5 below) with
respect to all such common shares.
4. Expenses. In addition to any fees that may be payable hereunder, the
Company agrees, from time to time upon request, to reimburse INVESTOR-GATE.COM
for all reasonable out of pocket expenses incurred by it in the performance of
services on behalf of the Company. Such out of pocket expenses shall include any
travel on behalf of the Company. It is understood by INVESTOR-GATE.COM, that
individual expenses in excess of $200.00 (two hundred dollars) will be approved,
in advance, by the Company in writing. Any disputed expense must be made known
to INVESTOR-GATE.COM in writing within 5 days of receipt. Out of pocket expenses
will be billed on or about the fifteenth of each month and will be due and
payable with 10 days of receipt.
5. Equity Participation. As an inducement for INVESTOR-GATE.COM to enter
into this Agreement, the Company agrees to grant to INVESTOR-GATE.COM or its
successor or designee, within 10 business days of the date of this Agreement,
warrants for the purchase of 50,000 common shares, at an exercise price per
share equal to the greater of (i) 50% of the average closing price of one of the
Company's common shares on the Over-the-Counter Bulletin Board (or any other
trading system or exchange on which the Company's common shares may be traded)
during the ten trading days prior to the date of exercise, or (ii) $0.75. The
warrants granted pursuant to this Section 5 may be exercised by
INVESTOR-GATE.COM no earlier than the first anniversary of the date of this
Agreement and no later than the second anniversary thereof; provided, that such
warrants may be exercised for the purchase of no more than 12,500 shares during
any three-month period within such period of exercisability. Termination of
INVESTOR-GATE.COM's engagement hereunder shall not effect the provisions of this
Section 5 which shall survive such termination.
The Company shall include the shares issuable upon the exercise of the
warrants granted pursuant to this Section 5, together with any shares issued
pursuant to (or upon the exercise of warrants granted pursuant to) Section 3 of
this Agreement, with any of the Company's securities it determines to register
for its own account at any time, subject only, in an underwritten public
offering, to such customary limitations which such underwriter may impose based
upon its determination that marketing factors require a limitation on the number
of shares to be underwritten (the "Piggy Back Rights"). The Piggy Back Rights
shall not apply from time to time, if, at the time such holder desires to sell
any of the Shares, the holder of the Shares (together with its affiliates) is
able to sell all such Shares remaining pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended. The Piggy Back Rights shall continue
until all the Shares are registered and sold.
6. Termination of the Engagement. INVESTOR-GATE.COM's engagement hereunder
may be terminated by either the Company or INVESTOR-GATE.COM at any time, with
or without cause, upon written advice to that effect to the other party;
provided, however, that INVESTOR-GATE.COM will be entitled to (a) its full fee
for the first One Hundred and Eighty (180) days of the current program
activities under Section 3 (with the exception of the warrant package) hereof
regardless of when this Agreement is terminated if terminated by the Company and
provided further, that the provisions of this Section 6 and Sections 4, 5 and 7
hereof shall survive such termination. All warrants and options are excluded
from cancellation for 18 months from the signing of this contract.
7. Indemnity.
(a) Indemnification by the Company. In connection with
INVESTOR-GATE.COM's engagement hereunder, including modifications or future
additions to this engagement and the related activities prior to this date, the
Company agrees that it will indemnify, hold harmless and defend
INVESTOR-GATE.COM and its affiliates, any director, officer, agent or employee
of INVESTOR-GATE.COM or any of its affiliates and each other person, if any,
controlling INVESTOR-GATE.COM or any of its affiliates and each of their
successors and assigns (collectively, the "INVESTOR-GATE.COM Group") against and
in respect of any and all losses, damages, claims, obligations, demands,
actions, suits, proceedings, assessments, liabilities, judgments, recoveries and
deficiencies, costs and expenses (including, without limitation, reasonable
attorneys' fees and costs and expenses incurred in investigating, preparing,
defending against or prosecuting any litigation, claim, proceeding or demand),
all on an after-tax basis, less any amounts actually paid as insurance
reimbursement, of any kind or character (collectively, a "Loss"), (i) related
to, arising out of or result from (A) oral or written information provided by
the Company, the Company's employees or the Company's other agents, for use by
INVESTOR-GATE.COM in connection with INVESTOR-GATE.COM's performance of services
under this Agreement; (B) other action or failure to act by the Company, the
Company's employees or the Company's other agents or by INVESTOR-GATE.COM at the
Company's request or with the Company's consent or (C) any breach of, or failure
by the Company to fully perform, or any inaccuracy in, any of the
representations, warranties, covenants or agreements of the Company in this
Agreement or (ii) otherwise related to or arising out of the engagement of
INVESTOR-GATE.COM pursuant to this Agreement or any transaction or conduct in
connection therewith except that this clause (ii) and clause (i)(B) relating to
actions by INVESTOR-GATE.COM, shall not apply with respect to any losses that
are finally judicially determined to have resulted primarily from
INVESTOR-GATE.COM's bad faith or gross negligence.
