Exhibit 10.1
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, is entered into by and between PROVECTUS PHARMACEUTICALS, INC., a
Nevada corporation, with headquarters located at 0000 Xxx Xxxxx Xxxxxxx, Xxxxx
X, Xxxxxxxxx, XX 00000 (the "Company"), and each individual or entity (other
than the Company) named on a signature page hereto (as used herein, each such
signatory is referred to as the "Lender" or a "Lender") (each agreement with a
Lender being deemed a separate and independent agreement between the Company and
such Lender, except that each Lender acknowledges and consents to the rights
granted to each other Lender [each, an "Other Lender"] under such agreement and
the Transaction Agreements, as defined below, referred to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Lender are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration for offers and sales to accredited investors afforded, inter alia,
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Lender wishes to lend funds to the Company, subject to and
upon the terms and conditions of this Agreement and acceptance of this Agreement
by the Company, the repayment of which will be represented by 8% Convertible
Debentures of the Company (the "Convertible Debentures"), which Convertible
Debentures will be convertible into shares of Common Stock, $.001 par value per
share, of the Company (the "Common Stock"), upon the terms and subject to the
conditions of such Convertible Debentures, together with the Warrants (as
defined below) exercisable for the purchase of shares of Common Stock;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) Subject to the terms and conditions of this Agreement and the other
Transaction Agreements, the undersigned hereby agrees to loan to the Company the
principal amount set forth on the Lender's signature page of this Agreement (the
"Purchase Price"), out of the aggregate amount being loaned by all Lenders of
$500,000.00 (the "Maximum Purchase Price"). The obligation to repay the loan
from the Lender shall be evidenced by the Company's issuance of one or more
Convertible Debentures to the Lender
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in such principal amount (the Convertible Debentures issued to the Lender, the
"Debentures"). Each Debenture (i) shall provide for a conversion price (the
"Conversion Price"), which price may be adjusted from time to as provided in the
Debenture or in the other Transaction Agreements, (ii) shall have the terms and
conditions of, and be substantially in the form attached hereto as, Annex I and
(iii) shall have a Warrant attached, as provided below. The loan to be made by
the Lender and the issuance of the Debentures and Warrants to the Lender are
sometimes referred to herein and in the other Transaction Agreements as the
purchase and sale of the Debentures and Warrants.
(ii) The Purchase Price to be paid by the Lender shall be equal to the face
amount of the Debentures being purchased on the Closing Date (as defined below)
and shall be payable in United States Dollars.
(iii) The actual total Purchase Price of all Lenders, which shall not be
less than the Minimum Purchase Price and not more than the Maximum Purchase
Price, is hereinafter referred to as the "Aggregate Purchase Price."
b. Certain Definitions. As used herein, each of the following terms has the
meaning set forth below, unless the context otherwise requires:
(i) "Affiliate" means, with respect to a specific Person referred to in the
relevant provision, another Person who or which controls or is controlled by or
is under common control with such specified Person.
(ii) "Certificates" means the Debentures and the Warrants, each duly
executed by the Company and issued on the Closing Date in the name of the
Lender.
(iii) "Closing Date" means the date of the closing of the purchase and sale
of the Debentures and Warrants, as provided herein; provided, however, that at
the option of the Company and the Finder, once subscriptions for at least the
Minimum Purchase Price have been received and accepted and the Purchase Price
for the Lenders whose subscriptions have been accepted have been received in
escrow as provided herein, there may be an Initial Closing Date followed by one
or more additional Closing Dates, as provided in Section 6 hereof.
(iv) "Closing Price" means the closing bid price during regular trading
hours of the Common Stock (in U.S. Dollars) on the Principal Trading Market, as
reported by the Reporting Service.
(v) "Company Control Person" means each director, executive officer,
promoter, and such other Persons as may be deemed in control of the Company
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as
defined below).
(vi) "Conversion Shares" means the shares of Common Stock issuable upon
conversion of the Debentures (including, if relevant, accrued interest on the
Debentures so
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converted).
(vii) "Effective Date" means the effective date of the Registration
Statement covering the Registrable Securities.
(viii) "Escrow Agent" means the escrow agent identified in the Joint Escrow
Instructions attached hereto as Annex II (the "Joint Escrow Instructions").
(ix) "Escrow Funds" means the Purchase Price delivered to the Escrow Agent
as contemplated by Sections 1(c) and (d) hereof.
(x) "Escrow Property" means the Escrow Funds and the Certificates delivered
to the Escrow Agent as contemplated by Section 1(c) hereof.
(xi) "Finder" means Grosvenor International Holdings, Ltd..
(xii) [INTENTIONALLY OMITTED]
(xiii) "Holder" means the Person holding the relevant Securities at the
relevant time.
(xiv) "Initial Closing Date" means the Closing Date or, if there is more
than one Closing Date for the transactions contemplated by this Agreement, the
Closing Date for the first of such closings (which shall be for at least the
Minimum Purchase Price).
(xv) "Last Audited Date" means December 31, 2002.
(xvii) "Lender Control Person" means each director, executive officer,
promoter, and such other Persons as may be deemed in control of the Lender
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.
(xviii) "Material Adverse Effect" means an event or combination of events,
which individually or in the aggregate, would reasonably be expected to (w)
adversely affect the legality, validity or enforceability of the Securities or
any of the Transaction Agreements, (x) have or result in a material adverse
effect on the results of operations, assets, prospects, or condition (financial
or otherwise) of the Company and the it subsidiaries, taken as a whole, (y)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under any of the Transaction Agreements or the transactions
contemplated thereby, or (z) materially and adversely affect the value of the
rights granted to the Lender in the Transaction Agreements.
(xix) "Person" means any living person or any entity, such as, but not
necessarily limited to, a corporation, partnership or trust.
(xx) "Principal Trading Market" means The Over the Counter Bulletin Board.
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(xxi) "Registrable Securities" has the meaning set forth in the
Registration Rights Agreement.
(xxii) "Registration Right Agreement" means the Registration Rights
Agreement in the form annexed hereto as Annex IV, as executed by the Lender and
the Company simultaneously with the execution of this Agreement.
(xxiii) "Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
(xxiv) "Reporting Service" means Bloomberg LP or if that service is not
then reporting the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by the Holders of the
Debentures and reasonably acceptable to the Company.
(xxv) "Securities" means the Debentures, the Warrants, and the Shares.
(xxvi) "Shares" means the shares of Common Stock representing any or all of
the Conversion Shares and the Warrant Shares.
(xxvii) "State of Incorporation" means Nevada.
(xxviii) "Trading Day" means any day during which the Principal Trading
Market shall be open for business.
(xxix) "Transaction Agreements" means the Securities Purchase Agreement,
the Debentures, the Joint Escrow Instructions, the Registration Rights
Agreement, and the Warrants and includes all ancillary documents referred to in
those agreements.
(xxx) "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
c. Form of Payment; Delivery of Certificates.
(i) The Lender shall pay the Purchase Price by delivering immediately
available good funds in United States Dollars to the Escrow Agent no later than
the date prior to the Closing Date.
(ii) No later than the Closing Date, but in any event promptly following
payment by the Lender to the Escrow Agent of the Purchase Price, the Company
shall deliver the Certificates, each duly executed on behalf of the Company and
issued in the name of the Lender, to the Escrow Agent.
(iii) By signing this Agreement, each of the Lender and the Company,
subject to
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acceptance by the Escrow Agent, agrees to all of the terms and conditions
of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set
forth in full.
d. Method of Payment. Payment into escrow of the Purchase Price shall be
made by wire transfer of funds to:
Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx & Xxxxxx LLP
Account No.: 630-0000000
Re: PCVT Transaction
2. LENDER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Lender represents and warrants to, and covenants and agrees with, the
Company as follows:
a. Without limiting Lender's right to sell the Shares pursuant to the
Registration Statement or otherwise to sell any of the Securities in compliance
with the 1933 Act, the Lender is purchasing the Securities and will be acquiring
the Shares for its own account for investment only and not with a view towards
the public sale or distribution thereof and not with a view to or for sale in
connection with any distribution thereof.
b. The Lender is (i) an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its Affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the loss of the entire Purchase Price.
c. All subsequent offers and sales of the Securities by the Lender shall be
made pursuant to registration of the Shares under the 1933 Act or pursuant to an
exemption from registration.
d. The Lender understands that the Securities are being offered and sold to
it in reliance on specific exemptions from the registration requirements of the
1933 Act and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Lender's
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compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Lender set forth herein in order to determine the
availability of such exemptions and the eligibility of the Lender to acquire the
Securities.
e. The Lender and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities and the offer of the
Shares which have been requested by the Lender, including those set forth on
Annex V hereto. The Lender and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Lender has also had the opportunity to obtain and to review
the Company's filings on XXXXX listed on Annex VII hereto (the documents listed
on such Annex VII, to the extent available on XXXXX or otherwise provided to the
Lender as indicated on said Annex VII, collectively, the "Company's SEC
Documents").
f. The Lender understands that its investment in the Securities involves a
high degree of risk.
g. The Lender hereby represents that, in connection with its purchase of
the Securities, it has not relied on any statement or representation by the
Company or the Finder or any of their respective officers, directors and
employees or any of their respective attorneys or agents or the Finder, except
as specifically set forth herein. The Finder is a third party beneficiary of
this provision.
h. The Lender understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
i. This Agreement and the other Transaction Agreements to which the Lender
is a party, and the transactions contemplated thereby, have been duly and
validly authorized, executed and delivered on behalf of the Lender and are valid
and binding agreements of the Lender enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
j. Except for payment of fees to the Finder, payment of which is the sole
responsibility of the Company, the Lender has taken no action which would give
rise to any claim by any Person for brokerage commission, finder's fees or
similar payments by the Company relating to this Agreement or the transactions
contemplated hereby. The Company shall have no obligation with respect to such
fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this paragraph that may be due in connection with
the transactions contemplated hereby. The Lender shall indemnify and hold
harmless each of the Company, its employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
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expenses suffered in respect of any such claimed or existing fees, as and when
incurred.
k. The Lender understands that if there is more than one Closing Date, the
terms applicable on the Initial Closing Date (such as the amount of the
Conversion Price, the determination of the number of Warrants and the Warrant
Exercise Price) will apply to subsequent closings as well, although certain
facts, such as Closing Prices may vary from those applicable to the Initial
Closing Date.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to the
Lender as of the date hereof and as of the Closing Date that, except as
otherwise provided in the Annex IV hereto or in the Company's SEC Documents:
a. Rights of Others Affecting the Transactions. There are no preemptive
rights of any shareholder of the Company, as such, to acquire the Debentures,
the Warrants or the Shares. No party other than a Lender or an Other Lender has
a currently exercisable right of first refusal which would be applicable to any
or all of the transactions contemplated by the Transaction Agreements.
b. Status. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Incorporation and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. The Company is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify would not have
or result in a Material Adverse Effect. The Company has registered its stock and
is obligated to file reports pursuant to Section 12 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The Common Stock
is listed and quoted on the Principal Trading Market. The Company has received
no notice, either oral or written, with respect to the continued eligibility of
the Common Stock for such listing and quotation on the Principal Trading Market,
and the Company has maintained all requirements on its part for the continuation
of such listing and quotation.
c. Authorized Shares. The authorized capital stock of the Company consists
of (i) 100,000,000 shares of Common Stock, $.001 par value per share, of which
approximately 10,187,689 shares are outstanding as of the date hereof, and (ii)
25,000,000 shares of Preferred Stocknone of which are outstanding.. All issued
and outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid. The Company has sufficient authorized and unissued
shares of Common Stock as may be necessary to effect the issuance of the Shares.
The Shares have been duly authorized and, when issued upon conversion of, or as
interest on, the Debentures or upon exercise of the Warrants, each in accordance
with its respective terms, will be duly and validly issued, fully paid and
non-assessable and, except to the extent, if any,
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provided by the law of the State of Incorporation, will not subject the Holder
thereof to personal liability by reason of being such Holder.
d. Transaction Agreements and Stock. This Agreement and each of the other
Transaction Agreements, and the transactions contemplated thereby, have been
duly and validly authorized by the Company, this Agreement has been duly
executed and delivered by the Company and this Agreement is, and the Debentures,
the Warrants and each of the other Transaction Agreements, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.
e. Non-contravention. The execution and delivery of this Agreement and each
of the other Transaction Agreements by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Debentures, the Warrants and the other
Transaction Agreements do not and will not conflict with or result in a breach
by the Company of any of the terms or provisions of, or constitute a default
under (i) the certificate of incorporation or by-laws of the Company, each as
currently in effect, (ii) any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a party or by which it
or any of its properties or assets are bound, including any listing agreement
for the Common Stock except as herein set forth, or (iii) to its knowledge, any
existing applicable law, rule, or regulation or any applicable decree, judgment,
or order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Company or any of its properties or assets, except such conflict, breach or
default which would not have or result in a Material Adverse Effect.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the shareholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Lender as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
g. Filings. None of the Company's SEC Documents contained, at the time they
were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made, not
misleading. Since March 1, 2002, the Company has timely filed all requisite
forms, reports and exhibits thereto required to be filed by the Company with the
SEC.