(b) Notice of Claim. Whenever INVESTOR-GATE.COM learns of or discovers
any matter which may give rise to a claim for indemnification (the "Claim")
against the Company under this Section 7 (the "Indemnity Obligor"), as the
indemnified party (the "Indemnified Party"), shall give notice to the Indemnity
Obligor of the Claim. With respect to Claims which are the subject of actions,
suits, or proceedings threatened or asserted in writing by any third party (a
"Third Party Claim"), the Indemnified Party shall, within 15 days following
receipt of such Third Party Claim, promptly notify the Indemnity Obligor in
writing of any Claim for recovery, specifying in reasonable detail the nature of
the Loss and the amount of the liability estimated to arise therefrom. If the
Indemnified Party does not so notify the Indemnity Obligor within 15 days of its
discovery of a Third Party Claim, such Claim shall be barred only to the extent
that the Indemnity Obligor is prejudiced by such failure to notify. The
Indemnified Party shall provide to the Indemnity Obligor as promptly as
practicable thereafter all information and documentation reasonably requested by
the Indemnity Obligor to verify the Claim asserted.
(c) Defense. If the facts relating to a Loss arise out a Third Party
Claim, or if there is any claim against a third party available by virtue of the
circumstances of the Loss, the Indemnity Obligor shall, by giving written notice
to the Indemnified Party within 15 days following its receipt of the notice of
such claim, assume the defense or the prosecution thereof, including the
employment of counsel or accountants, reasonably satisfactory to the Indemnified
Party, at its cost and expense; provided, however, that during the interim the
Indemnified Party shall use its best efforts to take all action (not including
settlement) reasonably necessary to protect against further damage or loss with
respect to the Loss. The Indemnified Party shall have the right to employ
counsel separate from counsel employed by the Indemnity Obligor in any such
action and to participate therein, but the fees and expenses of such counsel
shall be at the Indemnified Party's own expense, unless (a) the employment
thereof has been specifically authorized by the Indemnity Obligor, (b) such
Indemnified Party has been advised by counsel reasonably satisfactory to the
Indemnity Obligor that there may be one or more legal defenses available to it
which are different from or additional to those available to the Indemnity
Obligor and in the reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel, or (c) the Indemnity Obligor has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the Indemnified Party. Whether or not the Indemnity Obligor
defends or prosecutes such claim, all the parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony and shall attend such conferences, discovery proceedings and trial as
may be reasonably requested in connection therewith. The Indemnity Obligor shall
not be liable for any settlement of any such claim effected without its prior
written consent. In the event of payment by the Indemnity Obligor to the
Indemnified Party in connection with any Loss arising out of a Third Party
Claim, the Indemnity Obligor shall be subrogated to and shall stand in the place
of the Indemnified Party as to any events or circumstances in respect of which
the Indemnified Party may have any right or claim against such third party
relating to such indemnified matter. The Indemnified Party shall cooperate with
the Indemnity Obligor in prosecuting any subrogated claim. The Indemnity Obligor
will take no action in connection with any claim that would adversely affect the
Indemnified Party without the consent of the Indemnified Party.
(d) Duration of the Company's Obligations. The Indemnity Obligor's
indemnification obligations under this Agreement shall survive the termination
of this Agreement.
8. Acknowledgments and Representations.
(a) The Company recognizes and confirms that in performing its duties
pursuant to this Agreement, INVESTOR-GATE.COM will be using and relying upon
data, material and other information furnished by the Company, its employees and
representatives (the "Information"). The Company hereby agrees and represents
that all Information furnished to INVESTOR-GATE.COM in connection with this
Agreement shall be accurate and complete in all material respects at the time
furnished, and that if such Information, in whole or part, becomes materially
inaccurate, misleading or incomplete during the term of INVESTOR-GATE.COM's
engagement hereunder, the Company shall so advise INVESTOR-GATE.COM in writing
and correct any such inaccuracy or omission. INVESTOR-GATE.COM assumes no
responsibility for the accuracy and completeness of such Information. In
rendering its services hereunder, INVESTOR-GATE.COM shall be entitled to use and
rely upon the Information without independent verification thereof. To the
extent consistent with legal requirements, all Information, unless publicly
available or otherwise available to INVESTOR-GATE.COM without restriction or
breach of any confidentiality agreement, will be held by INVESTOR-GATE.COM in
confidence and will not be disclosed to anyone other than INVESTOR-GATE.COM's
agents and advisors without the Company's prior written approval or used for any
purpose other than those referred to in this Agreement.
(b) The Company understands and agrees that in furnishing the Company
with advice and other services as provided in this Agreement, neither
INVESTOR-GATE.COM nor any officer, director or agent thereof shall be liable to
the Company, its affiliates or its creditors for errors of judgment or anything
except bad faith or gross negligence in the performance of its duties under the
terms of this Agreement.
(c) The Company acknowledges that INVESTOR-GATE.COM has been retained
solely as an advisor to the Company, and not as an advisor to or agent of any
other person, and that the Company's engagement of INVESTOR-GATE.COM is not
intended to confer rights upon any persons not a party hereto (including
shareholders, employees or creditors of the Company) as against
INVESTOR-GATE.COM, INVESTOR-GATE.COM's affiliates or their respective directors,
officers, agents and employees.
(d) The Company represents and warrants to INVESTOR-GATE.COM that it
will not cause, or knowingly permit (a) any action to be taken which violates or
(b) a failure to act, the effect of which violates, any federal or state
securities law.
9. Notices. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be delivered by hand or fax or
mailed by overnight courier or first class certified or registered mail, return
receipt requested, postage prepaid and properly addressed as follows:
If to INVESTOR-GATE.COM, to: INVESTOR-GATE.COM
Attention: Kevin Leigh, President
18533 Roscoe Blvd #142
Northridge CA 91324
Fax:
If to the Company, to: Provectus Pharmaceuticals, Inc.
Attention: Timothy C. Scott, Ph.D.,
President
7327 Oak Ridge Highway, Suite A
Knoxville, TN 37931
Fax: 865/539-9654
with a copy to:
Baker, Donelson, Bearman & Caldwell, P.C.
Attention: David L. Morehous, Esq.
2200 Riverview Tower, 900 S. Gay Street
Knoxville, TN 37902
Fax: 865/525-8569
Any party may change its address for purposes of this provision by
giving the other party written notice of the new address in the manner set forth
above. Notice will be conclusively deemed to have been given when personally
delivered, or if given by mail, on the second day after being sent by overnight
courier or on the third day after being sent by first class, registered or
certified mail, or if given by fax, when confirmation of transmission is
indicated by the sender's fax machine.
10. Arbitration. All controversies, disputes or claims arising out of or
relating to this Agreement shall be resolved by binding arbitration. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. All arbitrators shall possess
such experience in, and knowledge of, the subject area of the controversy or
claim so as to qualify as an "expert" with respect to such subject matter. The
governing law for the purposes of any arbitration arising hereunder shall be as
set forth in Section 11 hereof. The prevailing party shall be entitled to
receive its reasonable attorney's fees and all costs relating to the
arbitration. Any award rendered by arbitration shall be final and binding on the
parties, and judgment thereon may be entered in any court of competent
jurisdiction.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of California, without regard to the
conflicts of laws provisions thereof, and may not be amended or modified except
in writing signed by both parties.
12. Successors. This Agreement and all rights and obligations thereunder
shall be binding upon and inure to the benefit of each party's successors, but
may not be assigned without the prior written consent of the other party, which
shall not be unreasonably withheld or delayed.
13. Severability. If any provision of this Agreement shall be held or made
invalid by a statute, rule, regulation, decision of a tribunal or otherwise, the
remainder of this Agreement shall not be affected thereby and, to this extent,
the provisions of this Agreement shall be deemed severable.
14. Authorization. The Company represents and warrants that it has all
requisite power and authority, and has received all necessary authorizations, to
enter into and carry out the terms and provisions of this Agreement.