h. Absence of Certain Changes. Since the Last Audited Date, there has been
no material adverse change and no Material Adverse Effect, except as disclosed
in the Company's SEC Documents. Since the Last Audited Date, except as provided
in the Company's SEC Documents, the Company has not (i) incurred or become
subject to any material liabilities (absolute or contingent) except liabilities
incurred in the ordinary course of business consistent with past practices; (ii)
discharged or satisfied any material lien or encumbrance or paid any material
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obligation or liability (absolute or contingent), other than current liabilities
paid in the ordinary course of business consistent with past practices; (iii)
declared or made any payment or distribution of cash or other property to
shareholders with respect to its capital stock, or purchased or redeemed, or
made any agreements to purchase or redeem, any shares of its capital stock; (iv)
sold, assigned or transferred any other tangible assets, or canceled any debts
or claims, except in the ordinary course of business consistent with past
practices; (v) suffered any substantial losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the loss
of any material amount of existing business; (vi) made any changes in employee
compensation, except in the ordinary course of business consistent with past
practices; or (vii) experienced any material problems with labor or management
in connection with the terms and conditions of their employment.
i. Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally or as disclosed in the
Company's SEC Documents) that has not been disclosed in writing to the Lender
that would reasonably be expected to have or result in a Material Adverse
Effect.
j. Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company before or
by any governmental authority or nongovernmental department, commission, board,
bureau, agency or instrumentality or any other person, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, any of the Transaction
Agreements. The Company is not aware of any valid basis for any such claim that
(either individually or in the aggregate with all other such events and
circumstances) could reasonably be expected to have a Material Adverse Effect.
There are no outstanding or unsatisfied judgments, orders, decrees, writs,
injunctions or stipulations to which the Company is a party or by which it or
any of its properties is bound, that involve the transaction contemplated herein
or that, alone or in the aggregate, could reasonably be expect to have a
Material Adverse Effect.
k. Absence of Events of Default. Except as set forth in Section 3(e)
hereof, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such agreement), has occurred
and is continuing, which would have a Material Adverse Effect.
l. Absence of Certain Company Control Person Actions or Events. None of the
following has occurred during the past ten (10) years with respect to a Company
Control Person:
(1) A petition under the federal bankruptcy laws or any state insolvency
law was filed by or against, or a receiver, fiscal agent or similar officer
was appointed by a court for the business or property of such Company
Control Person, or any partnership in which he was a general
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partner at or within two years before the time of such filing, or any
corporation or business association of which he was an executive officer at
or within two years before the time of such filing;
(2) Such Company Control Person was convicted in a criminal proceeding or
is a named subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:
(i) acting, as an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance
company, as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, any other Person
regulated by the Commodity Futures Trading Commission ("CFTC") or engaging
in or continuing any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of federal or
state securities laws or federal commodities laws;
(4) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or
state authority barring, suspending or otherwise limiting for more than 60
days the right of such Company Control Person to engage in any activity
described in paragraph (3) of this item, or to be associated with Persons
engaged in any such activity; or
(5) Such Company Control Person was found by a court of competent
jurisdiction in a civil action or by the CFTC or SEC to have violated any
federal or state securities law, and the judgment in such civil action or
finding by the CFTC or SEC has not been subsequently reversed, suspended,
or vacated.
m. Prior Issues. During the twelve (12) months preceding the date hereof,
the Company has not issued any stock option grants, convertible securities or
any shares of its Common Stock.
n. No Undisclosed Liabilities or Events. The Company has no liabilities or
obligations other than those disclosed in the Transaction Agreements or the
Company's SEC Documents or those incurred in the ordinary course of the
Company's business since the Last
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Audited Date, or which individually or in the aggregate, do not or would not
have a Material Adverse Effect. No event or circumstances has occurred or exists
with respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (X) change the certificate of incorporation or
other charter document or by-laws of the Company, each as currently in effect,
with or without shareholder approval, which change would reduce or otherwise
adversely affect the rights and powers of the shareholders of the Common Stock
or (Y) materially or substantially change the business, assets or capital of the
Company, including its interests in subsidiaries.
o. No Default. Neither the Company nor any of its subsidiaries is in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any material indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it or its property is bound.
p. No Integrated Offering. Neither the Company nor any of its Affiliates
nor any person acting on its or their behalf has, directly or indirectly, at any
time since May 1, 2003, made any offer or sales of any security or solicited any
offers to buy any security under circumstances that would eliminate the
availability of the exemption from registration under Regulation D in connection
with the offer and sale of the Securities as contemplated hereby.
q. Dilution. The number of Shares issuable upon conversion of the
Debentures may have a dilutive effect on the ownership interests of the other
shareholders (and Persons having the right to become shareholders) of the
Company. The Company's executive officers and directors have studied and fully
understand the nature of the Securities being sold hereby and recognize that
they have such a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges
that its obligation to issue the Shares upon conversion of the Debentures and
upon exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company, and the Company will honor every Notice of
Conversion (as defined in the Debentures) relating to the conversion of the
Debentures, and every Notice of Exercise (as contemplated by the Warrants),
unless the Company is subject to an injunction (which injunction was not sought
by the Company) prohibiting the Company from doing so.
r. Trading in Securities. The Company specifically acknowledges that,
except to the extent specifically provided herein or in any of the other
Transaction Agreements (but limited in each instance to the extent so
specified), the Lender retains the right (but is not otherwise obligated) to
buy, sell, engage in hedging transactions or otherwise trade in the securities
of the Company, including, but not necessarily limited to, the Securities, at
any time before, contemporaneous with or after the execution of this Agreement
or from time to time, but only, in
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each case, in any manner whatsoever permitted by applicable federal and state
securities laws.
s. Fees to Brokers, Finders and Others. Except for payment of fees to the
Finder, payment of which is the sole responsibility of the Company, the Company
has taken no action which would give rise to any claim by any Person for
brokerage commission, finder's fees or similar payments by Lender relating to
this Agreement or the transactions contemplated hereby. Lender shall have no
obligation with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this paragraph that
may be due in connection with the transactions contemplated hereby. The Company
shall indemnify and hold harmless each of Lender, its employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as and when incurred.