Please confirm that the foregoing correctly sets forth our Agreement
by signing the enclosed letter in the space provided and returning them to us
for execution, whereupon we will send you a fully executed original letter which
shall constitute a binding Agreement as of the date first above written. We look
forward to working with you on this assignment.
Very truly yours,
INVESTOR-GATE.COM
By: /s/ Kevin Leigh
--------------------
Kevin J. Leigh
President and CEO
Agreed to and Accepted as of the date above.
Provectus Pharmaceuticals, Inc.
By: /s/ Timothy C. Scott
-----------------------------
Timothy C. Scott, Ph.D.
President
Exhibit 10.11.2
[PROVECTUS PHARMACEUTICALS, INC. LETTERHEAD]
February 28, 2003
Kevin Leigh
Investor-Gate.com
9857 Rathburn Avenue
Northridge, CA 91325
Dear Mr. Leigh:
Pursuant to Section 6 of the letter agreement dated January 8, 2003 between
Provectus Pharmaceuticals, Inc. ("Provectus") and Investor-Gate.com (the "Letter
Agreement"), you hereby are advised that Provectus is terminating the Letter
Agreement, effective upon your receipt of this letter.
Provectus is exercising its termination rights as a result of
Investor-Gate.com's failure to perform the investor relations services
identified in the Letter Agreement. For that reason, and notwithstanding the
provisions of Section 6 of the Letter Agreement:
1. Provectus hereby terminates the warrant granted to Investor-Gate.com
pursuant to Section 5 of the Letter Agreement.
2. Effective as of the date hereof, Provectus terminates payment to
Investor-Gate.com of the monthly fees provided in Section 3 of the
Letter Agreement; provided, however, that Provectus will grant
Investor-Gate.com the warrants specified in Section 3 of the Letter
Agreement (for the purchase of (a) 25,000 common shares at an exercise
price $0.75, (b) 25,000 common shares at an exercise price of $2.00,
and (c) 25,000 common shares at an exercise price of $5.00).
Except with respect to the warrant granted pursuant to Section 5 of the Letter
Agreement, Investor-Gate.com may retain any fees previously paid by Provectus to
Investor-Gate.com.
Very truly yours,
/s/ Craig Dees
-----------------------
Craig Dees, Ph.D.
Chief Executive Officer
Exhibit 10.12
[Strategic Growth International, Inc. Letterhead]
February 20, 2003
Mr. Craig Dees
Chief Executive Officer
Provectus Pharmaceuticals, Inc.
7327 Oak Ridge Highway
Suite A
Knoxville, TN 37931
Dear Mr. Dees:
This letter will serve as an agreement between Provectus Pharmaceuticals, Inc.
("the Company") and Strategic Growth International, Inc. ("SGI").
DUTIES:
As Investor Relations Consultants, SGI will:
a) Consult with the management of the Company on Investor Relations
aspects of shareholder communications, including arranging and
conducting meetings with the professional investment community
and investor groups; communicating the corporate message to
specified audiences, and enhancing relations with security
analysts and the financial press.
b) Help develop and implement a comprehensive Investor Relations
program. The program will be designed to achieve results-oriented
goals and objectives.
c) Provide professional staff services as may be reasonably required
to help the Company carry out its programs and objectives.
The scope of SGI's services shall not include any activities related to or
regarding the raising of funds. Such activities, if any, shall be subject to a
separate agreement.
LIABILITY:
The Company agrees to indemnify and hold harmless SGI from and against any and
all losses, claims, damages, expenses or liabilities which SGI may incur based
upon information, representations, reports or data furnished by the Company to
the extent that such material is furnished, prepared or approved by Provectus
Pharmaceuticals, Inc. for use by SGI.
OUT OF POCKET EXPENSES
The Company will reimburse SGI for all reasonable out-of-pocket disbursements,
including travel expenses, made in the performance of its duties under this
agreement. Items, such as luncheons with the professional investment community,
graphic design and printing, postage, long distance telephones calls, etc., will
be billed as incurred.
RECORDS AND RECORDING KEEPING
SGI will maintain accurate records of all out-of-pocket expenditures incurred on
behalf of the Company. Authorization for projects and operating activities will
be obtained in advance before commitments are made.
TERMS OF PAYMENT
Billing will be done monthly for the coming month, with the first month payable
in advance. Expenses and charges will be included in the following month's bill.
Payment is due within ten (10) days upon receipt of invoice.