t. Multiple Closing Dates. The Company understands that if there is more
than one Closing Date, the terms applicable on the Initial Closing Date (such as
the amount of the Conversion Price, the determination of the number of Warrants
and the Warrant Exercise Price) will apply to subsequent closings as well,
although certain facts, such as Closing Prices may vary from those applicable to
the Initial Closing Date.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Lender acknowledges that (1) the Securities
have not been and are not being registered under the provisions of the 1933 Act
and, except as provided in the Registration Rights Agreement or otherwise
included in an effective registration statement, the Shares have not been and
are not being registered under the 1933 Act, and may not be transferred unless
(A) subsequently registered thereunder or (B) the Lender shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the Person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.
b. Restrictive Legend. The Lender acknowledges and agrees that, until such
time as the Common Stock has been registered under the 1933 Act as contemplated
by the Registration Rights Agreement and sold in accordance with an effective
Registration Statement or otherwise in accordance with another effective
registration statement, the certificates and other instruments representing any
of the Securities (including the Shares) shall bear a restrictive legend
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in substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
c. Filings. The Company undertakes and agrees to make all necessary filings
in connection with the sale of the Securities to the Lender under any United
States laws and regulations applicable to the Company, or by any domestic
securities exchange or trading market, and to provide a copy thereof to the
Lender promptly after such filing.
d. Reporting Status. So long as the Lender beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable
action under its control to ensure that adequate current public information with
respect to the Company, as required in accordance with Rule 144(c)(2) of the
1933 Act, is publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company will take
all reasonable action under its control to maintain the continued listing and
quotation and trading of its Common Stock (including, without limitation, all
Registrable Securities) on the Principal Trading Market or a listing on the
NASDAQ/Small Cap or National Markets and, to the extent applicable to it, will
comply in all material respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the Principal Trading Market and/or
the National Association of Securities Dealers, Inc., as the case may be, at
least through the date which is thirty (30) days after the later of the date on
which all of the Debentures have been converted or all of the Warrants have been
exercised or have expired.
e. Use of Proceeds. The Company will use the proceeds received hereunder
(excluding amounts paid by the Company for legal fees, finder's fees and escrow
fees in connection with the sale of the Securities) for general corporate
purposes.
f. Warrants. The Company agrees to issue to the Initial Investor on the
Closing Date transferable warrants (the "Warrants") for the purchase of a number
of shares equal to the Purchase Price. The Warrants will expire on the last day
of the calendar month in which the second annual anniversary of the Initial
Closing Date occurs. Each of the Warrants shall be in the form annexed hereto as
Annex VI, and shall have (x) [cashless exercise rights,] (y) registration rights
as provided in the Registration Rights Agreement, and (z) piggy-back
registration rights after the effectiveness of the Registration Statement
expires, as contemplated by the Registration Rights Agreement.
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g. Certain Agreements.
(i) The Company covenants and agrees that, except for the sale of
Debentures and Warrants to the Other Lenders, during the period (the "New
Transaction Period") from the Initial Closing Date and continuing through and
including the Final Lock-up Date (as defined below), it will not, without the
prior written consent of the Lender in each instance, enter into any subsequent
or further offer or sale of Common Stock or securities convertible into and/or
other rights exercisable for the issuance of Common Stock (collectively, "New
Common Stock") to or with any third party (any such offer or sale of New Common
Stock, a "New Transaction"). The term "Final Lock-up Date" means the date which
is the number of days after the Effective Date equal to the sum of (X) (1)
ninety (90) days, plus (Y) the number of days, if any, during which sale of
Registrable Securities was suspended after the Effective Date.
(ii) In the event there is a New Transaction which breaches the provisions
of this Section 4(g),
(A) the Conversion Price on any Unconverted Debenture (as defined in the
Debenture) shall be adjusted to an amount (the "Adjusted Conversion Price")
equal to the lowest of (1) ninety percent (90%) of the then existing
Conversion Price, or (2) seventy-five percent (75%) of the of the lower of
(X) the lowest fixed purchase price of any shares of the New Common Stock
contemplated in the New Transaction or (Y) the lowest conversion price
which would be applicable under the terms of the New Transaction;
(B) with respect to all portions of the principal and interest of the
Debenture converted prior to such date (or converted before the adjustment
referred to in the immediately preceding subparagraph (A) is effected), the
Company will issue to the Holder additional shares of Common Stock
("Additional Shares") equal to the excess, if any, of (1) (X) the aggregate
amount of the principal and accrued interest of the Debenture so converted,
divided by (Y) the Adjusted Conversion Price, over (2) the number of
Conversion Shares and Additional Shares, if any, previously issued in
connection with such conversion;
(C) the number of Warrants shall be adjusted to equal the higher of (1) the
number of Warrant Shares originally provided in the Warrants or (2) the
number of shares equal to (I) the Purchase Price divided by (II) the
Closing Price for the Trading Day immediately preceding the initial closing
date of the New Transaction; and
(D) the Exercise Price on the Warrants shall be adjusted to equal the lower
of (1) the then existing Warrant Price or (2) one hundred twenty percent
(120%) of the Adjusted Conversion Price; and
(E) the Holder will have the such other rights as provided in Debenture.
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h. Reimbursement. If (i) the Lender, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if the Lender is impleaded in any
such action, proceeding or investigation by any Person, or (ii) the Lender,
other than by reason of its gross negligence or willful misconduct or by reason
of its trading of the Common Stock in a manner that is illegal under the federal
securities laws, becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC against or involving the Company or in
connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if the Lender is impleaded in any
such action, proceeding or investigation by any Person, then in any such case,
the Company will reimburse the Lender for its reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith, as such expenses are incurred. In addition, other than
with respect to any matter in which Lender is a named party, the Company will
pay to the Lender the charges, as reasonably determined by Lender, for the time
of any officers or employees of the Lender devoted to appearing and preparing to
appear as witnesses, assisting in preparation for hearings, trials or pretrial
matters, or otherwise with respect to inquiries, hearing, trials, and other
proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this section shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Lender who or which are actually named
in such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of Lender and
any such affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, Lender
and any such affiliate and any such person. The Company also agrees that neither
the Lender nor any such affiliate, partner, director, agent, employee or
controlling person shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of any of the Transaction Agreements, except as
may be expressly and specifically provided in or contemplated by this Agreement.
i. Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, a number of shares (the
"Minimum Available Shares") at least equal to the sum of (x) one hundred fifty
percent (150%) of the number of shares of Common Stock issuable as may be
required to satisfy the conversion rights of the Holders of all outstanding
Convertible Debentures, plus (y) the number of shares issuable upon exercise of
all outstanding Warrants held by all Holders (in each case, whether such
Convertible Debentures or Warrants were originally issued to the Holder, the
Lender or to any other Holder or Lender). For the purposes of such calculations,
the Company should assume that all such Debentures were then convertible and all
Warrants were then exercisable without regard to any restrictions which might
limit any Lender's right to convert any of the Convertible Debentures or
exercise any of the Warrants held by any Holder.
j. Publicity, Filings, Releases, Etc. Each of the parties agrees that it
will not disseminate any information relating to the Transaction Agreements or
the transactions contemplated thereby, including issuing any press releases,
holding any press conferences or other forums, or filing
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any reports (collectively, "Publicity"), without giving the other party
reasonable advance notice and an opportunity to comment on the contents thereof.
Neither party will include in any such Publicity any statement or statements or
other material to which the other party reasonably objects. In furtherance of
the foregoing, the Company will provide to the Lender drafts of the applicable
text of any filing intended to be made with the SEC which refers to the
Transaction Agreements or the transactions contemplated thereby as soon as
practible (but at least three (3) business days before such filing will be made
and will not include in such filing any statement or statements or other
material to which the other party reasonably objects. Notwithstanding the
foregoing, each of the parties hereby consents to the inclusion of the text of
the Transaction Agreements in filings made with the SEC (but any descriptive
text accompanying or part of such filing shall be subject to the other
provisions of this paragraph).
k. Performance by the Company. The Company agrees that unless and until (i)
the Company has affirmatively demonstrated by the use of specific clear and
convincing evidence that the Lender has traded in securities of the Company in
violation of applicable federal securities laws and (ii) there has been issued
against the Lender a final non-appealable decision from a court of competent
jurisdiction to the effect that the Lender has violated applicable federal
securities laws with respect to its trading of the Company's securities, the
Lender shall be assumed to be in compliance with such laws and the Company shall
remain obligated to fulfill all of its obligations under each of the Transaction
Agreements; provided, further, that the Company shall under no circumstances be
entitled to request or demand that the Lender affirmatively demonstrate that it
has not engaged in any such violations as a condition to the Company's
fulfillment of its obligations under any of the Transaction Agreements and shall
not assert, whether as an affirmative claim or a defense to any claim made
against the Company, that the Lender's failure to demonstrate such absence of
such violations (including, but not limited to, its failure to provide any
trading or other records, it being specifically agreed that the Company,
directly or indirectly, will request the Lender or any of its agents, advisors,
brokers or representatives to provide such records in any forum) serves either
as a defense to any breach of the Company's obligations under any of the
Transaction Agreements or otherwise reflects adversely in any manner on the
legality of any action taken by the Lender.
l. Change In Control. The Company shall not enter into any agreement or
understanding which may, directly or indirectly, cause or effect the sale of or
substantially all of its assets or a change in "control" as defined in Rule 405
under the Securities Act of 1933, without the prior written consent of the
Investor
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that, with respect to the Securities, other than
the stop transfer instructions to give effect to Section 4(a) hereof, it will
give its transfer agent no instructions inconsistent with instructions to issue
Common Stock from time to time upon conversion of the Debentures in such amounts
as specified from time to time by the Company to the transfer agent, bearing the
restrictive legend specified in Section 4(b) of this Agreement prior to
registration of the
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Shares under the 1933 Act, registered in the name of the Lender or its nominee
and in such denominations to be specified by the Lender in connection with each
conversion of the Debentures. Except as so provided, the Shares shall otherwise
be freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Registration Rights Agreement. Nothing
in this Section shall affect in any way the Lender's obligations and agreement
to comply with all applicable securities laws upon resale of the Securities. If
the Lender provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a resale by the Lender of any
of the Securities in accordance with clause (1)(B) of Section 4(a) of this
Agreement is not required under the 1933 Act, the Company shall (except as
provided in clause (2) of Section 4(a) of this Agreement) permit the transfer of
the Securities and, in the case of the Conversion Shares, promptly instruct the
Company's transfer agent to issue one or more certificates for Common Stock
without legend in such name and in such denominations as specified by the
Lender.
b. Subject to the provisions of this Agreement, the Company will permit the
Lender to exercise its right to convert the Debentures in the manner
contemplated by the Debentures and to exercise the Warrants in the manner
contemplated by the Warrants.
c. The Company understands that a delay in the issuance of the Shares of
Common Stock beyond the Delivery Date (as defined in the Debentures) could
result in economic loss to the Lender. As compensation to the Lender for such
loss, the Company agrees to pay late payments to the Lender for late issuance of
Shares upon Conversion in accordance with the following schedule (where "No.
Business Days Late" refers to the number of business days which is beyond two
(2) business days after the Delivery Date): (1)
Late Payment For Each $10,000
of Debenture Principal or Interest
No. Business Days Late Amount Being Converted
---------------------- ----------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
--------
(1) Example: Notice of Conversion is delivered on Monday, October 3, 2003. The
Delivery Date would be Thursday, October 6 (the third business day after such
delivery). If the certificate is delivered by Monday October 10 (2 business days
after the Delivery Date), no payment under this provision is due. If the
certificates are delivered on October 18, that is 1 "Business Day Late" in the
table below; if delivered on October 11, that 6 "Business Days Late" in the
table.
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8 $800
9 $900
10 $1,000
>10 $1,000 + $200 for each
Business Day Late beyond
10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Lender's exclusive remedy (other than the
following provisions of this Section 5(c) and the provisions of the immediately
following Section 5(d) of this Agreement) for such delay. Furthermore, in
addition to any other remedies which may be available to the Lender, in the
event that the Company fails for any reason to effect delivery of such shares of
Common Stock by close of business on the Delivery Date, the Lender will be
entitled to revoke the relevant Notice of Conversion by delivering a notice to
such effect to the Company, whereupon the Company and the Lender shall each be
restored to their respective positions immediately prior to delivery of such
Notice of Conversion; provided, however, that an amount equal to any payments
contemplated by this Section 5(c) which have accrued through the date of such
revocation notice shall remain due and owing to the Converting Holder
notwithstanding such revocation. Anything in the foregoing provisions of this
paragraph (c) to the contrary notwithstanding, the total amount payable by the
Company under this paragraph (c) shall be reduced by an amount equal to fifty
percent (50%) of any Buy-In Adjustment Amount (as defined below) actually paid
by the Company to the Holder (but not by more than the total amount due without
regard to the provisions of this sentence).