SERVICE FEES
The Company will pay SGI a monthly retainer fee of $8,000.00 for services under
this agreement. At the option of the company, $5,000 of such fee shall be
payable in cash plus 30,000 shares of stock per month for the first 3 months.
The monthly retainer shall commence on February 20, 2003 and extend for 12
months. The first monthly fee shall be payable in advance.
In addition, immediately upon execution of this agreement, the Company agrees to
grant SGI warrants to purchase 360,000 shares of the Company's common stock
exercisable at the following prices: 120,000 shares at $0.25, 120,000 shares at
$0.35, and 120,000 shares at $0.50. Such options will be of a five-year
duration. At the option of SGI, such options may be exercised on a cashless
basis and will have piggy-back registration rights for one year with respect to
the options with demand registration rights after one year, and may be
transferred in whole or in part to one or more officers of the Company. Such
options will be vested immediately.
TERMS OF AGREEMENT
This agreement is to extend from February 20, 2003 for a period of 12 months.
The Company shall first have the right to terminate this agreement on August 20,
2003, upon 10 days prior written notice. Upon such termination on August 20,
2003, the Company will have the right to rescind 180,000 of the 360,000 options.
Sixty thousand (60,000) of the options rescinded will be the options granted at
$0.25, 60,000 of the options will be the options granted at $0.35 and 60,000
from the options granted at $0.50.
This agreement shall be governed by and subject to the jurisdiction of and law
of New York State.
Please confirm agreement to the above by endorsing all three (3) copies and
returning two (2) copies to SGI.
AGREED TO AND ACCEPTED BY:
/s/ Craig Dees Date: February 20, 2003
--------------------------------
Provectus Pharmaceuticals, Inc.
/s/ Date: February 20, 2003
-------------------------------------
Strategic Growth International, Inc.
Exhibit 10.13
[Josephberg Grosz & Co., Inc. Letterhead]
March 27, 2003
Craig Dees, Ph.D., CEO
Provectus Pharmaceuticals, Inc.
7327 Oak Ridge Highway
Knoxville, TN 37931
Dear Craig:
I. The purpose of this letter is to set forth the terms of our agreement
(the "Agreement") with respect to the compensation which Josephberg Grosz & Co.,
Inc. or their designees ("JGC") are to receive for assisting and advising
Provectus Pharmaceuticals, Inc. or related entities, direct or indirect (the
"Company"), in obtaining a capital infusion of equity, debt, bridge financing,
merger and acquisitions, letter or line of credit, lease financing or other
types of financial transactions, including any transactions of financial value
(the "Financing"). Our focus will be on providing the Company with equity for
working capital needs and the finalization of its Business Plan.
II. To assist the Company in obtaining Financing, the Company agrees to
engage JGC as its agent with respect to all Financing sources, direct or
indirect, (the "Investor"). When such Financing from any Investor introduced to
the Company, (other than a Financing in the nature of one described in
paragraphs III and IV below) is provided, JGC will be compensated by the
Company, in full, at the closing of the Financing, by receiving a total cash fee
of 7%, the fee due JGC when received by the Company and equal to the total gross
dollar value received or to be received (including any form of equity, bridge,
stock, warrant conversion, convertible securities, convertible debt or
subordinated debt Financing) by the Company (i.e., $1,500,000 Financing
provided; JG Capital, Inc. receives a cash fee of 7%, to be $105,000). In
addition, JGC will have the right to invest in the Company by receiving, at the
closing of the Financing, a five year warrant. Such warrant shall give JGC or
its designees the right, at any time over a five year period, to purchase
securities on a cashless basis in the Company equal to 8% of the total shares
issued to the Investor at the same price, JGC's designees receive warrants to
purchase shares of the same type securities and the same rights as the Investor
(i.e., $1,500,000 Financing provided, JGC's designees receive warrants to
purchase shares of the same type securities and at the same price and valuation
as the Investor at the time of Financing at anytime over a five year period).
Any and all securities and/or warrants and securities underlying such warrants
to be received by JGC and its designees shall have appropriate piggy-back and
registration rights and in any case become free trading immediately following
144 holding period.
III. For senior debt, credit facilities, guarantees; lease financing and
letter or line of credit Financing, JGC's cash fee, if such is provided by an
Investor introduced by JGC, and accepted by the Company, shall be 3.0% of the
total dollar value received by the Company. (All debt with convertible features
or warrants shall fall under fees in Paragraph 11 above.)