d. If, by the relevant Delivery Date, the Company fails for any reason to
deliver the Shares to be issued upon conversion of a Debenture and after such
Delivery Date, the Holder of the Debentures being converted (a "Converting
Holder") purchases, in an arm's-length open market transaction or otherwise,
shares of Common Stock (the "Covering Shares") in order to make delivery in
satisfaction of a sale of Common Stock by the Converting Holder (the "Sold
Shares"), which delivery such Converting Holder anticipated to make using the
Shares to be issued upon such conversion (a "Buy-In"), the Converting Holder
shall have the right, to require the Company to pay to the Converting Holder, in
addition to and not in lieu of the amounts due under Section 5(c) hereof (but in
addition to all other amounts contemplated in other provisions of the
Transaction Agreements, and not in lieu of any such other amounts), the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the
amount equal to the excess, if any, of (x) the Converting Holder's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (y) the net proceeds (after brokerage commissions, if any) received by the
Converting Holder from the sale of the Sold Shares. The Company shall pay the
Buy-In Adjustment Amount to the Company in immediately available funds
immediately upon demand by the Converting Holder. By way of illustration and not
in limitation of the foregoing, if the Converting Holder purchases shares of
Common Stock having a total purchase price (including brokerage commissions) of
$11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Buy-In Adjustment Amount which Company will be required
to pay to the Converting Holder will be $1,000.
e. In lieu of delivering physical certificates representing the Common
Stock
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issuable upon conversion, provided the Company's transfer agent is participating
in the Depository Trust Company ("DTC") Fast Automated Securities Transfer
program, upon request of the Holder and its compliance with the provisions
contained in this paragraph, so long as the certificates therefor do not bear a
legend and the Holder thereof is not obligated to return such certificate for
the placement of a legend thereon, the Company shall use its best efforts to
cause its transfer agent to electronically transmit the Common Stock issuable
upon conversion to the Holder by crediting the account of Holder's Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system.
f. The holder of any Debentures shall be entitled to exercise its
conversion privilege with respect to the Debentures notwithstanding the
commencement of any case under 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C. ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C. ss.362 in respect of the conversion of the Debentures.
The Company agrees, without cost or expense to such holder, to take or to
consent to any and all action reasonably necessary to effectuate relief under 11
U.S.C. ss.362.
g. The Company will authorize its transfer agent to give information
relating to the Company directly to the Lender or the Lender's representatives
upon the request of the Lender or any such representative, to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Lender in connection with a Notice of Conversion or
exercise of a Warrant, or (ii) the number of outstanding shares of Common Stock
of all shareholders as of a current or other specified date. On the Closing
Date, the Company will provide the Lender with a copy of the authorization so
given to the transfer agent.
6. CLOSING DATE.
a. The Initial Closing Date shall occur on the date which is the first
Trading Day after each of the conditions contemplated by Sections 7 and 8 hereof
shall have either been satisfied or been waived by the party in whose favor such
conditions run; provided, however, that, at the option of the Finder, the
Initial Closing Date may be deferred to allow for additional subscriptions (up
to the Maximum Purchase Price) to be included in the transactions effected on
the Initial Closing Date. If additional subscriptions and the related Purchase
Price are received after the Initial Closing Date, one or more additional
Closing Dates may be held by mutual agreement of the Company and the Finder.
b. Each closing of the purchase and issuance of Debentures and Warrants
shall occur on the Closing Date at the offices of the Escrow Agent and shall
take place no later than 3:00 P.M., New York time, on such day or such other
time as is mutually agreed upon by the Company and the Finder.
c. Notwithstanding anything to the contrary contained herein, the Escrow
Agent
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will be authorized to release the Escrow Funds to the Company and to others and
to release the other Escrow Property on the Closing Date upon satisfaction of
the conditions set forth in Sections 7 and 8 hereof and as provided in the Joint
Escrow Instructions.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Lender understands that the Company's obligation to sell the Debentures
and the Warrants to the Lender pursuant to this Agreement on the relevant
Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the Registration Rights
Agreement by the Lender;
b, Delivery by the Lender to the Escrow Agent of good funds as payment in
full of an amount equal to the Purchase Price for the Securities in accordance
with this Agreement;
c. The accuracy on such Closing Date of the representations and warranties
of the Lender contained in this Agreement, each as if made on such date, and the
performance by the Lender on or before such date of all covenants and agreements
of the Lender required to be performed on or before such date; and
d. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.
The Company understands that the Lender's obligation to purchase the
Debentures and the Warrants on the relevant Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the other Transaction
Agreements by the Company;
b. Delivery by the Company to the Escrow Agent of the Certificates in
accordance with this Agreement;
c. The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;
d. On such Closing Date, the Registration Rights Agreement shall be in full
force and effect and the Company shall not be in default thereunder;
e. On such Closing Date, the Lender shall have received an opinion of
counsel
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for the Company, dated the Initial Closing Date (provided, however, that such
counsel shall advise the Escrow Agent in writing after the Initial Closing Date
if the opinion issued on the Initial Closing Date would not be issued on any
subsequent Closing Date), in form, scope and substance reasonably satisfactory
to the Lender, substantially to the effect set forth in Annex III attached
hereto;
f. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained; and
g. From and after the date hereof to and including such Closing Date, each
of the following conditions will remain in effect: (i) the trading of the Common
Stock shall not have been suspended by the SEC or on the Principal Trading
Market; (ii) trading in securities generally on the Principal Trading Market
shall not have been suspended or limited; (iii), no minimum prices shall been
established for securities traded on the Principal Trading Market; and (iv)
there shall not have been any material adverse change in any financial market
that, in the reasonable judgment of the Lender, makes it impracticable or
inadvisable to purchase the Debentures.
9. INDEMNIFICATION.
a. (i) The Company agrees to indemnify and hold harmless Lender and its
officers, directors, employees, and agents, and each Lender Control Person from
and against any losses, claims, damages, liabilities or expenses incurred
(collectively, "Damages"), joint or several, and any action in respect thereof
to which Lender, its partners, Affiliates, officers, directors, employees, and
duly authorized agents, and any such Lender Control Person becomes subject to,
resulting from, arising out of or relating to any misrepresentation, breach of
warranty or nonfulfillment of or failure to perform any covenant or agreement on
the part of Company contained in this Agreement, as such Damages are incurred,
except to the extent such Damages result primarily from Lender's failure to
perform any covenant or agreement contained in this Agreement or Lender's or its
officers, directors, employees, agents or Lender Control Persons negligence,
recklessness or bad faith in performing its obligations under this Agreement.
(ii) If (x) the Lender becomes involved in any capacity in any action,
proceeding or investigation brought by any stockholder of the Company, in
connection with or as a result of the consummation of the transactions
contemplated by this Agreement or the other Transaction Agreements, or if the
Lender is impleaded in any such action, proceeding or investigation by any
Person, or (y) the Lender becomes involved in any capacity in any action,
proceeding or investigation brought by the SEC, any self-regulatory organization
or other body having jurisdiction, against or involving the Company or in
connection with or as a result of the consummation of the transactions
contemplated by this Agreement or the other Transaction Agreements, or if the
Lender is impleaded in any such action, proceeding or investigation by any
Person, then in any such case, other than by reason of the Lender's actions
(other than the Lender's execution of the Transaction Agreements to which it is
a signatory, the payment of the Purchase Price, and/or the exercise of any of
the Lender's rights under any one or more of the Transaction Agreements), the
Company hereby agrees to indemnify, defend and hold harmless the Lender from
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and against and in respect of all losses, claims, liabilities, damages or
expenses resulting from, imposed upon or incurred by the Lender, directly or
indirectly, and reimburse such Lender for its reasonable legal and other
expenses (including the cost of any investigation and preparation) for a single
firm of counsel incurred in connection therewith, as such expenses are incurred.
In addition, the Company will reimburse the Lender for reasonable internal and
overhead costs for the time of any officers or employees of the Lender devoted
to appearing and preparing to appear as witnesses, assisting in preparation for
hearings, trials or pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject matter of this
Agreement or the other Transaction Agreements, other than by reason of the
Lender's actions (other than the Lender's execution of the Transaction
Agreements to which it is a signatory, the payment of the Purchase Price, and/or
the exercise of any of the Lender's rights under any one or more of the
Transaction Agreements). The indemnification and reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have (other than matters specifically addressed in the
Registration Rights Agreement, which shall be governed solely by that
agreement), shall extend upon the same terms and conditions to any Affiliates of
the Lender who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and Lender Control Persons (if any),
as the case may be, of the Lender and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Lender, any such Affiliate and any such
Person. The Company also agrees that neither the Lender nor any such Affiliate,
partner, director, agent, employee or Lender Control Person shall have any
liability to the Company or any Person asserting claims on behalf of or in right
of the Company in connection with or as a result of the consummation of this
Agreement or the other Transaction Agreements, other than by reason of the
Lender's actions (other than the Lender's execution of the Transaction
Agreements to which it is a signatory, the payment of the Purchase Price, and/or
the exercise of any of the Lender's rights under any one or more of the
Transaction Agreements)
b. All claims for indemnification by any Indemnified Party (as defined
below) under this Section 9 shall be asserted and resolved as follows:
(i) In the event any claim or demand in respect of which any Person
claiming indemnification under any provision of this Section 9 (an "Indemnified
Party") might seek indemnity under Section 9(a) is asserted against or sought to
be collected from such Indemnified Party by a Person other than a party hereto
or an Affiliate thereof (a "Third Party Claim"), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim for indemnification that is being asserted under any
provision of this Section 9 against any Person (the "Indemnifying Party"),
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim (a "Claim Notice")
with reasonable promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party's ability to
defend has been prejudiced by such failure of the Indemnified Party. The
Indemnifying Party shall notify the
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Indemnified Party as soon as practicable within the period ending thirty (30)
calendar days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the "Dispute Period") whether
the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party under this Section 9 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim. The following provisions shall also apply.
(x) If the Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
Section 9(b), then the Indemnifying Party shall have the right to defend,
with counsel reasonably satisfactory to the Indemnified Party, at the sole
cost and expense of the Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which proceedings shall be vigorously and
diligently prosecuted by the Indemnifying Party to a final conclusion or
will be settled at the discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party in the case of any settlement that
provides for any relief other than the payment of monetary damages or that
provides for the payment of monetary damages as to which the Indemnified
Party shall not be indemnified in full pursuant to Section 9(a)). The
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnified Party may, at the sole cost and expense of the Indemnified
Party, at any time prior to the Indemnifying Party's delivery of the notice
referred to in the first sentence of this subparagraph (x), file any
motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate
protect its interests; and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party Claim that the
Indemnifying Party elects to contest. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this subparagraph (x), and
except as provided in the preceding sentence, the Indemnified Party shall
bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may take over the
control of the defense or settlement of a Third Party Claim at any time if
it irrevocably waives its right to indemnity under Section 9(a) with
respect to such Third Party Claim.
(y) If the Indemnifying Party fails to notify the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the Third
Party Claim pursuant to Section 9(b), or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Dispute Period, then the Indemnified Party shall have
the right to defend, at the sole cost and expense of the Indemnifying
Party, the Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted by the Indemnified Party in a reasonable
manner and in good faith or
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will be settled at the discretion of the Indemnified Party (with the
consent of the Indemnifying Party, which consent will not be unreasonably
withheld). The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; provided,
however, that if requested by the Indemnified Party, the Indemnifying Party
will, at the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnified Party and its counsel in
contesting any Third Party Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this subparagraph (y), if the
Indemnifying Party has notified the Indemnified Party within the Dispute
Period that the Indemnifying Party disputes its liability or the amount of
its liability hereunder to the Indemnified Party with respect to such Third
Party Claim and if such dispute is resolved in favor of the Indemnifying
Party in the manner provided in subparagraph(z) below, the Indemnifying
Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this subparagraph (y) or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party
in full for all reasonable costs and expenses incurred by the Indemnifying
Party in connection with such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by
the Indemnified Party pursuant to this subparagraph (y), and the
Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
(z) If the Indemnifying Party notifies the Indemnified Party that it does
not dispute its liability or the amount of its liability to the Indemnified
Party with respect to the Third Party Claim under Section 9(a) or fails to
notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party with respect to such Third Party Claim, the amount of
Damages specified in the Claim Notice shall be conclusively deemed a
liability of the Indemnifying Party under Section 9(a) and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified Party on
demand. If the Indemnifying Party has timely disputed its liability or the
amount of its liability with respect to such claim, the Indemnifying Party
and the Indemnified Party shall proceed in good faith to negotiate a
resolution of such dispute; provided, however, that it the dispute is not
resolved within thirty (30) days after the Claim Notice, the Indemnifying
Party shall be enlisted to institute such legal action as it deems
appropriate.