IV. In the event the Company enters into a merger, acquisition or joint
venture with an Investor or entity introduced by JGC or entities or Investors
negotiated with on behalf of the Company by JGC, JGC will be compensated by the
Company, in full, at the closing thereof, in accordance with the 5/4/3 Formula,
(i.e., by receiving a cash fee of 5% of the first $1,000,000 of Value received
by the Company or the Investor, whichever is applicable, 4% of the second
$1,000,000, and 3% of all Value received in excess of $2,000,000). While not all
inclusive, Value shall include total cash, notes, debt, stock, consulting,
non-compete, earn-out, sales and royalty agreements.
V. The fees in paragraphs II, III and IV above are totally independent of
one another and are based upon the type or types of transactions JGC arranges.
VI. Upon the execution of this Agreement, the Company agrees to pay JG
Capital, Inc. an engagement fee of $6,500,000 and 35,000 shares of the company's
common stock.
VII. This Agreement may be terminated or amended by the Company sixty days
from the signing of this Agreement or anytime thereafter with ten days prior
written notice. Termination of this Agreement shall not release the Company of
its obligation to compensate JGC or its designees for its services rendered per
this Agreement. In other words, JGC shall be compensated if any party introduced
to the Company per paragraphs II, II and IV, enters into a transaction or
provides Financing as long as the transaction (transactions) or Financing
(Financings) was provided or committed to by those parties within 24 months
after termination of this Agreement.
VIII. It is understood and agreed that you shall have the right to accept
or reject in your judgment the terms of any Financing or transaction proposed by
any Financing Sources, Investors, strategic partners and/or corporations
presented to you. If such Financing is provided by the Investor to the Company
and accepted, as a condition to the closing, the company agrees to represent to
JGC, to the Investor and the Company's and Investors' attorneys prior to the
closing of the transaction or Financing that the cash portion of the fees due
and payable to JGC as they apply to this Agreement will be paid to JG Capital,
Inc. by wire transfer or certified check at the closing of the transaction
and/or Financing along with any and all other fees due JGC (stock, etc.). The
Company also agrees to copy JGC promptly on all correspondence between all
prospective Investors and the Company and provide a copy of all closing
documents to JGC at closing.
IX. This Agreement shall be governed and construed in accordance with the
laws of the State of New York. In the event of any dispute between us regarding
the subject matter of this Agreement, such dispute shall be submitted to
arbitration before a single arbitrator in New York City in accordance with the
rules of the American Arbitration Association. Any decision or award shall be
final and binding upon the parties hereto. All legal fees, arbitration fees,
filing fees, collection fees, expenses and the maximum interest rate allowed by
law shall be paid to the prevailing party by the losing party. If you are in
Agreement to the foregoing, please sign and date below.
Sincerely,
Josephberg Grosz & Co., Inc.
By: /s/ Richard A. Josephberg 3/27/03
---------------------------------
Richard A. Josephberg Date
Chairman
AGREED AND ACCEPTED:
Provectus Pharmaceuticals, Inc.
By: /s/ Craig Dees Date: 3/28/03
-------------------------- --------------
Craig Dees, Ph.D.
CEO
Exhibit 99.1
Certification Pursuant to 18 U.S.C. ss. 1350*
Pursuant to 18 U.S.C.ss. 1350, as enacted by Section 906 of the
Sarbanes-Oxley Act of 2002 (Public Law 107-204), the undersigned, H. Craig Dees,
the Chief Executive Officer of Provectus Pharmaceuticals, Inc., a Nevada
corporation (the "Company"), hereby certifies that:
(1) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 2003, as filed with the U.S. Securities and Exchange Commission on the
date hereof (the "Report"), fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
This Certification is signed on May 9, 2003.
/s/H. Craig Dees
-------------------------------
H. Craig Dees
Chief Executive Officer
Provectus Pharmaceuticals, Inc.
/s/Daniel R. Hamilton
-------------------------------
Daniel R. Hamilton
Chief Financial Officer
Provectus Pharmaceuticals, Inc.
A signed original of this written statement required by Section 906 has
been provided to Provectus Pharmaceuticals, Inc. and will be retained by
Provectus Pharmaceuticals, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
Enacted by Section 906 of the Sarbanes-Oxley Act of 2002, Public Law 107-204.