(ii) In the event any Indemnified Party should have a claim under Section
9(a) against the Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party shall deliver a written notification of a claim for
indemnity under Section 9(a) specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such claim (an "Indemnity Notice") with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying Party
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demonstrates that it has been irreparably prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity Notice or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes the claim or the amount of the claim described in such Indemnity
Notice, the amount of Damages specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 9(a) and
the Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability or
the amount of its liability with respect to such claim, the Indemnifying Party
and the Indemnified Party shall proceed in good faith to negotiate a resolution
of such dispute; provided, however, that it the dispute is not resolved within
thirty (30) days after the Claim Notice, the Indemnifying Party shall be
enlisted to institute such legal action as it deems appropriate.
c. The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar rights of the indemnified party against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to.
10. JURY TRIAL WAIVER. The Company and the Lender hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out or in connection
with the Transaction Agreements.
11. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the exclusive jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement or any of the other
Transaction Agreements and hereby waives, to the maximum extent permitted by
law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions. To the extent
determined by such court, the Company shall reimburse the Lender for any
reasonable legal fees and disbursements incurred by the Lender in enforcement of
or protection of any of its rights under any of the Transaction Agreements.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require.
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e. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original.
g. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
h. If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
k. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
12. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the seventh business day after deposit, postage prepaid, in the
United States Postal Service by registered or certified mail, or
(c) the third business day after mailing by domestic or international
express courier, with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
Company:
PROVECTUS PHARMACEUTICALS, INC.
at its address at the head of this Agreement
Attn: Xxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
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Wm. Xxxxxxx Xxxx, Jr.
Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, P.C.
2200 Riverview Tower (Zip 37902)
000 Xxxxx Xxx Xxxxxx
Post Office Box 1792
Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
:
Lender: At the address set forth on the signature page of this Agreement.
with a copy to:
Xxxxxxx & Prager LLP, Esqs.
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
Escrow Agent: Xxxxxxx & Prager LLP
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Lender's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the payment
of the
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Purchase Price, and shall inure to the benefit of the Lender and the Company and
their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Lender (if
an entity, by one of its officers thereunto duly authorized) as of the date set
forth below.
PURCHASE PRICE: $
--------------------------------
NUMBER OF WARRANTS: --------------------------------
SIGNATURES FOR LENDERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day of November , 2003.
PLATINUM PARTNERS VALUE
------------------------------- ARBITRAGE FUND
Address ------------------------------------
Printed Name of Lender
--------------------------------
By:
------------------------------------
Telecopier No. ----------------- (Signature of Authorized Person)
------------------------------------
-------------------------------- Printed Name and Title
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
PROVECTUS PHARMACEUTICALS, INC.
By:
---------------------------------------------------
Title:
---------------------------------------------------
Date: , 2003
---------------------------------------------------
FINAL
IN WITNESS WHEREOF, this Agreement has been duly executed by the Lender (if
an entity, by one of its officers thereunto duly authorized) as of the date set
forth below.
PURCHASE PRICE: $
--------------------------------
NUMBER OF WARRANTS: --------------------------------
SIGNATURES FOR LENDERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day of November , 2003.
XXXXXX XXXXX
-------------------------------- ------------------------------------
Address Printed Name of Lender
--------------------------------
By:
------------------------------------
Telecopier No. ----------------- (Signature of Authorized Person)
------------------------------------
-------------------------------- Printed Name and Title
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
PROVECTUS PHARMACEUTICALS, INC.
By:
---------------------------------------------------
Title:
---------------------------------------------------
Date: , 2003
---------------------------------------------------
FINAL
IN WITNESS WHEREOF, this Agreement has been duly executed by the Lender (if
an entity, by one of its officers thereunto duly authorized) as of the date set
forth below.
PURCHASE PRICE: $
--------------------------------
NUMBER OF WARRANTS: --------------------------------
SIGNATURES FOR LENDERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day of November , 2003.
M/S FAMILY FOUNDATION
-------------------------------- ------------------------------------
Address Printed Name of Lender
--------------------------------
By:
------------------------------------
Telecopier No. ----------------- (Signature of Authorized Person)
------------------------------------
-------------------------------- Printed Name and Title
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
PROVECTUS PHARMACEUTICALS, INC.
By:
---------------------------------------------------
Title:
---------------------------------------------------
Date: , 2003
---------------------------------------------------
FINAL
IN WITNESS WHEREOF, this Agreement has been duly executed by the Lender (if
an entity, by one of its officers thereunto duly authorized) as of the date set
forth below.
PURCHASE PRICE: $
--------------------------------
NUMBER OF WARRANTS: --------------------------------
SIGNATURES FOR LENDERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day of November , 2003.
HUBERFELD FAMILY, LLC
-------------------------------- ------------------------------------
Address Printed Name of Lender
--------------------------------
By:
------------------------------------
Telecopier No. ----------------- (Signature of Authorized Person)
------------------------------------
-------------------------------- Printed Name and Title
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
PROVECTUS PHARMACEUTICALS, INC.
By:
---------------------------------------------------
Title:
---------------------------------------------------
Date: , 2003
---------------------------------------------------
FINAL
IN WITNESS WHEREOF, this Agreement has been duly executed by the Lender (if
an entity, by one of its officers thereunto duly authorized) as of the date set
forth below.
PURCHASE PRICE: $
--------------------------------
NUMBER OF WARRANTS: --------------------------------
SIGNATURES FOR LENDERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day of November , 2003.
XXXXXXX XXXXXXXXX
-------------------------------- ------------------------------------
Address Printed Name of Lender
--------------------------------
By:
------------------------------------
Telecopier No. ----------------- (Signature of Authorized Person)
------------------------------------
-------------------------------- Printed Name and Title
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
PROVECTUS PHARMACEUTICALS, INC.
By:
---------------------------------------------------
Title:
---------------------------------------------------
Date: , 2003
---------------------------------------------------
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ANNEX I FORM OF DEBENTURE
ANNEX II JOINT ESCROW INSTRUCTIONS
ANNEX III OPINION OF COUNSEL
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V COMPANY DISCLOSURE MATERIALS
ANNEX VI FORM OF WARRANT
ANNEX VII COMPANY'S SEC DOCUMENTS AVAILABLE ON XXXXX
ANNEX VIII INVESTOR QUESTIONNAIRE
